Part I
Background

Authority for Audit

This report is based on an audit of Richard Romero for Congress (RRFC), 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:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The disclosure of disbursements, debts and obligations.
The consistency between reported figures and bank records.
The completeness of records.

Other committee operations necessary to the review.

NAWPRYWNE



Interim Audit Report Recommendation and Committee Response
The Audit staff recommended RRFC demonstrate that Form 3Z-1 was filed timely or
provide any comments it may have relative to this matter. In response to the Interim
Audit Report, RRFC again acknowledged the late filing of Form 3Z-1 and stated that at
the close of 2003 they were unaware of the change to the regulations requiring the filing
of the form. RRFC reiterated that the Form 3Z-1 was promptly filed in response to a
Request for Additional Information (RFAI) in April of 2004 and noted that no candidate
in either the primary or general election committed any personal funds in connection with
this election.



Part III
Summaries

Findings and Recommendations

Finding 1. Failure to Itemize Debts and Obligations

The Audit staff identified debts and obligations totaling $26,881 that were not itemized
on Schedules D (Debts and Obligations). In response to the Interim Audit Report, RRFC
amended their reports to materially disclose these debts and obligations. (For more
detail, see p. 4)

Finding 2. Untimely Filing of Form 3Z-1

RRFC failed to file timely Form 3Z-1 (Consolidated Report of Gross Receipts for
Authorized Committees) with its 2003 Year End Report due on January 31, 2004.
Instead, RRFC filed Form 3Z-1 on April 14, 2004 (73 days late) in response to a Request
for Additional Information (RFAI). In response to the Interim Audit Report, RRFC
acknowledged that Form 3Z-1 was filed untimely and questioned the significance of the
filing since no candidate committed personal funds in connection with the primary or
general elections. (For more detail, see p. 5)



Part II
Overview of Campaign

Campaign Organization

Important Dates

RRFC

© Date of Registration

January 24, 2002

e Audit Coverage

January 1, 2003 — December 31, 2004

Headquarters

Albuquerque, NM

Bank Information

e Bank Depositories

1

e Bank Accounts 1 Checking
Treasurer
e Treasurer When Audit Was Conducted David Duhigg

e Treasurer During Period Covered by
Audit

Victor S. Bruno (January 1, 2003 — June
18, 2003

David Duhigg (June 19, 2003 — December
31, 2004)

Management Information

e Attended FEC Campaign Finance Seminar

No

© Used Commonly Available Campaign
Management Software Package

Yes

¢ Who Handled Accounting and
Recordkeeping Tasks

Volunteer campaign staff

Overview of Financial Activity

(Audited Amounts)
Cash on hand @ January 1, 2003 $ 40,221
o Contributions from Individuals $ 1,621,520
o Contributions from Political Committees 450,909
o_Refunds 14,803
o Other Receipts 119
Total Receipts $ 2,087,351
o Operating Expenditures $ 2,096,952
o Contribution Refund 2,450
Total Disbursements $ 2,099,402
Cash on hand @ December 31, 2004 $ 28,170



| Finding 2. Untimely Filing of Form 3Z-1

Summary

RRFC failed to file timely Form 3Z-1 (Consolidated Report of Gross Receipts for
Authorized Committees) with its 2003 Year End Report due on January 31, 2004.
Instead, RRFC filed Form 3Z-1 on April 14, 2004 (73 days late) in response to a Request
for Additional Information (RFAI). In response to the Interim Audit Report, RRFC
acknowledged that Form 3Z-1 was filed untimely and questioned the significance of the
filing since no candidate committed personal funds in connection with the primary or
general elections.

Legal Standard

Special Reporting Requirements. Principal campaign committees of candidates for the
U.S. House and the U.S. Senate must file FEC Form 3Z-1 as part of their July Quarterly
and Year-End Reports in the year preceding the year in which the general election for the
office sought is held. The information in this form allows opposing candidates to
compute their “gross receipts advantage” used to determine whether a candidate is
entitled to an increased contribution limit. The following information must be disclosed:

1. Gross receipts to date for the primary and general elections,

2. Aggregate amount of contributions from personal funds of the candidate for the
primary and general elections, and,

3. A calculation of gross receipts less the candidate’s personal contributions for each
election. 11 CFR §104.19.

Facts and Analysis

The Audit staff reviewed all filings by RRFC and determined that a Form 3Z-1 was not
filed with its 2003 Year End Report due on January 31, 2004. Instead, RRFC filed Form
3Z-1 73 days late on April 14, 2004 in response to a Request for Additional Information

(RFAI).

The Audit staff determined gross receipts for the primary election of $191,463 and for the
general election of $11,020 should have been disclosed on Form 3Z-1 of the 2003 Year-
End Report. The totals disclosed on the Form 3Z-1 filed in April 2004 were determined
to be materially correct. There were no personal contributions by the candidate.

The Audit staff discussed this matter with RRFC representatives at the exit conference.
In response, RRFC acknowledged the late filing of FEC Form 3Z-1 and noted that other
committees faltered in this area. Nonetheless, RRFC was required to file FEC Form 3Z-1
in a timely manner.

2 This regulation became effective January 27, 2003; as such, this form was first required to be filed by
committees in the 2004 election cycle.



FEDERAL ELECTION COMMISSION
WASHINGTON, D.C. 20463

June 22, 2006

MEMORANDUM

TO: ROBERT W. BIERSACK
PRESS OFFICER
PRESS OFFICE

FROM: JOSEPH F. STOLTZ th
ASSISTANT STAFF ‘CTOR
AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON
RICHARD ROMERO FOR CONGRESS COMMITTEE

Attached please find a copy of the audit report on the Richard Romero for Congress
Committee which was approved by the Commission on June 6, 2006.

All parties involved have received informational copies of the report and the report
may be released to the public.

Attachment as stated

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


Part IV
Findings and Recommendations

| Finding 1. Failure to Itemize Debts and Obligations

Summary

The Audit staff identified debts and obligations totaling $26,881 that were not itemized
on Schedules D (Debts and Obligations). In response to the Interim Audit Report, RRFC
amended their reports to materially disclose these debts and obligations.

Legal Standard

A. Continuous Reporting Required. A political committee must disclose the amount
and nature of outstanding debts and obligations until those debts are extinguished. 2
U.S.C §434(b)(8) and 11 CFR §§104.3(d) and104.11(a).

B. Separate Schedules. A political committee must file separate schedules for debts
owed by the committee and debts owed to the committee, together with a statement
explaining the circumstances and conditions under which each debt and obligation was
incurred or extinguished. 11 CFR §104.11(a).

C. Itemizing Debts and Obligations.

e A debt of $500 or less must be reported once it has been outstanding 60 days from
the date incurred (the date of the transaction); the committee reports it on the next
regularly scheduled report.

e A debt exceeding $500 must be disclosed in the report that covers the date on
which the debt was incurred. 11 CFR §104.11(b).

Facts and Analysis

During a 100% review of disbursements, the Audit staff identified debts and obligations
totaling $26,881 owed to four vendors that were not itemized on Schedules D. One of the
errors was a debt of $25,000 for media production costs that should have been itemized
on Schedule D of the 2004 October Quarterly Report. The Audit staff notes that RRFC
reported no debts owed for the entire period covered by this audit.

The Audit staff discussed this matter with RRFC representatives at the exit conference
and provided a schedule of the transactions noted above. A RRFC representative stated
that amendments would be filed to disclose the debts.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that RRFC amend its reports to correct the disclosure of
the debts and obligations noted above. In response, RRFC filed amended reports
materially correcting these errors.


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. Failure to Itemize Debts and Obligations
Finding 2. Untimely Filing of Form 3Z-1

Page



Report of the Audit Division on
Richard Romero for Congress

January 1, 2003 - December 31, 2004



Report of the Audit Division on

Richard Romero for Congress
January 1, 2003 - December 31, 2004

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).

About the Campaign (p. 2)

Richard Romero for Congress (RRFC) is the principal campaign
committee for Richard Romero, Democratic candidate for the
U.S. House of Representatives from the state of New Mexico, 1*
District. RRFC maintains its headquarters in Albuquerque, New
Mexico. For more information, see the chart on Campaign
Organization, p. 2.

Financial Activity (p. 2)
¢ Receipts

o Contributions from Individuals $1,621,520

o Contributions from Political 450,909
Committees

o Refunds 14,803

o Other Receipts 119

o Total Receipts 2,087,351
¢ Disbursements

o Operating Expenditures $ 2,096,952

o Contribution Refunds 2,450

o Total Disbursements $ 2,099,402

Findings and Recommendations (p. 3)
e Failure to Itemize Debts and Obligations (Finding 1)
e Untimely Filing of Form 3Z-1 (Finding 2)