•• FEDERAL ELECTION COMMISSION

WASHINGTON, 0 C. 20463

A8S-29

April 23, 1986

MEMORANDUM

Attached please find a copy of the final audit report

of Massachusetts Republican State Committee which was

approved by the Commission on April 10, 1986.

Informational copies of the report have been received

by all parties involved and the report may be released to

the public.

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TO:

FROM:

SUBJECT:

FRED EILAND

PRESS OFFICER

ROBERT J. COSTA lC-~ - --.:.4\., tz.~) L ,

ASSISTANT STAFF DIRECTOR 4.);" .~(('" AUDIT DIVISION

PUBLIC ISSUANCE OF FINAL AUDIT REPORT - MASSACHUSETTS REPUBLICAN STATE COMMITTEE

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Attachment as stated

cc: FEe Library

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Office of General Counsel ~blic Record
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fEDERAL ELECTION COMMISSION

WASHINCTON. D.C. 20463

1.85-29

REPORT OP THE AUDIT DIVISION

ON

MASSACHUSETTS REPUBLICAN STATE COMMITTEE

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I. Background

A. Overview

This report i8 based on an audit of the Massachusetts

RepUblican State Committee (Wthe CommitteeW), unde~taken by the

Audit Division of the Pedera1 Election Commission in accordance

with the provisions of the Federal Election Campaign Act of 1971,

as amended (Wthe Act-). The audit was conducted pursuant to

Section 438(b) of Title 2 of the United States Code which states,

in part, that the Commission may conduct audits and field

investigations of any political committee required to file a

report under section 434 of this title. Prior to conducting any audit under this subsection, the Commission shall 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.

The Committee registered with the Clerk of the Bouse of

Representatives on January 16, 1976 as the State Committee of the

RepUblican Party of Massachusetts. The Committee maintains its

headquarters in Boston, Massachusetts. The audit covered the

period January 1, 1983 through December 31, 1984. The Committee

reported a cash balance on January 1, 1983 of $1,874.78, total

receipts of $633,974.83, total expenditures of $576,591.27, and a

cash balance on December 31, 1984 of $59,258.34.

This audit report is based on documents and workpapers which support each of its factual statements. They form part of

the record upon which the Commission based its decisions on the

matters in the report and were available to the Commissioners and

appropriate staff for review.

B. Key Personnel

The Treasurers of the Committee during the period covered by the audit were Thomas J. Barry from January 1, 1983 to

May 23, 1984 and James L. Bdho1m from May 24, 1984 to December

31, 1984 •
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The audit included such tests as verification of total

reported receipts and expenditures and individual transactions,

review of required supporting documentation, and such other audit

procedures as deemed necessary under the circumstances, except that although the disbursement records maintained by the

Committee met the recordkeeping requirements of 2 U.S.C. S

432(c) (5) and 11 CFR S 102.9(b), such records were not sufficient

to perform testing of debts and obligations. In addition,

although the contribution records provided by the Committee met

the recordkeeping requirements of 2 U.S.C. S 432(c) and 11 CFR S

102.9(a), such records were not maintained in a manner Which

allowed testing for correct aggregate contribution totals, proper itemization and compliance with the Act's contribution

limitations.

II. Audit Pindings and Recommendations

Sections 434(b) (1) and (2) of Title 2 of the United

States Codes require disclosure of the amount of cash on hand at

the beginning of the reporting period and the total sum of all

receipts.

A reconciliation of the Committee's bank activity to

its disclosure reports covering the periods January 1, 1983 to

December 31, 1983 and January 1, 1984 to December 31, 1984

indicated that reported 1983 receipts were overstated $6,074.60

(net) and 1984 receipts were overstated by $32,772.86 (net).

The overstatements were a result of the Committee's

failure to properly report contributor checks returned by the

bank for insufficient funds, interest income and unitemized

receipts.

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A. Misstatement of Financial Activity

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Committee officials stated that they did not know why the 1983 receipts were overstated, and gave no response in regard

to the 1984 receipts overstatement.

The Audit staff recommended that the Committee amend

its January 1, 1983 through December 31, 1984 reports to

accurately depict its financial activity.

On March 31, 1986, the Committee filed amended summary

pages which corrected the irregularities mentioned above •
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Recommendation

The Audit staff recommends no further action on this matter.

B. Missing Contributor Records

Sections 432(c)(1), (2), (3) and (d) of Title 2 of the

United States Code state that the treasurer of a political committee shall keep an account of all contributions received by

or on behalf of such political committees, the name and address

of any person who makes any contribution 1n excess of $50,

together with the identification of any person who makes a

contribution or contributions aggregating more than $200 during a

calendar year, together with the date and amount of any such

contribution. The treasurer shall preserve all records required

to be kept by this section and copies of all reports required to

be filed by this subchapter for 3 years after the report is

filed.

The Committee provided the Audit staff with copies of

contributor checks and deposit slips totaling $598,736.73.

However, the Committee failed to provide receipt records for

$12,015 of the funds deposited •

At the exit conference, the Committee was provided with

a schedule of deposits Which lacked contributor documentation.

On 'October 11, 1985, the Committee submitted deposit information

which adequately documented the items noted above.

Recommendation

The Audit staff recommends no further action on this matter.

C. Omission of Disclosure Information - Receipts

Section 434(b) (3) of Title 2 of the United States Code,

states, in part, that each report shall disclose the

identificatIon of each person whose contribution or contributions

have an aggregate amount or value in excess of $200 within the

calendar year.

Section 104.3(a) (4) (1) of Title 11, Code of Federal

Regulations states, in part, that the identification (as defined

at 11 CFR S 100.12) of each contributor and the aggregate year- to-date total for such contributor shall be reported for each

person who makes a contribution to the reporting committee during the reporting period which aggregates in excess of $200 per calendar year •

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The Audit staff analyzed the records made available and

performed testing with respect to those contributions equal to or

greater than $200.01 received from individuals. Based on a

discussion with a Committee official and our analysis of the

Committee's receipt records, it was apparent that the Committee

did not maintain a system for aggregating multiple contributions

received from individuals. However, our testing did indicate

that the Committee did not include on its reports adequate disclosure information for 110 of 252 contributions received from

individuals (43.65.).

Committee officials stated that they did not receive

multiple contributions and that generally small checks went into

the Federal account. The Committee was provided with a schedule

of contributions which lacked the disclosure information noted

above.

The Audit staff recommended that the Committee amend

its reports to provide the required information and that the

Committee develop an adequate system for aggregating contributions received.

On January 3, 1986, the Committee filed amended

Schedules A which substantially corrected the irregularities mentioned above.

Recommendation

The Audit staff recommends no further action on this matter.

D. Omission of Disclosure Information - Expenditures

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Section 434(b) (5) (A) of Title 2 of the united States

Code states, in part, that each report shall disclose the name

and address of each person to whom an expenditure in an aggregate

amount or value in excess of $200 within the calendar year is

made, together with the date, amount, and purpose of such

operating expenditure.

The Audit staff reviewed the Committee's 1983 and 1984

expenditures to determine if the Act's itemization requirements

were satisfied. Our review revealed that the Committee failed to

provide adequate disclosure information for 110 of 262

expenditures (42') which aggregated or had a value in excess of

$200 within~a calendar year. The Audit staff provided the

Committee with a schedule of the disbursements which required additional disclosure information•
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On September 5, 1985, the Committee filed amended

Schedules B which corrected the irregularitie8 mentioned above.

"commendation

~be Audit staff recommends no further action on this matter•