Part I
Background

Authority for Audit

This report is based on an audit of Clatworthy for U.S. Senate (CFS), 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 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.

ANAPYND

Changes to the Law

On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act
of 2002 (BCRA). The BCRA contains many substantial and technical changes to the
federal campaign finance law. Most of the changes became effective November 6, 2002.
Except for the period November 7, 2002, through December 31, 2002, the period covered
by this audit pre-dates these changes. Therefore, the statutory and regulatory
requirements cited in this report are those that were in effect prior to November 7, 2002.





Part III
Summary

Finding and Recommendation

Disclosure of Contributions

Contributions received from individuals were reviewed on a sample basis. The review
indicated that approximately 17% of contributions which aggregated in excess of $200
were not itemized on CFS reports. The review also indicated that the reported amount
was incorrect for 50% of the contributions tested. For contributors who made multiple
contributions within a reporting period, the aggregate for the period was reported as a
single transaction on the date that the last contribution was received. In response to the
recommendation in the Interim Audit Report CFS filed amended disclosure reports that
materially corrected the public record. (For more detail, see p. 4)



ie)

Part II
Overview of Campaign

Campaign Organization

Important Dates Clatworthy for U.S. Senate

e Date of Registration March 20, 2002

e Audit Coverage November 9, 2001 — December 31, 2002
Headquarters Dover, Delaware

Bank Information

e Bank Depositories 2

e Bank Accounts 3

Treasurer

e Treasurer When Audit Was Conducted Joan R. Wood

e Treasurer During Period Covered by Joan R. Wood
Audit

Management Information

e Attended FEC Campaign Finance Seminar | No

¢ Used Commonly Available Campaign No
Management Software Package

¢ Who Handled Accounting and Treasurer/volunteered staff
Recordkeeping Tasks

Overview of Financial Activity

(Audited Amounts)
Cash on hand @ November 9, 2001 $0
Total Receipts $ 2,089,666
o_ From Individuals 2,002,329
o From Political Party Committees 12,200
o__From Other Political Committees 5,520
o Other Receipts 69,617
Total Disbursements $ 2,020,468
Cash on hand @ December 31, 2002 $ 69,198



the last contribution was received. CFS representatives explained that since the reports
were handwritten they combined multiple contributions to streamline report preparation.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that CFS file complete amended disclosure reports to
correct reporting deficiencies noted above. In response CFS filed the necessary amended
reports to materially correct the itemization and disclosure errors.



FEDERAL ELECTION COMMISSION

WASHINGTON. DC. 20463

April 16, 2004

MEMORANDUM

TO: RON M. HARRIS
PRESS OFFICER
PRESS OFFICE

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

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON THE
CLATWORTHY FOR U.S. SENATE

Attached please find a copy of the final audit report on Clatworthy for U.S. Senate,
which was approved by the Commission on April 6, 2004.

Informational copies of the report have been received by all parties involved and
the report may be released to the public.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
Web Manager
FEC Library


Part IV
Finding and Recommendation

| Disclosure of Contributions

Summary

Contributions received from individuals were reviewed on a sample basis. The review
indicated that approximately 17% of contributions which aggregated in excess of $200
were not itemized on CFS reports. The review also indicated that the reported amount
was incorrect for 50% of the contributions tested. For contributors who made multiple
contributions within a reporting period, the aggregate for the period was reported as a
single transaction on the date that the last contribution was received. In response to the
recommendation in the Interim Audit Report CFS filed amended disclosure reports that
materially corrected the public record.

Legal Standard

Authorized candidate committees must itemize any contribution from an individual if it
exceeds $200 per election cycle, either by itself or when aggregated with other
contributions from the same contributor. 2 U.S.C. §434(b)(3)(A).

Definition of Itemization. Itemization of contributions received means that the recipient
committee discloses, on a separate schedule, the following information:
¢ The amount of the contribution;
The date of receipt (the date the committee received the contribution);
The full name and address of the contributor;
The contributor’s occupation and the name of his or her employer; and
The election cycle-to-date total of all contributions from the same contributor. 11
CFR §§100.12 and 104.3(a)(4) and 2 U.S.C. §434(b)(3)(A).

Facts and Analysis
Contributions from individuals were reviewed on a sample basis. The review indicated
that approximately 17% of the individuals whose contributions aggregated in excess of
$200 were not itemized.

Fundraising efforts were conducted from both the Dover, Delaware and Washington,
D.C. offices. CFS maintained separate databases for each office. However, they did not
have a system in place to aggregate contributions from contributors who appeared in both
databases. Further, inconsistency with respect to the data entry of contributor names in
the Washington office database hampered the aggregation process.

The review also indicated that the reported amount was incorrect for 50% of the
contributions tested. For contributors who made multiple contributions within a reporting
period, the aggregate for the period was reported as a single transaction on the date that



Table of Contents

Page

Part I. Background

Authority for Audit 1

Scope of Audit 1

Changes to the Law 1
Part II. Overview of Campaign

Campaign Organization 2

Overview of Financial Activity 2
Part III. Summary

Finding and Recommendation 3

Part IV. Finding and Recommendation

Disclosure of Contributions 4



Report of the
Audit Division on
Clatworthy for U.S. Senate

November 9, 2001 — December 31, 2002



Report of the Audit Division on

Clatworthy For U.S. Senate

November 9, 2001 - December 31, 2002

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.

' 2 U.S.C. §438(b).

About the Campaign (p. 2)

Clatworthy for U.S. Senate is the principal campaign committee
of Ray Clatworthy, Republican candidate for the U.S. Senate from
the state of Delaware and is headquartered in Dover, DE. The
Treasurer for the Campaign during the election cycle was Mrs.
Joan R. Wood who continues to serve in that capacity. For more
information, see chart on the Campaign Organization, p.2.

Financial Activity (p. 2)

Finding and Recommendation (p.3)
o Disclosure of Contributions

Receipts
From Individuals

Other Receipts
Total Receipts

Disbursements
o Total Disbursements

oo0o00

From Political Party Committees
From Other Political Committees

$ 2,002,329
12,200
5,520
69,617

$ 2,089,666

$ 2,020,468