FEDERAL ELECTION COMMISSION •

MEMORANDUM

WASHINCTON. D.C. 20463 A8l-66

May 27, 1982

TO:

FROM:

SUBJECT:

FRED S. EILAND

PRESS OFFICE ?/t-u

BOB COSTA -ttJF

PUBLIC ISSUANCE OF FINAL

AUDIT REPORT-AMERICAN PARTY

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Attached please find a copy of the final audit report

of the American Party which was approved by the Commission

on May 18, 1982.

Informational copies of the report have been received

by all parties involved and the report may be released to

the public.

Attachm~nt as stated

cc: FEC Library

RAD ~ub1ic Record
• FEDERAL ELECTION COMMISSIO~

WASHINCTON. 0 C. 20463

A81-66

REPORT OF THE AUDIT DIVISION

ON THE

AMERICAN PARTY

Release Date 6/1/82

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I. Background

A. Overview

This report is based on an audit of the American Party (lithe Committee"), undertaken 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(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 section, 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 Federal Election

Commission on August 15, 1975. The Committee maintains its

headquarters in Salt Lake City, Utah.

The audit covered the period January 1, 1980 through December 31, 1980. The Committee reported a cash balance on

January 1, 1980, of $3,133.43J total receipts for the period of

$17,284.4sJ total disbursements for the period of $18,046.69J and

a cash balance on December 31, 1980, of $1,078.56. !L

The figures reported by the Committee do not balance due to

disclosure and mathematical errors contained in

Committee reports. (See Finding A)

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This audit report is based upon documents and working

papers 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 audited were Mr. Vern Morse January 1, 1980 through March 27,

1980, and Mr. Robert L. Youngblood from March 28, 1980 to

December 31, 1980.

C. Scope

The audit included such tests as verification of total

reported receipts and expenditures and individual transactions,

review of required supporting documentation, and analysis of

Committee debts and obligationsl and such other audit procedures

as deemed necessary under the circumstances.

II. Findings and Recommendations

A. .Disclosure of Receipts

Section 432(c) of Title 2 of the united States Code

states that the treasurer of a political committee· shall keep an

account of all contributions received by or on behalf of such

political committee.

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Section 434(b) (2) and (3) (A) of Title 2 of the United

States Code provides that each report shall disclose the total

amount of all receipts during the reporting period, and if the

amount or value of a person's contributions aggregate in excess

of $200, the report shall disclose the identification of each

person, along with the date and amount of any such contributions.

A reconciliation of Committee bank statements to report figures disclosed that the Committee understated total 1980

receipts by $1,875.28 or 10.2%. The Audit staff also identified

8 contributions totaling $820.00, or 42.1% of the 19

contributions required to be itemized, which were not itemized on

Committee reports. Further, a review of the records and reports in support of the 11 contributions itemized determined that 90.9%

of the contributors were not properly disclosed with the

contributor's occupation and name of employer.

The problems noted above appeared to result from a

receipts processing system which did not facilitate aggregation of contributions, or the adequate preparation of FEC disclosure

reports.
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In the interim audit report, the Audit staff

recommended that the Committee file a comprehensive amendment for

1980 disclosing an additional $1,875.28 in receipts, itemize 8

contributions not previously itemized, and obtain and disclose

the missing occupation and name of employer information for the

contributors which require itemization. .

On AprilS, 1982, and May 7, 1982, the Committee

submitted a comprehensive amendment substantially complying with

the Audit staff's recommendation.

Recommendation

The Audit staff recommends no further action.

B. Possible Receipt of Prohibited Contributions

Section 44lb of Title 2 of the United States Code

states, in part, that it is unlawful for any corporation or any

labor organization to make a contribution or expenditure in

connection with any Federal election to political office and

unlawful for any political committee to knowingly accept or

receive any such contribution or expenditure.

Committee receipt records identified transfers-in

totaling $3,540.74 from unregistered state and county committees.

According to the Committee Treasurer, the Committee does not

control activity in the states and did not determine whether the

transfers-in were from accounts which contained funds from

prohibited sources•

. A similar problem, noted in an audit covering the

period January 1, 1975 through March 31, 1977, was included in

MUR 277(76).

In the interim audit report, The Audit staff

recommended that that the Committee submit evidence that the

contributions totaling $3,540.74 were not transferred from an

account which contained prohibited funds. If any of the

contributions were transferred from accounts containing prohibited funds, the Audit staff recommended that the

contributions be refunded to the contributors.

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On May 7, 1982, the Committee submitted a letter from

the National Chairman stating that the Committee had contacted

the state and county committees, and received verification from

the Committees that the transfers were from permissible sources•
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Recommendation

The Audit staff recommends that the Committee establish

procedures for aetermining the source of funds transferred from

state and local committees. T~e procedures should include the

following:

1) The verification by phone or letter of the

permissibility of funds received from unregistered committees.

A record should be kept of all communications oral and written.

2) Dissemination of information to state and local

committees concerning the types of contributions prohibited in

federal elections.

3) Procedures whereby transferring committees

automatically include a statement with their transfer stating that, the transfer was made from an account which received only contributions sUbject to the prohibitions and limitations of the

Act.

4) Procedures to refund transfers received from organizatio~s which are not established pursuant to 11 C.F.R.

102.5(a) and (b).

C. Disclosure of Transfers-In From Affiliated Committees

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

Code provides that each report shall disclose the identification

of each affiliated committee which makes a transfer to the committ~e during the reporting period and, where the reporting committee is a political party committee, each transfer of funds

from another political party committee regardless of whether such

committees are affiliated, together with the date and amount of

such transfer.

During the review of Committee receipt records, the

Audit staff identified seven (7) transfers-in totaling $791.93

from state party committees which were not itemized on Committee

disclosure reports. These seven transfers represent 9.1% of the

dollar value, and 18.9% of the number of transfers received

during 1980.

In the interim audit report, the Audit staff

recommended that the Committee file a comprehensive amendment for

1980 itemizing the seven (7) transfers not previously itemized.

On May 7, 1982, the Committee filed a comprehensive . amendment for 1980 itemizing the seven (7) transfers-in as

required.
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Recommendation

The Audit staff recommends no further action.

D. Disclosure of Expenditures

Section 434(b) (4) and (5) of Title 2 of the United

states Code requires the disclosure of total expenditures made

during the reporting period, and.if expenditures to a person

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

calendar year, the disclosure of the name and address, together wlth the date, amount, and purpose of each such expenditure.

The Audit staff identified 13 expenditures to~alin9

$2,560.04 which were not reported. Of these 13, 4 expenditures

totaling $2,065.28 required itemization. These expenditures

represent 12.5% of the total dollar value of Committee

expenditures required to be reported, and range in purpose from

tax payments to reimbursement of expenses.

In the interim audit report, the Audit staff

recommended that the Committee file a comprehensive amendment for

1980 reporting the additional expenditures, and itemizing the · four (4) expenditures which aggregated in excess of $200.00.

On May 7, 1982, the Committee filed a comprehensive

amendment for 1980 correcting the Committee's disclosed

expenditure activity, and itemizing the additional four (4)

expenditures.

Recommendation

The Audit staff recommends no further action.

E. Disclosure of Debts and Obligations

Section 434(b) (8) of Title 2 of the United States Code

states, in part, that each report shall disclose the amount and

nature of outstanding debts and obligations owed by such

political committee.

A review of Committee expenditure documentation

identified a debt of $1,937.00 for legal services rendered to the

Committee which was not disclosed on Committee reports•
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In the interim audit report, the Audit staff

recommended that the Committee include the debt noted above in

the comprehensive amendment to be filed for the 1980 period.

On May 7, 1982, the Committee submitted the recommended

amendment, and itemized the debt of $1,937 for legal services.

Recommendation

The Audit staff recommends no further action•