Interim Audit Report of the 

Audit Division on the 

Colorado Republican Federal 

Campaign Committee 

January 1, 2007 - December 31, 2008 

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. 

About the Committee (p. 2) 

The Colorado Republican Federal Campaign Committee is a state 

party committee headquartered in Greenwood Village, Colorado. 

For more information, see the chart on the Committee 

Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Transfers from Affiliated and 

Other Party Committees 

o Transfers from Non-federal 

Accounts 

o All Other Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Transfers to Affiliated and 

Other Party Committees 

o Contributions to Federal 

Candidates and Committees 

Other Disbursements 

Federal Election Activity 

Refund of Contributions 

o 

o 

o 

Total Disbursements 

$ 1,401,637 

1,148,144 

8,073,144 

437,078 

130,887 

$ 11,190,890 

$ 1,898,431 

4,656,015 

39,800 

54,872 

4,109,265 

25,275 

$ 10,783,658 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Allocation of Expenditures (Finding 2) 

2 U.S.C. §438(b). 
Interim Audit Report of the 

Audit Division on the 

Colorado Republican Federal 

Campaign Committee 

January 1, 2007 - December 31, 2008 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatementof Financial Activity 4 

Finding 2. Allocation of Expenditures 6 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Colorado Republican Federal Campaign 

Committee (CRFCC), 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 intemal 

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, this audit examined: 

1. the disclosure of disbursements, debts and obligations; 

2. the disclosure of expenses allocated between federal and non-federal accounts; 

3. the disclosure of individual contributors' occupation and name of employer; 

4. the consistency between reported figures and bank records; 

5. the completeness of records; and 

6. other committee operations necessary to the review. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration February 17,1976 

• Audit Coverage January 1,2007 - December 31,2008 

Headquarters Greenwood Village, Colorado 

Bank Information 

• Bank Depositories One 

• Bank Accounts Five Federal and Three Non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Richard Westfall 

• Treasurer During Period Covered by Audit Joseph Horatio Chavez 

(1/1/2007 to 8/15/2007) 

Richard Westfall (8/16/2007 to Present) 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ^ January 1,2007 $ 2,638 

Receipts 

o Contributions from Individuals 1,401,637 

o Contributions from Political Committees 1,148,144 

o Transfers from AffiUated and Other Party Committees 8,073,144 

o Transfers from Non-federal Accounts 437,078 

o All Other Receipts 130,887 

Total Receipts $ 11,190,890 

Disbursements 

o Operating Expenditures 1,898,431 

o Transfers to Affiliated and Other Party Committees 4,656,015 

o Contributions to Federal Candidates and Committees 39,800 

o Other Disbursements 54,872 

o Federal Election Activity 4,109,265 

o Refund of Contributions 25,275 

Total Disbursements $ 10,783,658 

Cash-on-hand @ December 31,2008 $ 409,870 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of CRFCC's reported figures with bank records revealed a 

misstatement of receipts and disbursements in 2007. CRFCC understated receipts by $70,809 and 

disbursements by $61,104. The Audit staff recommends that CRFCC amend its disclosure reports to 

correct the misstatements. (For more detail, see p. 4) 

Finding 2. Allocation of Expenditures 

During audit fieldwork, a review of disbursements made for allocable activity indicated that 

CRFCC overfunded its share of non-federal activity by $131,725. In addition, it appears that 

CRFCC paid $19,000 out of its allocation account for purely non-federal activity. The Audit staff 

recommends that CRFCC demonstrate that the non-federal account did not overfund its share of 

allocable activity and provide additional comments regarding the payment of non-federal activity 

from the allocation account. Absent such a demonstration, CRFCC should reimburse the nonfederal accounts $131,725. (For more detail, see p. 6) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of CRFCC's reported figures with bank records revealed a 

misstatement of receipts and disbursements in 2007. CRFCC understated receipts by $70,809 and 

disbursements by $61,104. The Audit staff recommends that CRFCC amend its disclosure reports 

to correct 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), (3), (4) and (5). 

Facts and Analysis 

A. Facts 

As part of fieldwork, the Audit staff reconciled reported activity with bank records for calendar 

years 2007 and 2008. The following chart outlines the discrepancies for receipts and disbursements 

in 2007. Succeeding paragraphs address the reasons for the misstatements, if known. 

2007 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1,2007 

$3,198 $2,638 $560 

Overstated 

Receipts $861,368 $932,177 $70,809 

Understated 

Disbursements $794,275 $855,379 $61,104 

Understated 

Ending Cash Balance 

@ December 31,2007 

$70,291 $79,436 $9,145 

Understated 

CRFCC overstated its beginning cash balance by $560, which is unexplained but likely resulted 

from prior period discrepancies. 
The understatement of receipts resulted from the following: 

• Unreported transfers from non-federal accounts $ 51,500 

• Unreported erroneous deposit of non-federal funds 7,950 

• Unexplained difference 11.359 

Understatement of Receipts $ 70.809 

CRFCC transferred non-federal funds of $51,500 to its allocation account to pay for shared 

activity; however, it did not report these transfers.^ Also, in December 2007, CRFCC 

erroneously deposited non-federal frmds of $7,950 into its federal operations account. Three 

weeks later, in January 2008, CRFCC transferred these funds back. CRFCC reported the transfer 

back; however, it did not report the initial deposit. 

The understatement of disbursements resulted from the following: 

• Unreported disbursements $ 40,500 

• Unreported transfers to non-federal account 23,600 

• Prior year payroll disbursements reported in error (10,568) 

• Disbursement reported not supported by check or debit (585) 

• Unexplained difference 8.157 

Net Understatement of Disbursements $ 61.104 

The $9,145 understatement of the ending cash balance was the result of the misstatements 

described above. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatements for 2007 with a CRFCC representative during the exit 

conference and provided copies of relevant work papers detailing the errors. The representative 

stated that corrective action would be taken based on the audit recommendation. CRFCC 

representatives did not submit a response following the exit conference. 

The Audit staff recommends that, within 30 calendar days of service of this report, CRFCC: 

• amend its reports to correct the misstatements for 2007 as noted above; 

• 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; and 

• reconcile the cash balance of its most recent report to identify any subsequent discrepancies 

that may affect the adjustment recommended by the Audit staff. 

Under 11 CFR §106.7, state party committees are allowed to mix funds from their federal and non-federal operating 

accounts to pay for allocable expenses utilizing an allocation account. These accounts are considered federal accounts 

from which a committee must report all activity, including the non-federal portion. 
I Finding 2. Allocation of Expenditures 

Summary 

During audit fieldwork, a review of disbursements made for allocable activity indicated that 

CRFCC overfunded its share of non-federal activity by $131,725. In addition, it appears that 

CRFCC paid $19,000 out of its allocation account for purely non-federal activity. The Audit staff 

recommends that CRFCC demonstrate that the non-federal account did not overfund its share of 

allocable activity and provide additional comments regarding the payment of non-federal activity 

from the allocation account. Absent such a demonstration, CRFCC should reimburse the nonfederal accounts $ 131,725. 

Legal standard 

A. Paying for Allocable Expenses. The Commission regulations offer party committees two ways 

to pay for shared federal/non-federal expenses. 

• They may pay the entire amount of the shared expense from the federal account and transfer 

fiinds from the non-federal account to the federal accoimt to cover the non-federal share of 

that expense; or 

• They may establish a separate, federal allocation account into which the committee deposits 

funds from both its federal and non-federal accounts solely for the purpose of paying shared 

federal/non-federal expenses. 11 CFR § 106.7(b). 

B. Disbursements from the Allocation Account. Funds from federal and non-federal accounts 

must be deposited into the allocation account solely for the purpose of paying shared federal/nonfederal expenses. 11 CFR §106.7(f)(l)(ii). 

C. Transfers. Generally, a political committee may not transfer funds from its non-federal account 

to its federal account, except when the committee follows specific rules for paying for shared 

federal/non-federal expenses. 11 CFR §§102.5(a)(l)(i) and 106.5(g). 

D. Reporting Allocable Expenses. A state, district or local committee that allocates federal/nonfederal expenses must report each disbursement it makes from its federal account (or separate 

allocation account) to pay for a shared federal/non-federal expense. Committees report these kinds 

of disbursements on Schedule H-4 (Disbursements for Allocated Federal/Non-federal Activity). 11 

CFR§104.17(b)(3). 

Facts and Analysis 

A. Facts 

CRFCC maintained five federal bank accounts and three non-federal bank accounts during 2007 

and 2008. CRFCC represented one of these federal accounts as an "allocation account." CRFCC 

paid shared federal and non-federal expenses from this account, but it also made disbursements for 

purely federal expenses, for purely non-federal expenses and for transfers to other federal and nonfederal accounts. During the audit period, CRFCC transferred $403,750 from non-federal accounts 

into the allocation account. As of December 31,2008, CRFCC had disbursed all funds from this 

account.^ 

Per CRFCC's bank statements, the allocation account balance was -$4,877 at December 31,2008. 
During audit fieldwork, the Audit staff calculated the non-federal share of expenditures required to 

be disclosed on Schedules H4 (Disbursements for Allocated Federal/Non-federal Activity) and 

compared that to the amount transferred from non-federal accounts. The review indicated that the 

non-federal portion of shared activity was $244,905 and CRFCC spent $19,000 on purely nonfederal activity. The following chart explains the calculation of overfunding by the non-federal 

account of $131,725. 

Net non-federal transfers to the allocation account $ 395,630^ 

Non-federal portion of allocable expenses (244,905) 

100% non-federal expenditures (19.000) 

Net Overfunding of Non-federal Funds $131.725 

This net overfunding amount does not include the impermissible non-federal activity paid out of the 

allocation account ($19,000). A committee is prohibited from transferring funds from a non-federal 

account to reimburse a federal account for non-allocable activity. Per 11 CFR §106.7(f)(l)(ii), 

funds must be transferred to the allocation account solely for the purpose of paying shared 

federal/non-federal expenses. 

B. Interim Audit Report & Audit Division Recommendation 

When the Audit staff presented the overfunding during pre-audit and fieldwork, CRFCC 

representatives offered no explanation. At the exit conference, the Audit staff further discussed 

these matters with CRFCC representatives and provided spreadsheets outlining the calculation of 

the overfunding and solely non-federal expenditures paid from the allocation account. CRFCC 

representatives did not submit a response to the matters presented at the exit conference. 

The Audit staff recommends that, within 30 calendar days of service of this report, CRFCC 

demonstrate that the non-federal account did not overfund its share of allocable expenses 

($131,725) and did not pay for non-federal activity ($19,000) out of the allocation account. Absent 

such a demonstration, CRFCC should reimburse tiie non-federal account $131,725 and provide 

additional comments with respect to the $19,000 in purely non-federal expenditures from the 

allocation account. If funds are unavailable, CRFCC should disclose a debt on Schedule D (Debts 

and Obligations) until satisfied. 

^ Net non-federal transfers to the allocation account consist of total transfers to the allocation account from non-federal 

accounts ($403,750) less transfers from the allocation account to non-federal accounts ($8,120).