WASHINGTON, D.C. 20463 

MEMORANDUM 

Lorenzo Holloway 

Assistant General Counsel 

Compliance Advice 

FROM: Neven F. Stipanovic 

Associate General Counsel 

Policy Division 

TO: Patricia C. Orrock 

Chief Compliance Officer 

Assistant Staff Director 

October 4, 2021

Dayna C. Brown 

Audit Division 

Margaret J. Forman 

Attorney 

SUBJECT: Draft Final Audit Report on the Republican Party of Minnesota – Federal 

(LRA 1108) 

The Office of the General Counsel has reviewed the proposed Draft Final Audit Report 

(“Proposed DFAR”) of the Republican Party of Minnesota - Federal (“RPOMF”). The Proposed 

DFAR contains six findings: Recordkeeping for Employees (Finding 1), Recordkeeping for 

Communications (Finding 2), Reporting of Apparent Independent Expenditures (Finding 3), 

Disclosure of Transfers and Allocation Ratios (Finding 4), Excessive Coordinated Party 

Expenditures (Finding 5), and Disclosure of Loans and Loan Repayments (Finding 6). We 

concur with the findings, and comment on Finding 1. If you have any questions, please contact 

Margaret J. Forman, the attorney assigned to this audit. 
 

 

 

 

 

 

LRA 1108 

DFAR on the Republican Party of Minnesota - Federal 

Page 2 of 2 

The Proposed DFAR found that RPOMF failed to maintain any monthly employee 

payroll logs for $297,9451 in payroll for 2017 and 2018, as required, to document the percentage 

of time that each employee spends in connection with a federal election. 11 C.F.R. § 106.7(d). 

This amount includes payroll totaling $290,060 for employees reported on Schedule H4 

(Disbursements for Allocated Federal and Non-Federal Activity) and paid with an allocation of 

federal and non-federal funds, and payroll expenses totaling $7,885 for employees paid 

exclusively with nonfederal funds. RPOMF, in response to the IAR recommendation, stated that 

it would implement a plan to maintain such monthly logs in the future. The Audit Division 

concludes in the proposed DFAR that RPOMF did not provide payroll logs for the payroll in 

question, but notes that RPOMF complied with the IAR recommendation by implementing a 

plan to maintain such a log. We recommend that, instead, the Audit Division give the RPOMF 

an opportunity to provide a record sufficient to verify that certain employees were involved in 

exclusively nonfederal activities. 

Depending on the percentage of time an employee spends on federal activities, 

Commission regulations dictate which accounts a committee may use to pay for the salary and 

benefit of the employee. Accordingly, salaries and benefits for employees who spend more than 

25% of their compensated time on federal election activity (“FEA”) or activities in connection 

with a federal election in a given month must be paid only from a federal account. 52 U.S.C. § 

30101(20)(A)(iv); 11 C.F.R. § 106.7(d)(1)(ii); see also 52 U.S.C. § 30125(b). Salaries and 

benefits for employees who spend 25% or less of their time on FEA or activities in connection 

with a federal election must either be paid from a federal account or be allocated as 

administrative costs. 11 C.F.R. §§106.7(c)(1), 106.7(d)(1)(i). Employees who spend none of 

their compensated time on FEA or activities in connection with a federal election may be paid 

entirely from a nonfederal account if the funds comply with state law. 11 C.F.R. 

§106.7(d)(1)(iii). 

Commission regulations also require political committees to maintain records that 

provide in sufficient detail the necessary information and data from which filed reports and 

statements may be verified, explained, clarified, and checked for accuracy and completeness. 11 

C.F.R. § 104.14 (b)(1). The Commission, however, has no way of knowing whether an 

employee spent no time on federal election-related activities unless it can review documentation 

that indicates that information. We do not believe that a payroll log is necessary to verify this 

information since only one type of activity (the percentage of time an employee spent in 

connection with a federal election) must be tracked and verified. Instead, we conclude that a 

record prepared in accordance with section 104.14(b)(1) would be sufficient for verification 

purposes. A simplified record for these types of employees would also be less burdensome than 

a payroll log for a committee to create and maintain. Therefore, we recommend that the Audit 

Division give RPOMF an opportunity to provide records consistent with 11 C.F.R. § 104.14 

(b)(1) to show that certain employees were involved in exclusively nonfederal activities. 

1 This amount in payroll does not include payments to employees paid 100% with federal funds. See 

Proposed DFAR, at Part 1. Background, Commission Guidance, at 1.