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REPORT OF THE AUDIT DIVISION

ON THE

BROUILLETTE FOR CONGRESS COMMITTEE

FEDERAl. ELECTION COl\t1MISSION

1\lCJ K SIIU liN W

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I. Background

A. Overview

This report is based on an audit of the Brouillette

for Congress Committee ("the Committee") undcrtnken by the Audit

Division of the Federal Election Commission in accordance with

the Commission's audit policy to determine whether there has

been compliance with the provisions of the Federal Election

Campaign Act of 1971, as amended ("the Act"). The audit was

conducted pursuant to Section 438(a) (8) of Title 2 of the

United States Code which directs the Commission to make from

time to time audits and field investigations with respect to

reports and statements filed under the provjsions of the Act.

The Committee registered with the Federal Election

Commission on May 10, 1976, in support of Francis D. Brouillette,

Candidate for election to the Office of u.S. Representative from

the Eleventh Congressional District of Michigan. The Committee

maintnincd its headquarters in Iron Mountain, Michigan.

The audit covered the period from May 10, 1976,

through August 31, 1977. During this period the Committee

reported a beginning c3sh balance of $-0-, totvl receipts of

$98,622.40, tolal expenditures of $93,574.69 ar.d a closing

cash balance on March 31, 1977 !/ of $47.71.

This audit report is based on documents and working

papers which support each of the factual statements. They form

part of the record upon which the Commission based its decisions

on the matters in tl1(~ report and were available to Commissioners

and appropriate staff for review.

!/ The CO;1uni t tee filed a FEe Form 3a Postcard for the

period 4/1/77-3/31/;7.

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B, Key Personnel

The principal officers of the Committee· during the

period covered by the audit were Thomas Baldini, Chairman, and

Bernadine Blomquist, Treasurer.

c. Scope

The audit included such tests as verification of total

reported receipts and expenditures and individual transactions:

review of required supporting documentation: analysis of Committee debts and obligations; and such other audit procedures as

deemed necessary under the circumstances.

II. Auditor's Statement and Description of Findings

It is the opinion of the Audit staff, based upon examination

of the reports and statements filed and the records presented,

that except for the deficiencies noted below, the reports and

statements of the Brouillette for Congress Committee fairly

present the financial activities of the Committee for the period

covered by the audit. Further, except as noted below, no material

problems in complying with the Federal Election Campaign Act were

discovered during the course of the audit.

A. Filinq of Disclosure Report

Section 434(a) (1) (C) of Title 2 of the United States

Code requires in part, that politic~l committees authorized by a

candidate, shall in any year in which the candidate is not on the

ballot for election to Federal office, file quarterly reports of

receipts and expenditures following the close of any quarter in

which the candidate and his authorized committee received contributions or m~de expenditures, or both, the total amount of

which, taken together, exceeds $5,000.

During our review of the Committec's records for thc

first qU3rter of 1977, we found that the Committee had received

contributions and made expenditures, together amounting to

$7,751.52, thus requiring a full disclosure report to be filed

for the qu~rtcr. Howevcr, for the calendar quarter involved,

the Committee filed only an FEe Form 3a (letter equivalent)

received by the Commission on April 6, 1977. 'rhe Conunittee was

advised of the provisions o( Section 434(a) (1) (C) regarding the

$5,000 threshold for qU~lrterly filing exemptil)ns. The Committee

responded that the FEC Form 3a was filed because of a misunderstanding of the reporting requirements.

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In accordance with our recommendation, the Committee

filed an amendment on February 28, 1978, which included the first

quarter 1977 activity.

Rccommcnd(ltion

Since the Committee filed the nppropriate amendment, we

recommend no further action in this matter.

B. Depo~;it of Receipts and Cash Expenditures

in EXCl~~S of $100

Sectioll 437b(a) (1) of Title 2 of the United States Code

requires in part, that all contributions re~cived by a committee

be deposited into design~ted campaign depositories and that all

expenditures (except petty cash) be made by check.

Durinq our review of expenditures, it was noted that

in 1976 the Committee made three (3) cash expenditures to the

Candidate, each in excess of $100, totalinq $650. An examination of the b~nk records indicated that the cash receipts

from which these expenditures were made had not been deposited

as required.

The Committee explained that on three (3) occasions

when cash contributions were received, hasty expenditures were

made in cash to the Candidate who used the funds to pay his

travel expenses \vhile campaigning immediately thereafter. The

Committee was advised of the provisions of Section 437b(a) (1)

and they ackno\vlcd'jcd the problem.

R(~commend.:ltion

While we recognize the potential seriousness of such activity,

it is the opinion of the i\udit staff that the circumstances described represent three (3) isolated incidents rather than Committee practice. Therefore, as the Committee made a limited numbt'r

of such expendilurcs, e~ch with relatively small dollar values, 31H.1

because the receipts and expenditures were reported properly, we

rcconunend that the COInluission take no further action regarding

this matter.

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c. Cash Contribution in Excess of $100

Section 441g of Title 2 of the United States Code

prohibits any person from making contributions of currency to or

for the b0nefit of any candidate which, in the aggregate, exceed

$100 witl} re~pect to any campaign of such candidate for nomination [or ('lection, or for election, to Federal office. Section

110.4 (c) (~) of '1'i tIe 11 of the Code of Federal Regula tions requires

a candidat(~ or committee receivinq ;1 cash contribution in excess of

$100 to return the amount over $160 to the contributor.

During our review of Committee receipts, it was noted

that a $1,000 ca~jh contribution Wd:; received and deposited by

the Committ(!!!. 'l'ht' Committee was ddvi.scd of its responsibility

under Section 110.4(c) (2) of 'ritlt.' 11, Code of Federal Regulations, to promptly refund the portion of a cash contribution

in excess of $100. Commi.ttee reprl~:;entatives replied that the

Committee ~;t:aff member handlinq the contribution was unaware

of the limit regarding cash contributions and deposited the

cash in good faith.

We recommended that the Committee return $900,

reprcscntinfJ the cxcessive amounL received in cash, to the

contributor and provide the Commi~)sion with documcnte:ttion of

the refund. This matter was referred to the Office of General

Counsel which concurred with our recommcnde:ttion.

On January 9, 1978, the Candidate assumed the Committec's

obligation and repaid $900 to the contributor. Satisfactory

documentation of this transaction was provided to the Commission

on January 16, 1978.

Recommenddti )n

Since the excessive amount received in cash has been refunded,

we recommend no further action in this matter.

D. Itemized Contributions

Section 434(b) (2) of Title 2 of the United States Code

requires in part, that a committee disclose the full name, mailinq

address, occupation and principal place of business of each person

whose contributions to or for the conwittec aggregate in excess of

$100 durinq calendar year, together with the amount and date of

each contribution.

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During the audit, it was determined that nine (9)

individual contributions, representing 16.4% of tpe total

number of such contributions requiring itemization, were not

itemized. These contributions, which ranged in amounts from

$100 to $200, amounted to $1,150 (5.5~ of the total dollar

value of itcmizable contributions).

At our suggestion, the Committee filed a comprehensive

amendment including the contributions described above, on February

28, 1978.

Recommendation

Since the Committee has filed the appropriate amendment, we

recommend no furlhcr action.

E. Retention of Supportinq Documentation for Expenditures

Section 432(d) of Title 2 of the United States Code

requires in part, that the treasurer obtain and keep a receipted

bill, st~ting the particulars, (or every expenditure made by or

on behalf of a political committee in excess of $100 in amount,

and for any such expenditure in a lesser amount, if the aggregate

amount of such expenditures to the same person during a calendar

year exceeds $100.

Section l02.9(c) (4) or Title 11, Code of Federal

Regulations, states in part, that when a receipted bill is not

available, the treasurer may keep the cancelled check and the

bill, invoice or other contelnporaneous memorandum.

During our review of expenditures, it was determined

that for 68 expenditures (26.9% of ~he total number aggregating

in excess of $100) document~tion coasisted only of the cancelled

checks. These expenditures totaled $33,741.62 (36.5% of the

total dollar value of expenditures requiring such documentation) .

We recommended that the committee obtain the necessary

supporting documentation and submit it to the Audit staff for

review or present evidence of their efforts to do so. On November

23, 1977, the Committee provided the requested documentation.

Recommcnc1.:ttion

Since adequate documentation has been received, no further

action is recommended in this matter.

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F. Itemized Expenditures

Section 434(b) (9) and (10) of Title 2 of the United

States Code requires in part, that a committee disclose the

idcntifie'll ion of each person to whom expenditures aggregating

in exeC!j!: of $100 during a calendar year have been made, together

with the "mount, date, and purpose of each such expenditure.

During the audit, it was determined that six (6)

expenditu"c~B to four (4) payees aggregating in excess of $100

were not itemized as required. These expenditures, which range

in amount~ from $50 to $250, totalled $688.01 (1% of the total

dollar value of itemizable expenditures).

Since we requested that the Committee file a

comprehennive amendment for 1976 itemizing contributions as

indicated in Finding 0 above, we recommended that they include

these relatively minor expenditure omissions in the 1976

amendment. These expenditures were included in the comprehensive

amendment filed by the Committee on February 28, 1978.

R0eomrnend~tion

Since the Committee has filed the requested information,

no further action is recommended in this matter •

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CONGRESSIONAL ~UOIT REPORT

Candidate/Committee: Francis Brouillette/Brouillette for Congre~s Committee

State: Michigan

Oist~ict: 11

Location: Northern Michigan

Political Party Affiliation: Democrat

Major Opponent(s): Phillip Ruppe (R)

Ot~er Candjc~~~s ;uditad: Ruppe

Votes Cast: General Elec~ion - Ruppe 118,871 Brouillette 97,325

PrimarJ Election NONE

Total Rec~ip~s for ?eriod:

Total Ex~encit~r~s for ?~ricd:

Firs~ Elec:~c (if appiicable):

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$98,622.40

$98,574.69

N/A

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