FEDERAL ELECTION COMMISSION

WASHINeTON. 0 C 204&3

A83-34

REPORT OF THE AUDIT DIVISION

ON THE

COMMITTEE FOR CONGRESSMAN R. V. DELLUMS

I. Background

A. Overview

This report is based on an audit of the Committee For

Congressman R. V. De1lums ("the Committeeft ), undertaken by the

Audit Division of the Federal Election Commission in accordance

with the Commission's audit policy to determine whether there has

been compliance with the provisions of the Federal Election

Campaign Act of 1971, as amended ("the Act"). The audit was

conducted pursuant to Section 438(b) of Title 2 of the united

States Code which states, in part, that the Commission 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 subsection, the

Commission shall perform an internal review of reports by selected committees to determine if the reports filed by a

particular committee meet the threshold requirements for

substantial compliance with the Act.

The Committee originally registered with the Clerk of

the United States House of Representatives on April 17, 1972 as a

committee supporting Congressman Ronald V. Dellums, Democratic

candidate for the office of United States Representative from the

7th Congressional District of California. An amended Statement

of Organization was filed on May 22, 1982 noting that the

Committee is the principal campaign committee designated by Congressman R. V. Del1ums, Democratic candidate for the 8th

Congressional District of California. The Committee maintains

its headquarters in Berkeley, California.

The audit covered the period January 1, 1981, through

December 31, 1982. The Committee reported a cash on hand balance

at January 1, 1981 of $14,553.631 total receipts for the period of $951,611.69; total disbursements for the period of

$913,133.31, and a cash on hand balance at December 31, 1982 of

$35,000.96. 1/

1/ The Committee's reported cash on hand on December 31, 1982

was misstated due to various reporting errors noted in

Finding II.A.l.
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This report is based on documents and work papers supporting each of its factual statements. They form part of the

record upon which the Commission based its decisions on the

matters in this report and were available to Commissioners and

appropriate staff for review.

B. Key Personnel

The Treasurer of the Committee during the period of

audit was Mr. William Thomas.

C. Scope

The audit included such tests as verification of total

reported receipts and disbursements; review of required supporting documentation; and analysis of Committee debts and

obligations; and such other audit procedures as deemed necessary under the circumstances.

II. Audit Findings and Recommendations

A. Misstatement of Financial Activity

.," 1 • Incorrect Report Totals

f "

. ,..

Sections 434(b) (1)(2) and (4) of Title 2, United States

Code require that a committee report the amount of cash on hand

at the beginning of each reporting period, and the total sum of

all receipts and disbursements for the reporting period and the

calendar year •

The Audit staff performed a reconciliation of Committee

bank accounts compared to reports filed for the years 1981 and

1982 and noted the misstatements shown below:

a) $1,048.53;

Cash on hand on January 1, 1981 was overstated by

b) Total receipts were overstated by $130,692.82.

The Committee reported $142,697.71 in transfers between various

Committee accounts ("inter-account transfersn)l/ as unitemized

receipts. Also reported in unitemized receipts were

contributions in the form of checks received from individuals who

had insufficient funds in their accounts ("NSF checks") totaling $5,228.00. The Committee did not make any adjustment to its

reports for the NSF items. The value of these errors was

partially offset because the Committee underreported itemized

1/ Inter-account transfers made between various Committee bank

accounts are not reportable transactions.
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receipts totaling $15,093.92 on the 1982 pre-general and post- general reports and failed to report deposits of $1,856.50 and

$911.16 in September 1982 and November 1982 respectively. Other

minor discrepancies were apparently the result of computational

errors made during the preparation of the Committee's disclosure

reports.

c) Total disbursements were overstated by

$114,713.85. Part of the overstatement was the result of the

inclusion of inter-account transfers, totaling $83,719.71, as

operating expenditures. In addition, the Committee filed

amendments to their 1982 pre-primary and post-primary reports disclosing an additional $64,865.58 in unexplained unitemized

expenditures. No records were found to support these additional

expenditures. The value of the above errors was partially offset

because the Committee failed to report 12 expenditures made on

October 26, 1982 totaling $17,150.21. Also, an expenditure totaling $52,376.60 made on March 22, 1982 was reported as

$42,570.70 causing an understatement of $9,805.90. Finally, the

Audit staff noted numerous reporting errors including a failure

to report bank charges, incorrect reporting of voided checks,

computational errors, and unreported unitemized expenditures which account for the balance of the discrepancy.

d) The various errors noted above almost offset one

another as ending cash was understated by only $1,003.55.

2. Itemization of Expenditures

Section 434(b) (5) (A) of Title 2, United States Code ~.~ requires that a political committee itemize the name and address

of each person to whom an expenditure in excess of $200 is made

together with the date and amount and purpose of such operating expenditure.

The unreported expenditures noted in A.I.c) include 16

expenditures totaling $23,464.05 which required itemization.

Committee officials stated that they would file

comprehensive amendments for 1981 and 1982 to correct the

misstatements of financial activity and itemization errors

relating to expenditures. Committee officials said that they

were in the process of preparing report amendments when notified

an audit was scheduled, and delayed filing amendments until the

audit fieldwork was completed.

The Audit staff recommended that the Committee file

comprehensive amendments for calendar years 1981 and 1982 to

correct the cash on hand, receipts, and expenditure
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misstatements. In addition, the Audit staff recommended that the

Committee include itemization of the 16 expenditures totaling $23,464.05 in the comprehensive amendment for calendar year 1982.

On July 18, 1983 the Committee filed comprehensive amendments for calendar years 1981 and 1982 which disclosed

corrected totals for cash on hand, receipts, and expenditures.

In addition, the Committee itemized the 16 expenditures noted

above.

Recommendation

The Audit staff recommends no further action.

B. Itemization of Receipts

Section 434(b) (3) (A) of Title 2, United States Code

requires a political committee to report the identification of

each person who makes a contribution to the committee aggregating in excess of $200 per calendar year together with the date and

amount of such contribution. Section 431(13) of Title 2, United

States Code, defines identification to mean in the case of an

individual, the name, mailing address, occupation, and the name

of his or her employer.

Committee receipt records consisted of batches with

contributor cards from direct mail contributors and check copies for contributors who attended dinners, events, etc. or made

contributions without a direct mail solicitation. Except for

contributions received through direct mail solicitation after May

7, 1982, the Audit staff could not verify that the contribution

records represented contributions deposited into Committee bank

accounts. However, the Audit staff was able to perform limited

testing on the receipt records available. It was noted that of

38 contributions, each in excess of $200.00, only 17 or 45% were

itemized on the Committee's reports.

With respect to contributions less than $200.00 but

aggregating in excess of $200.00 per individual for a given calendar year, no testing was performed because the Committee was

still in the process of having all individual receipt records

consolidated into a contributor listing by their computer service. Therefore, a listing was not available at the time of

the audit fieldwork. Committee officials stated that amended

schedules 'A' for individual contributions would be filed and

that the contributor listing of all individual contributions

would be available for review by the Audit staff.

In the interim audit report the Audit staff recommended

that the Committee file a comprehensive amendment for 1981 and

1982 itemizing all contributors whose contributions aggregate in
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excess of $200.00. In addition, the Audit staff recommended that

the Committee make its contributor listing available for our

review.

On July 18, 1983 the Committee filed comprehensive amendments for calendar years 1981 and 1982 that included amended

schedules 'A' which adequately disclosed contributors whose

contributions aggregated in excess of $200.00.

On July 26, 1983 the Committee provided a computerized listing which according to the Committee contained all individual

contributions received during 1981 and 1982. However, the total

of the listing was approximately $182,000 greater than the

reconciled total of contributions received. In a letter dated

August 19, 1983, the Audit staff requested that the Committee

explain the reason for this discrepancy. By letters received

September 19 and October 11, 1983, the Committee responded that

the discrepancy was the result of including contributions

received prior to 1981, double counting of some contributions,

and input errors. Using source codes and revisions provided by

the Committee, the Audit staff was able to adjust the printout to

include only 1981 and 1982 contributions received. Testing was

performed on the adjusted printout and no material problems in

complying with the disclosure, recordkeeping, or limitation

provisions of the Act were noted.

Recommendation

The Audit staff recommends no further action in this matter.

C. Itemization of Contributions from Political Committees

Section 434(b) (3) (B) of Title 2 of the United States

Code states that each report under this section shall disclose

the identification of each political committee which makes a

contribution to the reporting committee during the reporting period, together with the date and amount of any such

contribution.

During pre-audit review it was noted that various

political committees had disclosed making 109 contributions

totaling $46,510.00 to the Committee during the period covered by

the audit. However, 64 or 58.71% of these contributions totaling $23,410.00 were not itemized on the Committee's reports. The

Committee maintained photocopies of checks for 46 of the

contributions totaling $18,800.00, however no records of receipt

were maintained for the remaining 18 contributions totaling $4,610.00.

Since the Committee did not maintain photocopies of

checks or other receipt records for contributions received from
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political committees for the entire period covered by the audit,

the Audit staff was unable to verify from Committee records the

exact amount received from political committees. Committee

officialS stated however, that they would contact the 18

committees which reported making contributions to the Committee

to determine whether the contributions had actually been made.

In-addition, they agreed to file amended reports itemizing all of

the contributions received from political committees.

The Audit staff recommended that the Committee verify the total amount of contributions received from political

committees and file comprehensive amendments for 1981 and 1982

itemizing these contributions.

On July 18, 1983 the Committee filed comprehensive

amendments for 1981 and 1982 itemizing 63 previously unitemized

contributions from political committees.

Recommendation

The Audit staff recommends no further action.