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rED[R,\l El.EClI0N CO,\\,\,\lSSION

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W/\~t II~(; IC)N.I> C. 204b

REPORT OF THE AUDIT DIVISION

ON TIlE

SHIPLEY CA}lPAIG~~ COtv~lITTEE

I. Background

A. Overview

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This report is based on an audit of the Shipley

Campaign COIrailittee (lithe Car.unittce") undertaken by the

Audit Division of the Federal Election COITmission in

accordance with the Commission's audit policy to determine

whether there has been comoliance with the orovisions at

the Federal Election Campaign Act of 1971, as amended ("the

Act"). The audit was conducted oursuant to Section 438(a)

(8) of Title 2 or the United States Code which directs the

Commission to make frow time to time audits and field

investi8ations with respect to reports and statements filed

with ic_

The Shipley Canlpaign Committee rcbistered with the Co~ission on August 7, 1975, as the principal campaign coomittce 0: the Honorable George E. Shipley, candidate for reelection to the office of United States Reorcsentative from

the 22nd District of Illinois. The Conu~ittc~ maintained its • headquarters in Olney, Illinois.

The audit. covered the period July 1, 1975 through

June 30, 1977, the-final coverage date of tha latest report

filed by the Corr~ittee at the time of the audit. During chat

period, ~he Corr.mittcc reported beginni~g cash of $-0-, total

receipts of $i3,626.S7, total expcnditur~s of $69,S49.37, ~nd

endins cash of $3,777.50. .

This audit reoort is bas~d on documents and t-lor!·:in~

papers sl~r>porting each of its factual st:atc:&~cnts. They form"

part of the record u?on ~:hich the COF.ntission bused its decisions on ~he m~t:tcrs in this report and w~rc avail~ble to

Cor.mtissioncrs and appropriaca staff for revie,v.

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The principal officers of the Co~~ittce during the

period ~uditcd were Mr. Charles H. Watson, Chairman, and Mr.

Charles Kesler, Treasurer.

c. Scope

The audit included such tc~ts as verification of

total reported rcceiptn and expenditures nnd individual transactions; review of required supporting doctlmf..~ntation; analysis

of Co~r.ittee debts and obligations; and, such pther audit procedures as deemed necessary under the circumstances.

Audit Findings and Recommendations

II. Auditor's Statement nnd Description of Findings

It is the opinion of the Audit staff, based upon examinaticn

of the reports and statements filed and records presented, that

except for the deficiencies noted belo~v, the reports and stateme~t~

of the Shipley Cam?aign Co~~ittee fairly present the financial

activities of the Committee for the period co·:ered by the audit.

Further, except as noted below, no material p~oblems in conplyi~;

with the Federal Election Campaign Act were discovered during the

course of the audit.

Section 432(d) of Title 2 or the ~nited States Code

requires the treasurer to obtain and keep a ~ecei?tcd bill,

stating the particulars, for every ex?enditur~ ~ade by or en

behalf of a political cot~,ittcc in excess or $100 in amount,

and for any such e=-:pe~diturc in a lesser u:lount, if the

aggregate amount of such expenditures to th~ sa~e ?erson

during a calendar year exceeds $100. In 3dciti~~. Section

l02.9(c)(4) of Title 11 of the Code of Fedc=al Regulations

provides that when a recci?tcd bill is ~ot ~v3~lable, the

tren5urer 03Y keep a cancelled check and a bill, invoice, or

other contemporaneous memorandum.

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A. Retention of Supporting Doc~~entation for Exoendit~r~s

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The Comnli ttec made 131 c:,pcnditurcs tot'lllinq

$(J4,OR6.80 \\'hich r('quire supporting documcntiltion. The Committc('

did not obt~in 'lnl1 J~ccp a rccciptcu bill, invoice or other cont(':~,)­

or-JncC>UG memorundum in SUPP01-t of 127 (97 .o~ of the total numbc:-)

of tho~j'~ c):pcnd i turcs rcquiring fiuch documcn til tion, totalling

$63.309.44, or ga.a~ of the total dollar value of ~ll such expcnditur.e:::. However, c.:lch was supported '.-li th a cilnccllec1 check.

The COl:'r~ittce maintuined no other record of it!: cxoenditurcs,

althouqh it did record the purpose of cxpcnditurcs·on 69 of its

check~. fis a result, we were unable to determine with certainty

the purpose for which the remaining 58 expenditures were nl.:ldc. COr.t.'l\itt(~e officials ::;tated they were not aware that receipted

bills ~rc required to be main~ained.

Subseq~lcnt to field\~ork,. the Committee submitted

acceptable documentation in support of lOa of the 127 expenditures totalling $57,721.64, reducing the total amount of

inadequately supported expenditures to $5,587.80 •

Based on the Co~~ittee's efforts outlined above, the Audit

staff rcco~~ends that no further action be taken on this matter.

B. Itemization of Expenditures

Section 434(b) (9) and (10) of Title 2 of the United

States CQd~ provides ~h3t reports filed under these sections shall

disclose the ~dentific~tion of each person to whom expenditures

have been rn.:icc \vhich e:-:ceed $100 in amount, and in a lesser a::10t.:nt

if the totu.L c:~pe!1ditures to the same person curing the cillcndc:r~

year ~ggr~gates in excess of $100, together with the date, amount

and purpose.

The Committee made 131 expenditures totalling

$64,036.80 which were required to be itemized on Co~~ittee

disclosur~ re?orts. H6~ever, 39 expenditures totalling

$6,709_05 w~r~ not itemized as required. Thirty of those were

made in ~~cu~ts of SlOO or less, but aggregated in excess of

$100 to each payee. ~h~ remaining nine (9) ex~enditu=es were for

amounts in ~xcess of $luO. Committee officials told us their

underst.:lnding \-;-:15 that it ..__·as not n~ccss~ry to itemize any

expenditure l~ss than $100. The Committee offc~ed no explanation ~s to Why the cxp~nditurcs in excess of $100 each were

not itemized •

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Committee offici~ls ngrccd to nmend th~ Committee's

disclosure reports. Subsequently, the Committee submitted

amendments to the disclosure reports itemizing 38 of the

previously unitemized expc~ditures.

Recomt~cnc1ation

We recommend that the Commission take no action in this

matter.

C. Acceptance of Corporate Contributions

Section 441b(a) of Title 2 of the United States Code

prohibits any candidate, political coremittee or other person

from knowingly ~ccepting any contribution from any cor?oration

in connection with an election to Federal office.

A review of the Co~mittee's contribution records

revealed 10 contributions were received from business

entities. Records maintai~ed by the Secretary of State in the

states involved indicated that six (6) of the companies,

accounting for contributions totalling $600.00, were incorporated. 7his matter was referred to the Co~~ission's Office

of General Counsel 0:1 October 21, 1977, where I·latter Under

Review ~63(77) was initiated. All of the contributions were

refunded ~y the Co"~ittce subsequent to fieldwork. Responses

from the corporations indicated that the contributions were

made as a result of book~ee?inG errors or sioply in ignorance

of the prohibition abainst such contributions in Section 441b(a)

of Title 2, United States Code.

Based on these f~cts, and the Corr~ittee's prompt

action in refu~ding the monies, the Corrmission voted on

February 1, 1978 to·close the file on the matter with no

further action.

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Candidate/Ccmmi:tee:

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State: Illinois

CONGRESSIONAL AUOIi REPORT

George Shipley / Shipley Campaign Committee

District: 22

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Location: Olney, Southern Illinois

Votes Cast: G:eneral E:lec:ion - Shipley 129,187

Ralph McGinnis (R)

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Political Par:y Affiliation:

Major Cppcnent(s):

Other Candi~a:=s ~~c~:ad: .

Total ~ecai;:s f:r ?s~icd:

Democrat

McGinnis

None

$73,626.87

$69,849.37

1958

McGinnis 81,102
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FEDERAL ELECTION COMMISSION

1\2:; 1\ S1Rll' \\.

\\~-\"HI~G10N,D(. 204b\

ADDITIONAL INFORMATION REGARDmG 'lHIS ORGANIZATION

MAY BE 1DCATED IN A OOMPLETED OOMPLIANCE ACtION

FlLE RELEASED BY THE (]]+fiSSION AND MAlE PUBLIC m

'lHE PUBLIC REOORDS OFFICE. roR THIS PARr1CULAR

ORGANIZATION'S OOMPLETED OOMPLIANCE ACTION FlLE

SlMPLY FUR 'mE PRESS St!+fARY OF MIJR /1 .yl.J

mE PRESS S1H1ARY WILL PROVIDE A BRlEF HIS'JDRY OF

'lBE CASE AND A SUM1ARY OF 'mE ACrIONS TAKEN, IF Rrl.
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