FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

June 4,2009 

MEMORANDUM 

To: Judith Ingram 

Press Officer 

From: Joseph F. Stoltz 

Assistant Staff L»l~.gQo(

Audit Division 

Subject: Public Issuance of the Audit Report on Zinga for Congress 

Attached please find a copy of the audit report on Zinga for Congress, which was 

approved by the Commission on May 22, 2009. 

All parties involved have received informational copies of the report and the report 

may be released to the public June 4, 2009. 

Attachment as stated 

cc:	 Office of General Counsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library 

lTD Web 
Report of the Audit Division on 

Zinga For Congress 

January 1, 2005 - December 31, 2006 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.' The audit 

determines whether the 

committee complied with 

the limitations, 

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). 

About the Campaign (p. 2) 

Zinga for Congress is the principal campaign committee for Andrea 

Lane Zinga, Republican candidate for the U.S. House of 

Representatives from the state of Illinois, 17th District and is 

headquartered in Moline, Illinois. For more information, see the 

Campaign Organization Chart, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals	 $334,419 

o Contributions from Political Committees	 91,760 

o Loans from the Candidate	 25,000 

o Other Recei pts	 306 

o Total Receipts	 $ 451,485 

• Disbursements 

o Operating Expenditures	 $ 415,456 

o Reimbursements to Candidate	 35,000 

o Total Disbursements	 $ 450,456 

Findings and Recommendations (p.3) 

•	 Receipt of Contributions that Exceed Limits (Finding 1) 

•	 Personal Use of Campaign Funds (Finding 2) 

•	 Misstatement of Financial Acti vity (Finding 3) 

•	 Disclosure of OccupationlName of Employer (Finding 4) 

•	 Disclosure of Disbursements (Finding 5) 

•	 Disclosure of Debts and Obligations, Including Loans 

(Finding 6) 

I 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1
 

Scope of Audit 1
 

Part II. Overview of Campaign
 

Campaign Organization 2
 

Overview of Financial Activity 2
 

Part III. Summaries 

Findings and Recommendations 3
 

Part IV. Findings and Recommendations, and 

Committee Response 

Finding 1. Receipt of Contributions that Exceed Limits 5
 

Finding 2. Personal Use of Campaign Funds 8
 

Finding 3. Misstatement of Financial Activity 9
 

Finding 4. Disclosure of Occupation/Name of Employer 11
 

Finding 5. Disclosure of Disbursements 12
 

Finding 6. Disclosure of Debts and Obligations, Including Loans 13
 
1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of Zinga for Congress (ZFC), 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 

This audit examined: 

1. The receipt of excessive contributions and loans. 

2. The receipt of contributions from prohibited sources. 

3. The disclosure of contributions received. 

4. The disclosure of disbursements, debts and obligations. 

5. The consistency between reported figures and bank records. 

6. The completeness of records. 

7. Other committee operations necessary to the review. 
2 

Part II 

Overview of Campaign 

Campaign Organization 

-

Treasurer During Period Covered by Audit • 

Management Information 

•	 Attended FEC Campaign Finance Seminar 

•	 Used Commonly Available Campaign 

Management Software Package 

•	 Who Handled Accounting and 

Recordkeeping Tasks 

Important Dates Zinza for Conzress 

December 22, 2003 

January 1,2005 ­ December 31,2006 

• Date of Registration 

• Audit Coverage 

Headquarters 

Bank Information 

• Bank Depositories 

• Bank Accounts 

Treasurer 

• Treasurer When Audit Was Conducted 

Moline, Illinois 

One 

One 

Charles McClurg 

Marleine Davis (12/5/03 - 4/14/05); No 

treasurer (4/15/05 - 5/23/05); Leon 

Walschaert (5/24/05 - 9/8/05); No treasurer 

(9/9/05-10/11/05); David Springer (10/12/05 ­

5/22/06); Charles McClurg (5/23/06 - present) 

No 

Yes 

Paid staff and the above treasurers. 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1, 2005 $1,795 

0 Contributions from Individuals $ 334,419 

0 Contributions from Political Committees 91,760 

0 Loans from the Candidate 25,000 

0 Other Receipts 306 

Total Receipts s 451,485 

0 Operating Expenditures $ 415,456 

0 Reimbursements to Candidate 35,000 

Total Disbursements $ 450,456 

Cash on hand @ December 31, 2006 $ 2,824 
3 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Receipt of Contributions that Exceed Limits 

The Audit staff identified 16 contributions from nine individuals that exceeded the 

limitation by $8,600. Of these excessive contributions, $1,800 could have been resolved 

by ZFC sending presumptive reattribution notices. The remaining $6,800 appeared 

resolvable only by refund. The Audit staff recommended that ZFC provide evidence 

demonstrating that the contributions were not excessive, send notices to those 

contributors that were eligible for presumptive reattribution, or, refund the excessive 

amounts. ZFC's response to the interim audit report did not address this matter. Further, 

subsequent reports filed by ZFC did not disclose any refunds of the excessive 

contributions, a payment to the U.S. Treasury, or debts owed to the contributors. (For 

more detail, see p. 5) 

Finding 2. Personal Use of Campaign Funds 

ZFC made payments to the Candidate totaling $9,473 and disclosed such payments as 

reimbursed expenses. At issue are seven payments, totaling $5,749, that were supported 

only by a canceled check. Absent documentation supporting the campaign-related nature 

of the payments, the Audit staff considers these reimbursements to potentially be 

personal use of campaign funds. The Audit staff recommended that ZFC demonstrate 

that the payments did not represent personal use of campaign funds or seek a 

reimbursement from the Candidate of $5,749. In response, ZFC provided the necessary 

documentation that materially demonstrated that the reimbursements to the Candidate 

were campaign-related. (For more detail, see p. 8) 

Finding 3. Misstatement of Financial Activity 

A comparison of ZFC's reported financial activity to its bank records revealed a 

misstatement of financial activity in calendar year 2006. Reported receipts were 

understated by $23,926; reported disbursements were understated $40,810; and the 

ending cash balance on December 31, 2006, was overstated as a result of the receipt and 

disbursement discrepancies. It appeared that the frequent change in treasurers as well as 

periods of time without a treasurer contributed to the above misstatements. The Audit 

staff recommended that ZFC amend its reports to correct the misstatements. ill response, 

ZFC filed amended reports that materially corrected the above misstatements. (For more 

detail, see p. 9) 

Finding 4. Disclosure of Occupation/Name of Employer 

A review of contributions from individuals revealed that 148 itemized entries, totaling 

$88,366, lacked, or did not adequately disclose, the contributor's occupation and/or name 

of employer. Furthermore, there was no evidence that "best efforts" to obtain, maintain, 
4 

and submit the information had been exercised. The Audit staff recommended that ZFC 

contact each contributor lacking this information, submit evidence of such contact, and 

disclose any information received. In response, ZFC documented its efforts to obtain the 

missing contributor information and filed amended reports that materially disclosed the 

contributor's occupation/name of employer. (For more detail, see p. 11) 

Finding 5. Disclosure of Disbursements 

Our review revealed that itemized disbursements, totaling $50,158, lacked or 

inadequately disclosed the required information. The disclosure errors consisted of 

missing or inadequate purposes and improper reporting of payees and dates. The Audit 

staff recommended ZFC amend its reports to correct the disclosure errors. In response, 

ZFC filed amended reports that materially corrected the disclosure errors. (For more 

detail, see p. 12) 

Finding 6. Disclosure of Debts and Obligations, Including 

Loans 

The Audit staff identified debts and obligation totaling $22,336 that were either not 

reported or not continuously reported on Schedule D (Debts and Obligations). Further, 

ZFC failed to continuously report two Candidate loans totaling $75,000 on Schedule C 

(Loans). The Audit staff recommended that ZFC amend its reports to properly disclose 

the debts and loans. In response, ZFC filed amended Schedules C and D that materially 

corrected the disclosure errors note above. (For more detail, see p. 13) 
5 

Part IV
 

Findings and Recommendations
 

IFinding 1. Receipt of Contributions that Exceed Limits 

Summary 

The Audit staff identified 16 contributions from nine individuals that exceeded the 

limitation by $8,600. Of these excessive contributions, $1,800 could have been resolved 

by ZFC sending presumptive reattribution notices. The remaining $6,800 appeared 

resolvable only by refund. The Audit staff recommended that ZFC provide evidence 

demonstrating that the contributions were not excessive, send notices to those 

contributors that were eligible for presumptive reattribution, or, refund the excessive 

amounts. ZFC's response to the interim audit report did not address this matter. Further, 

subsequent reports filed by ZFC did not disclose any refunds of the excessive 

contributions, a payment to the u.s. Treasury, or debts owed to the contributors. 

Legal Standard 

A. Authorized Committee Limits. An authorized committee may not receive more 

than a total of $2,100 per election from anyone person or $5,000 per election from a 

multicandidate political committee. 2 U.S.c. §441a(a)(l)(A), (2)(A) and (f); 11 CFR 

§§110.1(a) and (b), 110.9(a) and 11O.17(b). 

B. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either: 

•	 Return the questionable check to the donor; or 

•	 Deposit the check into its federal account and: 

o	 Keep enough money in the account to cover all potential refunds; 

o	 Keep a written record explaining why the contribution may be illegal; 

o	 Include this explanation on Schedule A if the contribution has to be 

itemized before its legality is established; 

o	 Seek a redesignation of the excessive portion, following the instructions 

provided in the Commission regulations (see below for explanations of 

redesignation); and 

o	 If the committee does not receive a proper redesignation within 60 days 

after receiving the excessive contribution, refund the excessive portion to 

the donor. 11 CPR §§103.3(b)(3), (4) and (5) and 110.1(k)(3)(ii)(B). 

C. Joint Contributions. Any contribution made by more than one person (except for a 

contribution made by a partnership) must include the signature of each contributor on the 

check or in a separate writing. A joint contribution is attributed equally to each donor 

unless a statement indicates that the funds should be divided differently. 11 CPR 

§110.1(k)(l) and (2). 
6 

D. Reattribution of Excessive Contributions. The Commission regulations permit
 

committees to ask donors of excessive contributions (or contributions that exceed the
 

committee's net debts outstanding) whether they had intended their contribution to be a
 

joint contribution from more than one person and whether they would like to reattribute
 

the excess amount to the other contributor. The committee must inform the contributor
 

that:
 

1.	 The reattribution must be signed by both contributors; 

2.	 The reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and 

3.	 The contributor may instead request a refund of the excessive amount. 11 CPR 

§110.1(k)(3). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper reattribution or refund the excessive portion to the donor. 11 CFR 

§§103.3(b)(3) and 110.1(k)(3)(ii)(B). Further, a political committee must retain written 

records concerning the reattribution in order for it to be effective. 11 CPR §110.1(l)(5). 

Notwithstanding the above, any excessive contribution that was made on a written 

instrument that is imprinted with the names of more than one individual may be attributed 

among the individuals listed unless instructed otherwise by the contributor(s). The 

committee must inform each contributor: 

1.	 How the contribution was attributed; and 

2.	 The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3)(B). 

E. Redesignation of Excessive Contributions. When an authorized candidate 

committee receives an excessive contribution (or a contribution that exceeds the 

committee's net debts outstanding), the committee may ask the contributor to redesignate 

the excess portion of the contribution for use in another election. The committee must 

inform the contributor that: 

1.	 The redesignation must be signed by the contributor; 

2.	 The redesignation must be received by the committee within 60 days after the 

committee received the original contribution; and 

3.	 The contributor may instead request a refund of the excessive amount. 11 CPR 

§110.1(b)(5). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper redesignation or refund the excessive portion to the donor. 11 CPR 

§§103.3(b)(3) and 110.I(b)(5)(ii)(A). Further, a political committee must retain written 

records concerning the redesignation in order for it to be effective. 11 CPR §110.1(1)(5). 

When an individual makes an excessive contribution to a.candidate's authorized 

committee, the campaign may presumptively redesignate the excessive portion to the 

general election if the contribution: 

1.	 Is made before that candidate's primary election; 

2.	 Is not designated in writing for a particular election; 

3.	 Would be excessive if treated as a primary election contribution; and 
7 

4.	 As redesignated, does not cause the contributor to exceed any other contribution 

limit. 110. 1(b)(5)(ii)(B)(l)-(4). 

The committee is required to notify the contributor of the redesignation within 60 days of 

the treasurer's receipt of the contribution, and must offer the contributor the option to 

receive a refund instead. 

Facts and Analysis 

The Audit staff identified 16 contributions from nine individuals that exceeded the 

limitations by $8,600. Of these excessive contributions, one contributor was excessive 

by $650 for the primary election and eight contributors were excessive by $7,950 for the 

general election. Evidence that ZFC sought signed redesignations or reattributions was 

not provided nor was evidence provided that the contributors were notified that their 

contributions were presumptively redesignated and/or reattributed. 

It should be noted that excessive contributions totaling $1,800 qualified for presumptive 

reattribution. The remaining excessive contributions ($6,800) appeared resolvable only 

by refund to the contributors or disgorgement to the U.S. Treasury. Finally, ZFC did not 

maintain a separate account or a sufficient balance in its bank account to refund the 

excessive contributions. 

The Audit staff discussed this matter with ZFC representatives at an exit conference and 

provided a schedule of the apparent excessive contributions. ZFC representatives stated 

they would attempt to obtain additional designations/affidavits pertaining to the election 

designations. 

Interim Audit Report Recommendation and Committee's Response 

The Audit staff recommended that ZFC provide evidence demonstrating that 

contributions totaling $8,600 were not excessive. Such evidence was to include, but not 

be limited to, documentation that the contributions were reattributed or redesignated in a 

timely manner or that the excessive contributions were timely refunded. 

Absent such evidence, ZFC should have sent notices to those contributors that were 

eligible for presumptive reattribution ($1,800) to inform them how the contribution was 

attributed and offering the contributors an option of receiving a refund. For notices sent 

to contributors, ZFC should have provided a copy of each notice and evidence that it was 

sent. Absent a request for a refund by the contributors, these notices obviated the need 

for a refund or payment to the U.S. Treasury; and, 

For the remaining excessive contributions ($6,800), ZFC should have refunded the 

excessive portions to the contributors or paid that amount to the U.S. Treasury and 

provided evidence of the refunds or payment to the U.S. Treasury (copies of the front and 

back of negotiated check(s)); or, 
8 

If funds were not available to make the necessary refunds, ZFC should have disclosed the 

contributions requiring refunds as debts owed on Schedule D (Debts and Obligations) 

until funds became available to make such refunds. 

ZFC's response to the interim audit report did not address this matter. Further, 

subsequent reports filed by ZFC did not disclose refunds of the excessive contributions, a 

payment to the U.S. Treasury, or debts owed to the contributors. 

I Finding 2. Personal Use of Campaign Funds 

Summary 

ZFC made payments to the Candidate totaling $9,473 and disclosed such payments as 

reimbursed expenses. At issue are seven payments, totaling $5,749, that were supported 

only by a canceled check. Absent documentation supporting the campaign-related nature 

of the payments, the Audit staff considers these reimbursements to potentially be 

personal use of campaign funds. The Audit staff recommended that ZFC demonstrate 

that the payments did not represent personal use of campaign funds or seek a 

reimbursement from the Candidate of $5,749. In response, ZFC provided the necessary 

documentation that materially demonstrated that the reimbursements to the Candidate 

were campaign related. 

Legal Standard 

A. Required Records for Disbursements. For each disbursement, the treasurer of a
 

political committee must keep records on the:
 

•	 Amount; 

•	 Date; 

•	 Name and address of the payee; 

•	 Purpose (a brief description of why the disbursement was made); and 

•	 If the disbursement was made on behalf of a candidate, the candidate's name and 

the office sought by the candidate. 

•	 If the disbursement was in excess of $200, the records must include a receipt or 

invoice from the payee, or a cancelled check or share draft to the payee. If the 

disbursement was by credit card, the record must include the monthly statement 

or customer receipt and the cancelled check used to pay the credit card bill. 2 

U.S.c. §432(c)(5) and 11 CPR §102.9(b). 

B.	 Use of Campaign Funds. Using campaign funds for personal use is prohibited. 2 

U.S.C. §439a(b)(l). 

C. Personal Use Defined. Personal use is defined as any use of funds in a campaign 

account of a present or former candidate to fulfill a commitment, obligation or expense of 

any person that would exist irrespective of the candidate's campaign or duties as a 

Federal officeholder. 11 CPR §113.1(g). 

If a committee uses campaign funds to pay expenses associated with travel that involves 

both personal activities and campaign or office related activities, the incremental 
9 

expenses that result from the personal activities are personal use, unless the person(s) 

benefiting from this use reimburse(s) the campaign account within thirty days for the 

amount of the incremental expenses. 11 CPR §113.1(g)(l). 

Facts and Analysis 

During the audit period, ZFC made 12 payments to the Candidate totaling $9,473. The 

payments were disclosed as either campaign-related expenses or reimbursements for 

charges on the candidate's personal credit card. At issue are seven payments totaling 

$5,749. The only documentation supporting these payments was a canceled check 

payable to the Candidate. Absent documentation supporting the campaign-related nature 

of the reimbursements, the Audit staff considered these payments to potentially be 

personal use of campaign funds. 

This matter was discussed at the exit conference and schedules detailing the above 

transactions were provided to ZFC. Representatives stated they would attempt to obtain 

the necessary documentation. 

Interim Audit Report Recommendation and Committee's Response 

The Audit staff recommended that ZFC provide documentation that demonstrated the 

payments ($5,749) represented reimbursements of campaign-related expenses. In 

response, ZFC provided documentation that materially demonstrated that the 

reimbursements to the Candidate were campaign-related. 

IFinding 3. Misstatement of Financial Activity 

Summary 

A comparison of ZFC's reported financial activity to its bank records revealed a
 

misstatement of financial activity in calendar year 2006. Reported receipts were
 

understated by $23,926; reported disbursements were understated $40,810; and the
 

ending cash balance on December 31, 2006, was overstated as a result of the receipt and
 

disbursement discrepancies. It appeared that the frequent change in treasurers as well as
 

periods of time without a treasurer contributed to the above misstatements. The Audit
 

staff recommended that ZFC amend its reports to correct the misstatements. In response,
 

ZFC filed amended reports that materially corrected the above misstatements.
 

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 election cycle; 

•	 The total amount of disbursements for the reporting period and for the election 

cycle; and, 

•	 Certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 2 U.S.c. §434(b)(l), (2), (3), (4) and (5). 
10 

Facts and Analysis 

The Audit staff reconciled the reported financial activity to the bank records and 

determined there was a misstatement of activity in 2006. The following chart outlines the 

discrepancies. 

2006 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January 1, 2006 

$5,355 $2,605 $2,750 

Overstated 

Receipts $387,625 $411,551 $23,926 

Understated 

Disbursements $370,522 $411,332 $40,810 

Understated 

Ending Cash Balance @ 

December 31, 2006 

$22,459 $2,824 $19,635 

Overstated 

The understatement of receipts was due to the following: 

•	 Contributions from PACs ($10,000) and from individuals 

were deposited but not reported. + $19,126 

•	 Unexplained difference	 ...:..+ ---'-== 4,800

• Understatement of Receipts	 $23,926 

The understatement of disbursements was due to the following: 

•	 Disbursements not reported. The majority of which 

represent loan repayments to the candidate. + $47,743 

•	 Disbursements over reported 6,640 

•	 Unexplained difference 293 

•	 Net Understatement of Disbursements $40,810 

The overstatement of the ending cash balance on December 31, 2006, resulted from the 

receipt and disbursement discrepancies noted above, along with the beginning cash 

discrepancy. 

It appeared that the frequent change in treasurers as well as periods of time without a 

treasurer contributed to the above misstatements. 

The Audit staff discussed this matter at the exit conference and provided schedules of the 

reporting discrepancies. ZFC representatives expressed concerns about how to amend 

their reports and the time needed to do so because ZFC does not possess complete 

electronic data for the audit period. Each treasurer used their own computer to upload 
11 

files in order to file the electronic disclosure reports. The back-up files from the previous 

treasurers are not available to ZFC.z 

Interim Audit Report Recommendation and Committee's Response 

The Audit staff recommended that ZFC amend its reports to correct the misstatements 

noted above. In addition, the Audit staff recommended that ZFC amend its most recently 

filed report to correct the cash on hand balance with an explanation that the change 

resulted from a prior period audit adjustment. 

In response, ZFC filed amended reports that materially corrected the misstatements
 

discussed above.
 

IFinding 4. Disclosure of Occupation/Name of Employer 

Summary 

A review of contributions from individuals revealed that 148 contributions totaling 

$88,366 lacked, or did not adequately disclose, the contributor's occupation and/or name 

of employer. Furthermore, there was no evidence that "best efforts" to obtain, maintain, 

and submit the information had been exercised. The Audit staff recommended that ZFC 

contact each contributor lacking this information, submit evidence of such contact, and 

disclose any information received. In response, ZFC documented its efforts to obtain the 

missing contributor information and filed amended reports that materially disclosed the 

contributor's occupation/name of employer. 

Legal Standard 

A. Itemization Required for Contributions from Individuals. An authorized
 

candidate committee must itemize any contribution from an individual if it exceeds $200
 

per election cycle, either by itself or when combined with other contributions from the
 

same contributor. 2 U.S.C §434(b)(3)(A).
 

B. Required Information for Contributions from Individuals. For each itemized
 

contribution from an individual, the committee must provide the following information:
 

• The contributor's full name and address (including zip code);
 

.• The contributor's occupation and the mime of his or her employer;
 

•	 The date of receipt (the date the committee received the contribution); 

•	 The amount of the contribution; and 

•	 The election cycle-to-date total of all contributions from the same individual. 11 

CFR §§100.l2 and 104.3(a)(4) and 2 U.S.C §434(b)(3)(A). 

C. Best Efforts Ensures Compliance. When the treasurer of a political committee
 

shows that the committee used best efforts (see below) to obtain, maintain, and submit
 

the information required by the Act, the committee's reports and records will be
 

considered in compliance with the Act. 2 U.S.C §432(h)(2)(i).
 

2 The Audit staff assisted ZFC with filing the amended reports. 
12 

D. Definition of Best Efforts. The treasurer and the committee will be considered to 

have used "best efforts" if the committee satisfied all of the following criteria: 

•	 All written solicitations for contributions included: 

o	 A clear request for the contributor's full name, mailing address, 

occupation, and name of employer; and 

o	 The statement that such reporting is required by Federal law. 

•	 Within 30 days after the receipt of the contribution, the treasurer made at least one 

effort to obtain the missing information, in either a written request or a 

documented oral request. 

•	 The treasurer reported any contributor information that, although not initially 

provided by the contributor, was obtained in a follow-up communication or was 

contained in the committee's records or in prior reports that the committee filed 

during the same two-year election cycle. 11 CFR §104.7(b). 

Facts and Analysis 

A review of contributions from individuals revealed that 148 contributions totaling 

$88,366 lacked, or did not adequately disclose, the contributor's occupation and/or name 

of employer. This amount represented about 40 % of the dollar value of individual 

contributions itemized ($220,211) by ZFC. In most cases, the required information was 

either missing or disclosed as "best efforts." With respect to these contributions, there 

was no evidence that "best efforts" to obtain, maintain, and submit the information had 

been exercised. 

The Audit staff discussed this matter with ZFC representatives at an exit conference and 

provided schedules of the disclosure errors. ZFC representatives stated they would 

search for best efforts letters. 

Interim Audit Report Recommendation and Committee's Response 

The Audit staff recommended that ZFC contact each contributor lacking this information, 

submit evidence of such contact, and disclose any information received on an amended 

report(s). In response, ZFC submitted a form letter it sent to the contributors and a 

worksheet that documented the contributor's occupation and/or name of employer it had 

obtained. In addition, ZFC filed amended reports that materially disclosed the 

contributor's occupation/name of employer. 

IFinding 5. Disclosure of Disbursements 

Summary 

Our review revealed that itemized disbursements, totaling $50,158, lacked or 

inadequately disclosed the required information. The disclosure errors consisted of 

missing or inadequate purposes and improper reporting of payees and dates. The Audit 

staff recommended ZFC amend its reports to correct these disclosure errors. In response, 

ZFC filed amended reports that materially corrected the disclosure errors. 
13 

Legal Standard 

A. Reporting Operating Expenditures. When operating expenditures to the same
 

person exceed $200 in an election cycle, the committee must report the:
 

•	 Amount; 

•	 Date when the expenditures were made; 

•	 Name and address of the payee; and 

•	 Purpose (a brief description of why the disbursement was made-see below). 11 

CPR §104.3(b)(4)(i). 

B.	 Examples of Purpose. 

•	 Adequate Descriptions. Examples of adequate descriptions of "purpose" include 

the following: dinner expenses, media, salary, polling, travel, party fees, phone 

banks, travel expenses, travel expense reimbursement, catering costs, loan 

repayment, or contribution refund. 11 CPR §104.3 (b)(4)(i)(A). 

•	 Inadequate Descriptions. The following descriptions do not meet the requirement 

for reporting "purpose": advance, Election Day expenses, other expenses, 

expense reimbursement, miscellaneous, outside services, get-out-the-vote, and 

voter registration. 11 CFR §104.3 (b)(4)(i)(A). 

Facts and Analysis 

Our review revealed that $50,158 in itemized disbursements lacked or inadequately 

disclosed the required information. This amount represents 12.4% of the dollar value of 

disbursements requiring itemization ($405,195). The majority of these errors were due to 

missing or inadequate purposes and improper reporting of payee and dates. 

For those transactions with an inadequate purpose, it was determined that a person not 

associated with ZFC would not easily discern why the disbursement was made when 

reading the name of the recipient with the purpose disclosed on Schedules B. 

The Audit staff discussed this matter at an exit conference and provided schedules of the 

disclosure errors noted above. ZFC representatives did not have any questions. 

Interim Audit Report Recommendation and Committee's Response 

The Audit staff recommended that ZFC amend its reports to correct the disclosure errors. 

In response, ZFC filed amended reports that materially corrected the disclosure errors 

noted above. 

Finding 6. Disclosure of Debts and Obligations, Including 

Loans 

Summary 

The Audit staff identified debts and obligation totaling $22,336 that were either not 

reported or not continuously reported on Schedule D (Debts and Obligations). Further, 

ZFC failed to continuously report two Candidate loans totaling $75,000 on Schedule C 
14 

(Loans). The Audit staff recommended that ZFC amend its reports to properly disclose
 

the debts and loans. In response, ZFC filed amended Schedules C and D that materially
 

corrected the disclosure errors note above.
 

Legal Standard 

A. Contents of Reports. Each report must disclose for the reporting period and for the 

election cycle, the total amount of loans made by or guaranteed by the candidate and the 

identification of each person who makes, endorses or guarantees a loan to the committee. 

2 U.S.c. §§434(b)(2)(G) and (3)(E). 

B. Continuous Reporting Required. A political committee must disclose the amount
 

and nature of outstanding debts and obligations until those debts are extinguished. 2
 

U.S.C §434(b)(8) and 11 CFR §§104.3(d) and 104. l1(a). 

C. Separate Schedules. A political committee must file separate schedules for debts 

owed by the committee and debts owed to the committee, together with a statement 

explaining the circumstances and conditions under which each debt and obligation was 

incurred or extinguished. 11 CFR §104.11(a). 

D.	 Itemizing Debts, Obligations and Loans. 

•	 A debt or obligation, including a loan, of $500 or less must be reported once it has 

been outstanding 60 days from the date incurred (the date of the transaction); the 

committee reports it on the next regularly scheduled report. 

•	 A debt or obligation, including a loan, exceeding $500 must be disclosed in the 

report that covers the date on which the debt was incurred. 11 CFR §104.11(b). 

Facts and Analysis 

The Audit staff identified debts and obligations totaling $22,336 that were either not 

itemized or not continuously reported on Schedules D. These debts consisted of: 

•	 Debts owed to vendors ($8,712) that were not paid during the reporting period in 

which the debt was incurred. 

•	 Debts owed to vendors ($13,624) that were initially reported on Schedule D, but 

not continuously reported untilsuch time as the debt was paid in full. 

In addition, ZFC failed to continuously disclose two Candidate loans totaling $75,000 on 

Schedule C and failed to disclose on Schedule C any repayments made on the loans. The 

first loan, a $50,000 loan made on June 30, 2004 was reported continuously up through 

the July 2006 Quarterly report. Subsequent reports did not include this loan. On 

December 29,2006, ZFC repaid the Candidate $10,000. However, since the outstanding 

loan was no longer disclosed on Schedule C, the payment although disclosed as a 

disbursement on Schedule B, did not appear on Schedule C. The balance of the loan was 

not repaid and must be continuously reported unless forgiven by the Candidate. 

A second Candidate loan ($25,000) was received on June 30, 2006, and repaid in full on 

July 7,2006. This loan was initially disclosed on the July 2006 Quarterly Report. 
15 

However, neither the loan nor the repayment of the loan was disclosed on Schedule C 

with the October 2006 Quarterly report. 

The Audit staff discussed this matter with a ZFC representative and provided schedules 

of reporting errors. The ZFC representatives stated they were not aware of this matter but 

agreed to file amended reports. 

Interim Audit Report Recommendation and Committee's Response 

The Audit staff recommended that ZFC file amended reports disclosing the debts and 

obligations, loans and payments on the appropriate Schedules. It was further 

recommended that ZFC continuously report the balance of the $50,000 loan until repaid 

or forgiven. In response, ZFC file amended Schedules C and D that materially corrected 

the disclosure errors note above.