FEDERAL ELECTION COMMISSION

PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

DURENBERGER FOR U.S. SENATE VOLUNTEER COMMITTEE

FRED EILAND

CHIEF, PRESS OFFICE 4-

ASSISTANT

ROBERT J. COSTA

STAFF DIRECTOR

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AUDIT DIVISION

Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure

Reports Analysis Division

FEC Library

January 11, 1991

Attached please find a copy of the Final Audit Report on the

Durenberger for U.S. Senate volunteer Committee which was approved

by the Commisslon on January 8, 1991.

Informatlona1 copies of the report have been received by all

parties involved and the report may be released to the public.

SUBJECT:

FROM:

TO:

MEl'iORANDUM

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REPORI' OF THE AUDI T DIVIS ION

ON

DURENBERGER FOR U.S. SENATE VOLUNTEER COMMITTEE

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FEDERAL ELECTION COMMISSION

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I. Background

A. Overview

This re'DOrt is based on an audit of the Durenbe rge r for

U.S. Senate Volunteer Committee ("the Committee"), undertaken by

the Audit Division of the Federal =:lection Canmission in

accordance with the provisions of the Federal Election Campaign

Act of 19TI, as amended (" the Act"). ~he audit was conducted

oursuant to section 438(b) of '!'itle 2 of the United States Code

which states, in part, that the Canmission 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

int:e rnal review of reports filed by selected canmittees to

de termine if the reports filed by a particular committee meet the

threshold requirements for stDstantial canp1iance with the Act.

The Committee registered with the Secretary of the

Senate on May 2, 1979 for the 1982 election and amended its

registration on April 18, 1983 for the 1988 election. The

Canmittee maintains its headquarters in B1oanington, Minnesota.

The audit covered the period from January 1, 1987

through December 31, 1988, the closing date for the latest report

filed at the time of the audit.~ The Committee reported a cash

balance on January 1,1987 of $468,812.27; total receipts for the

period of $4,969,453.69; total disbursements for the period of

$5,410,787.49; and a closing cash balance on December 31,1988 of

$27,478.47.

This audit report is based on documents and workpapers

which support each of its factual statements. They form part of

the record upon which the Canmission based its decisions on the

rna t tersin the re port and we re av ai 1a ble to the Comm issionersand

appropriate staff for review.

~/ It should be noted that contribution records prior to 1/1/87

were reviewed in order to test the 2 U.S.C. §441a(a)

limitations for pre-1987 contributions includable in the

1988 election cycle.
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3. Kev Pers:lnnel

The T~easurers of the Canmittee during the audit i?eriod

were Sue Dean (12/18/86 to 4/10/87), Luci Fenner (4/11/87-

1/31/88) and Leon a istad (2/1/88 - 10/24/89). The cur rent

Treasurer is Delwyn Olson.

C. Scooe

The audit included such tests as veri fication of total

reported receipts and disbursements and i:1dividual t~ansactions;

revIew of required supporting documenr.at::..on; analysIs of

COmIuttee debts and obligations: and such other audit ?rocedures

as deemed necessary under -=he clrcumstances.

II. Audit F indines and Recanmendations

A. Disclosure of Recel ~t:s

Section 434(b) (3) (A) of ':'itle 2 of the United States

Code sta tes, in part, tha t each report shall d islose t::e

identification of each pers:ln who makes a contribution -=0 t~e

reporting committee during the ~eporting period, whose

con trl bution or can trl butions have an aggregate amount or value

in excess of $200 within the calendar year, together •..lith the

date and amount of any such contribution.

Section 431 (13) of Title 2 of the United States Code

defines identification to include, in the case of anv i:1dividual,

the occupation of such individual, as well as the name of his or

her employe r.

Section 104.8(d} (3) of '!'itle 11 of the Code of Federal

Reaulations states, in oart, that i: an itemized contr~~ution is

reat ttl bute d by the cantri butor (s) in accord anc e with 11 C.F. R.

Sll0.l(k), the treasurer shall report the reattribution l~ a memo

entry on Schedule A of the report covering the reporting period

in which the reattribution is received.

Section l04.3(a)(4) of Title 11 of the Code of Federal

Regulations requires the disclosure of the aggregate year-to-date

totals for each perSJn who makes a contribution in an amount or

aggregate in excess of $200 and for all committees which ~ake

contr::..butions to the reporting canmittee.

The Audit staff's review of contributions received f~om

indivIduals revealed matenal disclosure errors. N'ith respect to

itemlzation, the Committee's computerized contribution processing
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system produced Schedules A itemizing contributions from

individuals based on contributions aggregated year-to-date by

election des ignation for the 1988 Octobe r Quarte rly and

subsequent disclosure reports. Thus, an individual who had

contri buted in excess of $200 during the year des ignated for the

primary, would not have a subsequent, general-designated

con tri but i on i temi zed unl es s that con tri but ion was in an amoun t

(or when aggregated with other general designated contributions

from the contributor) in excess of $200.

Further, the Audit staff's review indicated this

(system) problem also caused substantial errors with respect to

the d is closure of cor rect aggrega te yea r- to-da te totals not only

for con tri but ions from i nd i vi du als i tern i zed on S chedul es At !:lut

also for contributions from other political committees.

Finally, the Audit staff noted that throughout the

audit period occupation/name of employer ("OCC/NOE") for

individual contributors which had been made available, were not

originally disclosed on Committee reports nor amended later. As

related to the auditors, Canmittee procedures consisted of a

review of dis closure reports, s ubsequen t to fi ling, to ident ify

entries lacking OCC/NOE for follow-up by letter. Information

received in response to these letters was entered into the

computerized contribution system and manual amendments to

disclosure reports filed. The Audit staff's review considered

all amendments filed by the Canmittee.

At the exit conference, Canmittee representatives were

receptive to filing amendments to correct these disclosure

problems.

The Audit staff recanmended in the Inte rim Audit Report

that the Committee file amended Schedules A.

The Canmittee filed amended Schedules A on April S,

1990, substantially correcting the reporting problems noted

above. The Canmittee' s response fur ther explains that the

problems resulted from the vendor who maintained the computer

hardware for the Canmittee arbitrarily changing the reporting

criteria for the program from year to date aggregation to

election aggregation. In addition, the vendor had di fficul ty

with retaining occupation and employer information. In some

instances the Canmittee re-ente red 400 occupations four times.

The Committee discussed this often with the vendor and believes

the problem is finally resolved.

Recommendation *1

The Audit staff recanmends no further action on this matter.
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9. Reporting of Debts and Obligations

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

in part, requires each re!X>rt filed by the treasurer of a

political committee to disclose the amount and nature of

outsta ndi ng debt s and obligations owed by the commit tee.

Section 104 .11 (a) of Ti tle 11 of the Code of Federal

Reg ulations sta tes, in pa rt, that debts and obligations shall l)e

continuously reported until extinguished. In addition, 11 C.F.R.

5104.11 (b) states, in part, that debts of $500 or less shall be

reported as of the time payment is made or no later than 60 days

after the obligation is incurred and that debts in excess of $500

shall be reported at the time of the transaction.

The Audit staff performed a review of all disbursaments

associated with each vendor identified on Schedule D of

disclosure reports filed by the Canmittee during the audit

period. The auditor's review indicated that $150,953.02, or

17.32%, of re!X>rtable debts were not disclosad as required.

At the exit conference, Committee representatives were

provided copies of the auditor 1 s workpapers detai ling these

discrepancies. Committee representatives were receptive to

fi ling necessary amendments.

The Audit staff recommended in the Inte rim Audit Report

that the Committee file amendments to correct the disclosure of

debts on Scheduled and Line 10 of the Summary Page.

The Committee did not file amended Summary Pages but

did file amended Schedules 0 on April 5,1990, substantially

correcting the previously mentioned reporting problems. As part

of its response, the Canmittee believes it complied with the

reporting requirements of the Act concerning the reporting of

debts and obligations. The Canmittee' s response states that when

n fi ling its disclosure reports, the Committee would

review all invoices on hand on the closing day of the

reporting period and include them in the debts and

obligations owed by the Canmittee. In their review of

the paid invoices, the auditors determined anything

with a date during a particular reporting period should

be included in the debts and obligations of that

particular report. ~iith the benefit of hindsight, that

is an easy assumption to make. However, during the

cour sa of a campai gn, s peci fi c amoun ts a re unknown and

the obligation is often dependant upon performance of a

specific task. To use estimates would require

committees to continuously amend their reports as would

the auditors policy of applying invoice dates to

reporting pe~iods. Carried to the extreme, accrued but

unpaid salaries would fall into their reporting

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Certain Mtmr8 noted darin, the aacUt wn referred to the Offlce of Oeneral Coun_l.

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