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MEMORANDUM

TO:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

WASHINGTON. 0 C 20463

A8S-33

February 19, 1987

FRED EILAND

CHIEF, PRESS OFFICE

ROBERT J. COSTA ./

ASSISTANT STAFF D{~T';;;:' AUDIT DIVISION

PUBLIC ISSUANCE OF FINAL AUDIT REPORT

REPUBLICAN STATE CO~IITTEE OF DELAWARE - 1984 VICTORY COMMITTEE

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Attached please find a copy of the final audit report of Re~ub1ican State Committee of Delaware - 1984 Victory Committee

WhlCh was approved by the Commission on February 3, 1987.

Informational copies of the report have been received by all

parties involved and the report may be released to the public.

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a Attachment as stated

cc: FEC Library

RAD

Office of General Counsel ~b1iC Disclosure

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• FEDERAL ELECTION COMMISSION

WASHINelON, D.C. 20463

A8S-33

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REPORT OF THE AUDIT DIVISION

ON THE

REPUBLICAN STATE COMMITTEE OF DELAWARE1984 VICTORY COMMITTEE

I. Background

A. Overview

This report is based on an audit of the Republican State Committee of Delaware - 1984 Victory Committee (ftthe

CommitteeR) 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 (Rthe Actft ). The audit was conducted pursuant to 2

U.S.C. 5 438(b) 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 subsection, the Commission shall perform an internal review

of reports filed by selected committees to determlne 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 November 17, 1983, and maintains its headquarters in Wilmington, Delaware.

The audit covered the period, from the Committee's

inception October 13, 1983, through December 31, 1984. The

Committee reported a beginning cash balance on October 13, 1983,

of -0-; total receipts for the period of $318,936.00; total

disbursements for the period of $303,~20.31 and an ending cash

balance on December 31, 1984, of $15,017.00. !/

This report is based on documents and workpapers 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•

• 1:1 The Committee rounds some of its reported totals to the

nearest dollar.
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~he ~reasurer of the Committee ~uring the audit period

was Mr. Cyric W. Cain, Jr.

C. Scope

The audit included such tests as verification of total

reported receipts, disbursements and individual transactions,

review of required supporting documentation, analysis of

Committee debts and obligations, and such other audit procedures

as deemed necessary under the circumstances. However, the

receipt records made available for the Audit staff's review were

not maintained in a manner which allowed complete testing for

correct aggregate contribution totals, proper itemization and

contribution limitations.

Introduction to Findings

During the period audited the RepUblican State Committee of

Delaware maintained seven bank accounts. The Audit staff

determined that three of the accounts, the 1984 victory Committee, the Delaware GOTV, and the Voter Registration account 21 (the federal account(s» financed activity in

connection with federal elections. The remaining four accounts

(the non-federal account(s» were involved in financing activity in connection with non-federal elections and payment of general operating expenses. Reports filed by the Committee contained

only activity involving the federal accounts.

II. Audit Findings and Recommendations

A. unreported Activity

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

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

cash on hand at the beginning of the reporting period and for the

reporting period and calendar year, the total amount of all

receipts and disbursements.

11 The only activity relative to the Voter Registration Account

included in the Committee's disclosure reports was a

transfer of $16,500.00. See Finding II.A•

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During the period April 10, 1984, through January 25,

1985, the Committee maintained a AVoter Registration- checking

account. A review of the account's Dank statements disclosed

that $60,862.36 in receipts and disbursements were processed through the account. The account was funded with transfers from

the Committee's federal account, the Republican National

Committee eRNC) and Reagan-Bush '84. The majority of this

account's activity was not disclosed on the Committee's

disclosure reports.

The Committee provided documentation which indicated

that the activity involved voter identification and voter

registration through phone banks and door to door canvassing. A

review of the account's cancelled checks revealed expenses consistent with that type of activity.

In the interim audit report the Audit staff recommended

that the Committee file amendments to its disclosure reports disclosing the receipts and disbursements noted above including

itemization where necessary pursuant to 2 U.S.C. 55

434b (3) (B) eC) (D) and (5) CA) •

On JUly 1, 1986, the Committee filed an amended report which materially disclosed the financial activity requested above •

Recommendation

The Audit staff recommends no further action in this matter.

B. Itemization of Contributions from Individuals

Pursuant to 2 U.S.C. S 434(b) (3) CA) each report shall

disclose the identification of each person who makes a

contribution to the reporting committee during the reporting period, whose contribution or contributions have an aggregate

amount or value in excess of $200 within the calendar year together with the date and amount of each contribution.

Section 100.12 of the Code of Federal Regulations

states that "identification" means, in the case of an individual,

his or her full name, including first name, middle name or

initial, i~.available, and last namel mailing address 1

occupationl and the name of his or her employeri and in the case

of any other person, the person's full name and address.

The Audit staff's review of available contribution

records disclosed that 34 itemizable contributions totaling $6,744.00 were not itemized as required. These contributions

accounted for 37.8% of the number and 11.8% of the dollar amount
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of contributions requiring itemization for which records were

available. In addition, the Committee failed to disclose

aggregate Year-to-Date totals for all itemized contributions. We

concluded through our review and discussions with current and

·former Committee personnel that only contributions the amount of

which exceeded $200.00 were itemized on disclosure reports.

In the interim audit report the Audit staff recommended

that, the Committee file amendments to its 1984 reports disclosing the aforementioned contributions. The Audit staff

also recommended that the amended reports include aggregate Yearto-Date totals for all itemized contributions.

In response to the interim audit report recommendation,

the Committee submitted amended Schedules A disclosing the

contributions as required.

Recommendation

~he Audit staff recommends no further action on this matter.

C. Itemization of Contributions from Political

Committees/Organizations

Sections 434(b) (3) (B) and (D) of Title 2 of the United

States Code state, in part, that each report shall disclose the

identification of each political committee which makes a

contribution to the reporting committee during the reporting period, together with the date and amount of each contribution

and the identification of each transfer of funds to the reporting committee from another political party committee together with

the date and amount of each transfer.

Our review identified 13 transfers totaling $58,760.00

which were not itemized and one $16,050.00 transfer that was

itemized incorrectly on the Committee's disclosure reports. Ten

of the transfers were deposited into the Committee's GOTV bank

account. The Committee did not include the activity from this

account in its disclosure reports until an amended report for the

Post General Election period (10/18 -11/26/84) was filed on

February 27, 1985. This amended report did not itemize any of

the 10 transfers, but did include the total amount of these

transfers in the Summary Page figures. The other four (4) transfers were deposited into the 1984 Victory Committee account:

one transfer of $200 was improperly itemized as a contribution

from an individual, one transfer of $16,050.00 from the

RepUblican National Committee was itemized as being from the

RepUblican State Committee of Delaware, one transfer of $~O,OOO

from a non-federal account was not itemized, and one transfer of

$60 was not itemized for no apparent reason. Committee officials

offered no explanation for these discrepancies.
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In the interim audit report the Audit .taff recommended

that the Committee file amended reports to properly reflect the

aforementioned transfers.

The Committee included in its response amended

Schedules A which accurately disclose the contributions.

Recommendation

The Audit staff recommends no further action on this matter.

D. Supporting Documentation for Contributions

Section 432(c) (1) of Title 2 of the United States Code

states, in relevant part, that the treasurer of a political committee shall keep an account of all contributions received by

or on behalf of such political committees.

In addition, 11 C.F.R. S5 102.9(a) (1), (2), and (3) require the treasurer of a political committee to keep an account

by any reasonable accounting procedure of all contributions as

follows:

(1) for contributions in excess of $50.00, such

account shall include the name and address of the

contributor and date and amount o~ the

contribution1

(2) for contributions aggregating in excess of

$200.00 per calendar year such account shall

include the identification of the contributor and

date and amount of the contribution1 and .. -

(3) for contributions from a political committee, such

account shall include the identification of the

political committee and the date and amount of

such contribution.

The Committee did not maintain a complete centralized

contribution list. Instead the Committee kept copies of contribut~~ checks attached to the deposit ticket.

Twenty-eight deposits did not h~ve copies of

contributor checks attached, therefore th~ Audit staff was· unable

to review the source documents for receip~s totaling ~29,843.50

representing 9.36% of total reported receipts. JI

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The Committee did maintain photocopies of contributor checks

in alphabetical order for each solicitation, however, the

records were not complete.
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Of the deposits which did not include photocopies of

contributor checks, 18 deposits totaling $17,899.50 included

Individual check listings by bank routing numbers only. The

contributions within these deposits for the most part ranged from

$25.00 to $100.00. One of the deposits totaling $5,440.00

included a single $5,000.00 item.

The remaining 10 deposits totaling $11,944.00 did not

have check listings or an itemization on the deposit tickets.

The amount of these deposits ranged individually between $120 and

$3,583.00. Committee officials were provided with a list of the

deposits during th~ fieldwork.

In the interim audit report the Audit staff recommended

that the Committee obtain the missing documentation for these

receipts, and submit it to the Audit staff for review.

In response to the interim audit report, the Committee

supplied deposit slips and copies of contributor checks which

materially document the contributions received. The Committee

has also implemented new accounting and recordkeeping procedures which should prevent recurrence of this matter.

Recommendation

The Audit staff recommends no further action in this matter.

E. Matters Referred to the Office of General Counsel

Certain matters noted during the audit have been

referred to the Commission's Office of General Counsel.

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