FEDERAL ELECTION COMMISSION

WASHINCTON. D.C. 20463

A8l-34

REPORT OF THE AUDIT DIVISION

ON THE

LIBERAL PARTY FEDERAL CAMPAIGN COMMITTEE

I. Background

A. Overview

This report is based on an audit of the Liberal Party

Federal Campaign Committee ("the Committee"), 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 ("the Act"). The audit was

conducted pursuant to Section 438(b) of Title 2 of the United

States Code which states, in part, that the Commission may conduct audits and field investigations of any political ,,'~ommittee required to file a report under Section 434 of this "'title~ Prior to conducting any audit under this section, the

Commission shall 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.

\~ The Committee registered with the Federal Election

Commission on February 25, 1980. The Committee maintains its

headquarters in New York, New York.

The audit covered the period February 14, 1980 through December 31, 1980. The Committee reported a cash balance on

February 14, 1980, of $-0-: total receipts for the period of

$237,676.30: total disbursements for the period of $236,829.17:

and a cash balance on December 31, 1980, of $847.13.

This audit report is based on documents and working

papers 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.
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B. Key Personnel

The Treasurer of the Committee during the period audited was Mr. Herbert B. Rose.

C. Scope

The audit included such tests as verification of total

reported receipts and expenditures and individual transactionsJ

review of required supporting documentation and analysis of

Committee debts and obligationsJ and such other audit procedures

as deemed necessary under the circumstances.

II. Findings and Recommendations

A. "Allocation of Administrative Expenses

Pursuant to 11 C.F.R. 102.5(a) (l)(i), the Committee

maintained separate accounts for Federal and non-F~deral activity and disclosed the activity of its Federal account in its reports.

During the review of the Committee's reports and

records, it was determined that the Committee's Federal account

paid no administrative expenses during the period audited. The

Committee had no system for allocating administrative expenses between the Federal and non-Federal accounts. When informed of

the requirements of the Act concerning this matter, Committee

officials presented the Audit staff with an invoice from the nonFederal account to the Federal account for $825.00, its share of

the administrative expenses. However, the invoice did not

indicate how this amount was calculated.

The interim audit report recommended that, within 30

days of receipt of the report, the Committee submit support for

the calculation for administrative expenses allocated to the

Federal account and amend its reports to disclose the allocation.

In addition the Audit staff recommended that the

Federal account reimburse the non-Federal account for a

reasonable portion of the administrative expenses and present to _ the Audit staff copies (front and back) of the reimbursement

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On April 23, 1982, the Committee provided the Audit

staff with an explanation of its ca1cu1ation of the $825.00 in

administrative expenses allocable to the Federal account. In

addition the Committee also provided a copy of a check drawn on

the Federal account reimbursing the non-Federa1 account for the

$825.00.

Recommendation

The Audit staff recommends no further action in this matter

however, the Audit staff does recommend that the Committee

establish a system for allocating its administrative expenses in

the future which includes timely reimbursement to the non-Federal

account when required.

B. Itemization of Expenditures

Section 434(b) (6) (A) (B) (iv) of Title 2 of the United

States Code states, in part, that each report under this section

shall disclose the name and address of each person who receives

any expenditure from the reporting committee during the reporting period in connection with an expenditure under section 441a(d) of

this title, together with the date, amount and purpose of any such expenditure as well as the name and office sought by the

candidate on whose behalf the expenditure is made.

During the period audited, the Committee supported Jacob Javits for United States Senator. A review of the

Committee's records identified expenditures totaling at least

$12,449.89 made on behalf of the Javits campaign and $27,611.26

disbursed jointly on behalf of Javits and another federal

candidate. In addition, $119,564.11 in expenditures appeared to

be made on behalf of federal candidates however, the records

maintained supporting those expenditures did not indicate on

whQse behalf they were made. The majority of the expenditures

were made for radio spots and newspaper ads.

Committee officials stated that the expenditures were

made in support of Federal candidates. All of the expenditures

were itemized on the Committee's reports but were not properly identified as coordinated expenditures.

In the interim audit report the Audit staff recommended

that the Committee, within 30 days of receipt of the report, review its records to determine which expenditures were made on

behalf of Senator Javits and amend its reports to properly itemize

the expenditures on Schedule F of FEC Form 3x.