10

Facts and Analysis

The Audit staff’s review of contributions from political party committees and PACs
revealed 263 contributions totaling $322,809 that were not properly disclosed. The errors
consisted of reporting an incorrect address and/or election cycle to date total for the
political committee on Schedules A (Itemized Receipts). For the address errors, most
were caused by CFAS incorrectly disclosing the PAC contact name on the mailing
address line of the Schedule A instead of the actual street address. As for contributions
reported with an incorrect election cycle to date total, the Audit staff notes that these
contributions may have been caused by inconsistency with data entry for contributions
received from joint fundraisers and the first two reporting periods in 2004.

This matter was presented at the exit conference along with workpapers detailing the
errors The CFAS representative stated that amendments would be filed to correct this
matter.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that CFAS file amended Schedules A to correctly disclose
the receipt of its contributions from political party committees and PACs. In response to
the interim audit report, CFAS filed amended reports that corrected the disclosure
discrepancies.

Finding 3. Recordkeeping for Disbursements

Summary

Reviews of operating expenditures and contribution refunds indicated that 7% and 11%,
respectively, of the disbursements were not properly documented. The disbursements
were all greater than $200 and there were no canceled checks or vendor invoices. In
response to the interim audit report, CFAS provided copies of canceled checks that
corrected the discrepancies.

Legal Standard
A. Required Records for Disbursements. For each disbursement, the treasurer of a
political committee must keep records on the: -
e Amount;
e Date;
¢ Name and address of the payee’;
¢ Purpose (a brief description of why the disbursement was made—see below); and
e If the disbursement was made on behalf of a candidate, the candidate’s name and
the office sought by the candidate.
¢ If the disbursement was in excess of $200, the records must include a receipt or
invoice from the payee, or a cancelled check or share draft to the payee. If the
disbursement was by credit card, the record must include the monthly statement
or customer receipt and the cancelled check used to pay the credit card bill.
2 U.S.C. §432(c)(5) and 11 CFR §§102.9(b).


Part I
Background

Authority for Audit

This report is based on an audit of the Citizens for Arlen Specter (CFAS), 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

This audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The receipt of transfers from other authorized committees.
The disclosure of contributions and transfers received.

The disclosure of disbursements, debts and obligations.
The consistency between reported figures and bank records.
The completeness of records.

Other committee operations necessary to the review.

PNAKPWN


would have been resolved had CFAS notified contributors under the presumptive
redesignations and/or reattributions rules.

B. Excessive Contributions from Other Political Committees

The Audit staff’s review of contributions from political party committees and PACs
revealed that CFAS received excessive contributions totaling $21,850 from 9 political
committees. Included in the excessive amount were refunds totaling $11,500 that were
not made in a timely manner.

These matters were presented at the exit conference along with workpapers detailing the
errors. The CFAS representative stated that written redesignation/reattribution letters
were not available, and that most of the redesignations/reattributions were made over the
telephone.

After the exit conference, CFAS provided a letter and copies of two solicitations with
reply cards that explain that its contributors were informed on response cards and other
campaign materials of the Commission’s regulations and contribution limits. According
to CFAS, “Given the presence of this language on the reply cards, those who contributed
money in excess of the limit for the primary campaign confirmed the presumption
embodied in the Commission’s regulations “that a contributor of a large contribution to a
primary election campaign would also support the general election campaign of the same
candidate. See 67 Fed. Reg. 69, 928, 69,930 (Nov. 19, 2002).” CFAS further stated that
the individuals identified by the Audit staff did not contribute in excess of $4,000 to the
primary and the general election campaigns. The Audit staff accepts that contributions
accompanied by solicitation materials that were completed by the contributors and that
clearly state the election(s) to which the contribution(s) will be applied are sufficient in
demonstrating the contributors’ intent. As such, these contributions were not included in
the amount of excessive contributions. However, the remaining contributions were not
accompanied by solicitation materials or were accompanied by solicitation materials that
did not meet the requisites above. As a result, the Audit staff could not confirm the
contributors’ intent that their contribution be designated to multiple elections or that their
contribution be attributed to another individual.

Interim Audit Report Recommendation and Committee Response

The Audit staff recommended that CFAS:

« Provide evidence demonstrating that the contributions were not excessive. Evidence
should include documentation that was not available during the audit including copies
of solicitation cards completed by the contributors at the time of their contribution
and that clearly inform the contributors of the limitations; timely notifications sent to
contributors eligible for presumptive redesignation and/or reattribution; or, timely
refunds, redesignations, or reattributions made for excessive contributions (copies of
the front and back of negotiated refund checks) or;

e Absent such evidence, CFAS should send notices to those contributors that were
eligible for presumptive redesignation and/or reattributions ($1,126,557) to inform
those contributors how the contribution was designated and/or attributed and offering
the contributors the option of receiving a refund of the excessive portion. CFAS


Part III
Summaries

Findings and Recommendations

Finding 1. Receipt of Contributions That Exceed Limits
The audit disclosed that CFAS received excessive contributions from individuals and
political committees, most caused by its failure to send individuals notification of
election designation and contributor attribution. With respect to contributions from
individuals, CFAS addressed the $1,052,812 at issue by documenting untimely refunds of
$12,250 and, in response to the interim audit report, sending untimely redesignation or
reattribution notices for contributions totaling $895,669 and documenting additional
untimely refunds of $22,091. Contributions of $133,152 remain unresolved. Included in
this amount is $4,260 that CFAS indicates has been refunded, but has not provided
evidence that the refund checks have been negotiated. CFAS addressed the $21,850 of
excessive contributions from political committees by documenting untimely refunds of
$11,500. (For more detail, see p. 4)

Finding 2. Disclosure of Contributions from Political
Party Committees and PACs

CFAS did not properly disclose the receipt of contributions from political party
committees and PACs totaling $322,809. The discrepancies were primarily incorrect
addresses and incorrect election to date totals. In response to the interim audit report,
CFAS filed amended reports that corrected the discrepancies. (For more detail, see p. 9)

Finding 3. Recordkeeping for Disbursements
Reviews of operating expenditures and contribution refunds indicated that 7% and 11%,
respectively, of the disbursements were not properly documented. The disbursements
were all greater than $200 and there were no canceled checks or vendor invoices. In
response to the interim audit report, CFAS provided copies of canceled checks that
corrected the discrepancies. (For more detail, see p. 10)

Finding 4. Failure to Timely File 48 Hour Notices

CFAS did not timely file 48 hour notices for contributions totaling $567,250 prior to the
primary election. In response to the interim audit report recommendation, CFAS
acknowledged that the notices were not filed timely, and explained the steps it has taken
to ensure timely filing of reports. (For more detail, see p. 11)


Part II

Overview of Campaign

Campaign Organization

Important Dates

Citizens for Arlen Specter

¢ Date of Registration

December 28, 1992

e Audit Coverage

January 1, 2003 ~ December 31, 2004

Headquarters

Philadelphia, PA

Bank Information

¢ Bank Depositories

3

« Bank Accounts

1 Checking, 3 Money Market, 1 Savings
and 12 Investment Accounts

Treasurer

e Treasurer When Audit Was Conducted

Stephen J. Harmelin, Esq.

« Treasurer During Period Covered by Audit

Stephen J. Harmelin, Esq.

Management Information

e Attended FEC Campaign Finance Seminar__| Yes

¢ Used Commonly Available Campaign Yes
Management Software Package «

« Who Handled Accounting and Paid Staff

Recordkeeping Tasks

Overview of Financial Activity

(Audited Amounts)
Cash on hand @ January 1, 2003 $ 5,768,579
© Contributions from Individuals 11,944,289
o Contributions from Political Party 2,586,558
Committees and PACs
o_ Transfers from Authorized Committees 100,277
o Offsets to Operating Expenditures 78,202
o Other Receipts 333,263
Total Receipts $ 15,042,589
o Operating Expenditures 20,176,701
o Refunds of Contributions 115,219
Total Disbursements $ 20,291,920
Cash on hand @ December 31, 2004 $ 519,248



e Is made before that candidate’s primary election;

¢ Is not designated in writing for a particular election;

« Would be excessive if treated as a primary election contribution; and

¢ As redesignated, does not cause the contributor to exceed any other

contribution limit.

Also, the committee may presumptively redesignate the excessive portion of a general
election contribution back to the primary election if the amount redesignated does not
exceed the committee’s primary net debt position.

The committee is required to notify the contributor in writing of the redesignation within
60 days of the treasurer’s receipt of the contribution and must offer the contributor the
option to receive a refund instead. For this action to be valid, the committee must retain
copies of the notices sent. Presumptive redesignations apply only within the same
election cycle. 11 CFR §110.1(b)(5)(ii)(B) & (C) and (1)(4)(ii).

D. Reattribution of Excessive Contributions. When an authorized committee receives
an excessive contribution, the committee may ask the contributor if the contribution was
intended to be a joint contribution from more than one person.
« The committee must, within 60 days of receipt of the contribution, obtain and
retain a reattribution letter signed by all contributors; or
e refund the excessive contribution. 11 CFR §§110.1(k)(3), 110.1(1)(3) and
103.3(b)(3).

Notwithstanding the above, any excessive contribution that was made on a written
instrument that is imprinted with the names of more than one individual may be attributed
among the individuals listed unless instructed otherwise by the contributor(s). The
committee must inform each contributor:
e How the contribution was attributed; and
¢ That the contributor may instead request a refund of the excessive amount. 11
CFR §110.1(k)(3)(ii)(B).

For this action to be valid, the committee must retain copies of the notices sent. 11 CFR
§110.1(1)(4)(ii).

Facts and Analysis

A. Excessive Contributions from Individuals

The Audit staff’s review of contributions made by individuals revealed that CFAS
received excessive contributions totaling $1,181,347 from 892 individuals. Of these
excessive contributions, 859 totaling $1,121,347 were excessive for the primary election
and 33 totaling $60,000 were excessive for the general election. Included in the
excessive amount are refunds totaling $12,250 that were not made in a timely manner. In
most cases, CFAS either reattributed the excessive portions to the original contributors’
spouses, or redesignated the excessive portions to the next election. However, for these
contributions CFAS did not provide evidence of timely reattributions or redesignations;
or provide evidence that the contributors were notified of any presumptive reattribution
or redesignation made by CFAS. Of these excessive contributions, $1,126,557 (95%)


FEDERAL ELECTION COMMISSION
Washington, DC 20463

December 21, 2007

MEMORANDUM

To: Robert W. Biersack
Press Officer

From: Joseph F. Stoltz 1G
Assistant Staff Pifector
Audit Division

Subject: Public Issuance of the Report of the Audit Division on Citizens for Arlen
Specter

Attached please find a copy of the audit report which was approved by the
Commission on December 7, 2007.

The report may be released to the public on December 21, 2007.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library
DSDD Website -~


language. The Audit staff requested that CFAS submit complete copies of solicitations or
reply cards, but CFAS responded that they had provided all they could locate.

Second, CFAS provided evidence demonstrating that notifications for contributions
eligible for presumptive reattribution/redesignation were sent to contributors. The
opportunity to send such notifications was provided as a result of Commission decisions
in other audits. These notifications were sent for $895,669 of the excessive contributions
that were eligible under the presumptive rules. In addition, CFAS refunded another
$12,841 of these contributions. CFAS provided evidence that $10,591 of these refunds
have been negotiated. Absent such evidence for the remaining refunds of $2,250, the
Audit staff considers this amount as unresolved.

Third, CFAS provided evidence of untimely contribution refunds for excessive
contributions that were not eligible for presumptive reattribution/redesignation totaling
$13,510. CFAS provided evidence that $11,500 of these refund checks have been
negotiated. Absent such evidence for the remaining refunds of $2,010, the Audit staff
considers this amount as unresolved.

Fourth, CFAS provided evidence demonstrating that notifications were sent to political
committees requesting the designation of excessive amounts to the general election.
However, since presumptive rules only apply to excessive contributions from individuals,
the Audit staff considers the $21,850 from the political committees as excessive.

In summary, the Audit staff reduced the amount of excessive contributions from
individuals to $1,052,812. CFAS provided evidence that notifications of presumptive
reattribution/redesignation were sent for excessive contributions totaling $895,669 and
untimely contribution refunds were issued for excessive contributions from individuals
totaling $38,601 ($12,250 + $12,841 + $13,510). Refunds totaling $4,260? ($2,250 +
$2,010) have been submitted without evidence of whether they have been negotiated.
For the excessive contributions totaling $21,850 from political committees, CFAS has
refunded $11,500. The Audit staff considers the remaining excessive contributions from
individuals totaling $122,802 ($1,052,812 - $895,669 - $38,601 + $4,260) and the
remaining excessive contributions from political committees totaling $10,350 ($21,850 -
$11,500) as unresolved.

? These contribution refunds will be considered as resolved if CFAS should demonstrate that the refunds
have been negotiated by providing a copy of the front and back of the refund check. CFAS has indicated
that it intends to issue an appropriate remittance to the United State Treasury in the event any remaining
refunds checks are not deposited by contributors. Any such amounts will also be considered as resolved.

* The payee is usually the person providing the goods or services to the committee. In the case of travel
advances, however, the payee is the person receiving the advance. 11 CFR §102.9(b)(2).


should provide evidence to the Audit staff that the notices were sent. Absent the
contributor’s request for a refund, these notices obviate the need to refund the
contributions or make a payment to the U.S. Treasury.

e For the remaining excessive contributions for which refunds have not been issued,
CFAS must refund the excessive portion to the contributors or pay the amount to the
U.S. Treasury and provide evidence of such refunds (copies of the front and back of
negotiated refund checks); or

¢ If funds are not available to make the necessary refunds, disclose the contributions
requiring refunds on Schedule D (Debt and Obligations) until funds become available
to make such refunds.

In response to the interim audit report recommendations, CFAS took the following
actions:

First, CFAS provided adequate documentation to demonstrate some of the contributions
from individuals were not excessive. As a result, the Audit staff reduced by $128,535 the
amount of excessive contributions from individuals to $1,052,812 ($1,181,347 -
$128,535). The Audit staff removed excessive contributions totaling $122,285 because
CFAS demonstrated that the associated solicitation materials were completed by the
contributors and clearly stated the election(s) to which their contribution(s) were to be
applied. The Audit staff further reduced the excessive amount by $6,250 based on
information and documentation that demonstrated the contributions were not excessive.

CFAS stated that it had provided check copies and solicitations for 106 contributors that
were excessive by $168,984. CFAS claims that these contributions were accompanied by
solicitations that clearly informed the contributors of their limits and should be removed
from the excessive totals. CFAS also stated that it had provided check copies and
solicitations for 393 contributors that were excessive by $453,424. CFAS provided only
partial copies of these solicitations and contends the portions of the solicitations with the
required language were mistakenly not copied.

After reviewing this documentation, the Audit staff found that the majority of the
solicitations that CFAS provided in its response were associated with earlier
contributions that were not excessive. Some of these solicitations were for contributions
made years before the contributor became excessive and when different contribution
limits were in effect. The Audit staff concluded these solicitations did not sufficiently
demonstrate the contributors’ intent at the time the excessive contributions were made. It
is also noted that CFAS provided documentation for contributions that the Audit staff had
previously removed from the excessive total.

In addition to the solicitations mentioned above, CFAS provided a sampling of various
solicitations that it had used during the 2004 cycle. All of these solicitations contain the
required language clearly stating the election(s) to which the contribution(s) should be
applied. From this sampling, CFAS claims that the Audit staff should be able to infer
that all contributors that signed a solicitation were fully apprised of the federal
contribution limits. However, the Audit staff notes that copies of several other
solicitations that were examined during the review did not appear to contain the required


Part IV
Findings and Recommendations

| Finding 1. Receipt of Contributions That Exceed Limits

Summary

The audit disclosed that CFAS received excessive contributions from individuals and
political committees, most caused by its failure to send individuals notification of
election designation and contributor attribution. With respect to contributions from
individuals, CFAS addressed the $1,052,812 at issue by documenting untimely refunds of
$12,250 and, in response to the interim audit report, sending untimely redesignation or
reattribution notices for contributions totaling $895,669 and documenting additional
untimely refunds of $22,091. Contributions of $133,152 remain unresolved. Included in
this amount is $4,260 that CFAS indicates has been refunded, but has not provided
evidence that the refund checks have been negotiated. CFAS addressed the $21,850 of
excessive contributions from political committees by documenting untimely refunds of
$11,500.

Legal Standard

A. Authorized Committee Limits. An authorized committee may not receive more
than a total of $2,000 per election from any one person. 2 U.S.C. §441a(a)(1)(A) and 11
CFR §110.1(a) and (b).

B. Handling Contributions That Appear Excessive. If a committee receives a
contribution that appears to be excessive, the committee must either:
«return the questionable contribution to the donor; or
¢ deposit the contribution into its federal account and keep enough money on
account to cover all potential refunds until the legality of the contribution is
established. 11 CFR §103.3(b)(3) and (4).
The excessive portion may also be redesignated to another election or reattributed to
another contributor as explained below.

C. Redesignation of Excessive Contributions. The committee may ask the contributor
to redesignate the excess portion of the contribution for use in another election.

e The committee must, within 60 days of receipt of the contribution, obtain and
retain a signed redesignation letter which informs the contributor that a refund
of the excessive portion may be requested; or

e refund the excessive amount. 11 CFR §§110.1(6)(5), 110.10)(2) and
103.3(b)(3).

Notwithstanding the above, when an authorized political committee receives an excessive
contribution from an individual or a non-multi-candidate committee, the committee may
presumptively redesignate the excessive portion to the general election if the
contribution:


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit

Part II. Overview of Campaign
Campaign Organization
Overview of Financial Activity

Part Il. Summaries
Findings and Recommendations

Part IV. Findings and Recommendations
Finding 1. Receipt of Contributions That Exceed Limits
Finding 2. Disclosure of Contributions from Political Party Committees
And PACs
Finding 3. Recordkeeping for Disbursements
Finding 4. Failure to Timely File 48 Hour Notices

Page

10
11


ll

B. Required Supporting Evidence. For any single disbursement that exceeds $200, the
treasurer must also keep a receipt, an invoice, or a canceled check. 2 U.S.C. §432(c)(5).

C. Preserving Records and Copies of Reports. The treasurer of a political committee
must preserve all records and copies of reports for 3 years after the report is filed.
2US.C. §432(d).

Facts and Analysis

The Audit staff reviewed operating expenditures on a sample basis. The review indicated
that approximately 7% of operating expenditures were not properly documented. The
only documentation available for these items was the entries on CFAS’s disbursement
database. The errors were all disbursements greater than $200 for which there were no
canceled checks, wire notices, reports from the payroll service or vendor invoices.

In addition, the Audit staff’s review of contribution refunds indicated that approximately
11% of contribution refunds were not properly documented. For these errors, CFAS
failed to maintain a canceled check or any other documentation to support these
expenditures.

At the exit conference, CFAS’s representative was informed of these matters. The
representative stated that he would provide additional documentation relating to these
transactions.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that CFAS obtain and provide for Audit staff review, the
missing documentation for disbursements. In response to the interim audit report, CFAS
provided copies of canceled checks that corrected the recordkeeping discrepancies.

| Finding 4. Failure to Timely File 48 Hour Notices

Summary :

CFAS did not timely file 48 hour notices for contributions totaling $567,250 prior to the
primary election. In response to the interim audit report recommendation, CFAS
acknowledged that the notices were not filed timely, and explained the steps it has taken
to ensure timely filing of reports.

Legal Standard

Last-Minute Contributions (48 Hour Notice). Campaign committees must file special
notices regarding contributions of $1,000 or more received less than 20 days but more
than 48 hours before any election in which the candidate is running. The Federal
Election Commission must receive the notices within 48 hours of the committee’s receipt
of the contribution. This rule applies to all types of contributions to any authorized
committee of the candidate, including:

¢ Contributions from the candidate;

¢ Loans from the candidate and other non-bank sources; and

¢ Endorsements or guarantees of loans from banks. 11 CFR §104.5(f).


Report of the Audit Division
on the
Citizens for Arlen Specter

January 1, 2003 —- December 31, 2004



Report of the
Audit Division on the

Citizens for Arlen Specter
January 1, 2003 - December 31, 2004

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
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.

' 2 U.S.C. §438(b).

About the Campaign (p. 2)

Citizens for Arlen Specter is the principal campaign committee
for Arlen Specter, Republican candidate for the United States
Senate from the state of Pennsylvania, and is headquartered in
Philadelphia, PA. For more information, see the chart on the
Campaign Organization, p.2.

Financial Activity (p. 2)
« Receipts

o From Individuals $ 11,944,289
o From Political Party and Political

Action Committees (PACs) 2,586,558
o Transfers from Authorized

Committees 100,277
o Offsets to Operating Expenditures 78,202
o Other Receipts 33 3° 63

1 Receipts ,
© Total Receip $ 15,042,589
¢ Disbursements

o Operating Expenditures $ 20,176,701
o Refunds of Contributions 115,219
o Total Disbursements $ 20,291,920

Findings and Recommendations (p.3)_ .

¢ Receipt of Contributions That Exceed Limits (Finding 1)

¢ Disclosure of Contributions from Political Party Committees
and PACs (Finding 2)

e Recordkeeping for Disbursements (Finding 3)

e Failure to Timely File 48 Hour Notices (Finding 4)


Finding 2. Disclosure of Contributions from Political
Party Committees and PACs

Summary

CFAS did not properly disclose the receipt of contributions from political party
committees and PACs totaling $322,809. The discrepancies were primarily incorrect
addresses and incorrect election to date totals. In response to the interim audit report,
CFAS filed amended reports that corrected the discrepancies.

Legal Standard

A. Itemization Required for Contributions from Individuals. An authorized
candidate committee must itemize any contribution from a political committee made
during the election cycle. 2 U.S.C. §434(b)(3)(B).

B. Election Cycle. The election cycle begins on the first day following the date of the
previous general election and ends on the date of the next general election. 11 CFR
§100.3(b).

C. Required Information for Contributions from Individuals. For each itemized
contribution from a political committee, the committee must provide the following
information:

« The contributor’s full name and address (including zip code);

« The date of receipt (the date the committee received the contribution);

e The amount of the contribution; and

¢ The election cycle-to-date total of all contributions from the same political

committee. 11 CFR §§100.12 and 104.3(a)(4) and 2 U.S.C. §434(b)(3)(B).

D. Best Efforts Ensures Compliance. When the treasurer of a political committee
shows that the committee used best efforts (see below) to obtain, maintain, and submit
the information required by the Act, the committee’s reports and records will be
considered in compliance with the Act. 2 U.S.C. §432(h)(2)(i).

E. Definition of Best Efforts. The treasurer and the committee will be considered to
have used “best efforts” if the committee satisfied all of the following criteria: -

e All written solicitations for contributions included:

o Aclear request for the contributor's full name, mailing address, occupation,
and name of employer; and
o The statement that such reporting is required by Federal law.

e Within 30 days after the receipt of the contribution, the treasurer made at least one
effort to obtain the missing information, in either a written request or a
documented oral request.

¢ The treasurer reported any contributor information that, although not initially
provided by the contributor, was obtained in a follow-up communication or was
contained in the committee’s records or in prior reports that the committee filed
during the same two-year election cycle. 11 CFR §104.7(b).


12

Facts and Analysis

A 100% review of contributions of $1,000 or more received within the 48 hour reporting
period for the primary election revealed that CFAS did not timely file notices totaling
$567,250. The contributions requiring notices were all received between April 9, 2004
and April 23, 2004. However, the 48 hour notice filings were all made on April 26, 2004,
the day before the primary election in the state of Pennsylvania.

The Audit staff addressed this matter at the exit conference. CFAS’s representative
stated that CFAS was aware of the problem. The representative further stated that it was
simply an oversight, and once that CFAS was aware of the problem, it filed all required
48 hour notices. Furthermore, he stated that notices were filed timely during the general
election period.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that CFAS provide evidence that the 48 hour notices were
timely filed or submit any written comments it considers relevant. CFAS responded that,
as soon as it became aware of the delays, it filed all of the required reports on April 26,
2004 — the day before the primary. The delayed findings were an isolated incident, and
CFAS filed all 48-hour reports in a timely manner prior to the general election.