• FEDERAL ELECTION COMMISSION

December 15, 1980

r.,EMORANDUM

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TO:

I'll ROU GH :

FROM:

: , It~ J E C T :

FRED EILAND

PRESS OFFICE

BOB COSTA

FlICK HALTER

PUBLIC ISSUANCE OF FINAL (POST-PRIMARY)

AUDIT REPORT - BROWN FOR PRESIDENT CO~MITTEE

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Attached pleas0 find a copy of the final (Post-Primary)

aud i t report of the Brown For President Committee which t-las

approved by the Com:'1ission on November 18, 1980.

A11 i n forr.1 t. i 0 :: .:l. 1 cop i C s 0 f the abo v C InC n t ion e d r e 11 0 r t

have been received by all parties involved and this report may

be released to t~c rub1ic today, December 15, 19~O.

Attilchment as s~atej
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FEDERAL ELECTION CQ.'v\MISSION

\\'ASHISCTON. 0 C. 204&3

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REPORT OF THE AUDIT DIVISION

ON

BROvrn FOR PRESIDENT

I. Backg=:ound

A. Overview

This audit report is based on an audit of Brown fer Presiden~ (lithe Com.~itt.ee"), to determine whetl1er there has

been compliance with the provisions of the Federal Election

Carnpaig:1 Act of 1971, as amend,=c (lithe Act"). The audit was

conduct.ed pursua~t to Sect.ion 9038(a) of Title 26 of the Un~ted

States Code which states, in pa=:~, that after each matching

paYill€nt period, the Co~~issio~ shall conduc~ a thorough

exa...·:lir.a ticn and audit 0: the cuali£ied Caf&"l::'.:l.i~:l e:-:=enses 0: eve=~:

ca~cidate and his aut~orizec cc~~ittaes Wh~ received pa~~ents • under Section 9037.

In adcitio~, Section 9039(b) of Title 26 of the G~itec

States Coce and Scc~~on 9038.1(b) of Title l~ of the eoce 0: Fede~~l Regulations state, i~ r~levant part, th~t the CC~~~5S~C~

may conduct other exa~inations ~~d audits =~c~ ti~e to ti~e as ..

~c ~8eillS ~ecessary.

The Co~~itte,= registc~cd with the Fec~=al Electio~

Co~~issio~ on Ju17 30, 1979 as t~e princi?al ca~pa~s~ co~~i~~e~

of the HO:1o=able Ec.rr.1"lnd G. Bro\·:a, Jr. The Co::-:::it:~ee xr.ain-=a':'::s

its head~ua=ters in Los .~~geles, Cali:ornia.

T~e a~=it cove=e= th8 ~~riod :=o~ J~:~ 25, 1979, ~~~

~~ce~~~8~ date 0: t~e Co~~it~ee, th=ou;~ April 30, 1980, the fina~ cc~e=age date of t~e 13~e5~ repo=t file6 at t~e ~i=e c~

t~e a~~~~. ~he C~~~~~tee re?c=~ed a begi~n~~g cas~ bala~ce C~

July 25, 19i9 of $-0-, total receipts :or the per~od 0=

$2,789,307.03, total ex?e~d~~~res for the pe=icd 0: $2,709,333.:3,

a:-.,=- a. ':~csi:.g cas~ bala~ce 0:: A~=il 30, 1930 c: $i9,373.S5. :/

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f~~3~c~~1 ac=iv~:y ~h=~u;h ~~;ust 31, 1?3G ~o ve:i~y ~~~

C""""...-....- - o ... I S ~. 0'" ,,..., ... - ... - ~,.,.: .: .--,.. C - ........... .:....... Cl.-"'; ... .. .: :-1 - ""..: ....; ........ _-'- .,,--- v'-"'_~'-.;;....... •• ,--:.•••:"' ....... ":' •• .., ..... ::"-4 __ ~C~S c.;~ v~

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.. This audit report is based on documents and working

papers which support each of the factual statements. They fo~

part of the record upon which the Commission based its decisions

on the matters in the report and were available to Co~missione~s

and appropriate staff for review.

B. Key Personnel

The principal officers of the Committee during the

period covered by the audit were Mr. Thomas Quinn, Chairman

for the period July 25, 1979 through March 10, 1980, Mr. Harvey

Furgatch, Chairilian for the period ~arch 10, 1980 through April

30, 1980, and Ms. Jodie Krajewski, Treasurer.

c. Scope

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The audit included such tests as verification of total

repo=ted receipts and expenditures and individual transactions;

review of required supporting doc~~entation and analysis of

Co~~ittee debts and obligations; review of contribution and

ex?enciture 1i~ita~ions and such other audit procedures as deened

necessary under the circ~~stances.

II. Findings Related to Title 2 0= the U~ited Sta~es Code

o~ Se?te~~e~ 9, 1980, the inte~~~ pest pri~a=y audit report

was ~eceived by the Corr~ittee :or response within 30 days of recei?t. Re:erences ~it~in this report to corrective action

t3.ke:: bo,.: the Cc::-.:::it.t.ee relate onl·... to materials and i:l:o~.ation . - ~:~_!L;:::" 7. e·:: b;;" the Co::'..~i t. ~ee \a.°i ~~in the 30 day response pe=ieoe ~hich enced on October 9, 1980, except for a cor=ectcc a=encec :-·..:~)o=~ :ilec by the COr:1I'Jittee on October 14, 1980.

A. Adva~ces ~o Field Perso~s

Sect.ic~ ~3~ (=:» (1) a:"'~= (~; (for::-.e::-2.i· -!34 (b) (;..:1.)) * ~: ~~~:~ ~, U~itcd States Code requires t~at eac~ report

u::~-;;= ~::::.s sec~ic,n shall disclose t::e ar:10'.:~t of cash on hand

a~ ~~~ te~i~ning 0: t~e report~ng period; a~d t~e total S~~

== ~~S~~~s2~e~~3 ~a~e by suc~ c~~.:"~tee d~ring the re?o~ti:lg

;.lso, Se=-:.icn 434 (b~ (5) (:c=~c=l~r 43~.(b) (9)).* 0: r:i~:e

-, ~~:~2i S~a~es Cc~e sta~es ~~ rele';an~ ~a=~ tnat eac~ ~e?c=7.

~::=~= ~~~3 s~ct~=~ s~all disclcse t~e ~a~e a~d acc=ess 0: eac~

'-.;'''--:--.~ ::;w---- .. -

-'-...........•~-.., \,.., -::--'1 c·.·-'::'-~':_··-:::' _.•::'_•• '-4"_~"""'" .:'" ,.=.·.· ....~...... 0550:-"\JS.,Ii.j is .....~.,a,-";e , _ :'::J~~~::e::'

~~~~ ~~~ ~3~e, a~c~~~ a~d p~=~cse c~ su=~ ex?e~~~t~re .

• .-:...:-: -- :...: ~~. :.: :-. :. 3 •

sec':. e : -~,...- .. -,,"-,,-"
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During the course of the audit, the Audit staff

determined that the Committee was not adequately disclosing

advances to individuals for travel and incidental eXDenses on

its reports of receipts and expenditures filed with the Corr~ission. Specifically, when the Committee made an advance

of funds to an individual, the transaction was treated as a

non-reportable expenditure and viewed as an intra-co~~ittee

transfer of funds. wnen the Conrnittee received an exoense

voucher :ro~ the individual showing how the funds advanced were

expended, the expenditures made from the advance were disclosed

on Schedule B-P as itemized exnenditures.~ Prior to the receiot

of an expense voucher, the funds advanced were considered as cash

on hand recardless 0: the amount 0: time which had elaosed. It

is the opinion of the Audit staff that the Committee h~d no

control over the length of time it took an individual to submit

an ex?ense voucher. Therefore, a majority of the advances were

considered as cash-an-hand at the end of the reporting period,

although funds were, in fact, expenced frow the advance curing

the reporting period.

Accordi~g to both the Treasurer a~d Assistant Treasurer,

this method is in acco=cance wi~h the ins~=~=t~cns for the

reporting of advances which appear on the reV3rse side of FEe Schedu~e G-P (Li~~~=a~~o~ 0: Adva~=es - O?~io~a:). The inst=uctions do state that the portion cf t~e ad~a~ce ~~ich re~ai~s

unexpe~ded at t~e close of the repo=~ing period is included in

the Co::-.mi ~tee I s cash-an-hand. Ho',.;ever I the ins:'=:lctions imply

and the cuidance incl~ced in the Fi~ancial Control and Com~liance

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(P=i~a=y E:ec=io~ ?in~~c~~~) expressly s~a:.es t~~~ the individ~al

would :crNa=d at the close c~ each reporting period an accou~ti~;

of all ex?enditures a~d t~e e~ci~g cas~ :igure for inccr?ora~ic~

in~o the disc~os~=e report in t~e sa~e rn3~~er as with t~e

CC~2~~t~e's {expe~~~t~=e3 f=ow~ hca~qua~~2~ accou~ts. As a res~l= o~ t~is ti~e lag, tO~3: ex~~~~~~u=~ a~d ca5h-c~-~~~~ =~g~=es

fer ea=h re;orti~g p~r~od were si;~~fica~~~y rnissta~ed ~~~il

A?ril 30, lS38.

re~c== ex~e~d~t~=e3 ~rc= adv~~ces ~~ a ti~~~7 ~~~~e= dis=~ssed

a~cve, an ad~~~~c~al ~3~~er waE ~~~ei d~=~~; o~r =evie~ o~ the

Co::'=.~~:.ee' s acv~:-.c'2 ac=i·... ~t~·.

~~; .;;;~~;~; ~~~~i :~~ ;~~~ ~~. ~~.;: ~~~~.~ ~~~:~'~.: f;~i ::~=~::~:~;~;::~ :: 0 ::' t.:-. -2 ::-. :-. :.:-. c:. .:'..::::-:. 2. I :. ? SO. ':' e :; -= J. -..: .: :". S ;13.i ;:--:- -:: ::-:.:; :: 2 ':::e ...................... -.;.-- -...; ...... .. ......... ---".':: .... ".. ......... ...,-

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The Co~~ittee's Assistant T~easurer explained that

he had bee~ unable to obtain an accounting of how these advances

had been spent and therefore reclassified them as consulting

fees in order to reflect the expenditures in the disclosure

On Se?tember 3, 1980, the Co~~ission made a preliminary dete~~ination that the Co~mittee be required to file amended

:reports to correct this matter. On October 8, 1980, the Corrmittee

filed a~ a~ended report with the Co~~ission. The Audit staf:

reviewed t~is ~nendment during fieldwork conducted in October of

1980 and suggested that the Committee file an amendment to

supercede t~e October 8, 1980 amend~e~t which was lacking in

several respects (i.e., dates were o~itted and explanations :or

the changes in the purpose of most of the e:<penditures were also

omitted). This amended report was filed on October 14, 1980

and contai~ed the required information.

c 0: the 28 expenditures reclassified from advances to

consultins :ees, the Octocer 14 arr,enced repo=t disclosed the ac~~al

use of the :unds relating to 25 expe~ditures totalling $16,360.45.

The re~ai~~~g three (3) expe~ditures totalling $1,930.00 we=e

initially c~assi:~ed co~=ectly as co~s~lting fees.

Reco~~end~tion

The A~cit st~f: recc~~~nds no :~=~~er action since the a~~n~e~

re;c=t adeq~at~ly clarified the pub~~~ recc~d.

B. ~~e Use of Rea~ and ?ersc~~l Pro?e=ty and Ce=~a~~ Other C03~S for F~~~~a~s~~~

Du~in= the oerioe a~citec !0r the initial ohase of

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no~ i~cl~~~ t~e use c: re~l or pe~sc~al ?ro~e~~y a~a tne cos~

o~ invita~~cns, ~ccd, and bev~ra;es, vol~~~ari~y.~r?vided wi:~o~t

C"'"•• ,~-- .... :4_ •.") \-,. A.,J,; --...:: .. i~':'': ............ e •• ': d,"al to a c3.::'::'i:;'~~e on the J.nc!.·J'~::'ual' • s

r~3~~e~tia: ~re~iS0S, to the ex~en~ t~3~ t~e c~~~la~~ve val~e 0: . . . . . . .,.." · _. -'':: +:...... ~..: ,.:: a- 0

t..:-.o S t2 C ::. •.; :. ~:. e oS :; ~' t:,.(; :.:::: :..•• ~.:: 3. ... C ~. ::t:: :1. ~:- a ... '-•. ca.••- .. \ooA ... -

de ~o~ ex=~e~ $500 wit~ re~~ect to a~ ele=t~on.

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.. This statement had a provision that as a married couple,

the cost of the fundraising event did not exceed $l,OCO. The

Committee retained this documentation from all but eight (8)

individuals.

In accordance with our request, letters were sent to the

individuals. The Co~~ittee obtained statements from six (6) of

the eight (8) individuals which were reviewed by the Audit staff.

On Septe~ber 3, 1980, the Corr~ission approved the reco~­

mandation that no further action be taken on this matter.

III. Findings Relating to Title 26 of the_United States Code

A. Determination of Net Outstanding C~?aign Obligations

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Section 9034.5(b) of Title 11 of the Code of Federal

Regulations requires a candidate to submit a statement of net

outstanding campaign obligations within 15 days of the candidate's

date of ineligibility. The te=~ net outstanding campaign

obligations is explained in Section 9034.5(a) of Title 11 of the

Code of Federal Regulations.

Sec~ion 9033(b) (1) o~ ~itle 26 of the ~nitc~ States Coce

states that if the Co~~ission determines that any portion of the

pa~~ents made to a ca~=idate :~~~ the matching ?a~~e~~ account was

in excess of the aggregate. 0: pa~~e~ts to which such ca~didate was

entitled under Section 9034, i~ shall notify the ca~didate, and t~e

cand~da~e shall pay to the Sec~c~~=~· un a~ount equal to the a~o~nt

0: excess pay~ents.

Section 9034.1(a) 0: ~itle 11 of the Co~e 0: Federal

Regulatio~s states, i~ part, that a candidate who has become

ineligible under 11 C.F.R. 9033.5 may not receive =urth~r rnatc~i~g

pa~~.e~t3 rega=cless 0: the ca~e c: cepo3it of the unde~lring cont~ibu~ic~s i: h0 has nc ne~ ou~sta~~~~s c~~p~~g~ ob:~~~~:o~s as ce::~ed

i~ 11 C.F.R. 903~.5.

On Ap~il 19, 1980, the Co~~~t~ee :iled a S~a~e~e~t of ,~-~ .ft.:... OU""--::1""...:i~9"\'" ..\oo~ ... _ •• --:- ..... ,:: C~~--~-~ w.. •• :--':--:..... Ob'~--""~o""s • :':'c-_.... ("'~OCO") ... ,

".........

~;",,~ 1oooo:. c"'~sc'osed _ ... ..;.

its c:::>l~g.3.":.:'o:1S as c: ;'.pr~l. .:J, 1930. 1/ On Se?-:e::-.=~= ~, 1980, ... ~. ') C ....-.; - -.; .... ......- --.. th ,..: ~.... - .., "7.= I - e -.; --::1 - t - ..... e •• '-= • O.\.. '"- c.. a e _ .• e .:1. - - • ,;:) ........ - - '7 5 ,:"'"....... - - •• - .n. Cc~~~~~~e's ~et 0~":.5~a~d~ng c~~~~:.;~ o~l~~at~cns as 0: A?~ll 3, 1~50 to~a:leci $~~~,5J6.31 (de~~=~~), wh~le no":.ing tha: there to· n·:..-. - ·_ .::':.-'.':.... - .. • • :":\ - 1 c'-"'l - - - :;.;\:;'-' ,- ..- ~=~• - 0 : t:..... •..• • --. _.:-- : ,- \..,;_.-,,,- ;~ t' "., - so'"•• ..-.......... '-"I C0-. .; .. eo' -... s

~:(-2') StZ1:'C:7.C~~. .;2 a =esul~ :;: to::e · c=~ pe=:cr:::e~ a:~e= t:he 30 .-: -:'.. ,.... ~..) - .-.. 9""IIfto .. ..... - ".. ,...,.: .. -... t "'" ...- ~.-, -. '.. ': - .,.r'1 0 ,.. .. .. ' .. ...: .;.. S .. .: "-'-~; .. _:-:.:_c •• ~_ :''''~ __ '-''''-- -.J _.- ,. a~\-.t._,- ~., .. __ , -. '-6 w ...

cs~i:7.~~~j ~::~~ :~~ C~~~:::e~'s ~~~ ~~t3~~~i~~~ =~~~~~;~ ob:~qa~:~~3

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STATEMENT OF NET OUTSTANDING CAMPAIGN OBLIGATIONS

Assets

Debts Owed by the Committee (3,000.00) 1/

Estimated Windin~ Down Costs (8,636.70)

(10/7/80-12/31/80 projected

termination d~te)

Qualified Campaign Expenses paid ($527,281.55) ~/

through 10/6/80 (including qualified

campaign expenses incurred prior to

4/3/80 and actual fundraising and

winding down costs paid 4/4/80-

10/6/80)

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Cash-on-Hand (April 3, 1980)

Accounts Receivable

Total Assets

Liabilities

Total Liabilities for

Campaign Expenses

$ 64,265.35

13,561.14

$ 77,826.49

($538,209.93)

$ 77,826.49

(S538,209.93)

Net Outstanding Campaiqn Obligations ($461,091.76) ($461,091.76)

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~/ This amount does not include those exoenditures made after

date of ineligibility (April 3, 1980): which were insufficiently documented or apparently non-campaign related.

These expenditures arc detailed in Finding III.B. (4)

and (5) of this report.

The amount shown ($3,000) is an estimate due to the fact

that the Committee has not received a billing from a vender

for services durina June-AuGust 1980. The estimated arnou~t

will ce co~?arcd to the actual amount billed, when avail~~le,

and an adjustment will be ~~de, as appropriate •
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Therefore, based on the Committee's NOCO position on April 3, 1980,

the Committee was entitled to an amount of matching funds (provided

matchable contributions are submitted in accordance with Commission

procedures) sufficient to reduce the Committee's obligations to

zero. However, any funds from other sources (i.e., non-matching

fund payments) are to be applied against the debt. The Committee's

matching fund contribution activity is shown below for the purpose

of illustrating the reduction of the debt.

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Committee's NOCO as of 4/3/80 (deficit)

Less: Contributions and Interest Income~

Received From 4/4/80 to 7/17/80 $260,540.44

Matching Funds Received After 4/3/80

4/10/80 27,045.38

4/25/80 38,752.15

5/22/80 14,314.04

6/05/80 43,181.24

7/07/80 61,966.11

7/17/80 35,066.68

Total Matching Funds and Contributions

Received 4/4/80 thru 7/17/80 $480,866.04 $480,866.04

Final Cash Position as of 7/17/80 - Surplus $ 19,774.28

As is de~icted above, the Committee's financial position on

7/17/80 reflects surplus funds of $19,774.28 which represents that

portion of the July 17, 1980 matching funds payment over and above

the amount needed to satisfy Committee obligations. This amount

is then viewed as an excessive payment of matching funds which

pursuant to 26 u.s.c. g038(h) (1) is repayable in full to the U. S.

Treasury.

Recommendation

Since the Committee attained a surplus financial position as

of close of business July 17, 1980, a repayment of the excessive

portion of July 17, 1980 matching fund payment totaling $19,774.28

must be made in full to the u.s. Treasurv within 90 davs of receint

of this report. Shculd the Committee obtain the requisite docu- . mentation to support the expenditures, or a portion thereof, shown

in Finding 111.8 (4) and (5), as qualified c3mpaign expenses, the

final repay~ent amcunt will be reduced accordingly, since these

expenditures were n~t included in the estirnatation of NOCO as

of 4/3/80.
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Undocumented Expenditures

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Section 9033.l(a) (1) of Title 11, Code of Federal ~equlations sets forth the documentation necessary to determine a qualified

campaign expense as a receipted bill which is from the payee and states

the partlculars of the expenditure; or in the absence of such receipted

bill a cancel~ed check negotiated by the payee plus one of the followinq

documents generated by the payee which states the particulars of the

expenditure; a bill, invoice, voucher or contemooraneous memorandum.

Where these documents are not available, then the Commission will accept

a voucher or contemooraneOllS memorandum from the candidate or cOmMittee.

The Commission will· accept a cancelled check stating the particulars of

the expenditure, or the Commission may accept a cancelled check and

collateral evidence to document the qualified campaign expenses.

Section 9032.9 of Title 26, United States Code, in part,

defines qualified campaign expense as a payment made on behalf of

the candidate by an authorized committee in connection with his

campaign for nomination for election.

Section 9038(b) (2) of Title 26, United States Cede, in

purt, states that if the Commission determines that any amount of

any payment made to a candidate from the matching payment account wa~; used for any purpose other than to defray the qualified campaian

e:-:pcnses with respect to which such ~ayment was made it sh.:lll notify ~tlch candidate of the amount so used, and the candidate shall pay to

the Secretary an amount equal to such amount (also see 11 r.F.?

9038.2{a) (2) (i».

During the audit fieldwork conducted in ~ay and ~une

of lqSO, the ~udit staff conducted il review of dishurscments to

v0rify that all were for qualified cam~aiqn expenses. ~he Audit st~lff identified 337 disbursements totaling S228,785.39 which were m.:1\'1t~ bv Committee check or \--'ire transfer and not adeouate1~:

d0~ume~ted as to the particulars of the expenditure ~r verlfiablc

as to representing qualified cam?aiqn expenses.

On September 3, 1980, the Commission made a preli~inary

determination that, absent a showing to the contrary $228,i85.39

in exnenditures incurred from the incen~ion of the \o~mittee to April~ 30, 1980 be viewed as unqualified campaign expenses and the

value repaid in full to the D.S. Treasury. ~any of these exnenditurcs were not adequately documented due to a lack of su:::cient

internal control procedures for maintaininq exoenditure records .
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In October, 1980, the Committee presented additional

information regarding a portion of the insufficiently documented

expenditures. As a result of our review, the value of undocumented

expenditures, initially identified, was reduced from $228,785.39

to $52,261.46.

A breakdown by category is shown below:

I} consulting fees from the headquarter's account - 65 totaling $34,448.08;

2) other expenditures from tne headquarter's

account - 13 totalling $4,178.78; and

- 3) expenditures made from the state accounts - 35 totaling $13,634.60.

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In addition, a review of documentation for expenditures

made April 4, 1980 through October 6, 1980 revealed that the information retained by the Committee was not sufficient to establish

the connection of these expenditures with the Candidate's campaign

for nomination, thus we could not determine whether the expenditures

were, in fact, qualified campaign expenses (see 26 U.S.C. 9032(9) (A)

and item (4) below). Further, during this review the Audit staff

compiled a list of expenditures which, according to the documentation

retained by the Committee, had no apparent connection to the campai9n

(see item (5) below).

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5)

expenditures made from the headquarter's account

from April 4 to October 6, 1980 not adequately

documented - 56 tota1in~ $9,512.71;

expenditures made from the headquarter's account

from April 4 to October 6, 1980 for apparent noncampaign related purposes - 16 totaling $7,264.30.

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The value of the expenditures noted in item (4) and (5)

totaling $16,777.01 was excluded from the computation of the Co~mittee's NOCO, thereby, in effect, pr0cludin9 matching funds

from bei~g used to pay for these apparent non-campaign related

expenses, thus no additional repayment is necessary. (See

Finding III.A.). However, the expenditures noted in items (1)

through (3) above, were defrayed with matching funds, and therefore

the value is repayable to the U. S. Treasury pursuant to 26 U.S.C.

9038 (b) (2).

Recorrmended Repayment ~~ount - Item A (1) through (3)

$52,261.46 .
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Recommendation

The Audit staff recommends that the Committee be afforded

30 days from receipt of this report to provide additional

documentation. No materials will be accepted after this period

at which time the final repayment to the u.s. Treasury will be

determined. Further, it is our opinion that should the Committee

be unable to provide the required documentation the expenditures

noted in B (1) through (3) above should be viewed as non-qualified

campaign expenses and the value be repaid in full to the u.s.

Treasury.

C. Non-matchable Contributions Submitted

for ~atching

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Section 9034.3(i) of Title 11 of the Code of Federal

Regulations, in part, states that contributions in the form of

the purchase price paid for the admission to any activity that

primarily confers private benefits in the form of entertainment

to the contributor in which case the amount of the matchable

contribution shall include only the excess of the amount paid

for admission over the fair market value of all benefits available to the purchaser.

In December of 1979, the Committee sponsored a "train

ride" from Los Angeles to San Diego. According to the Treasurer,

the purpose of this train ride was primarily political discussion

with the Candidate. Based on this oremise, the Committee submitted

the total purchase price for these tickets for matching in accordance

with Sectio~ 9034.3(i) (2) of the Regulations.

Eowevcr, a review of the ticket used for this event

indicates t~at the purpose of the "train ride" was the transportation of certain individuals to a benefit concert. The charae

for the train ride was $150 per person. The Committee Treasurer

was unable to provide the Audit staff with the names or the numcer

of the contributors who took oart in this event at the close of our

June, 1980 :ieldwork. Also, the documentation to support the

expenditure for the train ride and other benefits included on this

trip was not sufficient to show the number of individuals on the • 1 r lc~e.

o~ September 3, 1980, the Commission made a preliminary

determination that the Committee be required to submit the

names of the contributors involved in this event and to provide

the Audit st~:f with full and detailed documentation and a

detailed description of the benefits provided to the contributo~,

includin~ t~e costs of the conce~t tickets and the train ride

within 30 days of receipt 0: the interim audit report .
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On October 9, 1980, the Committee provided the Audit

staff with the names of the contributors involved in this event.

Also, the Audit staff reviewed documentation relating to the

expenditures incurred as a result of the ev~nt during fieldwork

conducted in October of 1980. Based on the information provided,

the Audit staff calculated that 22 contributions from individuals

(apparently representing at least 51 ticket purchases of S150 each)

were submitted for matching, total1inq 57,950.00. A review of the

matching fund submissions indicated that two (2) of these contributions were deemed unrnatchable when origin~lly submitted since

the contributors' written instruments indic~tcd that the contribution related to the event. To compute~ repayment amount for

these contributions, the value of the "train ride" contributions

submitted for matching was reduced by· the estimated fair market

value associated with each ticket purchased (including fair market

value of the train ride, bus ride, and concert). In addition, an

adjustment was also made for the two (2) af9rementioned contributions deemed unmatchable. The Audit staff's analysis indicated

that the Committee received $412.08 in excess of the amount to

which the Committee was entitled (see 26 U.S.C. 9038(b) (1».

In addition, the Audit staff noted two (2) contributions

which were matched and later refunded to the contributor by the

Committee. As a result, the Committee recei\·ed ~447.45 in matchinq

funds to which it was not entitled. -

Recommended Payment ~~ount - Item III.C. $ -0-. *

Recommendation

Based on the amounts listed in items A, B, and C above,

the Audit staff recommends that the Co~~ittee repay $72,035.74

to the U. S. Treasury within 90 days of receipt of this report

or provide additional documentation within 30 days after receipt

of this report which demonstr~tes that those items are not

subject to repayment. A recapitu13tion of t~e components of

the repayment amount appears below:

Detcr~ination of ~et Outstanding Campaign 0bliqations -

Item 'ft.

Vndocu~c~ted Ex~enditur~s - Items R(l), (~) a~d (3)

~on-m3tchablc Contributions - Item C

Tot<:ll Rccom:nended Repayment

$19,774.28

52,261 . .1(;

( -0- ) *

S72,035.74

• * This value is a]rc3dy included in Itc~ (Excessive ~atching Fund

Pa¥~c~t), t~ere~0r0 it is cxcluJcd hcr0 ~o ~void double counti~q.
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Matter Referred to the Office of General Counsel

•

A certain matter noted during the audit was referred to

the Commission's office of General Counsel for consideration on

July 10, 1980 •

e·..

MEMORANDUM

TO:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

WASHINGTON, 0 C. 20463

April 21, 1981

FRED EILAND

PRESS OFFICE~ •

BOB COST A "7\.I.fl--/

PUBLIC ISSUANCE OF REVISED ADDENDUM

TO THE FINAL (POST-PRIMARY) AUDIT

REPORT - BROWN FOR PRESIDENT COMMITTEE

f'..

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Attached please find a copy of the revised addendum to

the final (Post-Primary) audit report of the Brown for President

Committee which was approved by the Commission on April 7, 1981.

Informational copies of this addendum have been received by

all parties involved and this addendum may be released to the

public as of today, April 21, 1981 .

Attachment as stated

cc: FEe Library

RAD

~bliC Record

?
II. Background

I. Summary of Issue and Recommendation

April 7, 1981

THE COMMISSIONERS

B. ALLEN CLUTTER, III~ STAFF DIRECTOR

BOB COSTA

BROWN FOR PRESIDENT - ADDENDUM

TO THE FINAL AUDIT REPORT

WASHINCTON. D.C. 20463

FEDERAL EL.ECTION COMMISSION

-.

On Z-larch 3, 1931, the Commission voted in favor of allowing

the CO:::::1 i t. t 0 1 Ct (1- i.. t i 0 ;1 1 d ':1 Ysin \.: hie h t 0 submit doc U r.l e :1 -

tation and/or in:Ul"r.l~tion for expenditures cited in th(~ final

audit report riS undocur.lentc-d and/or non-campaign relat(~d .

*

On December 9, 1980, the Committee received a copy of the

final audit report. The Committee was afforded 30 days to respond

to the repayment findings and conclusions contained in the final

report.*

Specifically, two (~) findings contained in the reFort

included recommendations that the Committee repay a portion of

the Federal funds it received during the primary election campaign.

One finding entitled "D~termination of Net Outstanding Campaign

Obligations" (III.A. on rages 5-7 of the final audit report),

concluded that the Co~~ittee received a Matching Fund payment on

J u 1 y 1 7, 1 98 0, a po r t i 011 0 f \.: h i c h ( $ 1.9 , 7 7 4 • 2 8 ) was i n e xc e s s 0 f

the amount to which the Committee was entitled.

On January 8 and March 16, 1981, the Audit Division received

from Brown for President (lithe Committee") responses to the final

audit report. Acceptable supporting documentation was presented

which reduces the amount repayable to the U.s. Treasury from

$72,035.74 (as cited in the final audit report) to $18,050.61.

The Audit staff recommends that the Commission approve this revised

repaynent a~ount based on the discussion below. Further, it is

recommended that this document be placed on the public record as

an addendum to the publicly released final audit report.

SUBJECT:

FROH:

MEMORANDUM

TO:

THROUGH:

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Page 2

The second finding entitled "Undocumented Expenditures"

(III.~. on pages 8-10 of the final audit report), stated that

the Committee made expenditures, totaling $52,261.46, for which

it did" not retain the requisite supporting documentation as

required by 11 C.F.R. 9033.1(a) (1).

On January 8 and March 16, 1981, the Committee submitted timely

responses to the final audit report which included information/

documentation pertaining to the aforementioned findings.

With respect to the finding entitled "Determination of Net

Outstanding Campaign Obligations" (Finding III.A.), the Committee

provided the Audit staff with the following information and

.documentation:

1) adequate supporting documentation for expenditures made

from the headquarter's account from 4/4-10/6/80 totaling $7,358.26

(item #4 on page 9 of the final report);

2) documentation to verify that expenditures made from the

headquarter's account from 4/4-10/6/80 totallfng $6,027.90 (item #5

on page 9 of the final audit report) were for qualified campaign

expenses; and

3} documentatio~ and information to verify that actual winding

down costs were $9,078.78 greater than the estimate noted in the

final audit report.

Based o~ the above review of this information and documentation,

the Audit sta~f con=ludes that the Committee was fully entitled to

the final matching fund payment of $35,066.68 received on 7/17/80,

and as of that date had a remaining entitlement of $2,690.66.

For the finding entitled "Undocumented Expenditures" (Finding

III.B. on pages 8-10 of the final audit report), the Committee

provided ade~uate supporting documentation totaling $34,210.85. The

remaining e:-::;enditu:r(?s totaling $18,050.61 are dee~ed as undocumented

expenditures.

Therefo~e the amount ($72,035.74) cited in the final audit

report as rc?ayablc to the u.s. Treasury is reduced to $18,050.61.

III. Suppor~ for the: ~ec0mr:1end.:ltion

Based O~ the Audit staff's review of the supporting documentation

S 11 bmit t e J 'ooJ i ~:1 the res p l :1 set 0 the f i :l it 1 a u d i t rep 0 r t by the Comm itt e e ,

it i~ r0com~~nd0~ that tl1e Commission determine that the revised

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••

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FEDERAL ELECTION COMMISSION

HlS 1\ STREET N.W.

WASHIl\GTON,D.C. 204&3

AlDrrICttAL INroRMATION BEGARDlNG '!HIS ORGANIZATIClt

MAY BE lOCATED IN A <D1PIElED CXH'LIANCE A.Cl'IC6

FILE BELEASED BY '!BE a:MtISSICN AND MAlE PUBLIC IN

'mE PUBLIC RECDRDS OFFICE. :roIl '!HIS PARTICULAR

ORGANIZATION'S aH'1E1ED (XH'LIANCE ACTION FILE

SDRY JSK R:lR '!BE PRESS SlItfARY OF MlR /1 /3,c./ft. /:3 '3 r-

'lHE PRESS St!+fARY WIlL PROVIDE A BRIEF HIS'lURY OF ,

'DIE CASE AND A StI+fARY OF mE ACl'I(ES TAKmt IF Nfi.
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