Part I
Background

Authority for Audit

This report is based on an audit of Talent For Senate, Inc. (“TFS”), 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

Following Commission approved procedures, the Audit staff evaluated various risk
factors and as a result, this audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The consistency between reported figures and bank records.

The completeness of receipt records.

Other committee operations necessary to the review.

DAwPwWnr

Changes to the Law

On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act
of 2002 (BCRA). The BCRA contains many substantial and technical changes to the
federal campaign finance law. Most of the changes became effective November 6, 2002.
Except for November 7, 2002 through December 31, 2002, the period covered by this
audit pre-dates these changes. Therefore, the statutory and regulatory requirements cited
in this report are primarily those that were in effect prior to November 7, 2002.


Part IV
Finding and Recommendation

| Misstatement of Financial Activity

Summary

A comparison of TFS’s reported figures to its bank records revealed that the ending cash-
on-hand balance had been misstated for calendar year 2002. In response to the interim
audit report, TFS amended its 2002 Year-end disclosure report to correct the misstatement
noted above.

Legal Standard

Contents of 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; and

¢ The total amount of disbursements for the reporting period and for the calendar year.
2 U.S.C. §434(b)(1), (2) and (4).

Facts and Analysis

A comparison of TFS’s reported figures to its bank records revealed that the ending cash-
on-hand balance for calendar year 2002 had been overstated by about $93,000. This
overstatement resulted from overreporting receipts by approximately $49,000 and
underreporting disbursements by $44,000.

At the exit conference, the Audit staff presented this matter to TFS representatives who
stated that they were aware of the overstatement of receipts but could not explain the
disbursement difference. The Treasurer explained that some duplication had occurred in
the receipts data when transmitted to the software vendor for disclosure of reported
activity. The Treasurer further indicated that amended reports would be filed.

Interim Audit Report Recommendation and Committee Response
In response to the recommendation in the interim audit report, TFS amended its 2002 Year-
End disclosure report to correct the misstatement noted above.


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Changes to the Law

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

Part III. Summary

Finding and Recommendation

Part IV. Finding and Recommendation

Misstatement of Financial Activity

Page

Nw


Part II

Overview of Campaign

Campaign Organization

Important Dates

Talent For Senate, Inc.

. Date of Registration

August 2, 2001

° Audit Coverage

August 2, 2001 — December 31, 2002

Headquarters

St. Louis, Missouri

Bank Information

¢ __ Bank Depositories

1

° Bank Accounts

1 checking and | brokerage account

Treasurers

° Treasurer When Audit Was Conducted Garrett Lott
e __ Treasurer During Period Covered by Audit | Garrett Lott
Management Information

° Attended FEC Campaign Finance Seminar_| No

¢ Used Commonly Available Campaign Yes

Management Software Package

. Who Handled Accounting, Recordkeeping
Tasks and Other Day-to-Day Operations

Paid Consultant

Overview of Financial Activity

(Audited Amounts)
Cash on hand @ August 2, 2001 $0
Receipts
o From Individuals $6,058,534
o From Political Party Committees 171,800
o From Other Political Committees 1,790,510
o Transfers From Other Authorized Committees 581,702
o Offsets to Operating Expenditures 12,508
o Other Receipts 13,729
o Total Receipts $8,628,783
Disbursements
o Operating & Other Disbursements $8,124,630
co Total Disbursements $8,124,630
Cash on hand @ December 31, 2002 $504,153



FEDERAL ELECTION COMMISSION
Washington, DC 20463

February 27, 2004

MEMORANDUM

TO: ROBERT W. BIERSACK
PRESS OFFICER
PRESS OFFICE

FROM: JOSEPH F. STOLTZ
ASSISTANT STAFF EC1TOR
AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON
TALENT FOR SENATE, INC.

Attached please find a copy of the audit report and related documents on Talent for
Senate, Inc., which was approved by the Commission on February 18, 2004.

The report may be released to the public on February 27, 2004.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library
Web Manager


Part III
Summary

Finding and Recommendation

Misstatement of Financial Activity

A comparison of TFS’s reported figures to its bank records revealed that the ending cash-
on-hand balance had been misstated for calendar year 2002. In response to the interim
audit report, TFS amended its 2002 Year-end disclosure report to correct the misstatement
noted above. (For more detail, see p. 4)



Report of the
Audit Division on

Talent For Senate, Inc.
August 2, 2001 —- December 31, 2002

Why the Audit About the Committee (p. 2)

Was Done Talent For Senate, Inc. is the principal campaign committee for James
Federal law permits the Talent, Republican candidate for the U.S. Senate from the state of
Commission to conduct Missouri, and is headquartered in Clayton, Missouri. For more

audits and field information, see the chart on the Campaign Organization, p.2.
investigations of any

political committee that Financial Activity (p. 2)

is required to file reports Receipts

under the Federal o From Individuals $6,058,534
Election Campaign Act o From Political Party Committees 171,800
(the Act). The o From Other Political Committees 1,790,510
Commission generally o Transfers From Other Authorized Committees 581,702
conducts such audits o Offsets to Operating Expenditures 12,508
when a committee o Other Receipts 13,729
appears not to have met o Total Receipts $8,628,783
the threshold

requirements for e Disbursements

substantial compliance o Total Operating & Other Disbursements $8,124,630

with the Act.! The audit
determines whether the

committee complied Finding and Recommendation (p. 3)

with the limitations, ¢ Misstatement of Financial Activity
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).


Report of the
Audit Division on
Talent For Senate, Inc.

August 2, 2001 - December 31, 2002