• FEDERAL ELECTION COMMISSION

WASHINGTON, D.C 20463

AK004481

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December 15, 1993

MEMORANDUM

TO: FRED EILAND

CHIEF, PRESS OFFICE

FROM: ROBERT J. COSTA

ASSISTANT STAFF DIR{Ci6R----

AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

UNITED CONSERVATIVES OF AMERICA

Attached please find a copy of the final audit report on

United Conservatives of America which was approved by the

Commission on December 7, 1993.

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 Analysis Division

FEC Library
• FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

REPORT OF THE AUDIT DIVISION

ON

UNITED CONSERVATIVES OF AMERICA

MW004870

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I. Background

A. Overview

This report is based on an audit of United Conservatives

Of America ("the Committee) undertaken by the Audit Division of

the Federal Election Commission ("the Commission") in accordance

with the provisions of the Federal Election Campaign Act of 1971,

as amended ("the Act"). ~he 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 Committee registered with the Federal Election

Commission on August 4, 1988, and maintains its headquarters in

McLean, virginia. The audit covered the period from January 1,

1989, through December 31, 1990. The Audit staff could only

perform certain reviews through October 31, 1990, the closing date

of the last report filed by the Committee at the time of

fieldwork. During the period· January 1, 1989 through October 31,

1990, the Committee reported a cash balance on January 1, 1989, of

$4,678.89, total receipts of $1,666,759.83, total disbursements of

$1,656,944.73 and a cash balance on October 31, 1990, of

$2,130.26 ..!/

!/ Totals do not foot due to Committee math errors.
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This audit report is based upon documents and work

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 the report and were available to the

Commissioners and appropriate staff for review.

B. Key Personnel

The treasurer on file for the Committee throughout the

audit period was Gregory A. Foster. On March 16, 1989, the

Commission received a letter from Mr. GUy Rodgers stating that he

had been hired as the Executive Director of the Committee. Mr.

Rodgers signed- as the treasurer all Committee reports filed in

1989. In 1990, Mr. Robert G. Mills began signing the Committee

reports as the treasurer and is currently the Executive Director

of the Committee. No amendment to the statement of Organization

was filed for either of the apparent changes of treasurer.

C. Scope

The audit review included such tests as verification of

total reported receipts, disbursements and individual

transactions; review of required supporting documentation;

analysis of Committee debts and obligations; and such other audit

procedures as deemed necessary under the circumstances. Due to

the lack of sufficient documentation for payment of rent and phone

expenses and loans received from individuals, testing relative to

these areas is incomplete. In addition, tests to verify: adequate

disclosure of receipts and disbursements was limited as a result

of no reports being filed for the period November 1, 1990 through

-December 31, 1990.

II. Audit Findings and Recommendations

A. Failure to File Disclosure Reports

Section 434(a)(I) of Title 2 of the united States Code

states, in relevant part, that the treasurer of a political

committee shall file reports of receipts and disbursements in

accordance with the provisions of the Act.

Section 434(a)(4)(A) and (B) of Title 2 of the united

states Code state, in relevant part, that all political committees

other than authorized committees of a candidate shall file

quarterly reports in a calendar year in which a regularly

scheduled general election is held; and file a post-general

election report which shall be complete as of the 20th day after

such general election and includes the requirement to file a

year-end report.

The last report filed by the Committee at the time of

fieldwork was received by the Commission on April 24, 1991 and

covered the period of October 1, 1990, through October 31, 1990.
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The Commission's Reports Analysis Division considered that report

a pre-general election report. The Committee failed to file a

post-general election report which would include the period from

November 1, 1990, through November 26, 1990. Additionally, the

Committee failed to file a Year End 1990 Report for the period

November 27, 1990, through December 31, 1990.

At the exit conference, the Audit staff recommended that

the Committee file the missing reports. On February 11, 1992, the

Committee filed these reports.

Recommendation #1

The Audit staff recommends no further action.

B. Misstatement of Financial Activity

Section 434(b) of Title 2 of the United States Code

states, in relevant part, that each report shall disclose the

amount of cash on hand at the beginning of the reporting period

and the total amount of all receipts and the total amount of all

disbursements received or made during the reporting period and the

calendar year.

The Audit staff performed a reconciliation of the

Committee bank accounts to its disclosure reports filed through

October 31, 1990, and determined that material differences existed

in 1990. Reported beginning cash was overstated by $8,587.66,

reported receipts were understated by $11,477.76, reported

disbursements were overstated by $ 8,129.14, and ending cash was

understated by $11,020.60.

The misstatement of beginning cash can be primarily

attributed to a difference of $7,792.03 between the ending cash

reported by the Committee as of December 31, 1989 ($12,556.59) and

the beginning cash reported as of January 1, 1990 ($20,348.62).

The ending cash-on-hand figure for December 31, 1989 was

materially correct. Committee officials provided no explanation

for this reporting discrepancy.

The receipts misstatement was primarily the result of an

understatement in reported receipts on the 3rd-quarter 1990

disclosure report. The Audit staff identified $26,614.85 more in

bank deposits than were included in the totals used by the

Committee in determining its reported receipts for individuals.

However, the Audits staff noted $18,500 in reported loan receipts

which could not be traced to identifiable bank deposits. Thus,

the net result would be an understatement of $8,114.85 in receipts

on its disclosure reports with a reconciling item of $3,362.91 for

the remaining periods.

It The misstatement of disbursements was the net result of

12 disbursements totaling $14,353.12 which were reported in both

the 3rd-quarter 1990 and October 1990 disclosure reports. In
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addition, there was a net overstatement of $8,324.03 for

disbursements where the Committee made math errors and amounts

were reported incorrectly. Finally, $14,031.15 in disbursements

were not reported by the Committee and a there was a reconciling

item of $516.86.

In the absence of Committee workpapers detailing the

preparation of its disclosure reports and without documentation of

loans received, which was requested by the Audit staff but not yet

provided by the Committee, the Audit staff was unable to determine

the composition of the reconciling items.

At the exit conference, the Committee was given

photocopies of audit work papers which described the required

adjustments to reported activity. The Audit staff explained the

procedures used in calculating the adjusted amounts and informed

the Committee that they would be required to file a comprehensive

amendment covering the period January 1, 1990, through October 31,

1990. At the Committee's request the Audit staff explained the

amendment process and identified which pages of the FEC forms the

Committee should use. A representative of the Committee's

accounting firm stated that the Committee would file the

amendments as requested. On February 11, 1992, the Committee

filed a comprehensive amendment to its disclosure reports that

materially corrected the record.

Recommendation #2

The Audit staff recommends no further action.

C. Matters Referred to the Office of General Counsel

Other matters noted during the audit have been referred

to the Commission's Office of General Counsel.