FE Of RAl. I: lfCllON C()1\1.\1ISSION

Decemher 18, 1980

MEMORANDU~

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TO:

THROUGH:

FROM:

SUBJECT:

FRED EILAND

PRESS OFFICE

BOB COSTA /,pI ;' .

RICK HALTER ',",J,- ,i. :

PUBLIC ISSUANCE OF FINAL (POST-PRIMARY)

AUDIT REPORT OF THE ANDERSON FOR PRESIDENT

COf\1MITTEE

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(\0 Attached please find a copy of the final (post-primary)

audit report of The Anderson for President Committee which

was approved by the Commission on November 18, 1980.

Informational copies of the report have been received by

all parties involved and this report may be released to the

public as of today, December 18, 1980.

Attachment as st~tcd

cc: FEC library

RAD

Public Records
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FEDERAL ELECTION COMMISSION

REPORT OF THE AUDIT DIVISION

ON

TIlE ANDERSON FOR PRESIDENT COrvUvlITTEE

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I. Background

In addition, Section 9039(b) of Title 26 of the United

States Code and Section 9038.l(b) of Title 11 of the Code of

Federal Regulations state, in relevant part, that the Commission

may conduct other examinations and audits from time to time as it

deems necessary.

This report is based on an audit of the Anderson

For President Committee (lithe Conunittee"), to determine whether

there has been compliance with the provisions of the Federal

Election Campaign Act of 1971, as amended (lithe Act"). The audit

was conducted pursuant to Section 9038(a) of Title 26 of the United

States Code which states that "after each matching payment period,

the Commission shall conduct a thorough examination and audit of

the qualified campaign expenses of every candidate and his

authorized committees who received pa1"ments under Section 9037."

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A. Overview

The Committee registered with the Federal Election

Commission on January 29, 1979, as the Anderson For President

Exploratory Committee. On May 7, 1979, the candidate authorized

the Committee to act on his behalf and changed the Committee's

name to the Anderson for President Committee. The Committee

maintains its headquarters in Rockford, Illinois.

The audit covered the period from the date of inception

of tht':; Exploratory Committee through April 30, 1980. The Cornrnit~QC:

reported an opening cash balance of $-0-, total receipts of

$6,878,253.50, total expenditures of $5,952,531.72, and a closin0

cash balance of $925,721.78 during this period.

This report is based upon docu~ents 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 the report and were available to Commissioners and appropriate

staff for review.
• B. Key Personnel

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The principal officers of the Conunittee dUI-ing the period

audited were: Mr. Frank P. Maggio, Chairman and Mr. Hugh D.

Hammerslag, 'I'.'Pilsurer.

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The audit included such tests as verification of total

reported receipts, expendi tures and individual tran!;dctions;

review of required supporting documentat~n; analysis of Committee

debts and obligations; review of contribution and expenditure

limitations; and such other audit procedures as deemed necessary

under the circumstances.

Section 441b(a) of Title 2 of the United States

Code states, in part, that it is unlawful for any national bank

to make a contribution or expenditure in connection with any

election to any political office, or in connection with any

primary election .

Section 100. 7 (a) (1) & (b) (] 1) of Title 11 of the

Code 0:: Fedc~-Cll Regulations states, in IJart, the term "contribution" includes a gift, subscription, loan, advance, or deposit

of money or an~·thing of value mac1l~ Ly any person for the purpose

of influencing any election for FcJcral office. An overdraft made

on ch0ckin~ or savings account sh~ll be considered a contribution

bv the bank or institution unless: the overdraft is made on an

a~count which is subject to automatic overdraft protection: the

ovcrdr3::t is subject to a definite interest rate which is usual

and customary; and there is a definite repayment schedule.

Findings Relating To Title 2 of the United States Code

1. Apparent Corporate Contribution

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During the reconciliation of the Con~ittce's bank

accounts to its disclosure reports, the Audit staff noted that

the Conmlittee's direct mail account for their Washington, D.C.

office \·;.:lS ovcrllrawn in the amount of $2,776.19 on April 28, 1980

~u:J. $12,802.23 nn April 30, 1980. In addition, there \\"as a chec:-~

outstanding as of April 30 in the a~ount of $235.46 whic~ was

paid by the bank on J.\lay 1, 1980, incrca~inq the overdra~t to

$13,037.69. Further analysis rev0alcd that the account ~aintained

the overJra:t position throush :'-lay 30, 1980.

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Committee officials stated that the overd~aft was

the result 0: boo}:keeping errors at the \-;aGhington, D.C. o~ficc

and the lenyth~' duration ou tstandilhJ was caused by coordi:lation

problems bot·.·;ccI1 the 111 inois and D. C. 0:- =- ices.
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By letter dated July 11, 1980, and copy of a

cancellL'd check, the Committee has provided-evidence that the

overdraft was paid in full, however, payment of interest was not

ind.i cal('cI at that time.

Recommendation

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As a result of audit work performed at the end of the 30 day

response period to the interim audit report, the Audit staff verified

that the Committee had paid to the bank ap September 22, 1980,

what appeared to be a usual and custom3~' charge for the usc of the

overdrawn funds. 'l.'he Audit staff therefore recommends no further

action on this matter.

2. Disclosure of Depositories

Section 433(c) of Title 2 of the United States

Code states, that any change in infor~:ation previously submitted

in a statement of organization shall be reported in accordance

with Section 432{g) no later than 10 days after the date of

change.

Our review of bank records presented for inspection

revealed 22 depositories which were no~ disclosed by the Committee.

The Audit staff advised the Committee of the requirement to

disclose all depositories.

Recommcn<1~tion

The Committee filed an amendment to its statement of organizatio::.

O~ October 20, 1980, adequately disclcsing the depositories noted

above. The Audit staff therefore recc~~cnds no further action on

t:1is matter.

3. Matter Referred to the Office of General Counsel

A certain matter noted during the audit was referred

to the Commission's Office of Gener131 Counsel for consideration on

J:.lly 25, 1980.

13. Findinqs ~~l.J.tin~r To Title 26 0:= rrhe United States Code

1. Undocumented L:q)cnc1i turcs

Sec t ion 9 0 33 . 2 (a) (2) & ( 3) 0 f TitIe 11 0 f the

CcJo of Fedcr31 Regulations r.-~quir0 the candid~te to repay any

a::-.Qun t.s deter:nined to ha':c bet-·n uS0d for p.J.yments of other than

q~.J.lified campaign expenses .
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aII C.F.R. Section q{13J.1(a) (1) sets forth the (1()(·\l1l\f~ntation necessary to df'tprmi !1("\ a qualified campaign ("X!lC'n~-;(~ as a receipted bi 11 whi eh is from the payee and stiltes

thl\ particulars of the expendi turc: or in the absence of such

recl'iptcd bill a cancelled chcc}~ negotiated by the payee plus

orlL-· of the following documents qener.:ltcd by the payee whic"h---

st~tes the particulars of the expenditurc; a bill, invoice,

voucher or contemporaneous memorandum. Where these documents

arc not available, then the Commission will accept a vouchpr or

contemporaneous memorandum from the candidate or committee. The

Commission will accept a cancelled check stating the particulars

of the expenditure, or the Commission m~lY .,pccept a cancelled

check and collateral evidence to document the qualified campaign

expenscs.

In reviewing state level pxpenditure activity, the

Audit staff noted expenditures totaling $63,204.57 which were not

adequately documented as to the particulars of the expenditure

or verifiable as to representing qU31ificd campaign expenses.

Of this total, $27,365.92 represented 71 identifiable disbursements

which were not adequately supported, and the remaining $35,838.65

consisted of activity for which no bank statements or cancelled

checks were presented for our review. The Committee officials

believed that they could obt~in dccu~entation for many of the

expenditures noted.

On Septcr.11:'er 16, 1980, tho Commission made a

preliminary determin3tion that, absent a showing to the contrar~

vlithin 30 dc:lys of the Committee' 5 receipt of the interim report,

the undocume~ted expendi turcs \~ould be viewed as no~-qualified

~~lmpaign expenses and the value re;:":lyablc to the U. S. Treasury.

P(\commend3tion

In response to the interim auc1it report, the Committee

submitted adequate supporting documentation which satisfied the

dc'cumentation requirements noted above in nl] material aspects. Thc~ Audit st.:iff therGfore reco:;,.me~ds no [urth('l- action on this

nl~tter.

2. Determi nCltion 0= !':ct Outst.• nd i llq C.:1m!)c:lign

ObI ia,-l-t i ons -(111(1 RC~~C1,.'i'!":0-!1t -te) t h~ ...---tf.S-~ Treasurv ----'- ---------_._--~------ --- -. ~--- - .

~. Dct0rrnin.:1tion of ::ct ('t\1~~~~l.':1l1dinc: Camp3iqn 61)-1-i~tlons

Section 9034.5(b) of Title 11, Code of Federal P('(:ul~ltions requires th:lt the c.:1r~did.:ttc submi t a St.:ltement of ~:ct

Outst3ndin<1 Camp.:liqn Oblic;.:1tior:s (:-:0CO) which contains, amonq

other items, the tot~l 0: all outst3ndinq obliqations for

qU.-:llificd canpaign e:·:pc!~SCS and .:1n estim<:1tc of necessary windin9

do~n costs within IS d~¥s of the ~3ndid~te's date of ineliqibility.
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On May 8, 1980, the Committee filed a Statement

of Net Outstanding Campaiqn Obligations dated April 24, 1980, the

candidate's date of ineligibility, and volun~arily submitted a

check in the amount of $323,573.00 representing the Committee's

preliminary c~lculation of their required repayment to the U.S.

Treasury pUrSl1.1nt to 26 U.S.C. 9038(h) (3).

During the course of the audi t, th(~ ]\udit

staff verified the items contained on the April 24, ]<)RO NOCO

statement and revie\ved the related acti vi ty throuqh rJ'dY 31, 1980.

Upon completion of our revic\v, the Commi ttee was in ~;\lbstantial

aareement with the audited statement whic.n indicated d net Quts~3ndinq campaiqn obligation surplus of ~1,013,119.61. During

audit field\\7or~: conducted in October, 1980, the Committee's

activity from June 1 through September 30, 1980 was reviewed

and the ~JOCO st.:ltemcnt adjusted accord inqlj'. The Commi ttee was

again in substantial agreement with the audited statement which

M appears on the following page.

C b. Repayment of Matching Funds to the

u.s. Treasur'y

Section 9038(b) (3) of Title 26 of the United

St;l tos codl? requires the c.:1nc1ida to to repa':, thll t par tion of any

uncxpcrided bal~nce remaininG in the candid~tc's accounts which

b03~S the same ratio to the-total unexpended h~]ancc as the total

l1m0unt rccC'i.~:o...: fr0:"'\ th\_'" m:1~2hing ptlym0nt accnunt bears to the

t nt:11 0 fa] 1 dC::0S i ts made' into the C~ ndic1Ll tC" ~-; accounts.

~s st~tcd above, the Audit sta~f has determined

t- h ton the c1 teof the C r:didate's inc 1 i q i b i 1 i t y, Apri 1 :2 -l, 1 9 8 0 ,

t- ~10 COr:1r:1i t tee !l~ld an ~1l1 j usted surp1us cLlsh po~~ i tion of $ R8, 125 • 94.

Et..~:)0.:,'mcnt und~~· thi s sccti0n of the l\ct is b~scct on the f(111o~·:inq

r nt-mula:

Tot~l N;tt,-'hinn Funds ?L"'c!:-:,i\"cd x Surp1 us = Repayment T·O·t~1-1-D-;-.~-~"\-s-rfs--ThrOll<.~~Inc-ligibiIi ty

P,.:1scd o~ this formula, the COIr.:':li ttee' s

rC~.:lv~e~t of cxce~~ funds to the U. S. Trca~ury is as follows:

S2,67S,~28.43 1/ s-r:-;j-s-r, -~'*-S: 13 1/

$ 0 3 3 , 1 5 • 9 ·1 1 / ~401,779.91

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1./ Amount LlC: ~l.lst··d do\·;n·.·:~:rd b~' non-sufficient fu~ds checks

m:ltched .
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Anderson For President COnmi.ttee

StatenEnt of Net OUtstanling Cant>aign Obligations

April 24, 1980

Assets

Cash on hard and in banks

J\c(x)W1ts receivable

~ital assets

Total assets

OblirJ.:.ltions

AccoWlts payable

$1,221,517.25

324,958.20

6,000.00 $l,5S2;~

( 479,112.66)

$1,552,475.45

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Estimated wiJldinq d~ costs

4/2~/80 to 2/28/81

(projected tennination date) Y

Salaries

Telephone

Travel

Supplies

COrrputer services

Equiprent rental

Office rent

Storage of records

Ta.xes-waqes

Consulting

Insurance

Incone Ta.x

Peserve for qualified

carrpaignc.xpenses:!l

$28,650.00

2,500.00

3,000.00

400.00

2,500.00

500.00

2,000.00

2,100.00

8,800.00

5,000.00

2,300.00

7,000.00

18,568.00

Total ~~inding 0Jwn Costs

Total Cb1igations

SUbtotal

less: Portion of ~SF Contritutions

t-utched

Nt~t QJtstarding C.:mt'.:Ug:l Obligations-Surplus

$ 83,318.00)

562,~30.66) ($ 562,~30.66)

$ ~90,O44.-;9

1,918.85)

$ 988,125.94 ...,

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E:<cl~cd fran this ~"X'\U1t are 13 payroll t..1x ~Ildlties totalL"'l-.) $2,17-1.52 which

'Nere ir.currcd prior to the r.1ltu of ineligibility ani paid subsequent to that

date (April 24,1980).

Winding dC't.'tl costs are reasonable estinntes of future activity projoctai through

Fc.bruaty 28, 1981, ",tlich are subjcct to ruvision b.:l~'\l upon actu.:U costs incurred.

This rese~-e is to co\'Cr l.ltc lJi11ir.·,;s paiJ OCL.~r 1 or aft,_,:o. '!~1Q re~r..c

should 00 licr~dat£rl by February 28, 1981.

The net outstar.dir.g c.1.'ll:Xliqn olJ1ig.ltions s\l.'1'lus \..us ca1culatld to be $1,013,119.67

after rcviC'.-I of the COrrrnit.tL"O'S activity t.~ouqh ~uy 31, 1980. 'nle d\..'Cre.JSa of

$24 , ~9 3.73 in t.~e :;0::0 sur~lus arrount as ca1cul,ltro through &.~ptcr.'ber 30, 1~SO

is d~e pri."':'.ll"il:· to t:.e late rcceitJt Qt V.:lI'iQUS ~t.lte level wlt.·poont! chJ.r"3~~

\o\,tlich ONere ur..l<r,a...n to the Cor.mi.ttcoe as of ~llY 31, 1980 •
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~dditional components ~f the repayment calculution are as follows:

1. Non-Sufficient Funds Checks ~atched

Section 9034.2(a) (3) of ~itle 11, Code of

1"l'df'rill Regulations st.:lt0S that a matchable campaiqn contribution

i ~~ onc' in which the amounl of the contribution which is submitted

for matching shall be actually received by the c~ndidute or any of

the candidate's authorized committees and depo~ited in a desiqnated

campaiqn depository In"intain0d by the principal campaiGn committee.

Dur inC} the reconci li..a tion l"r the bank Clccoun ts,

t.hC' Audit staff noted 34 contributions totali.n\.l ~2,038.00 which

had been submi t ted for rna tchinq funds Clnd a Iso ch~,rqed from the

Committee's accounts due to non-sufficient funds (NSF). Matchinq

funds actually pllid out \\'h.ich \vere for NSF items after ar'plic.::ltion

of the appropriate submission error rates totaled $1,918.85.

Section <J038.3(c) (1) of Title 11, Cede of

Federal Requ1ations st3tcs, in relevant part, that if O~ the

last day of candidate c1iqibi lity (l\pril 24, 1980), the C"-lndid.Jtc's

net Otl t s t 3 ndinq c .:lfT1Pa i ep1 0 b 1 i q ;t t ions, as de finedin 11 c. F • R • 9 0 3 -l • 5 ,

rC'flect a surplus, the c~noidate sh~11 within 30 days 0: the ineligibility date rep~y to the Secrctary of the ~reasury an amount which

represents the amount of m~tcllinq funds cont3i~ed in t~0 candid3te's

stll·plus.

On ~'~1~' R, 1980, the Commi ttee subm i ~~ ted a

check in the amount of $323,S73.00 navable to the P.S. ""'r-eilsurv

r{\pr(?f;entinn their in.i li:11 C;}]cul~tlon of the matchino :l.lnds .

C()l1t~linC'd in the Com:::it.tl..·("\'~~ surplus as of l\.pril 24, 19~0.

As :1 rl\~~tll t of th(~ interim audi t r0::ort, thL'

committee submitted a chl..·c~: on September 25, 198(), in t~e amount

of $88,369.85 pilyablc to th(' P.S.- '!'rcasury reprC'sentin(~ their

r0p'lymcnt of m~tchinn fund~~ h.-lS0ct on the prel ini:1.::lry c\.llculation.

Based on thl" rcn:1':mC'nt: c;llculation ~nd it0r.-;S list·:-:: in 1

and 2, the Commi ttoc- h:1S md<lt.... c:l net overpayment of matc:--.:nq

f1,.lnds in the: amOU:lt of ~8, 2-14. OC), \"hich sum shall be r0~·...lrn0d

to the Committee fort~1\·,'i the A recapitulation of the cc:~;)oncnts

of the repa'/mcnt amount .:lpni..... ~1r bclo~\':
$401,779.91

1,918.85

$403,698.76

(323,573.00)

88, ~9. 85)

($ 8,244.09)

-B5/8/80

9/25/80

Total Net Overpayment

Amount Per Formula

NSF Checks Matched

Subtotal

(Minus) Repayments

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FEDERAL ELECTION COMMISSION

1325 K SlREET N.W.

WASHINGTON,D.C. 20463

AlDrn~ INFORMATION REGARDING 'lHIS ORGANIZATION

MAY BE LOCATED IN A <D1PLETED CXH'LIANCE ACrIW

FILE RELEASED BY 'lm: CDMISSICN AND MADE PUBLIC m

'!HE PUBLIC RECDRDS OFFICE. :roR '!HIS PARl'ICULAR

ORGANIZATION'S CXM'I..ETm CXH'LIANCE ACrION FILE

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