Interim Audit Report of the 

Audit Division on 

Rossi for Senate 

(May 24, 2010 - December 31, 2010) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.' The audit 

determines whether the 

conmiittee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to the matter 

discussed in this report. 

About the Campaign (p. 2) 

Rossi for Senate is the principal campaign committee for Dino 

Rossi, Republican candidate for the United States Senate from the 

state of Washington, headquartered in Everett, Washington. For 

more information, see the Chart on the Campaign Organization, 

p.2. 

Financial Activity (p. 2) 

• Receipts 

o From Individuals 

o From Political Committees 

o Transfers from Affiliates 

o Offsets to Operating 

Expenditures 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Contribution Refunds 

o Transfers to Authorized 

Conimittees 

Total Disbursements 

$ 8,348,360 

641,248 

665,484 

19.298 

$9,674,390 

$ 9,553,965 

20,360 

1.500 

$ 9,575,825 

Finding and Recommendation (p. 3) 

• Misstatement of Financial Activity 

2U.S.C. §438(b). 
Interim Audit Report of the 

Audit Division on 

Rossi for Senate 

(May 24, 2010 - December 31, 2010) 
Table of Contents 

Page 

Parti. Backgroimd 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 2 

Part III. Summary 

Finding and Recommendation 3 

Part IV. Finding and Recommendation | 

Misstatement of Financial Activity 4 ' 
Parti 

Background 

Authority for Audit 

This report is based on an audit of Rossi for Senate (RFS), undertaken by the Audit 

Division of the Federal Election Commission (the Commission) in accordance with the 

Federal Election Campaign Act of 1971, as amended (the Act). The Audit Division 

conducted the audit pursuant to 2 U.S.C. §438(b), which permits the Commission to 

conduct audits and field investigations of any political committee that is required to file a 

report under 2 U.S.C. §434. Prior to conducting any audit under this subsection, the 

Commission must perform an internal review of reports filed by selected committees to 

determine if the reports filed by a particular committee meet the threshold requirements 

for substantial compliance with the Act. 2 U.S.C. §438(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

4. the disclosure of individual contributors' occupation and name of employer; 

5. the consistency between reported figures and bank records; 

6. the completeness of records; and 

7. other committee operations necessary to the review. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Dateof Registration June 8,2010 

• Audit Coverage May 24,2010 - December 31,2010 

Headquarters Everett, Washington 

Bank Information 

• Bank Depositories One 

• Bank Accounts One Checking 

Treasurer 

• Treasurer When Audit Was Conducted Phil Dyer (June 8,2010 - January 30,2012); 

Dino Rossi (January 31,2012 - present) 

• Treasurer During Period Covered by Audit Phil Dyer 

Management Information 

• Attended Commission Campaign Finance No 

Seminar 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ May 24,2010 $0 

Receipts 

o From Individuals 8,348,360 

o From Political Conimittees 641,248 

o Transfers from Affiliates 665,484 

o Offsets to Operating Expenditures 19.298 

Total Receipts $ 9,67430 

Disbursements 

o Operating Expenditures 9.553.965 

o Contribution Refunds 20.360 

0 Transfers to Authorized Conimittees 1.500 

Total Disbursements $ 9,575,825 

Cash-on-hand @ December 31,2010 $ 98,565 
Part III 

Summary 

Finding and Recommendation 

Misstatement of Financial Activity 

During audit fieldwork, a comparison of RFS's reported financial activity with its bank 

records revealed a misstatement of disbursements. The Audit staff recommends that RFS 

amend its disclosure reports to correct the misstatement. 

(For more detail, see p. 4) 
Part IV 

Finding and Recommendation 

Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of RFS's reported financial activity with its bank 

records revealed a misstatement of disbursements. The Audit staff recommends that RFS 

amend its disclosure reports to correct the misstatement. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• the amount of cash-on-hand at the beginning and end of the reporting period; 

• the total amount of receipts for the reporting period and for the election cycle; 

• the total amount of disbursements for the reporting period and for the election 

cycle; and 

• certain transactions that require itemization on Schedule B (Itemized 

Disbursements). 2 U.S.C. §434(b)(l), (2), (3), (4) and (5). 

Facts and Analsrsis 

A. Facts 

The Audit staff reconciled RFS's reported activity with its bank records and identified a 

misstatement of disbursements for 2010. The following chart details the discrepancy and 

the succeeding paragraphs explain the reasons for the misstatement, if known. 

2010 Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ May 24,2010 

$0 $0 $0 

Receipts $9,645,437 $9,674,390 $28,953 

Understated 

Disbursements $9,421,114 $9,575,825 $154,711 

Understated 

Ending Cash Balance 

©December 31. 2010 

$150,678^ 98,565 $52,113 

Overstated 

^ RFS's reported ending cash balance does not equal the difference of receipts and disbursements because 

RFS decreased its beginning cash-on-hand balance by $73,645 on its October 2010 Quarterly report. 

Absent that error, the reported ending cash balance at December 31,2010 would have been $224,323. 
As noted above, RFS understated disbursements by $154,711 in 2010. This misstatement 

of disbursements resulted from the following reporting discrepancies: 

• In-kind contributions reported as memo entries + $ 3.010 

• In-kind contributions reported on Schedule A, not on Schedule B + 4.847 

• Disbursements reported but not supported by check or debit - 178,492 

• Payroll Disbursements not reported + 40,958 

• Operating Disbursements not reported + 289,986 

• Unexplained Difference z 5.598 

Net Understatement of Disbursements $ 154,711 

RFS made payroll disbursements totaling $40,958 that could not be traced to its reports. 

The payroll disbursements consisted of payroll dated on July 1, 2010 ($22;422), and on 

July 15,2010 ($18,536). In addition, there were operating disbursements totaling 

$289,986 that could not be traced to its reports. These disbursements consisted of a 

media vendor payment ($231,047). two payments for consulting services ($33,350). and 

other disbursements ($25,589). 

B. Interim Audit Report & Audit Division Recommendation * 

The Audit staff and RFS representatives discussed this matter at the exit conference held 

at the end of audit fieldwork. The Audit staff also provided schedules supporting the 

disbursement adjustments. RFS representatives acknowledged the discrepancies in the 

reports and indicated that RFS would file corrective amendments. 

The Audit staff recommends that, within 30 calendar days of service of this report. RFS: 

• amend its reports to correct the misstatement of disbursements for 2010 as noted 

above; and 

• amend its most recently filed report to correct the cash-on-hand balance with an 

explanation that the change resulted from a prior period audit adjustment. 

Further. RFC should reconcile the cash balance on its most recent report to 

identify any subsequent discrepancies that may impact the $52.113 adjustment 

recommended by the Audit staff.