• FEDERAL ELECTION COMMISSION

WASHINGTON, 0 C 20463

May 4, 1981

MEMORANDUM

TO:

FROM:

SUBJECT:

FRED EILAND

PRESS OFFICE

BOB COSTA -<~ PUBLIC ISSUANCE OF FINAL AUDIT REPORT -

CIVIC HOST COMMITTEE FOR THE 1980

REPUBLICAN NATIONAL CONVENTION

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Attached please find a copy of the final audit report

of the Civic Host Committee for the 1980 Republican National

Convention which was approved by the Commission on April 24,

1981 .

Informatio~al copies of the report have been received

by all parties involved and this report may be released to

the public as of today, May 4, 1981.

Attached as stated

cc: FEC Library

RAD

----fubl ic Record
• FEDERAL ELECTION COMMISSION

WASHINGTON, D ( 204fd

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REPORT OF THE AUDIT DIVISION

OF THE

CIVIC HOST COMMITTEE FOR THE 1980 REPUBLICAN

NATIONAL CONVENTION

I. Background

A. Overview

This report is based on an audit of the Civic Host

Committee for the 1980 Republican National Convention (lithe

Committee U ), to determine whether there has been compliance with

the provisions of the Fede_ral Election Campaign Act of 1971, as

amended ("the Act"). The audit was conducted pursuant to Section

9008.9 of Title 11 of the Code of Federal Regulations which states,

in part, that the Commission shall conduct an examination and

audit of each host committee.

The Committee registered with the Federal Election

Commission on July 24, 1979 as a non-partisan corporation to act

as the civic host committee for the 1980 Republican National

Presidential Nominating Convention. The Committee maintains its

headquarters in Detroit, Michigan. The audit covered the period

July 24, 1979 through September 30, 1980. During the period, the

Committee reported a beginning cash balance of $-0-, total receipts

of $718,983.03, total expenditures of $658,931.10, and an ending

cash balance on September 30, 1980 of $60,051.93. In addition,

the financial activity was reviewed through December 31, 1980.

This audit report is based on documents and working

papers \~hich support each of its factual statements. They

form part of the record upon which the Commission based its decisions

on the matters in this report and were available to Commissioners

and appropriate staff for review.

B. Key Personnel

The principal officers for the period audited were:

Mr. Tho~as Murphy, Chairman, and Mr. Robert M. Surdarn, Treasurer .
• c. Scope

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The audit included such tests as verification of total

reported receipts and expenditures and individual transactions;

review of required supporting documentation and analysis of

Committee debts and obligations; review of contribution and expenditure limitations; und such other audit procedures as deemed

necessary under the circumstances.

II. Audit Findings and Recommendations

A. Omission of Disclosure Information

Section 434(b) (3) (A) of Title 2 of the United States

Code states, in part, that each report shall disclose the person

(other than a political committee) who makes a contribution to the

reporting Committee during the reporting period, whose contribution

or contributions have an aggregate amount or value in excess of

$200 within the calendar year, together with the date and amount

of any such contribution.

In addition, Section l04.3(a) (4) (i) of Title 11 of the

Code of Federal Regulations states, in part, that the Committee

shall disclose the identification of each contributor together

with the a~1reg~te year-to-date total for such contributor, whose

contribution or contributions aggregate in excess of $200

per calendar year, together with the date of receipt and amount

of any such contributions.

The Audit staff's sample review of the Committee's

disclosure reports and records indicated that at a 90% confidence

level, between 40% and 50% of the contributions, while itemized

as required, were not identified by the date of receipt as required.

In an attachment to the report, the Comnittee acknowledged that

contributions listed on 22 pages were received between April 15,

1980 and July 12, 1980. The attach~ent further stated "Our records

do not allow us to specifically identify the date of receipt."

Our review of Committee records revealed, however, that

the date of receipt of contributions was available. The Committee

utilized a bank lock box service which transmitted receipts on a

daily basis. The daily report consisted of an advice of credit,

a photocopy of each contributor's check, and a calculator tape on

which the a~ounts were totalled. The Committee, as part of its

processing system, entered the nane of the contributor by the

appropriate amount on the tape, and retained the photocopy of

the check as the contribution record. According to a Co~~ittee

official, the itemization schedule(s) (FEe Schedule A) for the

disclosure report was up-dated each Jay fro~ this information .
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On March 3, 1981, the Commission made a determination

that the Committee amend its reports to disclose the date of

receipt of the contributions noted above within 30 days of receipt

of the interim audit report.

Recommendation

The Committee filed an amendment on April 13, 1981 adequately

disclosing the date of receipt of the contributions. The Audit

staff recommends no further action.

B. Failure to Disclose In-kind Contributions

Section 434(b) (3) (A) of Title 2 of the United States

Code states, in part, that each report shall disclose the person

(other than a political committee) who makes a contribution to

the reporting committee during the reporting period, whose

contribution or contributions have an aggregate amount or value

in excess of $200 within the calendar year, together with the

date and amount of any such contribution.

In addition, Section 104.13 (a) (1) and (2) of Title 11

of the Code of Federal Regulations states, in part, that the

amount of an in-kind contributio~ shall be equal to the usual

and normal valu~on the date received. Each in-kind contribution

shall be reported as a contribution and expenditure.

The Audit staff's review of contributions noted two (2)

undisclosed in-kind contributions made to the Committee. These

in-kind contributions consisted of accounting services provided

by an accounting firm and production costs for a movie by an

advertising firm. Both business entities are located within

the Standard Metropolitan Statistical Area. The advertising

firm estimated the services they provided to be \·:orth

$18,000.00. The Audit staff was unable to determine the fair

market value of the accounting services which was the development

of a system of control over cash receipts and the distribution

and sale of cOmr:1er.1orative gift iter.1s.

The Co~mittee staff st~ted that it is common for

accounting firms to provide services to non-profit organizations

at no cost. The Co~~ittce staff also stated that the advertising

firm was incorrect ~nd they did not provide an in-kind contribution

to the Cor.~ittee.

On :·larc~ 3, 1981, the Cor:'..'7.ission r.1ade the determination

th3:', .:iDSl.2nt evidc:1ce frc::1 the CO::1~i::t.ce that thesl:~ entities did

not :::a;'~(~ in-k i nd can:' r i ~',-: ion s, t ~c CC~"~li t tee sha 11 renort the fair

rn~rj.~(· t. V.:11 ue of t~c s e 1-': i..:o s rCCt' i vc..l \,' i th i n. 30 dd~'S of the rece i pt

o~ the in tor i~ audi·.: rcpc~-t .
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Recommendation

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The Committee filed an amendment on April 13, 1981 adequately

disclosing the in-kind contributions. The Audit staff recommends

no further action.

C. Failure to Itemize Expenditures

Section 434(b) (5) (A) of Title 2 of the United States

Code states, in part, that the committee shall disclose the name

and address of each person to whom an expenditure in the aggregate

amount or value in excess of $200 within the calendar year is made

together with the date, amount, and purpose of such operating

expenditure.

In addition, Section 104.3(b) (3) (i) of Title 11 of the

Code of Federal Regulations states, in part, that the committee

shall disclose each person to whom an expenditure in an aggregate

amount or value in excess of $200 within the calendar year is made,

together with the date, amount, and purpose of such expenditure.

The Audit staff's review of the Committee's disclosure

reports and records indicated that there were 21 expenditures,

representing 2.9% of the total number of iternizable expenditures,

totaling $15,797.33 which were not itemized as required. The

Committee staff ~elieved that thes~ items were not itemized because

of an oversight on the Committee's part and a misunderstand~ng of

the aggregation process.

On March 3, 1981, the Commission made the determi~ation

that the Committee amend its reports to disclose these unitemized

expenditures noted above within 30 days of receipt of the interim

audit report.

Reco~~endation

The Committee filed an amendment on April 13, 1981 adequately

disclosing the unitemized expenditures. The Audit staff recommends

no further action .
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FEDERAL ELECTION COM,\t1ISSION

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\VASHI'G TO,\; ,0 ( , 20463

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