June 4, 2020 

MEMORANDUM 

To: The Commission 

Through: Alec Palmer 

Staff Director 

From: Patricia C. Orrock 

Chief Compliance Officer 

Dayna C. Brown

Acting Assistant Staff Director 

Audit Division 

Zuzana O. Pacio

Audit Manager 

By: Robert Morcomb

Lead Auditor 

us

Subject: Audit Division Recommendation Memorandum on the Mississippi 

Republican Party (A17-15) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presented the Draft Final Audit Report (DFAR) to Mississippi Republican 

Party (MRP) on November 4, 2019 (see DFAR attachment). MRP requested an audit 

hearing before the Commission. Two Commissioners did not agree to grant the request for 

an oral hearing. MRP was advised that it may submit a new hearing request once the 

Commission regains a quorum. MRP was also advised the submission of a new 

hearing request would not be guaranteed by the newly established Commission. 

This memorandum provides the Audit staff’s recommendation for each finding outlined in 

the DFAR. 

On November 22, 2019, MRP provided additional information in response to the DFAR. 

While the submitted information resulted in no change to the amounts in violation 

highlighted within the DFAR issued on November 4, 2019, MRP presented a new legal 

argument pertaining to Finding 3, Reporting of Apparent Independent Expenditures. The 

Office of General Counsel (OGC) reviewed MRP’s response to the DFAR and on April 30, 
 

2 

2020, offered its guidance in LRA 1077 (see LRA attachment). In this guidance OGC 

revised its analysis of two specific mailers discussed below in Finding 3.1 

With respect to MRP’s legal argument that it should be able to allocate the total cost of each 

mailer between the express advocacy content and other content, OGC planned to submit a 

joint memorandum with the Office of Compliance to raise the legal argument and 

recommend a disposition to the Commission pursuant to Commission Directive 69. 

However, in its LRA 1077 – Supplemental Comments, dated May 27, 2020 (see LRA – 

Supplemental Comments attachment), OGC provided its legal opinion that MRP should not 

be allowed to allocate the mailers, along with its reasoning for arriving at this conclusion. 

The Audit staff raises this issue of allocation for the Commission’s consideration, 

as recommended by OGC. 

Finding 1. Misstatement of Financial Activity 

In response to the DFAR, MRP reiterated that any incorrect reporting of receipts 

and disbursements was an inadvertent administrative oversight without any 

intention to circumvent reporting requirements. 

The Audit staff recommends that the Commission find that, in 2015, MRP 

understated its reported receipts and disbursements by $10,606 and $14,808, 

respectively. 

Finding 2. Reporting of Debts and Obligations 

In response to the DFAR, MRP reiterated that it hired a compliance professional 

who worked with Commission staff to properly disclose the debts and obligations 

to correct the public record. 

The Audit staff recommends that the Commission find that MRP failed to disclose 

debts and obligations to vendors totaling $152,931. 

Finding 3. Reporting of Apparent Independent Expenditures 

In response to the DFAR, MRP reiterated its position that the payments represented 

“routine political party solicitation expenses” and requested an audit hearing before 

the Commission. 

Based on MRP’s response to the DFAR, OGC revised its analysis of mailers2

 1 and 

8. Regarding mailer 1, OGC affirmed that mailer 1 still qualifies as an independent 

expenditure but for different reasons. Regarding mailer 8, OGC recommended that 

it be removed from the finding because it does not contain express advocacy and is 

not an independent expenditure. The Audit staff removed mailer 8, totaling $6,518, 

from the amount in violation and recalculated the amount in violation accordingly.3 

1

 The Audit staff provided OGC’s legal comments to MRP on May 4, 2020, and offered it an additional 

opportunity to respond. MRP declined to submit additional comments. 

2

 Copies of mailers 1 and 8, as well as each of the nine mailers referred to in Finding 3, can be found in: 

\\ntsrv1\Voting Ballot Matters\Audit\Mississippi Republican Party\MRP Mailer Copies Finding 3 

3

 The removal of mailer 8 resulted in a $6,518 decrease of the $43,967 amount in violation presented in the 

DFAR. The recalculated amount in violation, $37,449, will be presented in the upcoming Proposed Final 

Audit Report. 
3 

In LRA 1077 – Supplemental Comments, OGC stated that MRP should not be 

allowed to allocate the mailers based on the express advocacy content and any other 

content that does not contain express advocacy. As a result, the Audit staff did not 

perform any revisions to this finding that would involve the allocation of cost based 

on content. 

The Audit staff recommends that the Commission find that MRP failed to properly 

disclose apparent independent expenditures totaling $37,449. In addition, the Audit 

staff recommends that the Commission find that MRP did not file 24/48-hour reports 

for apparent independent expenditures totaling $36,969.4 

The Office of General Counsel has reviewed this memorandum and concurs with the 

recommendations. 

If this memorandum is approved, the Proposed Final Audit Report will be prepared and 

circulated within 30 days of the Commission’s approval. 

Given the Commission’s lack of quorum to approve this Audit Division 

Recommendation Memorandum on a tally vote, the matter would be placed on an 

open session agenda in accordance with Directive No. 70, once a quorum is 

reestablished. 

Documents related to this audit report, including the MRP’s November 22, 2019 response 

to the DFAR, can be viewed in the Voting Ballot Matters folder. Should you have any 

questions, please contact Robert Morcomb or Zuzana Pacious at 694-1200. 

Attachments: 

- Draft Final Audit Report of the Audit Division on the Mississippi Republican Party 

- LRA 1077 Mississippi Republican Party ADRM dated April 30, 2020 

- LRA 1077 – Supplemental ADRM Comments dated May 27, 2020 

cc: Office of General Counsel 

4

 The Audit staff notes that the removal of mailer 8 did not impact the failure to file 24/48-hour reports 

violation amount. 
OGC's legal comments provided in LRA 1077, dated April 30, 2020, 

resulted in a change in the amount in violation for Finding 3, as 

enumerated in the ADRM. 

Draft Final Audit Report of the 

Audit Division on the Mississippi 

Republican Party 

(January 1, 2015 - December 31, 2016) 

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.1

 The audit 

determines whether the 

committee 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 any of 

the matters discussed in 

this report. 

Committees and Other Political 

Transfers from Non-Federal 

About the Committee (p. 2) 

The Mississippi Republican Party is a state party committee 

headquartered in Jackson, Mississippi. For more information, see 

the chart on the Committee Organization, p. 2. 

Financial Activity (p. 3) 

• Receipts 

o Contributions from Individuals $ 740,807 

o Contributions from Political Party 

Committees 55,950 

o Transfers from Affiliated/Other 

Party Committees 1,647,080 

o Offsets to Operating Expenditures 2,686 

o Other Federal Receipts 98,202 

o

Account 172,635 

Total Receipts $ 2,717,360 

• Disbursements 

o Operating Expenditures $ 328,494 

o Allocated Federal/Non-Federal 

Expenditures 492,538 

o Transfers to Affiliated Committees 1,587,842 

o Federal Election Activity 296,857 

Total Disbursements $ 2,705,731 

Findings and Recommendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Reporting of Debts and Obligations (Finding 2) 

• Reporting of Apparent Independent Expenditures (Finding 3) 

1

 52 U.S.C. §30111(b). 
Draft Final Audit Report of the 

Audit Division on the 

Mississippi Republican Party 

(January 1, 2015 - December 31, 2016) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 3 

Part III. Summaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 6

Finding 2. Reporting of Debts and Obligations 8

Finding 3. Reporting of Apparent Independent Expenditures 9
 1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the Mississippi Republican Party (MRP), 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 52 U.S.C. §30111(b), which permits the 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report under 52 U.S.C. §30104. 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. 52 U.S.C. §30111(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; 

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 disclosure of disbursements, debts and obligations; 

6. the disclosure of expenses allocated between federal and non-federal accounts; 

7. the consistency between reported figures and bank records; 

8. the completeness of records; 

9. the disclosure of independent expenditures; and 

10. other committee operations necessary to the review. 
2 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration January 9, 1978 

• Audit Coverage January 1, 2015 - December 31, 2016 

Headquarters Jackson, Mississippi 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Three Federal; Three Non-Federal 

Treasurer 

• Treasurer When Audit Was Conducted Paul V. Breazeale (1/31/2018 - Present) 

Lucien Smith (1/26/2018 - 1/30/2018) 

• Treasurer During Period Covered by Audit Lucien Smith (7/20/2016 - 12/31/2016) 

Paul V. Breazeale (8/21/2012 - 7/19/16) 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and Recordkeeping 

Tasks 

Paid Staff 
3 

Overview of Financial Activity

(Audited Amounts) 

Cash on hand @ January 1, 2015 $ 42,307 

Receipts 

o Contributions from Individuals 740,807 

o Contributions from Political Party and Other 

Committees 

55,950 

o Transfers from Affiliated and Other Political 

Committees 

1,647,080 

o Offsets to Operating Expenditures 2,686 

o Other Federal Receipts 98,202 

o Transfers from Non-Federal Account 172,635 

Total Receipts $ 2,717,360 

Disbursements 

o Operating Expenditures 328,494 

o Allocated Federal/Non-Federal Expenditures 492,538 

o Transfers to Affiliated Committees 1,587,842 

o Federal Election Activity 296,857 

Total Disbursements $ 2,705,731 

Cash on hand @ December 31, 2016 $ 53,936 
 

 

4 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of MRP’s reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements in calendar year 2015. 

Specifically, MRP understated its receipts and disbursements by $10,606 and $14,808, 

respectively. In response to the Interim Audit Report recommendation, MRP filed a 

Form 99 (Miscellaneous Electronic Submission) on June 21, 2019, which corrected the 

misstatements for the 2015 calendar year. MRP also stated that the cash balance is 

correct as of its 2019 May Monthly disclosure report. (For more detail, see p. 6.) 

Finding 2. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff noted that MRP failed to disclose debts and 

obligations owed to 10 vendors totaling $152,931. In response to the Interim Audit 

Report recommendation, MRP filed a Form 99 on both June 21, 2019 and June 22, 2019, 

properly disclosing the debts and obligations and correcting the public record. (For more 

detail, see p. 8.) 

Finding 3. Reporting of Apparent Independent 

Expenditures 

During audit fieldwork, the Audit staff reviewed expenditures totaling $43,9672, that 

MRP disclosed on Schedule B, Line 21(b) (Other Federal Operating Expenditures) and 

Schedule H4 (Disbursements for Allocated Federal /Non-Federal Activity). These 

expenditures appear to be independent expenditures that contain express advocacy which 

should have been disclosed on Schedule E, Line 24 (Itemized Independent Expenditures). 

Additionally, of the $43,967, MRP did not provide sufficient documentation, pertaining 

to dissemination dates, to allow the Audit staff to verify whether 24/48-hour reports were 

required to be filed for the apparent independent expenditures totaling $36,969. 

In response to the Interim Audit Report recommendation, MRP stated that the 

expenditures were reported correctly as operating expenses or fundraising expenses. 

MRP also stated the primary purpose of these mailings was to solicit donors for 

contributions and to explain the potential uses of the donated funds, and that any mention 

of federal candidates was “incidental” to the purpose of the mailings. However, MRP 

2

 The amount cited in the Interim Audit Report was $38,940. An additional $5,027 has been added 

following the submission of an invoice and an estimated shipping cost in response to the Interim Audit 

Report. 
 5 

stated it will file amendments, based on the Commission vote, with respect to the Audit 

staff’s recommendation on this finding. 

Additionally, based on clarification provided in response to the Interim Audit Report 

which explained the “ship date” noted on some invoices, expenditures totaling $3,926 

required a 24-hour report and expenditures totaling $12,382 required a 48-hour report. 

For the remaining expenditures totaling $20,661 without associated dissemination dates, 

24/48-hour reports may still be required. MRP has not complied with the 

recommendation to correct the disclosure for these nine independent expenditures. (For 

more detail, see p. 9.) 
 6 

Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of MRP’s reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements for calendar year 2015. 

Specifically, MRP understated its receipts and disbursements by $10,606 and $14,808, 

respectively. In response to the Interim Audit Report recommendation, MRP filed a 

Form 99 (Miscellaneous Electronic Submission) on June 21, 2019, which corrected the 

misstatements for the 2015 calendar year. MRP also stated that the cash balance is 

correct as of its 2019 May Monthly disclosure report. 

Legal Standard 

Contents of Federal 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 calendar year; 

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

year; and 

• certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104(b)(1), (2), (3), (4), and 

(5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled MRP’s reported financial activity with 

its bank records for calendar years 2015 and 2016. The reconciliation identified that 

MRP misstated receipts and disbursements for 2015. The following chart details the 

discrepancies between MRP’s disclosure reports and bank activity. The succeeding 

paragraphs explain why the discrepancies occurred. 
 

 

7 

2015 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash on hand 

@ January 1, 2015 

$50,087 $42,307 $7,780 

Overstated 

Receipts $394,175 $404,781 $10,606 

Understated 

Disbursements $403,626 $418,434 $14,808 

Understated 

Ending Cash on hand 

@ December 31, 2015 

$28,6243

 $28,654 $30 

Understated 

The reported 2015 beginning cash on hand was over reported by $7,780 likely resulting 

from prior period discrepancies. 

The understatement of receipts resulted from the following: 

• Transfer from a Non-federal account not reported $7,830 

• In-kind contribution not reported as a receipt 2,868 

• Unexplained differences (92) 

Net Understatement of Receipts $10,606 

The understatement of disbursements resulted from the following: 

• Disbursements not reported $11,932 

• In-kind contribution not reported as a disbursement 2,868 

• Unexplained differences 8 

Understatement of Disbursements $14,808 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with MRP representatives during the exit 

conference and provided schedules detailing the misstatements. MRP representatives did 

not provide any comments. 

The Interim Audit Report recommended that MRP amend its disclosure reports or file a 

Form 994

 to correct the misstatements noted above. It was further recommended that 

MRP reconcile the cash on hand in its most recently filed report to include these 

adjustments and correct any subsequent discrepancies. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MRP explained that it believed 

that the “minor apparent misstatements” were “inadvertent administrative oversights.” 

MRP filed a Form 99, on June 21, 2019, which corrected the misstatements for the 2015 

calendar year. MRP also stated that the cash balance reflected on its 2019 May Monthly 

disclosure report is correct. 

3

 The reported ending cash on hand does not equal reported beginning cash on hand plus reported receipts 

minus reported disbursements likely due to the mathematical discrepancy. 4

 MRP was advised by the Audit staff that if it chose to file a Form 99, instead of amending its disclosure 

reports, the form must contain all pertinent information that is required on each schedule. 
 

 

 

8 

Finding 2. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff noted that MRP failed to disclose debts and 

obligations owed to 10 vendors totaling $152,931. In response to the Interim Audit 

Report recommendation, MRP filed a Form 99 on both June 21, 2019 and June 22, 2019, 

properly disclosing the debts and obligations and correcting the public record. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

52 U.S.C §30104(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts 

owed by the committee and debts owed to the committee, together with a statement 

explaining the circumstances and conditions under which each debt and obligation 

was incurred or extinguished. 11 CFR §104.11(a). 

C. Itemizing Debts and Obligations. 

• A debt of $500 or less must be reported once it has been outstanding 60 days from 

the date incurred (the date of the transaction); the committee reports it on the next 

regularly scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on 

which the debt was incurred. 11 CFR §104.11(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed MRP’s disbursements records and 

disclosure reports for proper reporting of debts and obligations. This review identified 

debts owed to 10 vendors totaling $152,9315

 that MRP failed to report on Schedule D 

(Debts and Obligations) during the audit period. Based on a review of the records, these 

vendors provided MRP with signs, stickers, printed membership/fundraising letters and 

cards, audio and video equipment, food and venue for events, financial services, national 

convention materials, transportation, compliance services, postage, and flower 

arrangements. MRP reported debt totaling $134,142 on Schedule D during the audit 

cycle. The Audit staff calculated the debts owed to the vendors based on the invoice date 

and the subsequent payment date. Debts were outstanding for periods ranging from 13 to 

1,047 days. 

5

 Each debt in this amount was counted once, even if it required disclosure over multiple periods. 
 

 

9 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter at the exit conference and provided MRP 

representatives schedules detailing the transactions requiring disclosure on Schedule D. 

MRP representatives inquired about the definition of debts and whether monthly 

recurring expenses would be considered debt if not paid within a specific timeframe or 

crossing reporting periods. The Audit staff noted that none of the errors were recurring 

expenses. In response to the exit conference, MRP provided no further comments. 

The Interim Audit Report recommended that MRP provide additional documents such as, 

invoices, billings statements, cancelled checks, etc., demonstrating that these transactions 

were not obligations which required reporting on Schedule D. Absent such 

documentation, the Interim Audit Report further recommended that MRP amend its 

reports or file a Form 99 to disclose these debts and obligations on Schedule D. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MRP filed a Form 99 on both 

June 21, 2019 and June 22, 2019, properly disclosing the debts and obligations and 

correcting the public record. 

Finding 3. Reporting of Apparent Independent 

Expenditures 

Summary 

During audit fieldwork, the Audit staff reviewed expenditures totaling $43,9676, that 

MRP disclosed on Schedule B, Line 21(b) (Other Federal Operating Expenditures) and 

Schedule H4 (Disbursements for Allocated Federal /Non-Federal Activity). These 

expenditures appear to be independent expenditures that contain express advocacy which 

should have been disclosed on Schedule E, Line 24 (Itemized Independent Expenditures). 

Additionally, of the $43,967, MRP did not provide sufficient documentation, pertaining 

to dissemination dates, to allow the Audit staff to verify whether 24/48-hour reports were 

required to be filed for the apparent independent expenditures totaling $36,969. 

In response to the Interim Audit Report recommendation, MRP stated that the 

expenditures were reported correctly as operating expenses or fundraising expenses. 

MRP also stated the primary purpose of these mailings was to solicit donors for 

contributions and to explain the potential uses of the donated funds, and that any mention 

of federal candidates was “incidental” to the purpose of the mailings. However, MRP 

stated it will file amendments, based on the Commission vote, with respect to the Audit 

staff’s recommendation on this finding. 

6

 The amount cited in the Interim Audit Report was $38,940. An additional $5,027 has been added 

following the submission of an invoice and an estimated shipping cost in response to the Interim Audit 

Report. 
10 

Additionally, based on clarification provided in response to the Interim Audit Report 

which explained the “ship date” noted on some invoices, expenditures totaling $3,926 

required a 24-hour report and expenditures totaling $12,382 required a 48-hour report. 

For the remaining expenditures totaling $20,661 without associated dissemination dates, 

24/48-hour reports may still be required. MRP has not complied with the 

recommendation to correct the disclosure for these nine independent expenditures. 

Legal Standard 

A. Definition of Independent Expenditures. An independent expenditure is an 

expenditure made for a communication expressly advocating the election or defeat of 

a clearly identified candidate that is not made in cooperation, consultation, or concert 

with, or at the request or suggestion of, a candidate, a candidate’s authorized 

committee, or their agents, or a political party or its agents. 

A clearly identified candidate is one whose name, nickname, photograph or drawing 

appears, or whose identity is apparent through unambiguous reference, such as “your 

Congressman,” or through an unambiguous reference to his or her status as a 

candidate, such as “the Democratic presidential nominee” or “Republican candidate 

for Senate in this state.” 

Expressly advocating means any communication that: 

• Uses phrases such as “vote for the President” or “re-elect your Congressman” or 

communications of campaign slogan(s) or individual word(s), which in context 

can have no other reasonable meaning than to urge election or defeat of one or 

more clearly identified candidates; or 

• When taken as a whole and with limited references to external events, such as 

proximity to the election, could be interpreted by a reasonable person only as 

advocating the election or defeat of one or more clearly identified candidates. 

11 CFR §§100.16(a), 100.17 and 100.22. 

B. Disclosure Requirements – General Guidelines. An independent expenditure shall 

be reported on Schedule E, if, when added to other independent expenditures made to 

the same payee during the same calendar year, it exceeds $200. Independent 

expenditures made (i.e., publicly disseminated) prior to payment should be disclosed 

as memo entries on Schedule E and as a debt on Schedule D. Independent 

expenditures of $200 or less need not be itemized, though the committee must report 

the total of those expenditures on line (b) on Schedule E. 11 CFR §§104.3(b)(3)(vii), 

104.4(a) and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour Reports). Any 

independent expenditures aggregating $1,000 or more, with respect to any given 

election, and made after the 20th day but more than 24 hours before the day of an 

election, must be reported and the report must be received by the Commission within 

24 hours after the expenditure is made. A 24-hour report is required each time 

additional independent expenditures aggregate $1,000 or more. The 24-hour report 

must be filed on a Schedule E. The date that a communication is publicly disseminated 
 

 

 

11 

serves as the date that the committee must use to determine whether the total amount of 

independent expenditures has, in the aggregate, reached or exceeded the threshold 

reporting amount of $1,000. 11 CFR §§104.4(f) and 104.5(g)(2). 

D. Independent Expenditure Reports (48-Hour Reports). Any independent 

expenditures aggregating $10,000 or more with respect to any given election, at any 

time during a calendar year, up to and including the 20th day before an election, must 

be disclosed within 48 hours each time the expenditures aggregate $10,000 or more. 

The 48-hour report must be filed on a Schedule E. The date that a communication is 

publicly disseminated serves as the date that the committee must use to determine 

whether the total amount of independent expenditures has, in the aggregate, reached 

or exceeded the threshold reporting amount of $10,000. The reports must be filed 

with the Commission within 48 hours after the expenditure is made. 

11 CFR §§104.4(f) and 104.5(g)(1). 

E. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which 

the filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

Facts and Analysis 

A. Reporting of Apparent Independent Expenditures 

1. Facts 

During audit fieldwork, the Audit staff reviewed disbursements to ensure proper 

reporting. The Audit staff noted that MRP did not disclose any independent 

expenditures on Schedule E, however, it made expenditures totaling $43,967 

disclosed on Schedule B, Line 21(b), and Schedule H4. These expenditures were 

for nine fundraising mailers, which contained express advocacy. A breakdown 

analysis for these expenditures is as follows: 

a. Apparent Independent Expenditures Reported as Disbursements for 

Allocated Federal /Non-federal Activity (Associated Mailer and Invoice 

Provided under 11 CFR §100.22(a)) 

MRP made 12 disbursements for five7

 apparent independent expenditures 

totaling $26,638 for which it provided copies of the mailers with associated 

invoices and cancelled checks. These communications contained language 

expressly advocating the election or defeat of a clearly identified candidate, as 

defined under 11 CFR §100.22(a): 

7

 Two mailers previously considered under §100.22(b) (Interim Audit Report of the Audit Division, p. 10), 

have been reclassified under §100.22(a), per the Office of General Counsel’s legal analysis, LRA 1077. 
 

12 

LRA 1077, p. 4, Mailer #1 

“We must elect a Republican as the 45th President of the United States” 

LRA 1077, p. 4, Mailer #2 

“If we unite to support Donald Trump, we still have a chance to save our 

country for the future” 

LRA 1077, p. 4, Mailer #3 

“Stop Hillary!”; “STOP HILLARY from becoming President of the United 

States” and “support Donald Trump” 

LRA 1077, p. 4, Mailer #4 

“... you can make a difference to support Donald Trump and stop Hillary 

Clinton from moving back into the White House” 

LRA 1077, p. 6, Mailer #8 

“We must elect a Republican President in 2016” 

b. Apparent Independent Expenditures Reported as Operating 

Expenditures and Disbursements for Allocated Federal /Non-federal 

Activity (Associated Mailer and Invoice Provided under 11 CFR 

§100.22(b)) 

MRP made 9 disbursements for four apparent independent expenditures 

totaling $17,3298

, for which it provided copies of the mailers with associated 

invoices and cancelled checks. 

Based on the definition of express advocacy under 11 CFR §100.22(b), the 

Audit staff believes the following mailers could only be interpreted by a 

reasonable person as advocating the election or defeat of a clearly identified 

candidate: 

LRA 1077, p. 5, Mailer #5

 “Donald Trump ...will nominate Supreme Court Justices who will protect the 

Constitution.... I’m asking you to please stand up in defense of our 

Constitution by making a contribution today...”; “The Mississippi Republican 

Party has been hard at work not only to ensure that Donald Trump wins 

Mississippi by a wide margin, but also that he wins swing states such as 

Florida and Ohio”; and “Your generous contribution today will help keep 

Trump from losing the presidency...” 

8

 In addition to the amounts reclassified in this category (footnote 7), an additional $5,027 has been added 

to the amount based on an invoice and an estimated shipping cost submitted in response to the Interim 

Audit Report. 
 

13 

LRA 1077, p. 5, Mailer #6

 “I am asking you to please contribute $100 to make sure that Donald Trump’s 

message of Making America Great Again can be delivered untainted by the 

media to undecided voters here in Mississippi and in key battleground states” 

LRA 1077, p. 5, Mailer #7

 “The Mississippi Republican Party is working hard to make sure Republicans 

in Mississippi turn out to vote and send Donald Trump to a landslide victory 

here. And the Party is doing the same thing in the critical battleground state 

of Florida... Will you please contribute $50, $75, $100 or more to enable our 

Party to do everything it can in these last days to turn out Republican voters in 

Mississippi and Florida?” 

LRA 1077, p. 6, Mailer #9 

“Recent polls suggest the presidential election is dead even and that’s good 

news for Donald Trump and Mike Pence as they build momentum to win the 

White House... NOW is the time for a final surge in the momentum. Will you 

help make sure that happens?” 

The Interim Audit Report recommended that MRP provide documentation 

showing that the apparent independent expenditures, totaling $38,9409

, did not 

require reporting as independent expenditures. Absent such documentation, the 

Interim Audit Report recommended that MRP amend its reports to disclose these 

disbursements as independent expenditures on Schedule E and submit procedures 

for reporting independent expenditures. 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented MRP with a schedule detailing 

these expenditures. MRP representatives did not have any comments. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MRP disagreed that any 

of its mailers constituted independent expenditures. MRP stated that expenditures 

totaling $38,94010 were reported on the appropriate schedule as “operating 

expenses or fundraising expenses”11 and that these mailings “constitute 

solicitations for MRP.” MRP further stated that the Commission should reject the 

assertion that these mailings contain express advocacy because the “call to action” 

was not “electoral” or an “explicit directive to vote for or against any clearly 

identified Federal candidate,” but rather, “a solicitation of a contribution.” Lastly, 

MRP stated that it and other “similarly situated parties lack notice that the 

Commission has taken the view that incidental issue or political advocacy 

9

 See footnote #5. 

10 See footnote #5. 11 Expenditures totaling $36,969 referenced a Federal candidate and were therefore incorrectly reported on 

Schedule H4. 11 CFR §300.32(a). 
 

 

14 

language can transform typical party expenses such as these into independent 

expenditures.” 

The Audit staff does not dispute MRP’s assertion that the mailers were used to 

solicit contributions, however, the Commission has concluded that if mailers 

contain express advocacy as defined in 11 CFR §100.22, they are considered 

independent expenditures, irrespective of the solicitations’ intended purpose to 

raise funds.12 

B. Failure to File 24/48-Hour Reports for Apparent Independent Expenditures 

1. Facts 

In addition to not reporting any independent expenditures during the audit period, 

MRP did not file any 24 or 48-hour reports. Therefore, the apparent independent 

expenditures identified above, may also have required such filings. 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed with the MRP representatives the 

requirements for filing 24/48-hour reports. MRP representatives did not provide 

any comments. 

The Interim Audit Report recommended that absent documentation that the 

apparent independent expenditures, totaling $38,94013, did not require reporting 

as independent expenditures, MRP provide documentation to support the date of 

public dissemination for each mailer to determine whether a 24/48-hour report 

was required. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MRP provided 

documentation and stated that the term “ship date,” as detailed on four of the nine 

invoices, reflects “the day that they took the mailers to the post office.” 

Accordingly, the Audit staff used the ship date as the date of dissemination for 

these invoices and determined that MRP failed to file one 48-hour report for 

expenditures totaling $12,382 and one 24-hour report for expenditures totaling 

$3,926. 

Thus, four of the remaining five mailers14 with no dissemination date may still 

require the filing of 24/48-hour reports. Absent evidence that the expenditures 

totaling $36,969 did not require reporting as independent expenditures, the Audit 

staff considers these independent expenditures which may have required filing of 

12 Final Audit Report on National Campaign Fund; Final Audit Report on Legacy Committee Political 

Action Committee; Final Audit Report on Freedom’s Defense Fund; and Final Audit Report on 

Conservative Majority Fund. 

13 See footnote #5. 14 The ninth mailer, for the 2015 activity totaling $6,998, did not require any 24/48-hour reports. 
15 

24/48-hour reports. The Audit staff recommends that MRP provide the dates of 

dissemination for the mailers discussed above. 
 FEDERAL ELECTION COMMISSION WASHINGTON, D.C. 20463 

 

 

 

 

 

 

 

 

 

 

 

April 30, 2020 

MEMORANDUM 

TO: Patricia C. Orrock 

 Chief Compliance Officer 

 Dayna Brown 

 Assistant Staff Director 

 Audit Division 

FROM: Neven F. Stipanovic

 Associate General Counsel 

 Policy Division 

 Lorenzo Holloway 

 Assistant General Counsel 

 Compliance Advice 

Joshua Blume

Attorney 

SUBJECT: Audit Division Recommendation Memorandum on the Mississippi Republican 

Party (LRA 1077) 

I. INTRODUCTION 

The Office of General Counsel has reviewed the Audit Division Recommendation 

Memorandum (“ADRM”) on the Mississippi Republican Party (“the Committee”) and the 

Committee’s response to the Draft Final Audit Report. We concur with Findings 1 and 2 of the 

Draft Final Audit Report (“DFAR”). We have reviewed arguments submitted by the Committee 

in response to the DFAR, and we plan to address one particular argument in a forthcoming 

memorandum jointly submitted by this office and the Office of Compliance pursuant to 

Commission Directive 69, Par. 3.a and d, in the near future.1 In this memorandum, we revisit 

The Committee argues that even if some of the mailers at issue in the DFAR are independent expenditures, 

the Committee should be permitted to allocate the total cost of each mailer between the express advocacy content 

and other content that does not contain express advocacy, thereby allowing it to report part of the mailers’ costs as 

1 
 

Although mailers one and eight used “magic words” such as “[w]e must elect a 

Republican as the 45th President of the United States” (mailer one) and “[w]e must elect a 

Republican President in 2016” (mailer eight), neither mailer clearly identified that candidate by 

name, photograph, drawing, or other unambiguous reference. See 11 C.F.R. § 100.17. In our 

earlier comments we had relied on the Commission’s reasoning in Advisory Opinion 2003-23 

(WE LEAD) to conclude that even though the eventual nominee was not known, the candidate 

was nonetheless identifiable as to the specific office, party affiliation, and election cycle. 

However, in that advisory opinion the Commission was interpreting a different regulation — 11 

C.F.R. § 110.6(b)(1) — to allow contributions to be earmarked for an undetermined federal 

candidate “in certain circumstances.” Advisory Opinion 2003-23 (WE LEAD) at 3. The 

Commission did not address whether a candidate may be sufficiently identified for express 

advocacy purposes using only office, party affiliation and election cycle. Thus, we believe that 

the facts in that advisory opinion are materially different than those presented in this audit. 

 

 

 

 

 

 

 

 

Comments on the Audit Division Recommendation Memorandum 

Mississippi Republican Party (LRA 1077) 

Page 2 

our independent expenditure analysis of two of the nine mailers discussed in our previous 

comments on the DFAR — specifically, mailers one and eight. See Memorandum from Neven 

F. Stipanovic to Patricia C. Orrock on Draft Final Audit Report on Mississippi Republican Party 

(LRA 1077), at 4, 6 (Oct. 2, 2019) (“DFAR Comments”).

2 

 We believe that mailer one still 

qualifies as an independent expenditure, but for different reasons. Because we are revising our 

basis for concluding that mailer one is an independent expenditure, we recommend that the Audit 

Division notify the Committee of this changed basis so that it may have a further opportunity to 

comment if it wishes to do so. We recommend that mailer eight be removed from Finding 3 

because we no longer believe it qualifies as an independent expenditure. 

II. REPORTING OF APPARENT INDEPENDENT EXPENDITURES (Finding 3) 

Although mailer one does not clearly identify the candidate that must be elected as the 

“45th President of the United States,” the mailer does clearly identify two other federal 

candidates: Bernie Sanders and Hillary Clinton, both of whom were candidates for the 

Democratic Party nomination. We believe that mailer one expressly advocates their defeat under 

11 C.F.R. § 100.22(b) because the mailer criticizes their character that, when taken as a whole 

and with limited reference to external events, cannot be understood as suggesting any other 

action than to defeat either candidate should either candidate become the Democratic party 

nominee. See Express Advocacy; Independent Expenditures; Corporate and Labor Organization 

Expenditures, 60 Fed. Reg. 35292, 35295 (July 6, 1995) (communications discussing or 

commenting on candidate’s character, qualifications, or accomplishments are express advocacy 

independent expenditures and part as operating expenditures. In our view, this is a complex, relatively close, and 

unsettled question of law, with possible arguments pro and con that we intend to address. 

On November 22, 2019, the Committee submitted its response to the DFAR and included a request for an 

audit hearing to discuss Finding 3. Two or more Commissioners did not agree to grant the request for a hearing. 

See Procedural Rules for Audit Hearings, 74 Fed. Reg. 33140, 33142 (July 10, 2009). The Commission advised the 

Committee of the denial of its request for a hearing on December 23, 2019, but also offered the Committee an 

opportunity to submit a new request for a hearing when a quorum is restored. Our comments may be revised if a 

hearing is held. 

2 
 

 

 

 

 

 

 

 

 

 

 

Comments on the Audit Division Recommendation Memorandum 

Mississippi Republican Party (LRA 1077) 

Page 3 

under section 100.22(b) if, in context, they have no other reasonable meaning than to encourage 

actions to elect or defeat candidates in question). The mailer disparages Bernie Sanders by 

characterizing him as an avowed socialist and condemns Hillary Clinton as dogged by political 

scandals and untrustworthy. It states that neither candidate seeking the Presidency is good for 

America. The mailer also contains an electoral portion that is “unmistakable, unambiguous, and 

suggestive of only one meaning,” see 11 C.F.R. § 100.22(b)(1), stating that “we are just months 

away from the most consequential presidential election in our lives.” The mailer’s assertion that 

it is imperative to electing their opponent and asking the reader to donate “[i]f you want Election 

Night, 2016 to be an evening of great celebration” can only be reasonably interpreted as a call to 

defeat Clinton or Sanders. 11 C.F.R. § 100.22(b)(2). 

Mailer eight, apart from using the phrase “[w]e must elect a Republican President in 

2016,” also contains references to 18 candidates that are clearly identified by name. 

Nevertheless, those candidates are simply listed in an apparent survey of potential nominees and 

the mailer does not urge the election of any specific candidate. Indeed, the mailer closely 

resembles the preference poll mailers that we concluded did not contain express advocacy in the 

audit of The Legacy Political Action Committee. See Memorandum from Christopher Hughey to 

Patricia Carmona on Interim Audit Report on The Legacy Political Action Committee (LRA 

# 815), at 7-8 (May 4, 2011) (comments on Letters 25 and 54); Commission Certification In the 

Matter of The Legacy Committee Political Action Committee, A09-22, Agenda Document No. 

12-30 (June 11, 2012) (containing list of communications containing express advocacy that 

excludes communications 25 and 54). Mailer eight thus should be removed from the finding 

because it does not contain express advocacy and is not an independent expenditure. 
 FEDERAL ELECTION COMMISSION WASHINGTON, D.C. 20463 

 

 

 

 

May 27, 2020 

MEMORANDUM 

TO: Patricia C. Orrock 

 Chief Compliance Officer 

 Dayna C. Brown 

 Acting Assistant Staff Director 

 Audit Division 

FROM: Neven F. Stipanovic 

 Associate General Counsel 

 Policy Division 

 Lorenzo Holloway 

 Assistant General Counsel 

 Compliance Advice 

Joshua Blume 

Attorney 

SUBJECT: Audit Division Recommendation Memorandum on the Mississippi Republican 

Party (LRA 1077) – Supplemental Comments 

I. INTRODUCTION 

On April 30, 2020, this office transmitted comments on the Audit Division 

Recommendation Memorandum on the Mississippi Republican Party (“the Committee”), 

prepared by the Audit Division. In those comments, we deferred commenting on one argument 

raised by the Committee; namely, that the Committee should be allowed to allocate the cost of 

mailers containing express advocacy and other, non-express advocacy content, for reporting 

purposes. We stated that because the issue of allocation appeared to be a complex, relatively 

novel and unsettled question, for which arguments pro and con might be adduced on both sides, 

we would draft a memorandum in concert with the Office of Compliance raising the issue and 

recommending a disposition of it to the Commission pursuant to Commission Directive 69. 

Following additional consideration of the issue, and for the reasons discussed below, we 

have determined that the issue is not as unsettled as we had previously thought, and that it would 
 

 

 

 

 

Supplemental Comments on the Audit Division Recommendation Memorandum 

Mississippi Republican Party (LRA 1077) 

Page 2 

be more expedient and appropriate to issue these supplemental comments in lieu of submitting a 

memorandum under Directive 69. We recommend that the Audit Division raise the issue for the 

Commission’s consideration in its cover memorandum to the Commission that will accompany 

the transmission of the Draft Final Audit Report (“DFAR”). 

II. REPORTING OF APPARENT INDEPENDENT EXPENDITURES (Finding 3) 

In response to the DFAR, the Committee argues that even if the mailers were 

independent expenditures, the Committee should be permitted to allocate the total cost of each 

mailer between the express advocacy content and other content that does not contain express 

advocacy, for example portions of the mailer that discuss fundraising or issues, or that contain 

only generic references to candidates of a political party. The effect of such an allocation would 

be to allow the Committee to report only the portion of each mailer containing express advocacy 

as an independent expenditure and to report the remainder of each mailer as an operating 

expenditure. 

We believe that the Committee should not be allowed to allocate the mailers in this 

manner. As the Commission previously explained, “communications that include express 

electoral advocacy [are treated] as express advocacy, despite the fact that the communications 

happen to include issue advocacy as well” — a conclusion that we believe applies equally, in 

principle, to communications that include express advocacy and content serving other kinds of 

purposes, such as fundraising, as well. See Express Advocacy; Independent Expenditures; 

Corporate and Labor Organization Expenditures, 60 Fed. Reg. 35291, 35295 (Jul. 6. 1995) 

(noting that the Supreme Court in FEC v. Mass. Citizens for Life, Inc., 479 U.S. 238 (1986) made 

clear that “isolated portions of a communication are not to be read separately in determining 

whether a communication constituted express advocacy”). The “subjective intent of the 

speaker,” the Commission further explained, is not a relevant consideration when deciding 

whether a communication contains express advocacy. Id. Consistent with this rationale, the 

Commission previously approved several audits where the committees’ fundraising 

communications were treated entirely as independent expenditures because they contained 

express advocacy, even though the intent of the communications may have been to raise funds.1 

 

In one of those audits, the Commission approved the audit even though the committee, like the 

Committee at issue here, explicitly argued that it should be allowed to allocate its fundraising 

communications.2  Therefore, the fact that the Committee’s mailers may have been intended for 

different purposes, for example to raise funds, is not a relevant consideration here. Because the 

mailers contain express advocacy, the entire cost of the mailers should be reported as 

independent expenditures. 

1 See Final Audit Report on Conservative Majority Fund, at 16-17 (approved Dec. 6, 2017); Final Audit 

Report on the Freedom’s Defense Fund, at 12-13 (approved Dec. 6, 2017); Final Audit Report on the National 

Campaign Fund, at 9-15 (approved Oct. 22, 2012); Final Audit Report on the Legacy Fund Political Action 

Committee, at 7-13 (approved July 31, 2012). 

2 See Final Audit Report on Conservative Majority Fund, at 16-17 (approved Dec. 6, 2017); see also 

Memorandum from Lisa J. Stevenson to Patricia C. Orrock on Draft Final Audit Report on the Conservative 

Majority Fund (LRA 986), at 2 (May 12, 2017). 
 

 

Supplemental Comments on the Audit Division Recommendation Memorandum 

Mississippi Republican Party (LRA 1077) 

Page 3 

Because of the importance of this issue, we recommend that the Audit Division raise the 

issue for the Commission’s consideration in the cover memorandum that will accompany the 

transmission of the DFAR to the Commission.