Final Audit Report of the 

Commission on the North 

Dakota Republican Party 

(January 1, 2009 - December 31, 2010) 

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 

tiie 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. 

About the Committee (p. 2) 

The North Dakota Republican Party^ is a state party committee 

headquartered in Bismarck, North Dakota. For more 

information, see the chart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

Receipts 

o Contributions from Lidividuals $ 1,322,913 

o Contributions from Political Committees 41,050 

o Transfers from Affiliates 175,358 

o Loans Received 10,325 

o Transfers from Non-federal Accounts 114,818 

o Other Federal Receipts 61,906 

Total Receipts $ 1,726370 

Disbursements 

o Operating Expenditures $ 1,424,962 

o Transfers to Affiliates 23,536 

o Loan Repayments Made 51,646 

o Federal Election Activity 212,263 

o Other Disbursements 5,075 

Total Disbursements $ 1,717,482 

Commission Findings (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Reporting of Debts and Obligations (Finding 2) 

' 2 U.S.C. §438(b). 

^ Formerly known as the North Dakota State Republican Committee. 
Final Audit Report of the 

Commission on the North Dakota 

Republican Party 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Audit Hearing 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Commission Findings 3 

Part IV. Commission Findings 

Finding 1. Misstatementof Financial Activity 4 

Finding 2. Reportingof Debts and Obligations 8 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the North Dakota Republican Party (NDRP), 

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 whether the reports filed by a particular committee meet the 

threshold requirements for substantia] 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: 

1. the disclosure of individual contributors' occupation and name of employer; 

2. the consistency between reported figures and bank records; 

3. the disclosure of disbursements, debts and obligations; 

4. the disclosure of expenses allocated between federal and non-federal accounts; 

5. the disclosure of independent expenditures; 

6. the completeness of records; and 

7. other committee operations necessary to the review. 

Audit Hearing 

NDRP declined the opportunity for a hearing before the Commission on the matters 

presented in this report. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration April 17, 1972 

• Audit Coverage January 1,2009 - December 31,2010 

Headquarters Bismarck, North Dakota 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Nine Federal; Four Non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Robert Harms 

• Treasurer During Period Covered by 

Audit 

Theresa Tokach (1/1/09 - 7/12/09) 

Robert Harms (7/13/09 - present) 

Management Information 

• Attended Commission Campaign 

Finance Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

Cash-on-hand @ January 1,2009 $ 2,151 

Receipts 

o Contributions from Individuals 1,322,913 

0 Contributions from Political Committees 41,050 

o Transfers from Affiliates 175,358 

o Loans Received 10,325 

o Transfers from Non-federal Accounts 114,818 

o Other Federal Receipts 61,906 

Total Receipts $1,726,370 

Disbursements 

o Operating Expenditures 1,424,962 

o Transfers to Affiliates 23,536 

o Loan Repayments Made 51,646 

o Federal Election Activity 212,263 

o Other Disbursements 5,075 

Total Disbursements $1,717,482 

Cash-on-hand @ December 31,2010 $ 11,039 
Part III 

Summaries 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

A comparison of NDRP's bank activity with its most recent amended reports prior to the 

audit revealed material misstatements in 2009 and 2010. In addition, a comparison of 

NDRP's bank activity with its original reports for 2009 and 2010 also revealed material 

misstatements. 

In response to the Interim Audit Report recommendation, NDRP attempted to correct the 

public record by filing amended disclosure reports. However, the amendments only 

materially corrected receipts for 2010. Receipts for 2009 and disbursements for 2009 and 

2010 remained misstated. Subsequent to the receiving the Draft Final Audit Report, 

NDRP filed additional amended disclosure reports for 2009 and 2010. These 

amendments materially corrected the misstatements. Regarding the understatement of 

disbursement activity on NDRP's original reports, NDRP did not submit any comments 

in response to the Interim Audit Report recommendation or after receiving the Draft Final 

Audit Report. 

The Commission approved a finding that NDRP misstated the beginning cash-on-hand 

balance in 2009 and receipts and disbursements in 2009 and 2010 on the most recent 

reports filed as of audit notification. In addition, the Commission approved a finding that 

NDRP filed original disclosure reports for 2009 and 2010 that materially understated its 

disbursements. (For more detail, see p. 4.) 

Finding 2. Reporting of Debts and Obligations 

Audit fieldwork indicated that NDRP did not disclose debts and obligations for nine 

vendors, totaling $235,563, on Schedule D (Debts and Obligations) of its disclosure 

reports. In response to the Interim Audit Report recommendation, NDRP filed amended 

reports to disclose these debts and obligations. 

The Commission approved a finding that NDRP failed to disclose debts and obligations 

totaling $235,563. (For more detail, see p. 8.) 
Part IV 

Commission Findings 

I Finding 1. Misstatement of Financial Activity 

Summary 

A comparison of NDRP's bank activity with its most recent amended reports prior to the 

audit revealed material misstatements in 2009 and 2010. In addition, a comparison of 

NDRP's bank activity with its original reports for 2009 and 2010 also revealed material 

misstatements. 

In response to the Interim Audit Report recommendation, NDRP attempted to correct the 

public record by filing amended disclosure reports. However, the amendments only 

materially corrected receipts for 2010. Receipts for 2009 and disbursements for 2009 and 

2010 remained misstated. Subsequent to the receiving the Draft Final Audit Report, 

NDRP filed additional amended disclosure reports for 2009 and 2010. These 

amendments materially corrected the misstatements. Regarding the understatement of 

disbursement activity on NDRP's original reports, NDRP did not submit any comments 

in response to the Interim Audit Report recommendation or after receiving the Draft Final 

Audit Report. 

The Commission approved a finding that NDRP misstated the beginning cash-on-hand 

balance in 2009 and receipts and disbursements in 2009 and 2010 on the most recent 

reports filed as of audit notification. In addition, the Commission approved a finding that 

NDRP filed original disclosure reports for 2009 and 2010 that materially understated its 

disbursements. 

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; 

• the total amount of disbursements for the reporting period and for the election 

cycle; and 

• certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 2 U.S.C. §434(b)(l), (2), (3), (4) and (5). 
Facts and Analysis 

A. Misstatement of Financial Activity - Most Recent Reports Filed Prior to the 

Audit 

1. Facts 

As part of this audit, the Audit staff reconciled NDRP's reported financial activity 

with its bank records for 2009 and 2010. The following charts outline the 

discrepancies between NDRP's disclosure reports and its bank records. Succeeding 

paragraphs explain why the discrepancies occurred. 

2009 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash-on-Hand 

@ January 1,2009 

$15,496 $2,151 $13,345 

Overstated 

Receipts $563,007 $584,942 ($21,935) 

Understated 

Disbursements $497,890 $515,172 ($17,282) 

Understated 

Ending Cash-on-Hand 

December 31,2009 

$80,613 $71,921 $8,692 

Overstated 

The overstatement of beginning cash-on-hand of $13,345 likely resulted from priorperiod discrepancies. 

The understatement in receipts resulted from the following. 

• Transfers from non-federal account, not reported^ $ 94,500 

• Non-federal receipts reported in error^ (85,230) 

• Receipts not reported 12,811 

• Unexplained difference (146) 

Net Understatement of Receipts $ 21,935 

The understatement in disbursements resulted from the following. 

• Debits and checks that cleared the bank, not reported $ 25,492 

• Reported disbursements that did not clear bank accounts (8,629) 

• Unexplained difference 419 

Net Understatement of Disbursements $ 17,282 

The misstatements described above resulted in the overstatement of ending cash-onhand by $8,692. 

^ In July 2009, NDRP failed to disclose two transfers ($60,000 and $34,500) from its non-federal account 

to its federal account. 

* These receipts consist of individual ($83,865) and PAC ($1,365) non-federal contributions that NDRP 

deposited into a non-federal account but mistakenly included in its disclosure reports. 
2010 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash-on-Hand 

@ January 1,2010 

$80,613 $71,921 $8,692 

overstated 

Receipts $982,166 $1,141,428 ($159,262) 

understated 

Disbursements $979,328 $1,202,310 ($222,982) 

understated 

Ending Cash-on-Hand 

@ December 31,2010 

$83,451 $11,039 $72,412 

overstated 

The understatement in receipts resulted from the following. 

• Transfers from non-federal account, not reported $ 20,318 

• Republican National Committee transfers, not reported 79,400 

• Non-federal political action committee contributions 

reported in error (2,050) 

• Bank interest received, not reported 236 

• Unexplained difference 61.358 

Net Understatement of Receipts $ 159,262 

The understatement in disbursements resulted from the following. 

• Media and operating disbursements, not reported^ $ 244,047 

• Transfers to non-federal accounts, not reported 20,475 

• Inter-account transfers reported in error^ (37,151) 

• In-kind contributions, not reported 7,448 

• Disbursements reported twice (7,936) 

• Unexplained difference (3.90n 

Net Understatement of Disbursements $ 222,982 

The misstatements described above resulted in the overstatement of ending cash-onhand by $72,412. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatements for 2009 and 2010 with NDRP 

representatives during the exit conference and provided copies of relevant work papers 

detailing the misstatements. The representatives asked questions and made comments 

regarding the reconciling adjustments presented and stated that the necessary amended 

reports would be filed in response to the Interim Audit Report. 

The Interim Audit Report recommended that NDRP amend its disclosure reports to 

correct the misstatements noted above and reconcile the cash-on-hand balance on its 

most recent report to identify any subsequent discrepancies that may have affected the 

recommended adjustments. Further, NDRP was to adjust the cash-on-hand balance as 

^ These disbursements consist of media ($109,722), operating ($124,511) and merchant fee ($9,814) 

payments that cleared the bank account but were not reported by NDRP in its disclosure reports. 

^ NDRP mistakenly included these inter-account transfers in its disclosure reports as operating 

expenditures. 
necessary on its most recent report, noting that the adjustment was the result of priorperiod audit adjustments. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, NDRP filed amended 

disclosure reports for 2009 and 2010. However, these amendments did not materially 

correct the receipt or disbursement misstatements. To assist NDRP with correcting the 

public record, the Audit staff thoroughly discussed the adjustments needed to 

materially correct the reports for both years. NDRP filed a second set of amended 

reports. However, these reports only materially corrected receipts for 2010. Receipts 

for 2009 and disbursements for 2009 and 2010 remained misstated. As such, NDRP 

had not fully complied with the Interim Audit Report recommendation. 

4. Draft Final Audit Report 

In the Draft Final Audit Report, the Audit staff stated that NDRP had not fully 

complied with the Interim Audit Report recommendation by filing amended disclosure 

reports that materially corrected the misstatements for 2009 and 2010. 

5. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, NDRP submitted additional amended 

disclosure reports that materially corrected the misstatements for 2009 and 2010. 

B. Misstatement of Financial Activity - Original Reports Filed 

1. Facts 

In addition to examining NDRP*s most recent reports filed prior to the audit 

notification, the Audit staff compared NDRP's original reports filed with bank records 

and discovered a $657,482 understatement of disbursements over the two-year period 

(2009 and 2010)^. As noted in the charts above, the latest amendments filed prior to 

this audit also included a net understatement of disbursements totaling $240,264 

($17,282 in 2009 plus $222,982 in 2010). Therefore, the latest amendments filed prior 

to this audit did not correct all of the understated disbursement activity for the twoyear period*. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the understatement of disbursements on its original reports 

filed with NDRP representatives during the exit conference and provided copies of 

relevant work papers detailing the disbursements not reported. The representatives 

had no specific comments at the time. 

The Interim Audit Report recommended that NDRP submit any additional information 

or written comments it considered relevant to this matter. 

7 

8 

This figure includes the $17,282 and $222,982 understatement of disbursements from 2009 and 2010, 

respectively, discussed in Section A (Misstatement of Financial Activity - 2009 and 2010). 

On average, NDRP filed four amended reports per reporting period. There were seven reporting periods 

during 2010 in which NDRP filed six or more amendments for the reporting period. 
3. Committee Response to the Interim Audit Report 

NDRP did not submit any additional information or written comments regarding this 

matter in its response to the Interim Audit Report recommendation. 

4. Draft Final Audit Report 

In the Draft Final Audit Report, the Audit staff noted that NDRP did not submit any 

comments regarding the understatement of disbursements in its original reports. 

Further, no additional comments were submitted subsequent to the Draft Final Audit 

Report. 

Commission Conclusion 

On December 17,2013, the Commission considered the Audit Division 

Recommendation Memorandum in which the Audit staff recommended that the 

Commission find that NDRP misstated the beginning cash-on-hand balance in 2009 

and receipts and disbursements in 2009 and 2010 on the most recent reports filed as of 

audit notification. In addition, the Audit staff recommended that the Commission find 

that NDRP filed original disclosure reports for 2009 and 2010 that materially 

understated its disbursements. 

The Commission approved the Audit staffs recommendations. 

I Finding 2. Reporting of Debts and Obligations 

Summary 

Audit fieldwork indicated that NDRP did not disclose debts and obligations for nine 

vendors totaling $235,563 on Schedule D (Debts and Obligations) of its disclosure 

reports. In response to the Interim Audit Report recommendation, NDRP filed amended 

reports to disclose these debts and obligations. 

The Commission approved a finding that NDRP failed to report debts and obligations 

totaling $235,563. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

2 U.S.C. §434(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts 

owed by and to the committee with a statement explaining the circumstances and 

conditions under which each debt and obligation was incurred or extinguished. 

11 CFR §104.11 (a). 

C. Itemizing Debts and Obligations. 

• Once it has been outstanding 60 days from the date incurred, a debt of $500 or 

less must be reported on the next regularly scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on 

which the debt was incurred. 11 CFR §104.11(b). 
Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed disbursement records and disclosure 

reports for proper reporting of debts and obligations. NDRP reported no debt during the 

audit period; however, the review identified debts totaling $235,563^ owed to nine 

vendors that NRDP should have disclosed on Schedule D. Based on the records, these 

vendors provided mainly telemarketing, printing and direct mail services. Most of the 

identified debts were greater than $500, and all remained outstanding during the reporting 

period in which they were incurred. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed the reporting of debts and obligations 

with NDRP representatives and provided a schedule detailing the transactions that 

required disclosure. The representatives asked general questions about the disclosure 

requirements for debts, specifically, when and how debts and obligations are disclosed. 

Audit staff referred NDRP to the regulations at 11 CFR §104.11(b) for guidance on 

itemizing debts and obligations and subsequently forwarded copies of Schedule D and its 

instructions to NDRP representatives. 

The Interim Audit Report recommended that NDRP amend its reports to disclose debts 

and obligations of $235,563 on Schedule D. 

C. Committee Response to the Interim Audit Report 

In response to the Interim Audit Report recommendation, NDRP filed amended reports 

that correctly disclosed the debts and obligations. 

D. Draft Final Audit Report 

In the Draft Final Audit Report, the Audit staff acknowledged that NDRP amended its 

reports to include the previously unreported debts and obligations. NDRP did not file an 

additional response to the Draft Final Audit Report. 

Commission Conclusion 

On December 17,2013, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit stafT recommended that the Commission find that 

NDRP failed to disclose debts and obligations totaling $235,563. 

The Commission approved the Audit staffs recommendation. 

9 Each debt in this amount was counted once even if it required disclosure over multiple periods. In order 

for NDRP to file amended reports correctly, the Audit staff provided schedules that included the amount 

of each debt required to be reported for each reporting period.