Part II
Overview of Campaign

Campaign Organization

Important Dates

Bill Manger for Congress, Inc.

e Date of Registration

December 12, 2003

e Audit Coverage

January 1, 2003 — December 31, 2004

Headquarters

Southampton, New York

Bank Information

e Bank Depositories

e Bank Accounts

Treasurer

e Treasurer When Audit Was Conducted

John V.N. Phillip

e Treasurer During Period Covered by Audit

John V.N. Phillip

Management Information

e Attended FEC Campaign Finance Seminar _| No

e Used Commonly Available Campaign Yes
Management Software Package

¢ Who Handled Accounting and Paid Staff

Recordkeeping Tasks

Overview of Financial Activity
(Audited Amounts)

Cash on hand @ January 1, 2003 $0
o Contributions from Individuals $919,377
© Contributions from Political Committees 244,896
o Loans from Candidate 249,459
Total Receipts $ 1,413,732
© Operating Expenditures $ 1,402,730
o Other Disbursements 1,000
co Contribution Refunds 3,400
Total Disbursements $ 1,407,130
Cash on hand @ December 31, 2004 $ 6,602


and Lines of Credit From Lending Institutions). BMC complied with the Audit staff's
recommendation by amending its reports to correctly disclose these loans.

Legal Standard

Contents of Reports. Each report must disclose for the reporting period and election
cycle, the total amount of loans made by or guaranteed by the candidate and the
identification of each person who makes, endorses or guarantees a loan to the committee.
2 U.S.C. §434(b)(2)(G) and (3)(E).

Brokerage Loans and Lines of Credit to Candidates. Loans derived from an advance
on a candidate’s brokerage account, credit card, home equity line of credit, or other lines
of credit shall be reported by the candidate’s principle campaign committee on Schedule
C. In addition, the committee must disclose the terms of the line of credit on Schedule C-
1. 11 CFR §§104.3(a)(3)(vii)(B) and (d)(4).

Facts and Analysis

On February 25, 2002, prior to running for Congress, the Candidate obtained a $400,000
line of credit from the Bank of New York. The line of credit was fully secured by assets
that were solely owned by the Candidate. The purpose of the line of credit as described
in the loan agreement was to purchase a home.

During the period August 24, 2004 through November 12, 2004, the Candidate made
three draws on the line of credit for a total of $232,000. The Candidate then loaned BMC
$232,000". BMC filed a Schedule C (Loans) disclosing each loan as coming from the
Candidate. However, the Schedule C did not identify the line of credit as being the
source of the funds loaned to BMC. Consequently, BMC did not file the required
Schedule C-1 disclosing the terms of the line of credit.

This matter was discussed at the exit conference. BMC representatives stated that
Schedule C-1 was not filed because the Candidate not BMC borrowed the funds from the
lending institution.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that BMC amend its reports to correctly disclose the
source of these loans on Schedule C and all required information on Schedule C-1. BMC
complied with the Audit staff's recommendation by amending its reports to correctly
disclose these loans on Schedules C and C-1.

? ‘The Candidate made another loan to BMC unrelated to the line of credit. BMC filed the required
Schedule C for this loan.


Part I
Background

Authority for Audit

This report is based on an audit of Bill Manger for Congress, Inc. (BMC), 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.

AMWPYNS


Part III
Summaries

Findings and Recommendations

Finding 1. Misstatement of Financial Activity

A comparison of BMC’s reported financial activity to bank records revealed a significant
misstatement of ending cash on hand for calendar year 2004. BMC complied with the
Audit staff's recommendation by amending its most recent disclosure report to correct the
public record.

(For more detail, see page 4.)

Finding 2. Disclosure of Candidate Loans

The Candidate made three draws on a line of credit totaling $232,000 and subsequently
made loans to BMC. Although BMC reported these loans on Schedule C (Loans), it did
not disclose all the required information. Further, BMC did not file Schedule C-1 (Loans
and Lines of Credit From Lending Institutions). BMC complied with the Audit staff's
recommendation by amending its reports to correctly disclose these loans.

(For more detail, see page 4.)


FEDERAL ELECTION COMMISSION
WASHINGTON, D.C. 20463

August 31, 2006

MEMORANDUM

TO: ROBERT W. BIERSACK
PRESS OFFICER
PRESS OFFICE

FROM: JOSEPH F. STOLTZ iL
ASSISTANT STAFF DIRECTOR
AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON
BILL MANGER FOR CONGRESS, INC.

Attached please find a copy of the audit report on the Bill Manger for Congress,
Inc. which was approved by the Commission on August 17, 2006.

All parties involved have received informational 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

Ag Library
Web Manager


Part IV
Findings and Recommendations

| Finding 1. Misstatement of Financial Activity

Summary

A comparison of BMC’s reported financial activity to bank records revealed a significant
misstatement of ending cash on hand for calendar year 2004. BMC complied with the
Audit staff's recommendation by amending its most recent disclosure report to correct the
public record.

Legal Standard

Contents of Reports. Each report must disclose:

¢ The amount of cash on hand at the beginning and end of the reporting period;

¢ The total amount of receipts for the reporting period and for the election cycle; and

¢ The total amount of disbursements for the reporting period and for the election cycle.
2 U.S.C. §434(b)(1), (2) and (4).

Facts and Analysis

For calendar years 2003 and 2004 minor differences were noted with respect to reported
receipts and disbursements. However, the effect of these reporting errors caused a
material misstatement in reported ending cash on hand at December 31, 2004. Cash on
hand at December 31, 2004 was overstated by $25,088. This overstatement, for the most
part, was the result of not reporting eleven disbursements totaling $17,555 and other
minor reporting errors.

This matter was discussed at the exit conference. A BMC representative was given
workpapers supporting our reconciliations and agreed to file the amended report.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that BMC amend its most recent disclosure report,
reducing the ending cash balance by $25,088 with an explanation that it resulted from
audit adjustments from a prior period. BMC complied with the Audit staff’s
recommendation by amending its most recent disclosure report to correct the public
record.

| Finding 2. Disclosure of Candidate Loans

Summary

The Candidate made three draws on a line of credit totaling $232,000 and subsequently
made loans to BMC. Although BMC reported these loans on Schedule C (Loans), it did
not disclose all the required information. Further, BMC did not file Schedule C-1 (Loans


Report of the Audit Division on

Bill Manger for Congress, Inc.
January 1, 2003 - 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.

' 2US.C. §438(b).

About the Campaign (p. 2)

Bill Manger for Congress, Inc. is the principal campaign
committee for Bill Manger, Republican candidate for the U.S.
House of Representatives from the state of New York, 1" District,
and is headquartered in Southampton, New York. For more
information, see the chart on the Campaign Organization, p.2.

Financial Activity (p. 2)
¢ Receipts

o Contribution from Individuals $ 919,377
© Contributions from Political

Committees 244,896
o Loans from Candidate 249,459

o Total Receipts $ 1,413,732

¢ Disbursements

© Operating Expenditures $ 1,402,730
© Other Disbursements 1,000
© Contribution Refunds 3,400

o Total Disbursements $ 1,407,130

Findings and Recommendations (p. 3)
¢ Misstatement of Financial Activity (Finding 1)
¢ Disclosure of Candidate Loans (Finding 2)


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 and Recommendations
Finding 1. Misstatement of Financial Activity
Finding 2. Disclosure of Candidate Loans

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