.' FEDERAL ELECTION COMMISSION

WASHINGTON, D.C 20463

AK005694

, I

, I

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•

November 30, 1994

MEMORANDUM

TO: RON HARRIS, PRESS OFFICER

PRESS OFFICE

FROM: ROBERT J. COSTA

ASSISTANT STAFF DI~E~O~ AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

FRIENDS OF CORRINE BROWN

Attached please find a copy of the final audit report

and related documents on Friends of Corrine Brown which was

approved by the Commission on November 17, 1994.

Informational copies of the report have been received by

all parties involved and the report may be released to the

public.

Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure

Reports Analys.is Division

FEel"· Library
•

•

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REPORT OF THE AUDIT DIVISION

ON

Friends of Corrine Brown

Approved November 17, 1994

FEDERAL ELECTION COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
•

TABLE OF CONTENTS

FRIENDS OF CORRINE BROWN

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Executive Summary

Final Audit Report

Background

Findings

Transmittal to Committee

Chronology

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5

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7

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FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

FINAL AUDIT REPORT

ON

FRIENDS OF CORRINE BROWN

EXECUTIVE SUMMARY

BJ006002

Friends of Corrine Brown (the Committee) registered with

the Clerk of the U.S. House of Representatives on July 23, 1992

as the principal campaign committee for Corrine Brown,

Democratic Candidate for the U.S. House of Representatives,

Florida, 3rd District.

The audit was conducte~ pursuant to 2 U.S.C. §438(b),which

states, that the Commission may conduct audits of any political

committee whose reports fail to meet the threshold level of

compliance set by the Commission.

The findings of the audit were presented to the Committee

at an exit conference held after the audit fieldwork (7/27/93)

and later in an interim audit report. The Committee's responses

to those findings are included in this final audit report.

The following is an overview of the findings contained in

the final audit report.

Contributions from Corporations and Apparent Foreign

Nationals - 2 U.S.C. §441(b) and (e). The Committee received

$4,200 in prohibited contributions from corporations and an

apparent $250 contribution from a foreign national. Three of

the contributions, totaling $1,250, were untimely refunded~ In

response to the interim report the Committee submitted copies of

refund checks for the remaining $3,200. However, copies of

negotiated checks were provided for only 3 of the refunds

totaling $600.

Use of Corporate Aircraft - 2 U.S.C. §441(b); 11 CFR

114.9(e). A candidate committee must pay a corporation, in

advance, either first class air fare or the usual ch~rter rate

(depending on the trip) for the use of the corporation's

aircraft. The committee failed to provide any documentation

showing that it had complied with this regulation when it used

the corporate plane of Florida Rock Industries, Inc.

Page 1

11/17/94
-2-

Misstatement of Financial Activity - 2 U.S.C. §434(b)'(1),

(2) and (4). The Committee understated its receipts by $12,325

and its disbursements by a net amount $24,480. Ending cash was

overstated $12,154. The Committee filed amended reports which

materially corrected the misstatements. '

Loans from the Candidate - 2 U.S.C. §431(8)(A)(i); 11 CFR

110.10. A candidate can make unlimited contributions--including

loans--to his or her own campaign as long as the contributions

are made from the candidate's personal funds. The Committee

failed to submit documentation to show that $14,500 in loans

from the candidate were compdsed of her own personal funds. One

loan was made on a personal check; the others were made by

cashier's checks and, in one instance, by currency.

Itemization of Receipts and Disbursements - 2 U.S.C.

§§434(b)(3), (4), (5) and 431(13); 11 CFR 104.3(a), 102.9(d) and

104.7. In its reports, the Committee failed to itemize $14,000

in contributions from political committees and $54,780 in

disbursements. The Committee also failed to provide complete

itemized information for $73,600 in contributions from

individuals and political committees/organizations.

Furthermore, the occupation and employer were missing from

itemized entries disclosing $10,450 in contributions from'

individuals.

The Committee filed amended reports that materially

corrected the omissions.

Recordkeeping - 2 U.S.C. §432(c)(5). The interim audit

report had also 'recommended that the Committee submit the

"purpose" of 117 disbursements totaling $46~962 i~ order tb

comply with recordkeeping requirements. The Committee, however,

failed to provide the "purpose" for disbursements 'totaling $19,412. '

Disbursements'Made payable to Cash 2 U.S.C.

§434 (b) (5) (A); 11 CFR 103. 3( a )'and 102 .11. Committee

disbursements must be made by check drawn, on the campaign'

depository account except for petty cash disbursements, which

are limited to $100 per transaction. The Committee wrote 46

checks totaling $26,833 payable to cash, but only one $25 che~k

was identified as a petty cash disbursement. The Committee did

'not tak~ recommended action to amend its'reportin~' sch~dules to

show the ultimate recipients of, the cash disbursemen~s.'

48~HourNotices - 2 U.S.C. §434(a)(6); 11CFR 104.5(£).

Theaudit found that the Committee failed" to£ile 48-hour

notices for contributions totaling $80,870. Candidate'

committees are required to file these notices to disclose

contributions of $1,000 or more received shortly before an

election.

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11/17/94
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Transfer from Candidate's Nonfederal Committee - 11 CFR

110.3(c)(6). The Committee received a transfer of $2,326 from

the Candidate's nonfederal committee. Initially, the transfer

was not itemized, nor did the nonfederal committee register as

required with the Commission. Subsequently, the Committee

disclosed, on amended reports, the source of the funds used to

make the transfer.

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11/17/94
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11/17/94
FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

REPORT OF THE AUDIT DIVISION

ON

FRIENDS OF CORRINE BROWN

BJ005714

I. Background

A. Overview

This report is based on an audit of Friends of Corrine

Brown (the Committee), undertaken by the Audit Division of the

Federal Election Commission in accordance 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 section, the

Commission shall 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.

The audit covered the period from June 10, 1992, the

date of the Committeers first bank transaction,. through December

31, 1992. The Committee reported a beginning cash balance of $0;

total receipts for the period of $286,556; total disbursements for

the period of $275,708; and an ending cash balance of $13,553!/.

B. Campaign Organization

The Committee registered with the Clerk of. the U.S.

House of Representatives on July 23, 1992 as the principal

campaign committee for Corrine Brown, Democratic candidate for the

!/ These amounts are the calendar year to date totals reported

on the 1992 Year End Report. The amounts do not foot due to

a mathematical discrepancy of $2,705. The amounts as

disclosed by report period total $289,261 for receipts and

$275,708 for disbursements. All amounts are rounded to the

nearest dollar.

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2

3rd District, u.s. House of Representativ~s from the state of

Florida. The Committee maintains its headquarters in ' Jacksonville; Florida.

The audit indicated that the Committee was financed

through contributions from political committees ($147,3~3),

contributions from individuals ($124,772), loans from the

candidate($14,SOO), and transfers from the candidate's non-federal

campaign ($2,326).

This report is based on documents and work papers which

support each of its factual statements. They form part of the re~ord upon which the Commission based its decisions on the

matters in the report and were available to the Commissioners and

appropriate staff for review.

c. Key Personnel

The Treasurer during the period of the audit was Dr.

Kenneth W. Jones., The current treasurer is Ms. Gloria Simmons.

D. Scope

Th~ audit included testing of the following general

cat'egories:

1. ~he receipt of contributions' or loans in e~cess

of the statutory limitation';

2. the receipt of contributions from prohibited

sources, such as those from corporations or

labor organizations (Finding'II.A.)';

3., proper disclosure of contributions from

individuals, political committees and other

entities, to include the itemization of

contributions when required, as well as, the

completeness and accuracy of the information

disclosed (,Findings II. D, E and 'H1; . . . . . , . . .

4.' proper disclosure' of disbursements including the

itemization of disbursements when required, as

well as, the completeriess and accuracy of the

information disclosed (Finding II.D.);

S. the accuracy of total reported receipts,

disbursements and cash balances as compared to

campaign bank reco,rds (Finding:rr. B.:);

6. 'adequate recordkeeping for campaign

transactions (FindingII.F.);

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7. other audit procedures that were deemed

necessary in the situation.

It should be noted that substantive testing of debts and

obligations was not performed due to a lack of vendor generated

documentation (such as invoices, receipted bills, etc.).

Unless specifically discussed below, no material

non-compliance was detected. It should be noted that the

Commission may pursue further any of the matters discussed in this

report in an enforcement action.

II. Audit Findings and Recommendations

A. Apparent ,Prohibited Contributions

1. Contributions from Corporations and Foreign

Nationals

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

Code states, in part, that it is unlawful for any corporation to

make a contribution in connection with any election to federal

office and further states that it is unlawful for any candidate,

.political committee or any other person knowingly to accept or

receive any contribution prohibited by this section.

Section 441(e) of Title 2 of the United States Code

states, in part, that it shall be unlawful for a fQreign national

directly or through any other person, to make any contribution of

money or anything of value in connection with an election to any

political office or in connection with any primary election,

convention, or caucus held to select candidates for any political

office; or for any person to solicit, accept, or receive any such

contribution from a foreign national.

Sections 103.3(b)(I) and (4) of Title 11 of the

Code of Federal Regulations state, in part, that contributions

that present genuine questions as to whether they were made by

corporations or foreign nationals may be, within 10 days of the

treasurer's receipt, either deposited into a campaign depository

or returned to the contributor. If any such contribution is

deposited, the treasurer shall make his or her best efforts to

determine the legality of the contribution. If the contribution

cannot be determined to be legal, the treasurer shall, within 30

days of receipt of the contribution, refund the contribution to

the contributor. Any contribution which appears to be illegal and

which is deposited into a campaign depository shall not be used

for any disbursements by the political committee until the

contribution has been determined to be legal. The political'

committee must either establish a separate account in a campaign

depository for such contributions or maintain sufficient funds to

make all such refunds.

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A review of the Committee's contributor records

identified 17 contributions from corporations totaling $4,200 and

1 contribution drawn on the account of an apparent foreign

national for $250. The corporate contributions were verified as

such by the appropriate Secretary of State. Three of the

corporate contributions totaling $1,250 were untimely refunded.

No action was taken with regard to the remaining $3,200 ($2,950,

corporate; $250 foreign national.)

The Committee did not establish a separate bank

account for questionable contributions; however, during the

campaign cycle, the balance maintained in the Committee's bank

account was sufeicient to make the refunds.

At the exit conference, the Committee was provided

with a schedule of the apparent prohibited contributions. An

official for the Committee stated that the Committee would submit

evidence that the $250 contribution is not from a foreign

national.

The interim audit report recommended that the

Committee provide evidence that the contributions are not

prohibited; or refund the contributions to the contributors and provid~ evidence of such refunds (copies of the front and· back of

the negotiated refund checks).

In response to the interim report, the Committee

provided copies of refund checks in the amount of $3,200. ($2,950

corporate; $250 foreign national) However, copies of negotiated

checks were provided for only 3 of the refunds, totaling $600.

These three checks were issued in 1993 shortly after the

conclusion of audit fieldwork. The remaining refund checks, . totaling $2,600, were dated July 20·, 1994 and July 25, 1994, just

prior to and after the July 22, 1994 due date for the Committee's

response. A Committee official stated that copies of the

negotiated refund checks would be provided once they were returned

by the bank.

2~Use of Corporate Aircraft

Section 114.9(e) of Title 11 of the Code of Federal

Regulations states that a candidate, candidate's agent, or person

traveling on behalf of a candidate who uses an airplane ~hich is

owned or leased by a corporation or labor organization other than

a corporation of labor organization licensed to offer commercial

services for travel in connection with a .Federal election must, in

advarice, reimburse the corporation or labor organization~ In. the

·case of travel· to a city served by regularly scheduled commercial

service, the first class air fare shall be used. In the caSe of

travel to a city not served by a regularly scheduled commercial

service, the usual charter rate shall be used.

During the review of the Committee's disbursements,

the Audit staff identified payments to Florida Rock Industries

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Inc., Aviation Department, totaling $4,111 for transportation

services rendered to the Committee. According to the 1993 Edition

of Standard & Poors Register, Florida Rock Industries, Inc. is a

producer of building materials (e.g. ready mix concrete, concrete

blocks, crushed limestone, building sand, etc.). Since Florida

Rock Industries Inc. is not a corporation licensed to offer

commercial service for travel, the Committee is required to make

payment in advance for the services received.

Invoices related to the travel services are dated

August 26, 1992 ($1,289) and October 13, 1992 ($2,823). The

October 13, 1992 invoice indicates that the transportation

services were rendered on September 23, 1992. The dates of the

flights covered by the August invoice are not known. payments on

the invoices were made on the following dates:

12/17/92

12/23/92

2/22/93

$1,300

$2,500

$ 311

The Audit staff requested that the Committee

provide the flight dates, a copy of the flight itineraries and

passenger listings. An official for the Committee stated that she

would obtain the requested information.

The interim audit report recommended that the Co~mittee provide the requested information as well as an

explanation of how the the cost of each flight was determined. In

response to the interim report, Counsel for the Committee stated

that:

" ..• The Commission'S regulations specifically

provide for this practice. At the time the

aircraft was used, the Campaign was not aware

that advance payment was required. The trips

were made under the pressure of the campaign

and the staff was unfamiliar with any such

requirement. The Committee, nevertheless,

made the necessary payments when it discovered

the omission."

Since none of the requested documentation was

provided, the Committee has not complied with the interim report

recommendation. Without the requested information it is clear

only that the flights were not paid in advance, but it cannot be

determined if the billings were correctly calculated.

B. Misstatement of Financial Activity

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

states Code require a committee to report the amount of cash on

hand at the beginning of each reporting period and the total

amount of all receipts and disbursements for the reporting period

and calendar year.

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The Audit staff performed a reconciliation of the

Committe'e's reported financial activi tyto its bank activity for

the period June 10, 1992 to December 31, 1992. The reconciliation

disclosed the following misstatements:

1. Receipts

The Committee's reportedreqeipts were understated

by $12,325. The components of the misstatement are as follows:

1992 Reported Receipts

Mathematical discrepancy

betwaen supporting Schedule A

and the summary page total of

the October Quarterly report.

In-kind contributions not

reported

Transfers from the Candidate's

'non-federal ,account not

reported

unexplained difference

Net Adjustment

Correct reportable receipts

2. Disbursements

$3,270

3,622

2,326

3,107

,$289,261

12 ,'3~5

$301,586

The Committee'S reported disbursements were

understated by a net amount of $24,480. The components of the

misstatement are as follows:

1992 Reported Disbursements

In~kind contributions not

reported

Bank Service Charges/Debits

not reported

Disbursements reported in

error .~/

3,,622 '

1,761

(20,491)

$275,708

~/ No documentation for these disburaements was present in the

Committee's records (such as canceled checks or debits to

bank accounts).

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Disbursements not reported

Disbursements reported twice on

Post General report.

1. Refunds

2. Loan Repayment

Unexplained difference

Net Adjustment

Correct reportable receipts

49,262

(1,250)

(6,000)

(2,424)

24,480

$300,188

3. Ending Cash on Hand Balance

The reported ending balance at December 31, 1992

was overstated by a net amount of $12,154, resulting from the

misstatements detailed above. The correct ending balance was

$1,399.

On August 4, 1993, the Committee filed amended

reports for 1992 which materially corrected the misstatement of

financial activity.

C. Loans from the Candidate

Section 431(8)(A)(i) of Title 2 of the United States

Code defines the term "contribution" to include any gift,

subscription, loan, advance, or deposit of money or anything of

value made by any person for the purpose of influencing any

election for Federal office.

Section 110.10(a) of Title 11 of the Code of Federal

Regulations states that candidates for Federal office may make

unlimited expenditures from personal funds.

Section 110.10(b) of Title 11 of the Code of Federal

Regulations defines "personal funds" as any assets which, under

applicable state law, at the time he or she became a candidate,

the candidate had legal right of access to or control over, and

with respect to which the candidate had either legal and rightful

title or an equitable interest.

The Audit staff identified 5 loans from the Candidate to

the Committee totaling $14,500. As of year end 1992, the

Committee had repaid $11,000 to the Candidate in 4 installments

leaving $3,500 outstanding. The loans were made to the Committee

in the following form:

July 24, 1992

July 31, 1992 - $3,000 Cashier'S check - $3,000 Cashier's check

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August 28, 1992 - $2,000 Personal check (#3441)

August 28, 1992 - $5,000 Credit Memo

August 31, 1992 - $1,500 Currency

Documentation provided by the Committee consisted of

copies of the cashier's checks, the Candidate's personal check and

a deposit slip for a currency deposit of $1,500. Notations on the

copy of the dep6sit slip indicate that the deposit is a loan from

the Candidate. No documentation was provided for the $5,000

credit memo. However, a notation on the Committee's bank records

indicate that it is a loan. Documentation to establish the

Candidate's owne~ship of the funds used to ~ake the loans was not

provided.

At the exit conference, a Committee official stated that

she would obtain further documentation regarding the source of the

loans.

The interim audit report recommended that the Committee

provide docum~rttation that demonstrates that the loans were made

using the Candidate's personal funds. The documentation should

include but is not limited to:

·1. Bank'statements from the Candidate's personal checking

account which show the ,deposits from which the $2,000

loan on August 28, 1992 was made, together with.a

description of the source of the deposits; and

2. A description of the source of the ftinds used to make

the' remaining $12,500 in loans together with

documentation to establish that the funds were the

Candidate,' s personal funds. The documentation $hould in~lude, but is not limited to, bank statements,

canceled checks, credit and/or debit memorand'j etc.

In response to the interim report, Counsel for the

Committee stated:

" .•. There is no indication in the report or

otherwise that Representative Brown did not

.have the nominal personal funds to make this

series of small loans. There is no c.use

shown· by the Audit staff for making any

additional showing on this pointJ certainly. no

justification for any production of all . financial records of a public official who

maintains some basic right to privacy in such

m'atte rs. If

None of the' requested: documentation was pro~ided.

Therefore, the:, COnlmi ttee has, not complied wi th the interim report

rec'ommendation and the source of the funds used by the candidate ~o make the loans to the Committee is still unknown.

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D. Itemization of Receipts and Disbursements

Sections 434(b)(3)(A) and (B) of Title 2 of the United

States Code state that each report shall disclose. the

identification of each person (other than a political committee)

who makes a contribution to the reporting committee during the

reporting period, whose contribution or contributions have an

aggregate amount or value in excess of $200 within the calendar

year, or in any lesser amount if the reporting committee should so

elect, together with the date and amount of any such contribution.

Each report shall also disclose any political committee which

makes a contribution to the reporting committee during the

reporting period, together with the date and amount of any such

contribution.

Sections 434(b)(4)(A) and (5)(A) of Title 2 of the

United states Code state that each report shall disclose for the

reporting peiiod and the calendar year, the total amount of all

expenditures made to meet candidate or committee operating

expenses; and the name and address of each person to whom an

expenditure in an aggregate amount or value in excess of $200

within the calendar year is made by the reporting committee to

meet a candidate or committee operating expense,together with the

date, amount, and purpose of such operating expenditure.

1. Receipts

The Audit staff's re~iew of the Committee's

receipts identified 16 contributions from political

committees/organzations totaling $14,000 that were not itemized as

required. This represents 8.5% of the total amount of

contributions from political committees/organizations.

2. Disbursements

The Audit staff's review of the Committee's

disbursements identified more than ~O disbursements totaling $54,780 or 19.5% of the total amount requiring itemization, that

were not itemized as required.

The findings noted above were presented to the

Committee at the exit conference. On August 4, 1993, the

Committee filed amended reports which materially corrected the

itemization errors.

E. Omission of Disclosure Inform~tion for Receipts

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

Code states, in part, that each report shall disclose the identity

of all persons who make a contribution to the reporting committee

during the reporting period, whose contribution or contributions

have an aggregate amount or value in excess of $200 within the

calendar year together with the date and amount of any such

contribution.

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10

. .

Section 43~(b)(3)(B) of Titl~ 2 of the united S~ates

Cod~ 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 the amount of any such

contribution.

Sections 431(13)(A) and (B) of Title 2 of the United

States Code defines "identification" to mean, in the case of any

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

individual, as well as the name of his or her employer; and in the

case of any other person, the full name and mailing address of

such person.

Section 104.3(a)(4) of Title 11 of the Code of Federal

Regulations requires that in addition to the above, the aggregate

year-to-date total for such contributor be reported.

Section 102.9(d) of Title 11 of the Code of Fed~ral

Regulations states, in part, that in performing recordkeeping

duties,· the treasurer or his or her authorized agent shall use his

or her best ~fforts to .obtain, maintain Bnd submit the required

information and shall keep a complete record of such efforts.

Section 104. 7 (a) and (b) of Ti tIe. 11 of the Code of

Federal Regulations states that when the Treasurer of a political

committee shows that best efforts have been used .to obtain,

maintain, and. submit the information required by the Act for the

political committee, any report of such commi.ttee shall be

considered in compliance with the Act. Rest efforts will not be

deemed to hav~ been exercised if the treasurer has not made at

least one effort per solicitation either by a written request or

by an· oral request documented in writing to·obtain such

information from the contributor. .

The Audit staff reviewed the Committee's reports and

identified en·tries for 27 contributions from individuals totaling $13,250 and 57' contributions from political committees/

organizations totaling $60,350 that were missing either the name,

the address, the aggregate year-to-date amount or the date of

receipt.· These amounts represent. 39% and 40%, respectively, of

the total a~ount of' contributions for which the informat~on was

required.

In addition, the Audit staff identified 27· contributions

from individuals totaling $10,450', which represents 31% of the dollar~amount of contributions requiring 'itemization, that were

missing the occupation and/or name of employer.

The conunfttee provided the Audit staff with a copy oia

contributor response card. The card contained a r~quest for all of

the required information except name of ·employer. In addition,

the Committee did not present evidence that demonstrated which if

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11

any of the contributors received the card. None of the response

cards returned by contributors were available for review by the

Audit staff. Therefore, the Audit staff is unable to determine

whether the Treasurer exercised "best efforts" to obtain the

required information.

At the exit conference the Committee was informed of the

re·porting problems. On August 4, 1993, the Committee filed

amended reports which materially corrected the disclosure errors.

F. Recordkeeping for Disbursements

Section 432(c)(5) of Title 2 of the United States Code

states, in part, that the treasurer of a political committee shall

keep an account of the name and address of every person to whom

any disbursement is made, the date, amount, and purpose of the

disbursement, and the name of the candidate and the office sought

by the candidate, if any, for whom the disbursement was made,

including a receipt, invoice, or canceled check for each

disbursement in excess of $200.

Section 102.9(b)(i)(iv) states that "purpose" has the

same meaning given the term at 11 CFR 104.3(b)(3)(i)(A), which is

"a brief statement or description of why the disbursement is made.

The Audit staff reviewed the Committee's disbursements

records and identified 117 disbursements, ·totaling $46,962, for

which the Committee had inadequate documentation. The

disbursements records· maintained by the Committee generally

included a canceled check with a purpose recorded on the memo line

and/or a check stub on which the purpose was recorded. However,

for the disbursements noted above, the documentation contained

either no purpose or an inadequate purpose. The majority of the

checks were made payable to individuals or to cash.

The finding was presented to the Committee at the exit

conference. The Committee had no comment.

The interim audit report recommended that the Committee

provide documentation for the $46,962 iri disbursements noted

above, including but not limited to, receipt&d bills, invoices or

canceled checks.

In the response to the interim audit report, Counsel for

the Committee stated that the Audit staff's listing contained

several errors:

Counsel stated that the Committee is required to

maintain receipts, invoices or canceled checks only for

disbursements over $200; however, 2 U.S.C. §432(c)(5) states that

Treasurers must keep an account of all disbursements, including

the name and address of every person to whom any disbursement is

made, date, amount, and purpose of the disbursement. As stated

above, for the disbursements noted, the Committee's documentation

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12

contained either no purpose or an inadequate purpose or were made

payable to cash.

The response details '6 disbursements totaling $808.18

for which the payees are listed as unknown. The Committee

submitted check copies for 4 of the disbursements totaling $428.18

showing the payees. However, the check copies do not include an

adequate purpose and no additional documentation, which describes

the purpose for the disbursements, was included. The Committee did

not provide any documentation for the 2 remaining disbursements

totaling $380.00. The Committee's response does not demonstrate

that the Committee satisfied the recordkeeping requirements of the

Act and regulations.

For disbursements totaling $13,089.31, Counsel stated:

"A majority of the expenditures listed on

Attachment 2 are for campaign workers and

get-out-the-vote efforts for which no

documentation of the nature requested by the

audit staff [exists] other than canceled checks~ No invoice or receipt would have been

available for these disbursements. They went

to pay individuals working on the campaign

both part-time and on an occasional basis

right around an election day. There are also

disbursements for campaign workers expenses.

Campaig.n workers will frequently have nominal

expenses for local travel, food and other

purchases that are not the sort for which a

receipt would be available. These workers'

often played a brief, but central, role in the

campaign and were sporadic at best in their

attention to recordkeeping

requirements."

The Commi ttee submi tt,ed check copies and check. stubs for.

the disbursements. However, these records do not include an

adequate· purpose and no· additional documentation which describes

the purpose for. the disbursements was included. The committee"s

'response does not demonstrate that the Committee. satisfied the·

recordkeeping requirements of the Act and regulations.

Finally, Counsel provided evidence ·that 7 disbursements

totaling $6,2-50 were adequately documented.

Notwithstanding the above adjustments, the Committee has

not maintained adequate records for disbursements totaling

$40,711.73.

G~ Disbursements Made payable to Cash

Section 434(b)(S)(A) of Title' 2 of the United states

Code states that each report under this section shall disclose the

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13

name and address of each person to whom an expenditure in an

aggregate amount or value in excess of $200 within the calendar

year is made by the reporting committee to meet a candidate or

committee operating expense, together with the date, amount, and

purpose of such operating expenditure.

Section 103.3(a) of Title 11 of the Code of Federal

Regulations states, in part, that a committee shall make all

disbursements by check or similar drafts drawn on an account at

its designated campaign depository, except for expenditures of

$100 or less made from a petty cash fund pursuant to 11 CFR 102.11

Section 102.11 of Title 11 of the Code of Federal

Regulations states that a political committee may maintain a petty

cash fund out of which it may make expenditures not in excess of

$100 to any person per purchase or transaction. If a petty cash

fund is maintained, it shall be the duty of the treasurer of the

political committee to keep and maintain a written journal of all

disbursements. This written journal shall include the name and

address of every perso~ to whom any disbursement is made, as well

as the date, amount, and purpose of such disbursement. In

addition, if any disbursement is made for a candidate, the journal

shall include the name of that candidate and the office (including

State and Congressional district) sought by such candidate.

During the review of the Committee's disbursements, the

Audit staff identified 46 checks totaling $26,833 made payable to

cash. Only one of the disbursements for $25 was identified as

petty cash. The remaining disbursements were for purposes

described on the check stubs as GOTV, field workers, travel

expense, etc. The Committee did not report or itemize $20,047 of

the disbursements on the disclosure reports initially filed (see

Finding 11.0.2.). However, on the amended reports filed on August

4, 1992, the payees of the disbursements are disclosed as cash.

At the exit conference, the Committee was provided with

a schedule of the cash disbursements.

The interim audit report recommended that the Committee

file amended Schedules B (Itemized Disbursements) for those cash

disbursements noted above which require itemization and disclose

the identity of the persons who ultimately received the cash

disbursements.

In response to the interim report, Counsel for the

Committee stated that:

"The Committee's cash disbursements reflect

the large number of expenditures that a

volunteer campaign must make day-to-day and a

lack of familiarity with the petty cash rules

under the FECA ... "

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14

The Committee's response. did ·not inciud~ amended

Schedules .B. Therefore, the Committee has not complied with the

recommendation of the interim report~

H. 48 Hour Notice Filings

Section 104.5(f) of Title 11 of the Code of Federal

Regulations requires that any authorized committee of a candidate

that receives any contribution of $1,000 or more after the 20th

day, but more than 48 hours, before 12:01 AM of the day of the

election notify the Clerk of the House within 48 hours of receipt

of the contribution. The notification shall be in. writing and

shall include the· name of the candidate and office sought, the

identification of the contributor and the date of receipt and

amount of the contribution. - The notification shall be in addition

to the reporting of these contributions on the post-election .- report.

The dates of the .elections in the state of Florida ~ere

as follows:

September 1,· 1992

October 1, 1992

November 3, 1992

Primary election . Run off election

General election

The Committe~ was required to notify the Cl~rk of th.

House of Representatives of .anycontributions of $1 ,000.· or mor·e,

received during the following periods:

.August 13, 1992

September 12, 1992

October 15, 1992

through

through

··through

August 29, 1992 . ·September ·28, ·1992

October 31, 1992

During the periods noted above the Committee received 45

:contributions of~$1,000 or more totaling $80,870 for which

48 hour notices were not filed.:-

At "the exit conference, Counsel for the Committee stated

that Corrine. Brown was a .first time candidate and her staff .was

·inexperienced with the federal-campaign' laws andreq~ire~~nts~

The Committee was provided with a schedule. of the ·45

contributions. ..

The interim audit report recommended that the Committee

provide any evidence which demonstrates that it has complied

with 11 C.F.R. §104.5(f).

The Committee's response to the interim report was

silentregaxding this issue.

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15

I. Transfer from Candidate's Nonfederal Committee

11 C.F.R. §110.3(c)(6) states that a candidate's

nonfederal campaign committee may transfer funds to his or her

authorized federal committee provided that the funds transferred

are not composed of contributions that would be in violation of

the Act. If a candidate's nonfederal campaign committee transfers

more than $1,000 to the candidate's authorized federal committee,

the nonfederal committee becomes a political committee pursuant to

11 CFR 100.5(a) and must register as such within 10 days after

making the transfer and file at least one report disclosing the

source(s) of its cash on hand balance and the amount transferred

-to the federal campaign committee.

The Committee received a transfer of $2,326 from the

Candidate's nonfederal committee. The transfer was not itemized

on the Committee's reports initially filed. In addition, the

nonfederal committee did not register with the Commission as a

political committee as required.

The Audit staff reviewed copies of the Campaign

Treasurer's Reports filed by the nonfederal committee with the

state of Florida and determined that the nonfederal committee's

cash on hand contained sufficient permissible funds to make the

transfer. The transfer was subsequently itemized on amended

reports filed after the audit fieldwork. The amended report

contained a memo Schedule A (Schedule of Itemized Receipts) which

disclosed the source of the contributions contained in the

transfer.

In response to this finding, Counsel for the Committee

stated that "they [the Committee] were not aware of the

requirement to register the state legislative committee at the

time of the transfer. They understood that disclosure on the

Committee's report was sufficient to inform the public and comply with federal law." .

Since the funds used to make the transter were

permissible and the source of the funds was disclosed, the Audit

staff recommends no further Committee action with regard to this

matter.

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FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

AK005669

November 21, 1994

Ms. Glorida Simmons, Treasurer

Friends of Corrine Brown

1248 West Edgewood Avenue

Jacksonville, FL 32208

Dear Ms. Simmons:

Attached please find the Final Audit Report on Friends

of Corrine Brown. The Commission approved the report on

November 17, 1994.

The Commission approved Final Audit Report will be

placed on the public record on November 30, 1994. Should you

have any questions regarding the public release of the

report, please contact the Commission's Press Office at (202)

219-4155. Any questions you have related to matters covered

during the audit or in the report should be directed to Wanda

Thomas or Ray Lisi of the Audit Division at (202) 219-3720 or

toll free at (800) 424-9530.

-a.;</t

Robert J Costa

Assistant Staff Director

Audit Division

Attachment as stated

cc: Ms. B. Holly Schadler

Ms. Amy Gilbert

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Page 22

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CHRONOLOGY

FRIENDS OF CORRINE BROWN

Audit Fieldwork

Interim Audit Report to

the Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

Page 23

11/17/94

7/12/93 - 7/27/93

5/6/94

7/24/94 & 7/26/94

11/17/94