Interim Audit Report of 

the Audit Division on 

Randy Hultgren for Congress 

September 22, 2009 - December 31, 2010 

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 

Conmiission 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 

conmiittee 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 

matter discussed in this 

report. 

About the Campaign (p. 2) 

Randy Hultgren for Congress is tiie principal campaign conimittee 

for Randy Hultgren, Republican candidate for the United States 

House of Representatives from Illinois, 14^ District, and is 

headquartered in St. Charles, Illinois. For more information, see the 

chart on the Campaign Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o Contributions from Party 

Committees 

o Loans from the Candidate 

o Other Receipts 

Tbtal Receipts 

• Disbursements 

o Operating Expenditures 

o Loan Repayments to the Candidate 

o Other Disbursements 

Total Disbursements 

$ 1,237,511 

393.942 

43,838 

19,146 

$ 1,694,437 

$ 1,590,720 

43,838 

4,625 

$ 1,639,183 

Finding and Recommendation (p. 3) 

• Misstatement of Financial Activity 

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

Audit Division on 

Randy Hultgren for Congress 

September 22, 2009 - December 31, 2010 
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. Summary 

Finding and Recommendation 3 

Part IV. Finding and Recommendation 

Misstatement of Financial Activity 4 
Parti 

Background 

Authority for Audit 

This report is based on an audit of Randy Hultgren for Congress (RHC), 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 whether the reports filed by a particular committee meet the 

tiireshold requirements for substantial compliance witii tiie 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 individual contributors' occupation and name of employer; 

2. the disclosure of candidate loans to the conunittee; 

3. the disclosure and recordkeeping of disbursements to the candidate; 

4. the consistency between reported figures and bank records; and 

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

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration September 21,2009 

• Audit Coverage September 22,2009 - December 31,2010 

Headquarters St. Charles, Illinois 

Bank Information 

• Bank Depositories One 

• Bank Account One checking account 

Treasurer 

• Treasurer When Audit Was Conducted Clifford A. Brown 

• Treasurer During Period Covered by Audit Clifford A. Brown 

Management Information 

• Attended Commission Campaign Finance 

^ Seminar 

No 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amoimts) 

Cash-on-Hand @ September 22,2009 $0 

Receipts 

o Contributions from Individuals 1,237,511 

o Contributions from Party Committees 393,942 

o Loans from the Candidate 43,838 

o Other Receipts 19,146 

Total Receipts $ 1,694,437 

Disbursements 

o Operating Expenditures 1,590,720 

o Loan Repayments to the Candidate 43,838 

o Other Disbursements 4,625 

Total Disbursements $ 1,639,183 

Cash-on-Hand @ December 31,2010 $ 55,254 
Part III 

Summary 

Finding and Recommendation 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of RHC's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements for 2009 and 2010, as well 

as, ending cash-on-hand for 2010. For 2009, RHC understated receipts by $9,440 and 

disbursements by $7,911, respectively. In 2010, RHC understated receipts by $83,278, 

disbursements by $58,694, and ending cash-on-hand by $26,113. The Audit staff 

recommends that RHC amend its disclosure reports to correct the misstatements for 2009 

and 2010. (For more detail, see p. 4) 
Part IV 

Finding and Recommendation 

Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of RHC's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements for 2009 and 2010, as well 

as, ending cash-on-hand for 2010. For 2009, RHC understated receipts by $9,440 and 

disbursements by $7,911, respectively. In 2010, RHC understated receipts by $83,278, 

disbursements by $58,694, and ending cash-on-hand by $26,113. The Audit staff 

recommends that RHC amend its disclosure reports to correct the misstatements for 2009 

and 2010. 

Legal Standard 

A. 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 (to 

include the total amount of loans made by or guaranteed by tiie Candidate); 

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

and 

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

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

B. Itemizing Loans. Each person who makes a loan to the political committee during 

tiie reporting period must be disclosed witii tiie following information: 

• Identification of any endorser or guarantor of the loan; 

• The date the loan was made; and 

• The amount of tiie loan. 11 CFR § 104.3(a)(4)(iv). 

C. Schedule C. On a Schedule C (Loans), both the original loan and payments to reduce 

principal must be reported each reporting period until the loan is repaid. The committee 

need only list the Candidate as the source of the loan. Also, tiie type of loan tiie 

Candidate receives (i.e. bank loan, brokerage account, credit card, home equity line of 

credit) must be disclosed in either the first box for endorsers and guarantors with a 

notation for loan type or in tiie box for "Loan Source" after tiie Candidate's name. 

11 CFR §§ 104.3(d) and 104.11. 
Facts and Analjrsis 

A. Facts 

As part of audit fieldwork, tiie Audit staff reconciled RHC's reported activity witii its 

bank records for 2009 and 2010. The following charts outiine the discrepancies for cashon-hand, receipts, and disbursements. Succeeding paragraphs address the reasons for the 

misstatements. 

2009 Campaign Activity 

Reported Bank Records Discrepancy 

Beginning Cash-on-Hand 

@ September 22,2009 

$0 $0 $0 

Receipts $167,171 $176,611 $9,440 

Understated 

Disbursements $130,946 $138,857 $7,911 

Understated 

Ending Cash-on-Hand 

@ December 31,2009 

$36,225 $37,754 $1,529 

Understated 

The understatement of receipts resulted from tiie following: 

• Loans from the Candidate not reported 

• Unexplained difference 

Net Understatement of Receipts 

$ 10.085 

(645^ 

$ 9.440 

The understatement of disbursements resulted from the following: 

• Disbursements not reported 

• Reported disbursements not supported by a check or debit 

• Unexplained difference 

Net Understatement of Disbursements 

8,200 

(453) 

164 

$ 7.911 

2010 Campaign Activity 

Reported Bank Records Discrepancy 

Beginning Cash-on-Hand 

©January 1,2010 

$36,225 $37,754 $1,529 

Understated 

Receipts $1,434,548 $1,517,826 $83,278 

Understated 

Disbursements $1,441,632 $1,500,326 $58,694 

Understated 

Ending Cash-on-Hand 

@ December 31, 2010 

$29,141 $55,254 $26,113 

Understated 
The understatement of receipts resulted from the following: 

• Contributions from individuals & PACs not reported $ 74.597 

• Loans from the Candidate not reported 8.953 

• Unexplained difference (272) 

Net Understatement of Receipts $ 83.278 

The understatement of disbursements resulted from tiie following: 

• Operating expenditures not reported $ 70.289 

• Reported disbursements not supported by check or debit (29.942) 

• Candidate loan repayments not reported 16.500 

• PAC contribution not reported 2.400 

• Unexplained difference (553) 

Net Understatement of Disbursements $ 58.694 

The $26.113 understatement of the ending cash-on-hand was tiie result of tiie 

misstatements described above. 

During the audit period, RHC provided a declaration signed by the Candidate attesting 

to loaning RHC $43,838. The loans consisted of checks written from tiie Candidate's 

personal accounts to RHC and payments made by the Candidate directiy to vendors 

for campaign related expenses. RHC did not report some of the loan activity (as noted 

above) and also did not correctiy disclose some transactions as being in connection 

witii tiie Candidate loans. It is noted tiiat RHC fully repaid tiie Candidate loans 

totaling $43,838. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed tiie misstatements for 2009 and 2010 with RHC representatives 

during tiie exit conference and provided copies of relevant work papers detailing the 

errors. A representative stated tiiat corrective action would be taken based on the audit 

recommendation. 

The Audit staff recommends tiiat, witiiin 30 calendar days of service of tiiis report, RHC: 

• Amend its reports to correct the misstatements for 2009 and 2010, as noted above, to 

include tiie proper itemization and disclosure of Candidate loans and repayments on 

Schedule A - Line 13 (Loans Made by the Candidate), Schedule B - Line 19 (Loan 

Repayments of Loans Made by tiie Candidate) and Schedule C (Loans); and 

• Amend its most recently filed report to correct tiie cash-on-hand balance with an 

explanation that the change resulted from a prior period audit adjustment. Furtiier, 

RHC should reconcile tiie cash balance of its most recent report to identify any 

subsequent discrepancies that may impact the $26,113 adjustment recommended by 

tiie Audit staff.