FEDERAL ElECllON COMMISSION

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A83-2

June 30, 1983

MEMORANDUM

TO:

FROM:

SUBJECT:

FRED EILAND

PRESS OFFICE~

BOB COSTA , I

PUBLIC ISSUANCE OF FINAL AUDIT REPORT - NATIONAL COMMITTEE FOR AN EFFECTIVE CONGRESS

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Attached please find a copy of the final audit report

on the National Committee For An Effective Congress which was

approved by the Commission on June 17, 1983.

Informational copies of the report have been received

by all parties involved and the report may be released to

the pUblic.

Attachment as stated

cc: FEe Library RAD

\J.Ublic Record
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FEDERAL ELECTION COMMISSION

WASHINelON. 0 C 204&3

A83-2

REPORT OF THE AUDIT DIVISION

ON THE

NATIONAL COMMITTEE FOR AN EFFECTIVE CONGRESS

I. Background

A. Overview

This report is based on an audit of the National

Committee For An Effective Congress ("the Committee"), 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 field investigations of any political committee 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 determine if the reports filed by a

particular committee meet the threshold requirements for

substantial compliance with the Act.

The Committee registered with the Office of the Clerk

of the U.S. House of Representatives on April 17, 1972 and

maintains its headquarters in New York City, New York.

The audit covered the period January 1, 1981, through

December 31, 1982. The Committee reported a beginning cash

balance at January 1, 1981 of $190,738.89: total receipts for the

period of $2,460,887.66; total expenditures for the period of

$2,512,684.881 and an ending cash balance at December 31, 1982 of

$119,585.63. _/

This report is based on documents and working papers supporting 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.

!/ The Committee's ending cash balance at 12/31/82 is

understated due to reporting errors (see Finding II.A. - Misstatement of Financial Activity).
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B. Key Personnel

The Treasurers of the Committee during the period of

the audit were Ms. Eileen K. Fischer 1/1/81-8/3/81, Mr. Mark

Gersh 8/3/81-4/23/82, Mr. Mark Miller 4/23/82-8/11/82, and Mr.

Alfred Jackson, III, 8/11/82 to present.

C. Scope

The audit included such tests as verification of total

reported receipts and expenditures and individual transactionsJ

review of required supporting documentation, analysis of

Committee debts and obligations; and such other audit procedures

as deemed necessary under the circumstances.

II. Audit Findings and Recommendations

A. Misstatement of Financial Activity

Sections 434 (b) (1), (2), (4), and (8) of Title 2 of the

united States Code require each political committee that files

reports required by this section to disclose the amount of cash

on hand, total receipts for the reporting period, total

disbursements for the reporting period, and the amount of debts

outstanding.

The Audit staff compared the Committee's bank activity with reported totals for the audit period and noted that total

receipts were overstated by $43,257.31J total expenditures were

overstated by $31,975.77: and ending cash on 12/31/82 was

understated by $7,898.39. These misstatements were the result of

the following errors:

1. Double reporting of mailing list rental income and

other receipts as itemized receipts as well as

unitemized receipts totaling $41,445.25;

2. Reporting of transfers between Committee bank accounts

as operating expenditures totaling $18,750.00;

3. Reporting of voided checks as operating expenditures totaling $9,825.20:

4. Double reporting of Committee personnel salary payments

as operating expenditures and as in-kind contributions

to candidates of $9,805.06;

5. Understating of beginning cash on hand on 7/1/81

(compared to the reported cash on hand on 6/30/81) of

$6,605.34:
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6. Understating an expenditure of $10,000 as $319.68 - difference of $9,680.32~

7. Other smaller discrepancies were noted as the result of

Committee errors in calculating unitemized receipts and

expenditures by subtracting itemized receipts and

expenditures from receipts and expenditures per bank

balances.

The Committee treasurer acknowledged these

discrepancies and agreed to file the necessary amendments.

In addition, the Audit staff noted that the Committee

did not properly report the amounts of outstanding debts during

the period from January 1, 1982 through August 31, 1982.

However, payments made in satisfaction of outstanding debts were

reported as operating expenditures during this period. Debts

outstanding subsequent to August 31, 1982 were properly reported.

In the interim audit report the Audit staff recommended

that the Committee file comprehensive amendments for 1981 and

1982 to reflect the correct totals for receipts, expenditures, and cash on hand.

No further action was recommended with respect to debts

since the debts were properly reported beginning on 9/1/82 and

all payments in satisfaction of debts outstanding during 1982

were properly reported as expenditures.

On May 6, 1983 and June 7, 1983 the Committee filed

amended reports which materially corrected the misstatements °of

financial activity noted above.

Recommendation

The Audit staff recommends no further action on this matter.

B. Itemization of Contributions

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

states in part that each report under this section shall disclose

the identification of each person who makes a contribution to the

reporting committee during the" reporting period which in the

aggregate value exceeds $200 within the calendar year. The term

identification is defined as in the case of any individual, the

name, mailing address, occupation, and the name of the

individual's employer.
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Section 104.7(a) of Title 11 of the Code of Federal

Regulations states that when a treasurer of a political committee

shows that best efforts have been used to obtain, maintain and

submit the information required by the Act for the political committee, any report of such committee shall be deemed in

compliance with the Act.

A review of Committee disclosure reports revealed that

68.4% of the contributors itemized on reports filed during 1981

and 1982 were not reported with their respective occupation and

name of employer. In a letter to the Commission dated December

8, 1982, the Committee stated that it had made its best efforts

to obtain contributor information by requesting such in its

initial solicitations, and in a follow-up letter when not

provided. The Audit staff reviewed the Committee's solicitation

materials and noted no such requests.

As noted above, the Committee's procedures to obtain

the requisite contributor information for occupation and name of

employer also included a follow-up letter request to those

individuals whose contributions aggregate in excess of $200

within the calendar year. However, no notation was made on the

reports to indicate that the information had been requested and

no attempt was made to amend the reports once a response for such

information was received from the contributor. The Audit staff

reviewed the Committee's contribution galley of 1981 and 1982

contributors and noted that although in some cases the required information was on the galley, it was not included on the

reports.

The Committee treasurer acknowledged the problem and

proposed a systems change to rectify the matter in the future.

The treasurer also agreed to file the necessary amendments to

correct the existing reports on file.

In the interim audit report the Audit staff recommended

that the Committee include requests for contributor information

on all future solicitations. It was further recommended that the

Committee file a comprehensive amendment for each calendar year

to reflect the previously undisclosed contributor information

presently included in their contribution records.

On May 6, 1983, the Committee filed amended reports which were reviewed by the Audit Division and determined to

include the above contributor information.

Recommendation

The Audit staff recommends no further action on this matter.