Attachment as stated

PUBLIC ISSUANCE OF FINAL AUDIT

REPORT - GEORGE BUSH FOR PRESIDENT

FRED EILAND

PRESS OFFIC~4.";-' 'if" ~" BOB COSTA /X ..~~. ~I

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FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20461

February 3, 1981

cc: FEC Library

~~D JUblic Record

Informational copies of the report have been received by

all parties involved and this report may be released to the

public as of today, February 3, 1981 •

Attached please find a copy of the final audit report

of the George Bush For President committee which was approved

by the Commission on January 22, 1981.

MEMORANDUM

FROM:

SUBJECT:

TO:

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'The audit covered the period from January 1 through

June 30, 1980. The Committee reported during the audit period:

an opening cash balance of $75,307.79: total receipts of

$16,760,929.42: total expenditures of $16,753,914.29: and a

closing cash balance of $82,322.92. 1/ As of August 31, 1980,

the Co~rnittee reported expenditures ,of $13,565,496.18 subject

to the overall limitation.

This report covers an audit of the George Bush

For President committee (lithe Committee"), to determine whether

there has been compliance with the provisions of the Federal.'

Election Campaign Act of 1971, as amended (lithe Act"). The audit

was conducted pursuant to Section 9038(a) of Title 26 of the United

States Code which states that "after each matching payment period,

the Commission shall conduct a thorough examination and audit of.. ' the qualified campaign expenses of every candidate and his

authorized committees who received payments under Section 9037."

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FEDERAL ELECTION COMMISSION

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WASHINGTON, 0 C 20463

REPORT OF THE AUDIT DIVISION

ON

GEORGE BUSH FOR PRESIDENT (COMMITTEE)

In addition, a review was made to determine the accuracy of

the Committee's reported net outstanding campaign obligations as of July 16, 1980 and July 18, 1980 and other limited

audit procedures were performed for the period through August 15, 1980.

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In addition, Section 9039(b) of Title 26 of the.United

States Code and Section 9038.l(b) of Title 11 of the Code of

Federal Regulations states that the Commission may conduct other ' examinations and audits from time to time as it deems 'necessary . to carry out the provisions of this subchapter•

The Committee registered with the Federal Election

Commission on January 5, 1979. The Committee maintains its

financial headquarters in Houston, Texas and maintained its

national political headquarters in Alexandria, Virginia.

I. Background.

A. Overview

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.....- ---, ,-.--- .. This r'eport' is based on documents and working papers

which support 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 principal' officers of the Committee during the

period covered by the audit were: Mr. James A. Baker, III,,'

Chairman from January 1, 1980 through the present: Mr. Thomas

M. Roberts, Treasurer from January 1, 1980 through June 30, 1980:

and Mr. W. Garrett Boyd, Treasurer from July 1, 1980 through the

,present.

C. 'Scope,'

The audit. included such tests as verification' of"total

reported receipts and expenditures and individual transactions:

",review of required supporting documentation and analysis of, . ",' Committee debts and obligations: review of contribution and'

:expenditure limitations: and such other audit procedures as

deemed necessary under the circumstances. '

Audit Findings and Recommendations

A. 'Allocation of Expenditures to States

Sections'44la(b) (1) (A), and 44la(c) of Title 2 'of

the United States Code provides that no candidate for the Office

of President of the United States who has received matching funds

may make expenditures in anyone-state aggregating in excess of

the greater of 16 cents multiplied by the state voting agepopulation or $200,000.00, adjusted by the Consumer Price Index.

Sectionl06.2(a) of Title 11 of the Code of Federal

Regulations states that expenditures made by a Presidential

candidate's authorized committee which seek to influence the

nomination of the candidate in a particular state shall be , , attributed to that state. This section further requires that

the allocation of expenditures ,shall be, reported on FEC form 3Pc.

Section l06.2(c) of Title 11 of the Code of Federal

Regulations requires that an expenditure by a Presidential candidate

for use in two or more states, which cannot be attributed in

specific amounts to each state, shall be attributed to each state

based on the voting age population in each state which can

reasonably be expected to be influenced by such an expenditure.
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1. Response to Threshold Audit Findings

The threshold audit report requested that the

committee's allocation of expenditures to state limitations be

amended. These additional allocations were both for specific

expenditures relating to specific states ($192,947.06) and

expenditures relating to two or more states to be allocated

based on voting age population ($289,050.38). Though the Committee

disagreed with the recommended allocations, an amended report

reflecting .the requested changes was received on August 14, 1980.

2. Post Primary Audit

During the post primary audit a test of the

Committee's allocation of expenditures to the state expenditure

limitations was conducted. Though amounts which were not properly

allocated were identified, no state limitation was exceeded.

On November 13, 1980 the Commission approved the

Audit staff's recommendation that, since the Committee filed the

requested amendments for the threshold audit, and since the

misallocations to state limitations in the post primary period

did not affect the Committee's compliance with the state expenditure limitations, no further action be required.

B. Expenditures Attributable to Exempt Legal

and Accounting and Fundraising

Section 44la(b) (1) (A) and 44la(c) of Title 2 of the

united States Code states, in part, that no Presidential candidate

who is eligible to receive matching funds payments may make

expenditures in excess of $10,000,000 (as adjusted by the Consumer

Price Index) during a campaign for nomination.

Section 431(9) (B) (vii) (II) of Title 2 of the United States

Code and Section 100.8(b) (15) of Title 11 of the Code of Federal

Regulations state, in part, that the term "expenditure" does not

include the payment for legal or accounting services rendered to

or on behalf of a political committee solely for the purpose of

ensuring compliance with Title 2 of the United States Code or

Chapters 95 and 96 of the Internal Revenue Code of 1954. Although

they must be reported, these compliance expenditures are exempt

from the limitations imposed by Section 44la(b) (1) (A) of Title 2

of the United States Code.
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Section 431(9) (B) (vi) of Title 2 of the United States

Code, and Section 100.8(b) (21) of Title 11 of the Code of

Federal Regulations state, in part, that fundraising costs are

not subject to the expenditure limitation of 441a(b) of Title 2

of the United States Code unless they exceed 20% of that

limitation. All such costs, however, shall be reported in

accordance with Section 434(b) of Title 2 of the United States

Code.

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1. Response to Threshold Audit Findings

The threshold audit report concluded that the

allocations to exempt legal and accounting and fundraising

categories were overstated. This conclusion was based on a

review of the Committee's allocation of overhead expenses and

the allocation of expenditures for accounting services. It was

recommended the Committee amend their reports to correct a

$35,159.64 overa11ocation to exempt fundraising and a $30,415.23

overa11ocation to exempt legal and accounting. On August 14, 1980,

the Committee filed the requested amended reports•

During the post primary audit a test of the

Committee's allocation of expenditures to exempt legal and accounting

and exempt fundraising was conducted. Though some overallocations

were identified, the Committee's compliance \'lith the overall

expenditure limitation was not affected. .

On November 13, 1980 the Commission approved the

Audit staff's recommendation that, since the Committee has filed

the amended reports requested in the threshold audit report, and

since the overa11ocations in the post primary period did not .

affect the Committee's compliance with the expenditure limitations,

no further action be required. .

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2. Post Primary Audit

r·.'" C. Failure to Itemize Refunds and Rebates

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

Code states that each report under this section shall disclose

the identification of each person who provides a rebate, refund,

or other offset to operating expenditures to the reporting

Committee in an aggregate amount or value in excess of $200.00

within the calendar year together with the date and amount of

such receipt•
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For the period January 1, 1980 through June 30, 1980,

the Audit staff found that the Committee failed to itemize 148

refunds and rebates totaling $35,364.02. This represents 28.5% , of the number and 5.1% of the dollar amount of refunds and rebates

required to be itemized.- Of this amount, 25 items totaling

$25,350.01 were in excess of $200.00. The remaining items were.

in amounts less than $200.00 but in.the aggregate exceeded $200.00

from each person. .

Committee officials stated that they did not have a

system'to aggregate refunds and rebates. Committee officials.

'also stated that they were informed by a consultant that receipts

from sales of office equipment need not be itemized as refunds

and rebates on the Committee's reports. On October 3, 1980, the

committee filed an amendment itemizing the.148 refunds and rebates~

on'November 13, 1980, the Commission approved the Audit

.' .• staff's recommendation that since the committee filed an amendment,; ..: itemizing the refunds and rebates, no further action be required •.

D. ," Disclosure' of Intermediary For Earmarked Contributions

Section 110.6(a) of Title 11 of the' Code of Federal

Regulations states that all contributions by a person made on . behalf of or to a candidate, including contributions which are in

any way earmarked or otherwise directed to. the candidate through ' .•, an intermediary or conduit, 'are contributions from the person to. " the candidate. .

SectionllO.6(b) of Title 11 of the Code of Federal

Regulations states, in part, that for purposes of Section 110.6,

earmarked means a designation, instruction, or encumbrance which

results in all or any part of a contribution being made to a

clearly identified candidate or a candidate's. arithorized

committee. .' . .

Section 110.6(c) (3) of Title 11 of the Code of Federal

Regulations requires the recipient of such earmarked. contributions

to disclose each intermediary or conduit through which the contribution passed.

Our review of earmarked contributions indicated that

the intermediaries for 34 contributions totaling $3,958.50 were

not disclosed as required. .

These 34 represent 21.79% of the number and 22.27%

of the dollar value of earmarked contributions received by the

Committee during .the period .covered by the audit.
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On December 16, 1980, the Committee filed an amendment

disclosing the intermediaries through which the 34 earmarked

contributions passed • .

Recommendation

Since an amendment disclosing the intermediaries has been

filed, no further action is recommended.

E. Matters Referred to Office of General Counsel

Certain other matters noted during the audit were referred

to the Commission's Office of General Counsel for consideration on

December 24, 1980.

III. Repayment of Matching Funds

Section 9038(b) (1) of Title 26 of the United States Code

requires that if the Commission determines that a candidate

received matching funds in excess of the aggregate amount to

which the candidate was entitled, the candidate shall pay to

the Secretary of the Treasury an amount equal to the excess

payments.

The Candidate became ineligible to incur further qualified

campaign expenses on July 16, 1980, the date on which the

Republican National Convention nominated a candidate for the

Office of President.

As of JUly 18, 1980, the Committee's Net Outstanding Campaign

Obligations as adjusted, totaled $183,146.16. Based on this outstanding debt the Committee received a matching fund payment of

$107,591.73. Therefore, with the exception of the amount discussed

below, the Candidate has received no matching fund payments in

excess of his entitlement.

Based on the Audit Division holdback procedure for expedited

payment of matching fund requests, the Committee received excess

payments for matching fund submissions #11 and #12 totaling $39,691.01. This resulted from the percentage of unmatchable

contributions contained in these submissions exceeding the average

percentage contained in the four (4) previous submissions. Since

no subsequent matching fund requests had been received, the

excessive amount had not been recovered. On September 25, 1980,

the Committee voluntarily repaid the $39,691.01 to the united

States Treasury.

On November 13, 1980, the Commission approved the Audit staff's ':

recommendation that since the committee repaid the excess matching " funds, no further action be required.