FEDERAL ELECTION COMMISSIO~

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The Committee began reporting receipts and disbursements on

September 1, 1981.

A83-27

REPORT OF THE AUDIT DIVISION

" ON THE

WEBB FRANKLIN FOR CONGRESS COMMITTEE

I. Background

A. Overview

This report is based on an audit of the Webb Franklin

For Congress Committee ("the Commi·ttee ft ), 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(b) of Title 2 of the United States Code

which states, in part, that the Commission may conduct audits and

tl'field investigations of any political co~~ittee required to file

a report under Section 434 of this title. Prior to conducting

any audit under this section, the Commission shall perform an

internal review of reports filed by selected committees to

C) determine if the reports filed by a particular committee meet the

threshold requirements for substantial compliance with the Act.

a The Committee registered with the Clerk of the Bouse of

Representatives on May 17, 1982* as the p=incipal campaign

'T committee designated by the Honorable Wi11iam Webster Franklin.

The Committee maintains its headquarters in Greenwood,

Missis·sippi.

The audit covered the period September 1, 1981, through

December 31, 1982. The Committee reported a; cash on hand balance

September 1, 1981 of -0-; total receipts for the period of

$329,823.24; total disbursements for the period of $322,837.80;

and a cash on hand balance December 31, 1982 of $6,985.44.

. This report is based on documents and working papers

supporting each of its factual statements. They form part of the

record uoon which the Commission based its decisions on the

matters in this report and were available to Commissioners and

appropriate staff for review.

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B. Key Personnel

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The Treasurer of the Committee C~=:~: the period of

audit was Mr. Bob Knight.

c. Scope'

The audit included such tests as v~::fication of total

reported receipts and disbursements and in:i~i~ual transactions;

review of required supporting documentatio~; a~a1ysis of

Committee debts and obligations; and such :~~~: audit procedures

as deemed necessary under the circumstance ..

II. Audit Findings and Recommendations

A. Disclosure of Debts and Oblicaticns

Section 434(b) (8), Title 2, Unit~~ S:ates Code states,

in part, that each report under this secti~~ s~all disclose the

amount and nature of outstanding .debts and o~ligations owed by or

to a political committee.

During the audit period, the Ccr~i~t:e did not report

any debts or obligations owed by the Co~i:~~~. A review of

expenditure documentation revealed that th~ :c~~ittee apparently

owed $15,403.66 in undeposited federal incowe and FICA taxes on

December 31, 1982 but this debt was not re?c:t=a.

In addition, during the fourth q~a=:er of 1982,

according to the IRS Form 941 - Employer's :~a:terly Federal Tax

Return prepared by the Committee's treasur~r, ~he Co~mittee did

not make deposits for federal income and F.!.C.~. taxes which ..totaled $15-,403.66. In the previous quart-.:, all but $2.71 of a

total liability of $2,686.47 had been de?c_:~~5. At the end of

the fourth quarter, the Committee's report-c cash on hand balance

was $6,985.44 1/ making full payment of tt~ ~ax liability

impossible without the receipt of additio~ : funds.

In the interim audit report the· :-:::t staff recommended

that, the Co~~ittee within 30 days of Ieee ;~ of the report,

amend its 1982 year end report to disclose =~~ cebt.

1/ The Audit staff determined the correc- ~:lance to be

$7,906.66.

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$11, ~59'.11

10,537.89

921.22

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On October 17, 1983, the Com~it~~e filed an amended

report disclosing the debt.

Rec")mmendation

The Audit staff recommends no further action in this matter.

B. Misstatement of Financial Activity

Sectio~s 434(b) (2) and (4), Title 2, United States

Code, state, in part, that each report shall disclose the total

of all receipts and disbursements during the reporting period and

the calendar year.

The Audit staff's reconciliation of the activity in the

Committee's two bank accounts to the disclosure reports filed

revealed net variances for September 1, 1981 through December 31,

-.() 1982 as follows: ·

-Receipts were understated by

-Disbursements were understated by -Ending cash was understated by rt)

These variances r~sulted from the following . misstatements of financial activity:

1. The Committee did not report receipts and

disbursements from a fundraising event in the amount of

$10,352.51.

2. The Committee did not renort 21 in-kind

contributions totaling $5,433.50 thereby understating receipts

and disbursements by $5,433.50 (see discussion at Finding e.).

3. The Committee reported overdrafts in a checking

account as a loan received and repaid thereby overstating

receipts and disbursements by $4,246.76.

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4. In addition, the Committee further misstated

receipts and disbursements due to the following reasons:

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a) Reporting contribution checks returned by the

bank due to insufficient funds as receipts and disbursements

($600.00) and failing to report a contribution received

($500.00) •

b) Reporting disbursements not made ($977.41)

and failing to report disbursements tota1ing ($495.23).
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.• In the i~terim audit report the ~-::: staff reco~mended

that the Committee, within 30 days of rece:-~ ~: this report, file a comprehensive amendment for Septe~=~' :, 1981 through December 31, 1982 correcting the misstate~~~~: noted above.

On November 15, 1983, the Co~~it~-: :iled an amended

report which materially corrected the miss~~~~~:nts.

Recommendation

" The Audit staff recommends no further :c~:on in this matter.

C. Itemiza~ion of Contributions Frc:

political Committees

Section 434 (b) (3) (B), Title 2, Ur.:tec States Code,

requires disclosure of the identification c: ~ach political

committee which makes a contribution to thE =~?orting committee

during the reporting period, together with :~~ date and amount of

any such contribution.

The Audit staff's review of the R~?o:ts of Receipts and

Disbursements filed by political committees ~a~ing contributions

to the Committee, and the Committee's contr~c~:ion records,

revealed that the Committee had failed to ite~~ze 4S contributions totaling $23,252.45 (in-kind $5,433.:0 as noted in Finding

B. part 2. and monetary contributions of $li,3:S.95) received

from political committees. The Committee file: amendments to its

C) reports on June 2, '1983 (during the course of :he audit

fieldwork) itemizing 8 of the contributions totaling $9,708.95.

The treasurer expressed willingness to ite~:ze the remaining 37

contributions totaling $13,543.50. (j

In the interim audit report the ;..:~i: staff recommended

·that the Committee, within 30 days of rece:?~ cf the report, file

en a comprehensive amendment itemizing the' cO:-.-::: i~utions.

On October 17, 1983, the Committ~= filed an amended

report itemizing the remaining contributic~-.

Recommendation

The Audit staff recommends no fUIther :ct:on in this matter •

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Itemization of Contributions Frc~ Individuals

Section 434(b) (3) (A), Title 2, United States Code,

requires disclosure of the identification of each 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 th~ calendar year, together with the date and

amount of any such contribution.

The Aud~t staff reviewed contributions from individuals

on a sample basis· to determine whether the recordkeeping and

disclosure provisions for contributions had been met.

This review revealed that the Committee had failed to

itemize 43.59% (sample error rate) of the contributions required

to be itemized, and 46.15% (sample error rate) of the aggregate year-to-dat~ totals for other contributions requiring such itemization.

On June 2, 1983, the Committee filed an amendment to

its reports which materially corrected its prior filings with

respect to the itemization of individual contributions.

-"Recommendation

Since the Committee has materially corrected these discrepC) ancies, the Audit staff recommends no further action on this

matter.

o Missinc or Incomolete Vendor Addresses

Section 434(b) (5) (A), Title 2, united States Code,

states, in part, that each report shall disclose the name and

address of each person to whom an expenditure in an aggregate

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

made by the reporting committee, together with the date, amount,

and purpose of such operating expenditure.

The Audit staff's review of the vendor addresses

disclosed on the reports revealed that 217 expenditures of the

721 items disclosed (an error rate of 30.09%) had missing or

incomplete vendor addresses.

On June 2, 1983, the Committee filed amendments to its

reports materially correcting all of the missing or incomplete

address items noted above.

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·.Recommendation

Since the Committee filed an amend~en~ ~~ its disclosure

reports on June 2, 1983 materially correc~:-; :~e discrepancies

noted above, the Audit staff recommends nc :~=~~er action on this

matter.

F. Matters Referred to the Office 0: ~~~eral Counsel

Other matters " noted during the a~::t have been referred

to the Office of.. General Counsel • •

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