FEDERAL ELECTION COMMISSION 

Washington, DC 20463 

October 8, 2008 

MEMORANDUM 

To: Robert W. Biersack
 

Press Officer
 

From: WandaJ. Thomas~
 Acting Assistant Staff Director
 

Audit Division
 

Subject: Public Issuance of the Audit Report - National Right to Life Political 

Action Committee 

Attached please find a copy of the audit report on the National Right to Life 

Political Action Committee, which was approved by the Commission on September 24,


2008.
 

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

may be released to the public on October 8, 2008. 

Attachment as stated 

cc:	 Office of General Counsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library 

DSDD Website 
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). 

Report of the 

Audit Division on the 

National Right to Life 

Political Action Committee 

January 1,2003 - December 31,2004 

About the Committee (p. 2) 

The National Right to Life Political Action Committee (NRLPAC) 

is the separate segregated fund of the National Right to Life 

Committee. NRLPAC qualified for multi-candidate status on June 

2, 1980, and is headquartered in Washington, DC. For more 

information, see the chart on Committee Organization, p.2 

Financial Activity (p.2) 

•	 Receipts 

o	 Contributions from Individuals $ 4,241,907 

o	 Contributions from Political 

Committees 7,500 

o	 Offsets to Operating Expenditures 44,338 

o	 Other Federal Receipts 62 

o	 Total Receipts $ 4,293,807 

•	 Disbursements 

o	 Independent Expenditures $3,719,773 

o	 Contributions to Federal Candidate 

Committees and Other Political 

Committees 16,304 

o	 Operating Expenditures 152,536 

o	 Total Disbursements $ 3,888,613 

Findings and Recommendations (p. 3) 

•	 Misstatement of Financial Activity (Finding 1) 

•	 Failure to File Notices of Independent Expenditures (Finding 2) 

•	 Disclosure of OccupationlName of Employer (Finding 3) 

•	 Disclosure of Receipts (Finding 4) 

I 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Other Matters 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

1

1

1 

2

2
 

Findings and Recommendations 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Finding 2. Failure to File Notices of Independent Expenditures 

4

5
 

Finding 3. Disclosure of Occupation/Name of Employer 8
 

Finding 4. Disclosure of Receipts 9
 

3 
1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the National Right to Life Political Action Committee 

(NRLPAC) 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. 

NRLPAC was not able to provide a useable receipts database, copies of contributor 

checks, or solicitation devices in a materially complete, organized manner for 2003. 

Based upon this lack of records, the Audit staff could not accurately evaluate 

contributions received during 2003 for recordkeeping, itemization, disclosure or 

permissibility. However, calendar year 2003 represents a small portion of the receipts and 

expenditures for the audit period. 

Other Matters 

An enforcement action was initiated by the Commission's Reports Analysis Division 

(RAD) on January 21, 2005, to address an increase of $125,100 in receipts reported on 

the 2003 Year End report. It was this amended report that is the subject of the audit. 

NRLPAC filed this report with the Commission on April 8, 2004. This enforcement 

action resulted in Alternative Dispute Resolution (ADR) Matter #225 and was resolved 

on August 3, 2005. In the settlement agreement NRLPAC acknowledged that not all 

receipts were reported in the 2003 Year-End report, as required by the Act. 
2
 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

•	 Date of Registration 

•	 Audit Coverage 

Headquarters 

Bank Information 

•	 Bank Depositories 

•	 Bank Accounts 

Treasurer 

•	 Treasurer When Audit Was Conducted 

•	 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 

NRLPAC
 

July 12, 1979 

January 1, 2003 - December 31, 2004 

Washington, DC 

2 

7 Checking and Money Market Accounts 

Amarie C. Natividad 

Amarie C. Natividad 

Yes 

Yes 

NRLPAC Staffers 

Overview of Financial Activity
 

(Audited Amounts)
 

Cash on hand @ January 1, 2003­

o Contributions from Indi viduals 

o Contributions from Political Committees 

o Offsets to Operating Expenditures 

o Other Federal Receipts
 

Total Receipts
 

o Independent Expenditures 

o Contributions to Federal Candidate Committees 

and Other Political Committees 

o Operating Expenditures 

Total Disbursements 

Cash on hand @ December 31, 2004 

$ 20,821 

4,241,907 

7,500 

44,338 

62 

$ 4,293,807 

$ 3,719,773 

16,304 

152,536 

$ 3,888,613 

$ 426,015 
3 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

A comparison of NRLPAC's reported activity to bank records revealed material 

misstatements in 2003. The beginning cash balance on January 2,2003 was understated 

$32,852; reported receipts were overstated $130,295; reported disbursements were 

understated $35,591 and the ending cash balance on December 31, 2003 was overstated 

$133,034 as a results of these discrepancies. Finally, the ending cash balance on 

December 31, 2004 was overstated $86,570. In response to the interim audit report, 

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

detail, see p. 4) 

Finding 2. Failure to File Notices of Independent 

Expenditures 

During the audit period, NRLPAC made independent expenditures totaling $3,718,909. 

NRLPAC failed to maintain documentation supporting the dissemination date for the 

majority of these independent expenditures. Where the dissemination date was known, 

NRLPAC failed to file or untimely filed 24 or 48 hour notices for a material number of 

independent expenditures. Finally, independent expenditures paid subsequent to the 

dissemination date were not properly disclosed on Schedule D (Debts and Obligations) 

and Schedule E (Independent Expenditures). In response to the interim audit report, 

NRLPAC provided details pertaining to new procedures they plan to implement. (For 

more detail, see p. 5) 

Finding 3. Disclosure of Occupation/Name of Employer 

NRLPAC did not adequately disclose the contributor's occupation and/or name of 

employer for 557 contributions that required itemization on Schedule A (Itemized 

Receipts). However, responses to additional requests for contributor information were 

noted in the.records, but amended reports were not filed. 2 In response to the interim audit 

report, NRLPAC filed amended reports that materially corrected the occupation/name of 

employer disclosure errors. (For more detail, see p. 8) 

Finding 4. Dfsolos'are of Receipts 

A sample review of 2004 receipts determined a material number of the contributors 

itemized on Schedule A had incorrect contributor information. For the most part, the 

contributor's name was incorrect. In response to the interim audit report, NRLPAC filed 

amended reports that materially corrected the contributor information disclosure errors. 

For more detail, see p. 9) 

2 A previous audit of NRLPAC for the 2002 election cycle contained a similar finding. 
4 

Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

A comparison of NRLPAC' s reported activity to bank records revealed material 

misstatements in 2003. The beginning cash balance on January 2, 2003 was understated 

$32,852; reported receipts were overstated $130,295; reported disbursements were 

understated $35,591 and the ending cash balance on December 31,2003 was overstated 

$133,034 as a results of these discrepancies. Finally, the ending cash balance on 

December 31, 2004 was overstated $86,570. In response to the interim audit report, 

NRLPAC filed amended reports that materially corrected the 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 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)(l), (2) and (4). 

Facts and Analysis 

The Audit staff reconciled NRLPAC's reported financial activity to its bank records for 

2003 and 2004. The following charts outline the discrepancies. 

2003 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

at January 1, 2003 

-$12,031 $20,821 $32,852 

understated 

Receipts $385,904 $255,609 $130,295 

overstated 

Disbursements $55,287 $90,878 $35,591 

understated 

Ending Cash Balance at 

December 31,2003 

$318,586 $185,552 $133,034 

overstated 

Beginning Cash Balance - 2003 

The understatement of beginning cash on hand in the amount of $32,852 was the result of 

prior period reporting errors. 
5 

The overstatement of receipts was the result of the following: 

• Unitemized contributions overreported + $125,358 

• Miscellaneous adjustments + 4,937 

• Overstatement of Receipts $130,295 

The understatement of disbursements was the result of the following: 

• Disbursements Not Reported + $34,942 

• Miscellaneous adjustments + $649 

• Understatement of Disbursements $35,591 

Closing Cash on Hand:
 

NRLPAC misstated the cash balances throughout 2003 and 2004 because of the errors
 

described above. On December 31,2004, the cash balance was overstated by $86,570.
 

The Audit staff notified NRLPAC representatives of this finding. The representatives
 

stated a computer system crash occurred in March 2004 which resulted in the receipt
 

misstatements. A majority of the disbursements not reported related to transfers from
 

NRLPAC to NRLC that arose from bank deposit errors.
 

Interim Audit Report Recommendation and Committee Response 

The interim audit report recommended that NRLPAC amend its reports to correct the 

misstatements noted above. In addition, it was recommended that NRLPAC amend the 

cash balance of its most recent report with an explanation that it resulted from audit 

adjustments from a prior period. In response, NRLPAC filed amended reports that 

materially corrected the misstatements. 

Finding 2. Failure to File Notices of Independent 

Expenditures 

S~m~

During the audit period, NRLPAC made independent expenditures totaling $3,718,909. 

NRLPAC failed to maintain documentation supporting the dissemination date for the 

majority of these independent expenditures. Where the dissemination date was known, 

NRLPAC failed to file or untimely filed 24 or 48 hour notices for a material number of 

independent expenditures. Finally, independent expenditures paid subsequent to the 

dissemination date were not properly disclosed on Schedule D (Debts and Obligations) 

and Schedule E (Independent Expenditures). In response to the interim audit report, 

NRLPAC provided details pertaining to new procedures they plan to implement. 

Legal Standard 

Independent Expenditures - Definition. An independent expenditure is a expenditure 

for a communication, such as a website, newspaper, TV or direct mail advertisement that: 
6 

•	 expressly advocates the election or defeat of a clearly identified candidate; and 

•	 is not made in consultation or cooperation with, or at the request or suggestion of 

a candidate, candidate's committee, party committee or their agents. 11 CFR 

§§104.4 and 109.20(a). 

Disclosure requirements - general guidelines: An independent expenditure shall be 

reported on Schedule E, when added to other independent expenditures made to the same 

payee during the same calendar year, exceeds $200. Independent expenditures made 

(i.e., publicly disseminated) prior to payment should be disclosed as "memo" entries on 

Schedule E and as a reportable debt on Schedule D. Independent expenditures of $200 or 

less do not need to be itemized, though the committee must report the total of those 

expenditures on line (b) on Schedule E. 11 CFR §§104.3(b)(3)(vii), 104.4(a) and 104.11 

Last-Minute Independent Expenditure Reports (24-Hour Notices): Any independent 

expenditures aggregating $1,000 or more, with respect to any given election, and made 

after the zo" day but more than 24 hours before the day of an election must be reported 

and the report must be received by the Commission within 24 hours after the expenditure 

is made. A 24-hour notice is required for each additional $1,000 that aggregates. The 

24-hour notice must be filed on a Schedule E. The date that a communication is publicly 

disseminated serves as the date that the Committee must use to determine whether the 

total amount of independent expenditures has, in the aggregate, reached or exceeded the 

threshold reporting amount of $1,000. 11 CFR §§104.4(f) and 104.5(g)(2). 

Last-Minute Independent Expenditure Reports (48-Hour Notices): Any independent 

expenditure aggregating $10,000 or more with respect to any given election, at any time 

during a calendar year, up to and including the 20th day before an election, must disclose 

this activity within 48 hours each time that the expenditures aggregate $10,000 or more. 

11 CFR §§104.4(f) and 104.5(g)(I). 

Facts and Analysis 

During the audit period, NRLPAC made 1,545 independent expenditures ($3,718,909) on 

behalf of 74 federal candidates. For the majority of the expenditures, NRLPAC failed to 

maintain documentation to support the dissemination date of the communications. Since 

the dissemination date was not known, NRLPAC filed 24 and 48 hour notices based on 

the check date for the expenditures. 

Seventy-one independent expenditures, totaling $176,721 on behalf of 16 candidates 

were made during the period January 1,2003 through September 30, 2004. A review of 

these transactions indicated 24/48 hour notices for 42 independent expenditures, totaling 

$110,168, were either not filed (9) or filed untimely (33). Twenty-nine of the untimely 

notices were filed after the general election. These notices were not only filed untimely 

but NRLPAC did not properly disclose the respective independent expenditures. 

Between October 1, 2004 and December 31,2004 NRLPAC made 1,474 independent 

expenditures, totaling $3,542,188, on behalf of 62 candidates. A sample review of these 

independent expenditures determined that the required notice was either not filed or filed 
7 

untimely for 30% of the items tested. Similar to the above, a number of independent 

expenditures paid subsequent to the general election were not properly disclosed." 

The reporting requirement for independent expenditures is based on the dissemination 

date, and, in certain cases the reporting requirement is based on both the dissemination 

date and the check date. An independent expenditure paid subsequent to the 

dissemination date should be disclosed as a memo entry on Schedule E and as a debt 

owed to the vendor on Schedule D in the reporting period that the independent 

expenditure was disseminated. When this independent expenditure is paid, it is reported 

on Schedule E and the reported debt on Schedule D is then disclosed as paid. For these 

independent expenditures, NRLPAC merely disclosed the independent expenditure on 

Schedule E at the time of payment. 

This matter was discussed with the NRLPAC representatives during the exit conference. 

The representatives stated that they itemized all independent expenditures and filed 24/48 

hour notices by check date rather than by dissemination date. They related that they 

planned to hire additional staff in the future and had developed a new procedure to track 

independent expenditures by dissemination date. 

Interim Audit Report Recommendation and Committee Response 

The interim audit report recommended that NRLPAC provide evidence that the 24/48 

hour notices were timely filed or submit any written comments it considered relevant. 

Further, it was recommended that NRLPAC submit and implement revised procedures 

for tracking the dissemination date for independent expenditures and the relevant 

aggregation for both 24 and 48 hour notices. 

In response, NRLPAC related that members of it's staff had attended a FEC seminar in 

2003, but they did not fully comprehend the significance of the independent expenditure 

dissemination date, and therefore, had incorrectly reported the independent expenditures 

based upon when they were incurred and paid. NRLP AC related it has since established 

new procedures that included the assignment of a person identified as an Independent 

Expenditure Coordinator (Coordinator). The Coordinator will be responsible for tracking 

and aggregating independent expenditures and identifying when 24 and/or 48 hour 

notices are required. The Coordinator will provide the appropriate NRLP AC 

representatives with the necessary reporting information so that the required notices can 

be filed. Lastly, the response reflected that NRLPAC staff will continue to attend FEC 

conferences to keep up-to-date with reporting requirements. 

3 The Audit staff noted that subsequent to the general election, and in response to Requests for Additional 

Information from the Reports Analysis Division, NRLPAC filed over 400 24/48 hour notices pertaining 

to communications reported as disseminated between October 1 and November 1,2004, totaling about 

$1.800.000. Obviously these notices were filed late. 
8 

f Finding 3. Disclosure of Occupation/Name of Employer 

Summary 

NRLPAC did not adequately disclose the contributor's occupation and/or name of 

employer for 557 contributions that required itemization on Schedule A (Itemized 

Receipts). However, responses to additional requests for contributor information were 

noted in the records, but amended reports were not filed. In response to the interim audit 

report, NRLPAC filed amended reports that materially corrected the occupation/name of 

employer disclosure errors. 

Legal Standard 

A. Itemization Required for Contributions from Individuals. A political committee 

other than an authorized committee must itemize any contribution from an individual if it 

exceeds $200 per calendar year, 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 name of his or her employer; 

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

•	 The amount of the contribution; and 

•	 The calendar year-to-date total of all contributions from the same individual. 11 

CFR §§100.12 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).
 

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

have used "best efforts" with respect to contributions 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). 
9 

Facts and Analysis 

NRLPAC did not adequately disclose the contributor's occupation and/or name of 

employer for 557 contributions that required itemization on Schedule A. "Information 

requested" or "requested" was disclosed for 537 of these transactions; the remaining 

disclosures were incomplete. Solicitations made available did request complete 

contributor information. 

NRLPAC provided a folder containing 81 documents, such as follow-up letters to 

contributors and responses received. It appears that 60 contributors responded to a 

follow-up letter and provided the necessary information; however, NRLPAC did not 

disclose this information. Based on the responses, it is obvious that an additional effort 

was made to obtain and maintain the contributor information. Therefore, filing amended 

reports, disclosing the information obtained, would satisfy the best efforts requirements. 

This matter was discussed at the exit conference. NRLPAC representatives stated they 

had not been aware that "best efforts" letters were missing until the audit. The 

representatives also agreed to amend their reports with the new information provided by 

the contributors. 

Interim Audit Report Recommendation and Committee Response 

The interim audit report recommended that NRLPAC file amended reports disclosing the 

occupation and/or name of employer for those contributors who responded to the 

additional request. In response, NRLPAC filed amended reports that materially corrected 

the occupation/name of employer disclosure errors 

IFinding 4. Disclosure of Receipts 

Summary 

A sample review of 2004 receipts determined a material number of the contributors 

itemized on Schedule A had incorrect contributor information. For the most part, the 

contributor's name was incorrect. In response to the interim audit report, NRLPAC filed 

amended reports that materially corrected the contributor information disclosure errors. 

Legal Standard . _ 

A. Itemization Required for Contributions from Individuals. A political committee 

other than an authorized committee must itemize any contribution from an individual if it 

exceeds $200 per calendar year, 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 name of his or her employer; 

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

• The amount of the contribution; and 
10 

•	 The calendar year-to-date total of all contributions from the same individual. 11 

CPR §§100.12 and 104.3(a)(4) and 2 U.S.c. §434(b)(3)(A). 

Facts and Analysis 

A sample review of receipts determined a material number of the contributions itemized 

on Schedule A contained incorrect contributor information; primarily the contributor's 

name was incorrect. It appeared NRLPAC disclosed the name that appeared on the 

solicitation device, rather than the name of the individual who signed the check. Other 

errors pertained to non-disclosure of the contributor's full address; including the city and 

state. 

This matter was discussed at the exit conference. NRLP AC representatives related they 

were unaware of these disclosure errors. 

Interim Audit Report Recommendation and Committee Response 

The interim audit report recommended that NRLPAC file amended disclosure reports to 

correct these errors. In response, NRLPAC filed amended reports that materially 

corrected the contributor information disclosure errors.