• FEDERAL ELECTION COMMISSION

WA~HINClON, 0 C 204b \

December 18, 1980

MEMORANDUM

." .

TO:

THROUGH:

FROH:

SUBJECT:

FRED EILAND

PRESS OFFICE ?!YP /'

BOB COSTA ~~

JOE STOLT.!Jft

PUBLIC ISSUANCE OF FINAL (POST-PRIMARY)

AUDIT REPORT OF THE BAKER COMMITTEE

•

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

audit report of the Baker Committee which was approved by

the Commission on December 16, 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 stated

cc: FEe Library

RAD

Publ i c Record ,"
• FEDERAL 11.1 eTION C()MMISSION

W ,\-"HI\;C ll)'" I) ( 204ft \

POST-PRI~~RY REPORT OF THE AUDIT DIVISION

ON

THE BAKER COM~ITTEE

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1. Background

A. Overview

This report is based on an audit of the Baker Committee

(lithe Committee"), to determine whether thf're has been compliance

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

as amended (lithe Act"). rrhe 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 payments under Section 9037."

Section 9039(b) of Title 26 of the United States Code

states, in part, that the Commission is authorized to conduct

examinations and audits in addition to those required by Section

9038(a), which it determines to be necessary to carry out its

responsibilities under this chapter.

In addition, Section 9038.l(b) of Title 11 of the Code

of Federal Regulations states that the Commission may conduct other

examinations and audits from time to time as it deems necessary to

carry out the provisions of this subchapter.

The Committee registered with the Federal Election

Commission as the principal campaign committee for the Honorable

Howard H. Baker, Jr. on January 31, 1979. 1/ The Committee

maintains its headquarters in Washington, D.C.

The audit covered the period from the Committee's

inception, January 29, 1979, through March 31, 1980, the final

coverage date 0: the last report filed at the time of the aUdit. ~/

1'he Conunittee reported a beginning cash balance of $-0-, total

receipts for the period of $7,165,761.30, total expenditures

for the period of $7,029,290.58 and a closing c~sh balance on

March 31, 1980 of $136,470.72.

~/ The Committee registered as the Baker Search Committee on

January 31, 1979. On April 2, 1979, the Committee amended

its name to the Baker Committee.

• ~/ In addition, a review was made to determine the accuracy

of the COITwittce's allocation of expenditures to the states

through Septen~er 30, 1980 and to verify the Committee's

reported net outstanding campaign obligations as of August

25, 1980.
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This report is based upon 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 the report and were available to Conunissioners and

appropriate staff for review.

B. Key Pers~nnel

The principal officers of the Committee during the

period audited were: Mr. James A. Haslam, II, Chairman, from

January 29, 1979 to March 21, 1979; and 13lfie Honorable Richard G.

Luyar, from March 21, 1979 to the present; and Mr. Stan Huckaby,

Treasurer from January 29, 1979 to the present.

c.

" '

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 obligations; review of

contribution and expenditure limitations; and such other audit

procedures as deemed necessary under the circumstances.

II. Interim Audit Findings and Recommendations

A. Allocation of Field Personnel Payroll

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Sections 441a{b) (l) (A) and 441a(c) of Title 2 of the

United states Code provide that no candidate for the office of

President of the United States who is eligible to receive and

has received matching funds may make expenditures in anyone

state aggregating in excess of the greater of 16 cents multiplied

by the state voting age population or $200,000.00, adjusted by

the Consumer Price Index.

Section 106.2(a) of Title 11 of the Code of Federal

Regulations states that expenditures made by a candidate's

authorized committee{s) which seek to influence the nomination

of that candidate for the office of President of the United

States with respect to a particular State shall be allocated

to that State.

Section l06.2(b) of Title 11 of the Code of Federal

R0gulations states, in part, that expenditures for staff, media,

printing and other services used in a campaign in a specific state

should be attributed to that State.

Duriny the threshold audit, our review of payroll

expenditures disclosed that the Committee allocated net, as opposed

to gross, pay to the states for the field personnel working on c~lmpailJns in the vurious states.
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The Audit staff recommended that where appropriate the

COIMlittee amend their reports to allocate payroll withholding

taxes to the states. On April 20, 1980, amended reports were

filed for the period covering through September 30, 1979.

Thereafter, the Committee adopted procedures to allocate the

gross amounts of these expenditures as incurred.

Recommendation

Based on the Committee's response as noted above, the Audit

staff recommends no further action in this matter.

B. Disclosure of Expenditures and Cash on Hand

Section 434(b) (4) of Title 2 of the United States Code,

in part, requires a committee to disclose the total amount of all

disbursements for the reporting period and the calendar year.

Section 434(b) (1) of Title 2 of the United States Code

requires a committee to disclose the amount of cash on hand at the

beginning of the reporting period.

Our review of Committee bank records revealed that the

Committee's reported ending cash balance at March 31, 1980 was

overstated by $17,356.74. This overstatement was the result of

misstatements of total receipts and total expenditures in each

of the reporting periods covered by the audit. The misstatements

were due largely to the following:

(1) $11,721.22 in expenditures were not reported;

(2) in-kind contributions totaling $4,400.52 were not

included in the Committee's expenditure totals;

(3) itemized expenditures on the Committee's 1979 yearend report were understated by $235.00; and

(4) two (2) $500.00 contributions reported by the

Committee were returned by the bank due to insufficient funds.

The Audit staff recommended that the Committee file

amendments to correct the matters noted above. On December 15,

1980, comprehensive amendments were filed covering the period

from October 1, 1979 through November 24, 1980.

Recommendation

Based on a review of the Committee's amendments, although

not filed in a timely manner, the Audit staff recommends no further

action in this matter.
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III. Repayment

Section 9038(b) (1) of Title 26 of the United States Code

provides that if the Commission determines that any portion of

the payments made to a candidate from the matching payment account

was in excess of the aggregate amount of payments to which such

candidate was elltitled under Section 9034, it shall notify the

candidate, and the candidate shall pay to the Secretary an amount

equal to the amount of the excess payments.

The Commission preliminarily determined March 5, 1980 to be

the day on which the Honorable Howard II. -Baker, Jr.' s candidacy

terminated for the purpose of incurring qualified campaign

expenses. The Candidate was so informed by letter and did not

object to this determination.

As of August 25, 1980, the Committee's reported net outstanding campaign obligations, as adjusted, totaled $271,163.69. ~/

Based on this outstanding debt, the Committee received a

matching fund payment of $114,516.13. Therefore, as of that time

the Candidate had received no matching fund payments in excess

of his entitlement.

Recommendation

Since no payments in excess of the Candidate's entitlement

were made, the Audit staff recommends no action on this matter

at this time.

This amount includes the Conunittee' s estimat€clreceivable

for their share of the contributions received by the

1980 Republican Presidential Unity Conunittee, a joint

fundraising Committee. Any adjustments in this amount

resulting from actual proceeds being determined could

alter the conclusion contained in the finding. The

committee also extended their projected termination date

from October 31, 1980 to March 31, 1981 when preparing

the August 25, 1980 Statement of Net Outstanding Campaign

Obligations.
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FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

April 16, 1981

MEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

FRED EILAND

PRE. SS OFFICE ~~

BOB COSTA !-~

JOE STOLTZ pS

PUBLIC ISSUANCE OF ADDENDUM TO THE

FINAL AUDIT REPORT ON THE ~AKER COMMITTEE

Attached please find a copy of the addendum to the final

audit report on the Baker Committee which was approved by the

Commission on April 6, 1981.

Informational copies of the addendum have been received

by all parties involved and the addendum may be released to

the public as of today, April 16, 1981.

Attachment as stated

cc: FEC Library

RAD

Public Record
MEMORANDUM

TO:

THROUGH:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

THE COMMISSIONERS

B. ALLEN CLUTTER

STAFF DIRECTOR

BOB COSTA ~~ ADDENDUM TO FINAL AUDIT REPORT

ON THE BAKER COMMITTEE

I. Summary of Issue and Recommendation

Based on an updated review of the Baker Committee's August

25, 1980 Net Outstanding Campaign Obligations (NOCO) statement,

it has been determined that matching fund payments were received

in excess of the Candidate's entitlement totaling $104,074.58.

This amount was determinable when the 1980 Republican Presidential

Unity Dinner (a joint fundraising committee) completed, and the

Audit staff verified, the calculation of the total net proceeds

due the Baker Committee.

On March 2, 1981, a check in this amount made payable to

"Treasury of the United States" was received by the Federal

Election Commission.

Since the Baker Committee refunded the amount received in

excess of the Candidate's entitlement, the Audit staff recommends

no further action. Further, it is recommended that this document

be placed on the public record as an addendum to the publicly

released final audit report after receipt by the Committee.

II. Background

Section 9038(b) (1) of Title 26 of the United States Code

states that if the Commission determines that any portion of the

payments made to a candidate from the matching payment account was

in excess of the aggregate amount of payments to which such

candidate was entitled under Section 9034, it shall notify the

candidate, and the candidate shall pay to the Secretary an amount

equal to the amount of the excess payments.
MEMORANDUM TO THF COMMISSIONERS

Page 2

-The Final Audit Report on the Baker Committee ("the Committee")

was released publicly on December 18, 1980.

Finding III. on page 4 of the final audit report entitled

"Repayment" stated that as of August 25, 1980, the Committee's

NOCO, as adjusted, totaled $271,163.69, and that based on this

outstanding debt, the Committee received a matching funds payment

of $114,516.13. The $271,163.69 NOCO total was footnoted to

state that this amount included the Committee's estimated

receivable for their share of the contributions received by the

1980 Republican .Presidential Unity Committee (RPUC), a joint

fundraising committee. Any adjustments in this amount resulting

from actual proceeds being determined could alter the conclusion

contained in the finding.

The finding concluded, subject to the above qualification,

that as of August 25, 1980, the Candidate had received no matching

fund payments in excess of his entitlement and therefore, the

Audit staff recommended no action on the matter at that time.

Subsequently, the RPUC completed, and the Audit staff verified,

the calculation of the total net proceeds due the Baker Committee.

The calculation was done as specified in the Commission's November

6, 1980 decision concerning this joint fundraising effort. The

first provision of that decision stated that contributions received

by the candidate authorized joint fundraising committee are deemed

monies available to pay candidates' net outstanding campaign

obligations as of the date of receipt by the joint fundraising

committee. In addition, the final provision stated that if by

operation of the first provision, it was determined that a

candidate has received matching payments in excess of those to

which he was entitled, the Commission can seek repayment of the

excess amount pursuant to 26 U.S.C. 9038(b) (1).

The actual net proceeds from the joint fundraising committee

due The Baker Committee as of August 25, 1980, total $252,821.71.

The original August 25, 1980 Statement of Net Outstanding Campaign

Obligations (NOCO) submitted by the Baker Committee contained an

estimate of $50,000.

III. Support for Recommendation

When the actual receivable from the RPUC was determined, the

Baker Committee's August 25, 1980 NOCO figures were again analyzed

and adjusted as appropriate and the revised statement shown below

was developed. The adjusted NOCO figures were discussed with a

Committee official after the completion of the updated review.
Revised August 25, 1980 NOCO statement

Assets:

Cash

Accounts Receivable

Monies due from RPUC l!

Capital Assets

Total Assets

Obligations:

Accounts Payable

Estimated Winddown

(Through projected date

of termination - 3/31/81)

Total Obligations

NOCO

37,269.56

86,655.97

252,821.71

2,000.00

141,758.33

247,430.46·

$378,747.24

$389,188.79

10,441.55)

Matching Fund Payment (9/4/80)

Amount in Excess of Entitlement

$114,516.13

$104,074.58

Since the Committee refunded the amount received in excess

of the Candidate's entitlement, the Audit staff recommends no

further action.

IV. Staff Coordination

A copy of this memorandum was furnished to the Office of

General Counsel for legal comment.

1/ This amount represents the actual net proceeds from RPUC

due the Baker Committee as of August 25, 1980.