Attachment as stated

Informational copies of the report have been received

by all parties involved and this report may be released to

the public.

>j

ij

21, 1981

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January

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PUBLIC ISSUANCE OF FINAL AUDIT REPORT -

HUDSON COUNTY REGULAR DEMOCRATIC ORGARIZATION

FRED ElLARD

PRESS OFFICE

BOB COSTA

.,

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. lO44J)

•

cc: FEC Library

~~liC Record

Attached please find a copy of the final audit report of

the Hudson County Regu~ar Democratic Organization wh~ch was

approved by the Commission on January 9, 1981.

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FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

FINAL-REPORT OF THE AUDIT DIVISION

ON THE

HUDSON COUNTY REGULAR DEMOCRATIC ORGANIZATION

I • Background

A. Overview

This report is based on an audit of the Hudson County

Regular Democratic Organization ("the Committee"), undertaken

by the Audit Division of the Federal Election Commission in

accordance with the Commission's audit policy to determine

whether there has been compliance with the provisions of the . Federal Election Campaign Act of 1971, as amended (" the Act").

The audit was conducted pursuant to Section 438(a) (8) of Title 2

of the United States Code which, at the time of the audit,

directed the Commission to make from time to time audits and

field investigations with respect to reports and statements

filed under the provisions of the Act.

The Committee registered with the Federal Election

Commission on October 12, 1976. The Committee maintained its

headquarters in West New York, New Jersey.

The audit covered the period October 6, 1976 through

December 31, 1976, the final coverage date of the Committee's

termination report. The Committee reported a beginning cash

balance at October 6, 1976 of $21,594.54, total receipts for

the period of $21,431.00, total expenditures for the period

of $35,460.80, and a closing cash balance on December 31, 1976

of $7,564.74.

This report is based on documents and working

papers supporting each of its factual statements. They form

part of the record upon which the Commission based its

decisions on the matters in the report and were available to

Commissioners and appropriate staff for review.
The cited section of the Code of Federal Regulations became

effective on April 13, 1977.

We recommended in our interim audit report that the

Committee amend their disclosure reports to identify the sources

of beginning cash on hand.

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B. Key Personnel

Our review of Committee records and disclosure reports

revealed that the Committee did not identify the source of its

reported beginning cash on hand, which amounted to $21,594.54.

Our analysis disclosed that the Committee's beginning cash on

hand was comprised of a transfer from the state party committee

and a transfer from the Regular Hudson County Dinner Committee - 1975. Both transfers occurred on September 29, 1976.

II. Audit Findings and Recommendations

A.Disc1osure of Cash on Hand at

Beginning of Reporting Per10d

During the period of the audit, Section 434(b) (1) of

Title 2 of the United States Code, stated that each report shall

disclose the amount of. cash on hand at the beginning of the

reporting period•

For the period covered by the audit, proposed Section . 104.10 !I of Title 11 of the Code of Federal Regulations stated that ':

political committees and candidates which have cash on hand at the

time of registration (which the committee or candidate anticipates

using in an election) shall disclose on their first report the

source(s) of these funds. The cash balances are assumed to be

composed of those contributions most recently received by the

committee or candidate. The committee shall exclude from funds

to be used for Federal elections any contributions not permissi- ble under the Act. .

C. Scope

• The aqqit included such tests ~s verifi9ation of total

reported receipts and expenditures and individual transactions;

review of required supporting documentation; analysis of Committee

debts and obligations; and, such other audit procedures as deemed

necessary under the circumstances.

The principal officers of the Committee during the

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On November 28, 1980, we received a letter from the

Committee which identified the sources of beginning cash on

hand.

Recommendation

Based on the .esponse received from the Committee, the

Audit staff recommends no further action in this matter.

B. Retention of Supporting Documentation for

Expenditures

For the period covered by the audit, Section 432(d) of

Title 2 of the United States Code required the treasurer of a

political committee to obtain and keep a receipted bill, stating

the particulars, for every expenditure made by or on behalf of a

political committee in excess of $100 in amount, and for any

such expenditure in a lesser amount, if the aggregate amount of

such expenditures to the same person during a calendar year

exceeds $100.

For the period covered by the audit, proposed Section

102.9(c) (4) 2/ of Title 11 of the Code of Federal Regulations

stated that when a receipted bill is not available, the treasurer

may keep the cancelled checks showing payment of the bill, and

the bill, invoice or other contemporaneous memorandum of the

transaction supplied to the committee by the payee containing the

identification of the person to whom the expenditure was made, the

date, amount, and the particulars of the expenditures.

For the period covered by the audit, proposed Section

102.9(e) of Title 11 of the Code of Federal Regulations stated that

a treasurer shall use his or her best efforts to obtain the required:

information, and shall keep a complete record of the efforts to do

so. If there is a showing that best efforts have been made; the

reporting committee shall be deemed to be in compliance with

Section 102.9.

Our review of Committee expenditure records revealed

that the Committee did not have available documentation for 18

expenditures totaling $18,958.76. These expenditures were each

in excess of, or aggregated in excess of $100. The auditors

examined cancelled checks for each expenditure. Of these 18

expenditures, 10 (totaling $4,850) were made to nine (9) local

Democratic Organizations for get-out-the-vote purposes: eight (8)

(totaling $14,108.76) were made to five (5) individuals or vendors.

These 18 expenditures represent 78% of the number and 91% of the

dollar value of expenditures requiring documentation.

The cited section of the Code of Federal Regulations became

effective on April 13, 1977.
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In our interim audit report we recommended that the .. Committee obtain and submit to the Audit staff receipted bills,

invoices, or contemporaneous memoranda for each of the 18 expendi- . tures, or demonstrate that the Committee has made its best efforts -. eO' oijtairi~ sAi'"d' C!oCMt'ne'htc1\;::bf,,":·· .~, ..._, ~.- r···.. • -- _.__ •._~... -n-~-" ..,-~ ----'---'---....

On November 28,1980, the. Committee submitted evidence

of their efforts to contact payees for verification of the reported purpo~e of 9 expenditures totaling $4,850. The Committee submitted

contemporaneous 'memoranda for expenditures totaling $12,400. For

the remaining expenditures (totaling $1,708.76), the Committee

presented an explanation of their nature and a statement that the

Committee has made their best efforts to obtain the required documentation. -- - -

Recommendation

-Based upon the documentation presented by the Committee,

the Audit staff recommends no further action in this matter. --.

C. Disclosure of Disposition of Residual Funds

For the period covered by the audit, proposed Section

102.4(a).3/ of Title 11 of the Code of Federal Regulations required

,that a committee seeking to disband shall file with the Commission a

notice of termination which shall contain a final report of

receipts and disbursements, including a statement as to the dis- pos~tion of residual funds if the committee is disbanding.

The Committee filed a termination report of receipts

and disbursements on February 3, 1977, which reported an ending

cash on hand balance of $7,564.74. The report did not include

a statement disclosing the disposition of these residual funds.

Our review of expenditures subsequent to the Committee's

termination date, indicated.that the residual funds on hand as of

the Committee's termination were not used in connection with

Federal elections.

In our interim audit report we recommended that the

Committee file a statement with, the Commission indicating that

the residual funds were not expended in connection with Federal

elections. .

On November 28, 1980, the Audit staff received a letter

from the Committee stating that the residual funds were not

utilized for any Federal election.

The cited section of the Code of Federal Regulations became

effective on April 13, 1977.