Part I
Background

Authority for Audit

This report is based on an audit of the WCF, undertaken by the Audit Division of the Federal
Election Commission (the Commission) in accordance with the Federal Election Campaign Act
of 1971, as amended (the Act). The Audit Division conducted the audit pursuant to 2 USC.
§438(b), which permits the Commission to conduct audits and field investigations of any
political committee that is required to file a report under 2 U.S.C. §434. Prior to conducting any
audit under this subsection, the Commission must perform an internal review of reports filed by
selected committees to determine if the reports filed by a particular committee meet the threshold
requirements for substantial compliance with the Act. 2 U.S.C. §438(b).

Scope of Audit

This audit examined:

1. The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The disclosure of disbursements, debts and obligations.

The disclosure of expenses allocated between federal and non-federal accounts.
The consistency between reported figures and bank records.

The completeness of records.

Other committee operations necessary to the review.

SI AKARWN

Changes to the Law

On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act of
2002 (BCRA). The BCRA contains many substantial and technical changes to the federal
campaign finance law. Most of the changes became effective November 6, 2002. The period
covered by this audit pre-dates these changes. Therefore, the statutory and regulatory
requirements cited in this report are those that were in effect during the audit period.


Closing Cash on Hand - 2000
The $18,037 understatement of the closing cash on hand resulted primarily from the
misstatements described above.

The majority of the reporting problems occurred between July and December 2000. The Audit

staff determined that the reporting irregularities were likely caused by the following factors:

e The WCF purchased new computer software in June 2000 and subsequently converted the

receipts data files from the previously used system. WCF suspected, and the Audit staff
confirmed that some of the data was lost or inadvertently deleted during the conversion
process. As a result, the newly created receipts database was incomplete;

¢ The committee staff responsible for recordkeeping and reporting performed essentially all
accounting functions manually which significantly increased the risk of error; and

© The WCF experienced high personnel turnover primarily during the second half of calendar

year 2000.

At the exit conference, the Audit staff provided the WCF representatives with schedules

explaining the misstatements. The representatives agreed to file amended reports for calendar

year 2000.

Interim Audit Report Recommendations and Committee Response

The Audit staff recommended that the WCF file amended reports, by reporting period, for

calendar year 2000. The amended reports were to include:

© Corrected Summary and Detailed Summary Pages for each reporting period to accurately
disclose the committee’s financial activity; and

e Amended Schedules A (Itemized Receipts) and B (Itemized Disbursements), by reporting
period, to support the corrected Summary and Detailed Summary pages.

In response to the interim audit report, the WCF amended its reports to materially correct the

misstatements noted above.

| Finding 2. Disclosure of Outstanding Debts

Summary

The WCF failed to report debts owed to 14 vendors which totaled as much as $82,777 during
calendar year 2000. In response to the interim audit report, the WCF filed Schedules D, by
reporting period, which correctly disclosed the debts noted above as well as additional debts
identified by the WCF’s officials.

Legal Standard

Continuous Reporting Required. A political committee must disclose the amount and nature
of outstanding debts and obligations until those debts are extinguished. 2 U.S.C §434(b)(8) and

11 CFR §§104.3(d) and104.11(a).


Part III
Summaries

Findings and Recommendations

Finding 1. Misstatement of Financial Activity

A comparison of the WCF’s reported figures to its bank records revealed that the receipts,
disbursements, and ending cash-on-hand had been misstated for calendar year 2000. In response
to the interim audit report, the WCF amended its reports to materially correct the misstatement
noted above. (For more detail, see p. 4.)

Finding 2. Disclosure of Outstanding Debts

The WCF failed to report debts owed to 14 vendors which totaled as much as $82,777 during
calendar year 2000. In response to the interim audit report, the WCF filed Schedules D, by
reporting period, which correctly disclosed the debts noted above as well as additional debts
identified by the WCF’s officials. (For more detail, see p. 6.)



Part II

Overview of Committee

Committee Organization

Important Dates

¢ Date of Registration

March 8, 1974

e Audit Coverage

January 1, 1999 - December 31, 2000

Headquarters

Washington, DC

Bank Information

e Bank Depositories

2

e Bank Accounts

6 Federal and 3 Non-Federal Accounts

Treasurer

e Treasurer When Audit Was Conducted

Lynn S. Martin

e Treasurer During Period Covered by Audit

Lynn S. Martin

Management Information

¢ Attended FEC Campaign Finance Seminar__| Yes

e Used Commonly Available Campaign Yes
Management Software Package

¢ Who Handled Accounting and Paid Staff

Recordkeeping Tasks

Overview of Financial Activity

(Audited Amounts)
Cash on hand @ January 1, 1999 $ 84,292
o Total Contributions 1,334,456
o. Transfers from Affiliates/Other Party Committees 161,532
o Other Receipts 58,240
Total Receipts $1,554,228
o Operating Expenditures 1,430,556
o__Other Expenditures 83,930
Total Disbursements $1,514,486
Cash on hand @ December 31, 2000 $ 124,034



Comparison of Disclosure Reports and Bank Records

2000 Activity
Reported Bank Records Discrepancy
Receipts $768,775 $918,942 $150,167
Understated
Disbursements $699,959 $831,781 $131,822
Understated
Ending Cash Balance $105,997 $124,034 $18,037
Understated

Explanation of Discrepancies

Receipts — 2000
The understatement of receipts resulted from the following:

Individual contributions not reported. These were
primarily telemarketing contributions collected by GSI.

Net unreported transfers from the non-federal account for
shared expenses.

Net unreported miscellaneous vendor refunds.
Unexplained difference

Total net understatement of receipts

Disbursements — 2000
The understatement of disbursements resulted from the following:

Payments to GSI not reported.

Unreported operating expenditures made from the
Allocation account. This amount consisted of unreported
vendor payments totaling $53,826 and net unreported
payroll totaling $11,551.

Unreported transfer to the non-federal account.
Unreported bank service charges and credit card fees.
Reported disbursements not clearing the bank

Unexplained difference
Total net understatement of disbursements

$ +115,945

+ 24,148

+ 435

+ 9,639

$+ 150,167

$+ 68,305

+ 65,378

+ 10.000
+ 3,747

3,124
12,484
$+ 131,822


FEDERAL ELECTION COMMISSION
Washington, DC 20463

October 10, 2003

MEMORANDUM

TO: RON M. HARRIS
PRESS OFFICER
PRESS OFFICE "

i
FROM: JOSEPH F. STOLTZ cL
ASSISTANT STAFF DIRECTOR
AUDIT DIVISION

SUBJECT: | PUBLIC ISSUANCE OF THE AUDIT REPORT ON THE
WOMEN’S CAMPAIGN FUND

Attached please find a copy of the audit report and related documents on the

Women’s Campaign Fund, which was approved by the Commission on October 2, 2003.

The report may be released to the public on October 13, 2003.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library


Itemizing Debts and Obligations

¢ A debt of $500 or less must be reported once it has been outstanding 60 days from the date
incurred (the date of the transaction); the committee reports it on the next regularly scheduled
report.

e A debt exceeding $500 must be disclosed in the report that covers the date on which the debt
was incurred. 11 CFR §104.11(b).

Facts and Analysis
The Audit staff reconciled the accounts” of 14 of WCF’s vendors and determined that the WCF

had outstanding debt at the end of five reporting periods, primarily the second half of the
calendar year 2000, that was not disclosed on Schedules D.

The debts, which totaled $82,777, were owed to the 14 vendors over several reporting periods.
The amount of debts not reported ranged from $2,557 (July 1 — September 30, 2000 reporting
period) to $34,627 (December 12 — December 31, 2000 reporting period). The major debt
categories were printing ($45,107) and payments for computer system-related services
($13,259).

At the exit conference, the Audit staff provided the WCF representatives a detailed listing of
unreported debts for the relevant reporting periods. The representatives agreed to file amended
Schedules D for these reporting periods.

Interim Audit Report Recommendations and Committee Response

The Audit staff recommended that the WCF include with the amended reports recommended at
Finding 1, Schedules D to disclose the outstanding debts addressed above. In response to the
interim audit report, the WCF filed Schedules D, by reporting period, which correctly disclosed
the debts noted above as well as additional debts identified by the WCF’s officials.

2 The reconciliation consisted of calculating invoiced and paid amounts for individual reporting periods in the
1999 — 2000 election cycle. The Audit staff determined whether any outstanding debts were correctly disclosed on

Schedules D.



Part IV
Findings and Recommendations

| Finding 1. Misstatement of Financial Activity

Summary

A comparison of the WCF’s reported figures to its bank records revealed that the receipts,
disbursements, and ending cash-on-hand had been misstated for calendar year 2000. In response
to the interim audit report, the WCF amended its reports to materially correct the misstatement

noted above.

Legal Standard

Contents of Reports. Each report must disclose:

e The amount of cash on hand at the beginning and end of the reporting period;

¢ The total amount of receipts for the reporting period and for the calendar year; and

© The total amount of disbursements for the reporting period and for the calendar year.
2 U.S.C. §434(b)(1), (2) and (4).

Facts and Analysis

The WCF used Gordon Schwenkmeyer, Inc. (GSI), a California based telemarketing firm, to
handle some of its fundraising. GSI worked from phone lists and solicited contributions for the
WCF. All contributions received were deposited into a checking account maintained by GSI. At
the end of each month, GSI provided the WCF with a Detailed Contributions Report and the
corresponding monthly bank statement. Fundraising proceeds were forwarded to the WCF by
check from this account upon WCF’s request. Periodically, GSI withdrew funds from the
account to pay its fees.

To account for the telemarketing receipts, the WCF used GSI’s Detailed Contributions Reports
to update its internal receipts files. However, the update process involved the manual input of
data and, as discussed below, errors and omissions occurred.

The following chart details the discrepancies between the totals on the WCF disclosure reports
and bank records for calendar year 2000. Succeeding paragraphs explain why the discrepancies
occurred. The WCF did not provide records to explain how the amounts shown on its disclosure
reports were calculated; as such not all discrepancies could be explained.



Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Changes to the Law

Part II. Overview of the Committee
Committee Organization
Overview of Financial Activity

Part III. Summaries
Findings and Recommendations

Part IV. Findings and Recommendations
Finding 1. Misstatement of Financial Activity
Finding 2. Disclosure of Outstanding Debts

Page

Nw


Report of the Audit Division
on the

Women’s Campaign Fund, Inc.

January 1, 1999 - December 31, 2000



Report of the
Audit Division on the

Women’s Campaign Fund, Inc.
January 1, 1999 - December 31, 2000

Why the Audit

Was Done

Federal law permits the
Commission to conduct
audits and field
investigations of any
political committee that is
required to file reports
under the Federal
Election Campaign Act
(the Act). The
Commission generally
conducts such audits
when a committee
appears not to have met
the threshold
requirements for
substantial compliance
with the Act.' The audit
determines whether the
committee complied with
the limitations,
prohibitions and
disclosure requirements
of the Act.

Future Action
The Commission may
initiate an enforcement
action, at a later time,
with respect to any of the
matters discussed in this
report.

' 2US.C. §438(b).

About the Committee (p. 2)

The Women’s Campaign Fund, Inc. (WCF) is a non-connected
committee. The WCF qualified for multi-candidate status on
January 1, 1975 and is headquartered in Washington, DC. For
more information, see chart on the Committee Organization, p.2.

Financial Activity (p. 2)
« Receipts
o Total Contributions
o Transfers from Affiliates/Other
Party Committees
o Other Receipts 58,240

$ 1,334,456
161,532

o Total Receipts $ 1,554,228
e Disbursements

o Operating Expenditures $ 1,430,556

o Other Disbursements 83.930

o Total Disbursements $ 1,514,486

Findings and Recommendations (p. 3)
© Misstatement of Financial Activity (Finding 1)
©. Disclosure of Outstanding Debts (Finding 2)