Part II
Overview of Campaign

Campaign Organization

Important Dates Coburn for Senate committee

e Date of Registration March 16, 2004

e Audit Coverage March 11, 2004 — December 31,2004
Headquarters Muskogee, Oklahoma

Bank Information

e Bank Depositories 1

e Bank Accounts 1 Checking

Treasurer

e Treasurer When Audit Was Conducted Wade A. Stubbs

¢ Treasurer During Period Covered by Audit _| Wade A. Stubbs

Management Information

e Attended FEC Campaign Finance Seminar_| No

¢ Used Commonly Available Campaign Yes
Management Software Package

e Who Handled Accounting and Paid Staff
Recordkeeping Tasks

Overview of Financial Activity

(Audited Amounts)
Cash on hand @ March 11, 2004 $0
o Individuals 3,898,5979
o Political Party Committees 65,144
o Other Political Committees 793,488
o Transfers From Other Authorized 352,437
Committees
o_Refunds/Rebates 2,722
Total Receipts $5,112,387
o Operating Expenditures 5,030,521
o Contribution Refunds 19,100
o Other Disbursements 7,500
Total Disbursements $5,057,121
Cash on hand @ December 31, 2004 $ 55,266



CSC stated that prior to the arrival of the Audit staff; the Committee conducted its own
internal audit, then corrected and amended all reports. This was done to expedite the
FEC audit process and in the interest of full disclosure, to correct the public record as
soon as possible. Further, CSC instituted procedures to prevent similar issues in future
reports.

| Finding 2. Failure to File 48-Hour Notices

Summary

CSC failed to file 48-hour notices for 202 contributions totaling $349,100. The Audit
staff recommended that CSC provide evidence that the 48-hour notices were timely filed
or submit any written comments it considers relevant. In response, CSC stated that they
have restructured their staff and procedures to ensure future compliance.

Legal Standard

Last-Minute Contributions (48-Hour Notice). Campaign committees must file special
notices regarding contributions of $1,000 or more received less than 20 days but more
than 48 hours before any election in which the candidate is running. This rule applies to
all types of contributions to any authorized committee of the candidate. 11 CEFR
§104.5(f).

Facts and Analysis

The Audit staff reviewed contributions of $1,000 or more that were received during the
48-hour notice filing periods for the primary and general elections. CSC failed to file 48-
hour notices for 202 contributions totaling $349,100; (13 contributions totaling $29,500
during the primary election, and 189 contributions totaling $319,600 during the general
election). CSC indicated that the failure to file these 48-hour notices were an oversight
due to inadequate staffing.

Interim Audit Report Recommendation and Committee's Response
The Audit staff recommended that CSC provide:
¢ documentation to demonstrate the contributions in question were
properly included in 48-hour notices; or,
¢ documentation establishing the contributions were not subject to
48-hour notification; and/or,
© any written comments it considers relevant.

CSC acknowledged that it failed to file several 48-hour notices. CSC stated it
understands the importance of the 48-hour notices and has restructured its staff and
procedures to ensure future compliance in filing all reports.


Part I
Background

Authority for Audit

This report is based on an audit of Coburn for Senate Committee (CSC), 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, this audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The consistency between reported figures and bank records.

The completeness of records.

Other committee operations necessary to the review.

ANPYWNE


Part III
Summaries

Findings and Recommendations

Finding 1. Itemization of Contributions from Individuals
Contributions received from individuals were reviewed on a sample basis. The review
indicated that approximately 18% of such contributions which aggregated in excess of
$200 were not itemized on CSC’s reports. CSC filed amended reports which materially
corrected the itemization errors. The Audit staff recommended that CSC submit any
written comments it considers relevant. In response, CSC stated that it has instituted
procedures to prevent similar issues in future reporting. (For more detail, see p. 4)

Finding 2. Failure to File 48-Hours Notices

CSC failed to file 48-hour notices for 202 contributions totaling $349,100. The Audit
staff recommended that CSC provide evidence that the 48-hour notices were timely filed
or submit any written comments it considers relevant. In response, CSC stated that they
have restructured their staff and procedures to ensure future compliance. (For more
detail, see p. 5)

Finding 3. Receipt of Contributions that Exceeds Limits
CSC accepted contributions from political action committees that exceeded the limitation
by $22,100. All of the excessive contributions were refunded; however, the refunds were
not timely. The Audit staff recommended that CSC submit any written comments it
considers relevant. In response, CSC stated it has instituted procedures to ensure that
excessive contributions are handled timely. (For more detail, see p. 6)


| Finding 3. Receipt of Contributions that Exceed Limits

Summary

CSC accepted contributions from political action committees that exceeded the limitation
by $22,100. All of the excessive contributions were refunded; however, the refunds were
not timely. The Audit staff recommended that CSC submit any written comments it
considers relevant. In response, CSC stated it has instituted procedures to ensure that
excessive contributions are handled timely.

Legal Standard

A. Authorized Committee Limits: An authorized committee may not receive more
than a total of $2,000 per election from any one person or $5,000 from a multi-candidate
political committee per election. 2 U.S.C. §441a(a)(1)(A), 11 CFR §§110.1(a) and (b)
and 110.2(a) and (b).

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
¢ deposit the contribution into its campaign depository 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).

Facts and Analysis

CSC accepted contributions from political action committees that exceeded the limitation
by $22,100. All of the excessive contributions were refunded; however, the refunds were
not timely. CSC did not deposit the excessive portions into a separate account but did
maintain sufficient funds to make the necessary refunds. This matter was discussed at the
exit conference. In response, CSC reiterated that refunds were made but not within the
required number of days.

Interim Audit Report Recommendation and Committee's Response
The Audit staff recommended that CSC submit any written comments it considers
relevant. CSC stated that it has instituted procedures to ensure that excessive
contributions are handled timely.


FEDERAL ELECTION COMMISSION
Washington, DC 20463

January 25, 2007

MEMORANDUM

To: Robert W. Biersack
Press Officer

From: Joseph F. Stoltz
Assistant Staff rr
Audit Division

Subject: Public Issuance of the Report of the Audit Division on Coburn for Senate
Committee

Attached please find a copy of the audit report on Coburn for Senate Committee,
which was approved by the Commission on January 9, 2007.

All parties involved have received 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
DSDD Website


Part IV
Findings and Recommendations

| Finding 1. Itemization of Contributions from Individuals _|

Summary

Contributions received from individuals were reviewed on a sample basis. The review
indicated that approximately 18% of such contributions which aggregated in excess of
$200 were not itemized on CSC’s reports. CSC filed amended reports which materially
corrected the itemization errors. The Audit staff recommended that CSC submit any
written comments it considers relevant. In response, CSC stated that it has instituted
procedures to prevent similar issues in future reporting.

Legal Standard
When to Itemize. Authorized candidate committees must itemize:
¢ Any contribution from an individual if it exceeds $200 per election cycle, either
by itself or when aggregated with other contributions from the same contributor;
and
e Every contribution from any political committee, regardless of the amount
2 U.S.C. §434(b)(3)(A), (B) and (D).

Definition of Itemization. Itemization of contributions received means that the recipient

committee discloses, on a separate schedule, the following information:

The amount of the contribution;

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

The full name and address of the contributor;

In the case of contributions from individual contributors, the contributor’s

occupation and the name of his or her employer; and

e Election cycle-to-date total of all contributions from the same contributor. 11
CFR §§100.12 and 104.3(a)(4) and 2 U.S.C. §434(b)(3)(A) and (B).

Facts and Analysis

Contributions received from individuals were reviewed on a sample basis. The review
indicated that approximately 18% of the contributions which aggregated in excess of
$200 were not itemized on CSC reports. After CSC received notice of the audit, it filed
amended reports. These amendments materially corrected the itemization errors.

This matter was discussed at the exit conference. CSC representatives stated it changed
to a different software application during the campaign and much of the data was omitted
by the input staff, thereby, affecting contributions requiring itemization.

Interim Audit Report Recommendation and Committee's Response
The Audit staff recommended that CSC submit any written comment it considers
relevant.



Report of the Audit Division on

Coburn For Senate Committee
March 11, 2004 - 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)

Coburn for Senate Committee (CSC) is the principal campaign
committee of Thomas A. Coburn, Republican candidate for the
U.S. Senate from the state of Oklahoma and is headquartered in
Muskogee, Oklahoma. For more information, see chart on the

Campaign Organization, p.2.

Financial Activity (p. 2)
e Receipts

o Individuals $ 3,898,597
o Political Party Committees 65,144
o Other Political Committees 793,488
o Transfer From Other Authorized

Committees 352,437
o Refunds/Rebates 2,722
o Total Receipts $ 5,112,387

« Disbursements

o Operating Expenditures $ 5,030,521
o Contribution Refunds 19,100
o Other Disbursements 7,500
o Total Disbursements $ 5,057,121

Findings and Recommendations (p. 3)

e  Itemization of Contributions from Individuals (Finding 1)
e Failure to File 48-Hour Notices (Finding 2)

e Receipt of Contributions that Exceed Limits (Finding 3)


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, Recommendations, and
Committee Response
Finding 1. Itemization of Contributions from Individuals
Finding 2. Failure to File 48-Hour Notices
Finding 3. Receipt of Contributions that Exceed Limits

Page

Ans