Part II

Overview of Campaign

Campaign Organization

_Important Dates

Cynthia McKinney for Congress

e Date of Registration

November 20, 1991

© Audit Coverage

January 1, 2005 — December 31, 2006

Headquarters

Decatur, Georgia

Bank Information

¢ Bank Depositories

One

e Bank Accounts

Two checking accounts

Treasurer

_® Treasurer When Audit Was Conducted

Joan Christian

e Treasurer During Period Covered by Audit

Elyria Mackie (1/1/05 to 7/11/05)
Joan Christian (7/12/05 to Present)

_Management Information

e Attended FEC Campaign Finance Seminar

Yes

e¢ Used Commonly Available Campaign
Management Software Package

Yes

© Who Handled Accounting, Recordkeeping
Tasks and Other Day-to-Day Operations

Paid and volunteer staff

Overview of Financial Activity
(Audited Amounts)

Cash on hand @ January 1, 2005 $ 1,996
Receipts
o From Individuals $ 336,465
o From Other Political Committees 129,266
o Offsets to Operating Expenditures 1,501
co Total Receipts $ 467,232
Disbursements
© Operating Expenditures $ 429,916
___o Other Disbursements 37,000
o Refunds of Contributions 30,715
o Total Disbursements $ 497,631
Cash on hand @ December 31, 2006 $ (28,403) 7

? CMFC bank statements did not show a negative balance because of a large amount of outstanding checks as

of December 31, 2006.



¢ The total amount of receipts for the reporting period and for the calendar year;
¢ The total amount of disbursements for the reporting period and for the calendar year; and

¢ Certain transactions that require itemization on Schedule A (Itemized Receipts) or
Schedule B (Itemized Disbursements). 2 U.S.C. §434(b)(1), (2), (3), (4), and (5).

Facts and Analysis

The Audit staff reconciled reported financial activity to bank records for calendar years 2005
and 2006. The following charts outline the discrepancies for the beginning cash balance,
receipts, disbursements and the ending cash balance for each year. Succeeding paragraphs
address the reasons for the misstatements.

2005 Activity
Reported Bank Records _| Discrepancy

Opening Cash Balance $11,352 $1,996 $9,356
Overstated
Receipts $147,522 $158,425 $10,903
Understated
Disbursements $123,118 $131,575 $8,457
Understated
Ending Cash Balance $35,756 $28,846 $6,910
| Overstated

The $9,356 overstatement of the beginning cash balance on January 1, 2005, could not be
explained but most likely occurred due to prior period errors.

The net understatement of receipts resulted from the following:
e Unreported contributions from individuals and political $ 13,193

committees

e Reported contributions from individuals not supported (2,280)
by deposit

e Unexplained difference. 10)
Net understatement of receipts $10,903

The net understatement of disbursements resulted from the following:

¢ Unreported disbursements $ 8,703

« Two disbursements reported incorrectly 246
Net understatement of disbursements $8,457

The $6,910 overstatement of ending cash on hand resulted from the unexplained beginning
cash difference as well as the receipt and disbursement misstatements noted above.


Part IV
Findings and Recommendations

|Finding 1. Receipt of Contributions that Exceed Limits

Summary

CMFC accepted 14 contributions from individuals and political committees that exceeded
the limit by $21,300. Of these excessive contributions, $11,100 was eligible for
presumptive redesignation and/or reattribution. The remaining excessive contributions,
$10,200, exceeded the limit per election and could not be resolved through redesignation
and/or reattribution. In response to the interim audit report, CMFC provided evidence that
redesignation and/or reattribution notices were sent. The response demonstrated that $500
was not excessive. In addition, CMFC responded that the remaining contributions totaling
$9,700 were not excessive, however, CMFC provided no evidence supporting this assertion.

Legal Standard

A. Authorized Committee Limits: An authorized committee may not receive more than a
total of $2,100 per election from any one person or $5,000 per election from a
multicandidate political committee. 2 U.S.C. §441a(a)(1)(A), (2)(A) and (); 11 CFR
§§110.1(a) and (b) and 110.9(a).

B. Handling Contributions That Appear Excessive. If a committee receives a
contribution that appears to be excessive, the committee must either:
e return the questionable contribution to the donor; or
e deposit the contribution into its federal account and keep enough money on account
to cover all potential refunds until the legality of the contribution is established. 11
CFR §103.3(b)(3) and (4).
The excessive portion may also be redesignated to another election or reattributed to another
contributor as explained below.

C. Redesignation of Excessive Contributions. The committee may ask the contributor to
redesignate the excess portion of the contribution for use in another election.
e The committee must, within 60 days-of receipt of the contribution, obtain and retain
a signed redesignation letter which informs the contributor that a refund of the
excessive portion may be requested; or
e refund the excessive amount. 11 CFR §§110.1(6)(5), 110.1(1)(2) and 103.3(b)(3).

Notwithstanding the above, when an authorized political committee receives an excessive
contribution from an individual or a non-multi-candidate committee, the committee may
presumptively redesignate the excessive portion to the general election if the contribution:
Is made before that candidate’s primary election;

Is not designated in writing for a particular election;

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

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


Part III
Summaries

Findings and Recommendations

Finding 1. Receipt of Contributions that Exceed Limits
CMFC accepted 14 contributions from individuals and political committees that exceeded
the limit by $21,300. Of these excessive contributions, $11,100 was eligible for
presumptive redesignation and/or reattribution. The remaining excessive contributions,
$10,200, exceeded the limit per election and could not be resolved through redesignation
and/or reattribution. In response to the interim audit report, CMFC provided evidence that
redesignation and/or reattribution notices were sent. The response demonstrated that $500
was not excessive. In addition, CMFC responded that the remaining contributions totaling
$9,700 were not excessive, however, CMFC provided no evidence supporting this assertion.
(For more detail, see page 4.)

Finding 2. Misstatement of Financial Activity

A comparison of CMFC’s reported figures to its bank records revealed that cash-on-hand,
receipts and disbursements had been misstated for calendar years 2005 and 2006. In
response to the interim audit report, CMFC amended its 2006 reports. However, the
amendments did not materially correct the misstatement for 2006. In addition, no
amendments were filed for the 2005 misstatement. (For more detail, see page 6.)


6

At the exit conference, the Audit staff discussed this issue with CMFC’s treasurer and legal
counsel and subsequently provided them with schedules detailing these discrepancies. They
agreed to review these schedules to determine whether they concurred with the exceptions
listed and respond accordingly.

Interim Audit Report Recommendation and Committee Response

The Audit staff recommended that CMFC:

e Send notices to those contributors whose contributions were eligible for presumptive
redesignation and/or reattribution ($11,100) informing them how their contribution was
designated and/or attributed and offer a refund of the excessive portion. Absent a
request for a refund by the contributors, these notices would have obviated the need for
contribution refunds or payments to the U.S. Treasury. For notices sent to contributors,
CMFC should have provided a copy of each notice and evidence that it was sent. These
notices must demonstrate that both the contributor and the individual to whom the
contribution was reattributed were notified. If any contributor could not be located or if
the presumptive notice came back undeliverable, a disgorgement of the excessive
contribution should have been made to the U.S. Treasury with evidence of such action;
and

e Provide evidence demonstrating that the remaining contributions, totaling $10,200, were
not excessive. Such evidence should have included, but not be limited to,
documentation that the contributions were reattributed, redesignated, or refunded in a
timely manner; or

e Absent such evidence, refund $10,200 to the contributors or make a disgorgement to the
U.S. Treasury and provide evidence of such action (copies of the front and back of
negotiated refund checks); or

e If funds were not available to make the necessary refunds, disclose the contributions
requiring refunds on Schedule D (Debt and Obligations) until funds became available to
make such refunds.

In response to the interim audit report recommendations, CMFC provided evidence that
notices were sent to contributors that were eligible for presumptive redesignation and/or
reattribution. The response demonstrated that $500 was not excessive. For the remaining
contributions totaling $9,700, CMFC indicated that these contributions were not excessive,
however, CMFC provided no evidence supporting this assertion.

| Finding 2. Misstatement of Financial Activity

Summary

A comparison of CMFC’s reported figures to its bank records revealed that cash-on-hand,
receipts and disbursements had been misstated for calendar years 2005 and 2006. In
response to the interim audit report, CMFC amended its 2006 reports. However, the
amendments did not materially correct the misstatement for 2006. In addition, no
amendments were filed for the 2005 misstatement.

Legal Standard
Contents of Reports. Each report must disclose:
¢ The amount of cash on hand at the beginning and end of the reporting period;


FEDERAL ELECTION COMMISSION
WASHINGTON, D.C. 20463

September 27, 2007

MEMORANDUM

To: Robert W. Biersack
Press Officer

From: Joseph F. Stoltz bg we
Assistant Staff Director
Audit Division

Subject: Public Issuance of the Audit Report on Cynthia McKinney for Congress
Attached please find a copy of the audit report on Cynthia McKinney for Congress
which was approved by the Commission on September 19, 2007.

The report may be released to the public on September 27, 2007.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library
Web Manager


2006 Activity
Reported Bank Records _| Discrepancy
Opening Cash Balance $35,756 $28,846 $6,910
Overstated
Receipts $218,251 $308,807 $90,556
Understated
Disbursements $193,165 $366,056 $172,891
Understated
Ending Cash Balance $60,842 $(28,403) 89,245
Overstated

The net understatement of receipts resulted from the following:

¢ Unreported contributions from individuals $ 96,489

¢ Reported contributions from individuals and political (5,708)
committees not supported by deposit

e Unexplained difference 225
Net understatement of receipts $_ 90,556

The understatement of disbursements resulted from the following:

« Unreported operating expenditures $ 92,259

¢ Unreported disbursements to poll workers 80,630

¢ Unexplained difference 2
Understatement of disbursements $172,891

At the exit conference, the Audit staff explained the misstatements and subsequently
provided CMFC’s treasurer and legal counsel with schedules detailing these discrepancies.
They agreed to review the speadsheets provided and expressed a willingness to file amended
reports.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that CMFC amend its reports to correct the misstatements
noted above and amend its most recently filed report to correct the cash on hand balance.

In response to the interim audit report, CMFC amended the 2006 reports. However, the
amendments did not materially correct the misstatement for 2006. In addition, no
amendments for the 2005 misstatement were filed.


Also, the committee may presumptively redesignate the excessive portion of a general
election contribution back to the primary election if the amount redesignated does not
exceed the committee’s primary net debt position.

The committee is required to notify the contributor in writing 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. For this action to be valid, the committee must retain copies of the
notices sent. Presumptive redesignations apply only within the same election cycle. 11
CFR §110.1(b)(5)(ii)(B) & (C) and (1)(4)(ii).

D. Reattribution of Excessive Contributions. When an authorized committee receives an
excessive contribution, the committee may ask the contributor if the contribution was
intended to be a joint contribution from more than one person.
e The committee must, within 60 days of receipt of the contribution, obtain and retain
a reattribution letter signed by all contributors; or
e refund the excessive contribution. 11 CFR §§110.1(k)(3), 110.1(1)(3) and
103.3(b)(3).

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:

e how the contribution was attributed; and

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

§110.1(k)(3)(ii)(B).

For this action to be valid, the committee must retain copies of the notices sent. 11 CFR

§110.1()(4)Gi).

E. Refund or Disgorge Questionable Contributions. Ifthe identity of the original
contributor is known, the committee must either refund the funds to the source of the
original contribution or pay the funds to the U.S. Treasury. AO 1996-5.

Facts and Analysis

The Audit staff reviewed all contributions from individuals and political committees to
determine if excessive contributions were received. The Audit staff identified 11
contributions from individuals and 3 contributions from political committees that exceeded
the limit by $14,400 and $6,900, respectively. During this review, it was noted that CMFC
routinely redesignated contributions to another election or reattributed contributions to
another account holder. However, no documentation was provided by CMFC in support of
these redesignations and reattributions; neither signed redesignations or reattributions, nor
the contributor notifications required to take advantage of the presumptive reattribution or
redesignation options discussed above.

Of the excessive contributions, $11,100 is eligible for presumptive redesignations and/or
reattributions. The remaining excessive contributions, $10,200, could not be resolved
through redesignation and/or reattribution based upon available documentation.


Part I
Background

Authority for Audit

This report is based on an audit of Cynthia McKinney for Congress (CMFC), 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

Following Commission-approved procedures, the Audit staff evaluated various risk factors
and as a result, the scope of this audit was limited to the following:

1. The consistency between reported figures and bank records;

2. The receipt of excessive contributions; and

3. The disclosure of individual contributors’ occupation and name of employer.


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit

Part II. Overview of Campaign
Campaign Organization
Overview of Financial Activity

Part III. Summaries
Findings and Recommendations

Part IV. Findings and Recommendations
Finding 1. Receipt of Contributions that Exceed Limits
Finding 2. Misstatement of Financial Activity

Page


Report of the Audit Division on

Cynthia McKinney for Congress
January 1, 2005 - December 31, 2006

Why the Audit About the Campaign (p. 2)
Was Done Cynthia McKinney for Congress is the principal campaign committee

Federal law permits the for Cynthia McKinney, Democratic candidate for the U.S. House of
Commission to conduct Representatives from the state of Georgia, 4" District and is
audits and field headquartered in Decatur, Georgia. For more information, see the

investigations of any chart on the Campaign Organization, p. 2.

political committee that

is required to file reports Financial Activity (p. 2)

under the Federal ¢ — Receipts

Election Campaign Act o From Individuals

(the Act). The o From Other Political Committees
Commission generally o Offsets to Operating Expenditures
conducts such audits o Total Receipts

when a committee e¢ Disbursements

appears not to have met o Operating Expenditures

the threshold o Other Disbursements
requirements for o Refunds of Contributions
substantial compliance o Total Disbursements

with the Act.’ The audit
determines whether the

committee complied Findings and Recommendations (p. 3)
¢ Receipt of Contributions that Exceed Limits (Finding 1)
¢ Misstatement of Financial Activity (Finding 2)

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).

$336,465
129,266
1,501
$467,232

$429,916
37,000
30,715
$497,631