Why the Audit 

Was Done 

Federal law requires the 

Conunission to audit the 

national committee of a. 

party who receives 

payments for presidential 

nominating conventions.' 

The audit examines the 

receipt and use of Federal 

funds and whether the 

committee otherwise 

complied with the 

limitations, prohibitions 

and disclosure 

requirements of the 

election law. 

Future Action 

The Commission may 

initiate an enforcement 

action, at. a later time, 

with respect to any of the 

matters discussed in this 

report. 

Draft Final Audit Report of the 

Audit Division on the Committee 

on Arrangements for the 2012 

Republican National Convention 

(June 22, 2010 - Februaiy 28, 2014) 

About the Commiitee (p. 2) 

The Committee on Arrdngenients for the 2012 Republican 

National Convention (COA) was responsible for the day-to-day 

arrangements and..dperatior^s^f the Republican Presidential 

nomination convention. COA is headquartered in Washington, 

DC. For more information, see chaiii'pn the Committee 

Organization, p. 2. \ 

Financial Activity (p. 2) 

« Receipts 

.6^ Federal Funds 

o Loans^Rec,eived 

o' .Offsets^'to: Convention 

Expenditures.. • 

Total Risceipts 

s _• 

%. t 

• Disbursements 

o Convention Expenditures 

o Loaii Reiiaj^ents 

Total Disbursements 

$ 18,248,300 

1,000,000 

998,957 

$ 20,247,257 

$ 17,789,385 

1,000,000 

$ 18,789,385 

Findings and Recommendations (p. 3) 

• Net Outstanding Convention Expenses (Finding 1) 

• Failure to Itemize Debts (Finding 2) 

' 26U.S.C.§9008(g). 
Draft Final Audit Report of the 

Audit Division on the Committee 

on Arrangements for the 2012 

Republican National Convention 

(June 22, 2010 - February 28, 2014) ^ • ' 

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Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Inventory of Committee Records 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

P^rt III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Net Outstanding Convention Exposes. 4 

Finding 2. Failure to Itemize Debts 6 

. 

s . • 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Committee on Arrangements for the 2012 

Republican National Convention (COA), undertaken by the Audit Division of the Federal 

Election Commission (the Commission) as mandated by Section 9008(g) of Title 26 of 

the United States Code. That section directs the Commission to conduct an examination 

and audit of the payments for presidential nominating conventions no later than 

December 31 of the calendar year in which the presidential nominating convention 

involved is held. \ 

Scope of Audit 

This audit examined: ^ 

1. the disclosure of receipts and loans; ^ > 

2. the disclosure of disbursements, debts and obligations; \ 

3. the recordkeeping process and completeness of records; ^ \ N, 

4. the consistency between reported figures and bank records; ^ ' 

5. the accuracy of the Statement of Net Outstanding Convention Expenses; 

6. the committee's compliance with requirements concerning expenditures for 

convention expenses; and 

7. other committee operations necessary to the review. 

Inventory of Committee Records 

The Audit staff routinely conducts an inventory, of committee records before it begins the 

audit Eeldwork, COA records were materially complete and the Eeldwork began 

iimnqdiately. 

\ 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration June 21,2010 ; 

• Audit Coverage June 22,2010 - February 28,2014 

Headquarters Washington, DC 

Bank Information 

• Bank Depositories Twb 

• Bank Accounts Three Accounts 

Treasurer 

• Treasurer When Audit Was Conducted ..^^ony Parker 

• Treasurer During Period Covered by Audit LouisT'6pe.6/21/2010 - 4/12/2011 

Anthony.Parker 4/13/11 - Present 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes • \ • Who Handled Accounting and 

Recordkeeping Tasks / • 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ June 22,2010 $0 

Receipts 

o Federal Funds 18,248,300 

o Lx>ans Received 1,000,000 

o Offsets to Convention Expenditures 998,957 

Total Receipts $ 20,247,257 

Disbursements 

o Convention Expenditures 17,789,385 

o Lx)an Repayments 1,000,000 

Total Disbursements $ 18,789385 

Cash-on-hand @ December 31,2012 $ 1,457,872 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Net Outstanding Convention Expenses 

COA received $18,248,300 in federal funds to finance the Republican National 

Convention. The Statement of Net Outstanding Convention Expenses (NOCE), as 

calculated by the Audit staff, shows an amount of unspent funds of $1,020,769^. This 

amount is repayable to the United States Treasury. ,0n June 28,2013, COA made an 

interim r^ayment of $350,000. 

In response to the Preliminary Audit Report recpmmendation, COA provided 

documentation indicating the remaining capital assets were of no residual value and an 

updated NOCE through, August 2014. These ^justments-have been incorporated by 

Audit staff into the revised NOCE that refiects amammin't of unspent funds of $701,106 

as of February 28,2014. In addition COA, did not.dispute the NOCE calculations 

contained in the Preliminary Audit Rq)ort. . 

The Audit staff recommends that the Commission make a determination that the 

remaining portion of unspent funds, $701,106, is repayable to the United States Treasury. 

(For more detail, see p. 4.) 

Finding 2. Failure tb Itemize Debts 

Audit fi^ldwork found that COA failed to report debts and obligations relating to four 

vendors totaling $272,085 on Schedule D (Debts and Obligations). 

In response to the Preliminary Audit Report recommendation, COA filed amended 

reports to itemize these debts and obligations. In addition, COA stated that it disagreed 

with the basis for the finding but provided no further explanation. (For more detail, see 

p. 6.) 

^ This amount is based on the NOCE as prepared through October 31,2013. 
Part IV 

Findings and Recommendations 

Finding 1. Net Outstanding Convention Expenses 

Summary 

COA received $18,248,300 in federal iunds to finance the Republican National 

Convention. The Statement of Net Outstanding Convention Expenses (NOCE), as 

calculated by the Audit staff, shows an amount of unspent i^ds of $1,020,769^. This 

amount is repayable to the United States Treasury. On June 28,2013, COA made an 

interim repayment of $350,000. 

In response to the Preliminary Audit Report recommendation, COA provided 

documentation indicating the remaining capital assets were of no residual value and an 

updated NOCE through, August 2014. These adjustments have been incorporated by 

Audit staff into the revised NOCE that reflects an amount of unspent funds pf $701,106, 

as of February 28,2014. In additipn COA, did not dispute the NOCE calcpiations 

contained in the Preliminary Audit Report. 

The Audit staff recommends that the Commission make a determination that the 

remaining portion of unspent funds, $701,106, is repayable to the United States Treasury. 

Legal Standard 

A. Entitlement to Payments From the Fund. The national committee of a major party 

shall be entitled to payments with respect to my presidential nominating convention, in 

amounts that-in the aggregate shall not exceed $4,000,000, as adjusted by the Consumer 

Price Index. The major party entitlement for the 2012 nominating convention was 

$ 1.8,248,300. 26 li.S.C, §9008(b)(l) & (5). 

B. Repayments. Any portion of the entitlement that remains unspent after all convention 

expenses have been paid shall be returned to the Secretary of the Treasury. The national 

committee or convention conunittee shall make an interim repayment of unspent funds 

based on the Enmcial positibn of the committee as of the end of the ninth month 

following the last day of the convention, allowing for a reasonable amount as determined 

by the Commission to be wjthheld for unanticipated contingencies. The interim 

repayment shall be made no later than 30 calendar days after the end of the ninth month 

following the last day of the convention. 11 CFR §9008.12(b)(5). 

C. Repayment Determination Procedures. The Commission will follow the same 

repayment determination procedures, and the committee has the same rights and 

obligations as are provided for repayment determinations involving publicly funded 

candidates under 11 CFR 9007.2(c) through (h). 11 CFR §9008.12(c). 

^ See footnote #2. 
D. Net Outstanding Campaign Expenses (NOCE). A convention committee shall file, 

no later than 60 days after the last day of the convention, a statement of that committee's 

"net outstanding convention expenses." This statement must contain, among other things: 

• The total of all committee assets including cash on hand, amounts owed to the 

committee and capital assets listed at their fair market value; 

• The total of all outstanding obligations for qualified campaign expenses; and 

• An estimate of necessary winding-down costs. 11 CFR §9008.10(g). 

Facts and Analysis 

A. Facts 

For the 2012 national conventions, each major political party was entitled to receive 

federal fiuids of $18,248,300 to finance its national presidential nominating convention. 

The 2012 Republican National Convention ended pn August 30,2012. COA filed a 

Statement of Net Outstanding Convention Expenses as of October 14,2012. The Audit 

staff reviewed financial activity through February 28,2014, and estimated the winding 

down cost in preparing the figures shown below. 

Statement of Net Outstanding .Convention Expenses 

As of October 14; .2012 

Prepared Through February 128, 2014 

Assets 

Cash in Bank ^ . $2,556,924 

Accounts Receivable. 1.051.925 Tal 

Total Assets $3,608,849 

LiabUities 

Accounts Payable for Qualified Convention 

Expenses at 10/14/12 $1,840,027 

Winding Down Costs 

Actual (10/15/12-2/28/14) $691,866 

Estimated (3/01/14 - 8/31/14) 25.850 [b] 717.716 

Total LiabUities $2.557.743 

Net Outstanding Convention Expenses (Surplus) $1,051,106 [c] 

as of October 14,2012 

Less: Interim Repayment made June 28,2013 f$350.0001 

Amount Repayable to the United States Treasury $701.106 

[a] This amount includes a pending receivable of $4,182. 

[b] Estimated winding down costs will be compared to actual winding down cost and adjusted accordingly. 

[c] Due to the estimated winding down cost decreasing, the amount of surplus has increased by $30,337. 
The NOCE as calculated by the Audit staff showed unspent funds of $1,020,769 as of 

October 31,2013. At the exit conference, CCA representatives were provided a copy of 

the NOCE as calculated by the Audit staff. The Audit staff explained that the amounts 

will have subsequent adjustments relating to future financial activity. A COA 

representative stated that the amounts are close to their numbers and that COA would be 

filing an updated NOCE. Pursuant to 11 CFR §9008.12(b)(5), COA made an interim 

repayment of $350,000 to the United States Treasury on June 28,2013. 

B. Preliminary Audit Report & Audit Division Recommendation 

The Preliminary Audit Report recommended that COA provide documentation 

demonstrating that either: (a) no repayment of the remaining unspent funds was due; or 

(b) a lesser amount was due as repayable to the United States Treasury. 

C. Committee Response to Preliminary Audit ^Report 

In response to the Preliminary Audit Report recommendation, COA provided an updated 

NOCE through August 2014. COA also provided documentation indicating that capital 

assets initially valued at $15,372, as presented on the NOCE in the Preliminary Audit 

Report, were of no residual value. These adjustments have been incorporated into the 

revised NOCE that reflects an amount of unspent^^nds of $701,106, as of February 28, 

2014. In addition COA, did not dispute the NOCE calculations contained in the 

Preliminary Audit Report. As a result,.the amount repayable to the United States 

Treasury is $701,106. 

Finding 2. Failure to Itemize Debts . 

Summary 

Audit fieldwork found that COA failed to report'^ebts and obligations relating to four 

vendors totaling $272,085 on Schedule D (Debts aiid Obligations). 

In response to the Preliminary Audit Report recommendation, COA filed amended 

reports to itemize these debts.and obligations. In addition, COA stated that it disagreed 

with the basis for the finding but provided no further explanation. 

. I 

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 rq)ort that covers the date on which 

the debt was incurred, except reoccurring administrative expenses (such as rent) 

shall not be reported as a debt before the payment due date. 11 CFR § 104.11 (b). 

Facts and Analysis 

A. Facts 

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

reports for proper reporting of debts and obligations using both sampling and a 100 

percent review. These reviews identified debts owed t9 four vendors totaling $272,085 

that COA failed to disclose. COA should have reported the deMs on Schedule D of its 

disclosure reports that covered the dates on which the debts were incurred. Specifically, 

COA incurred a debt totaling $80,500 on May 22,2012, owed to Qampaign 

SolutionsAlie Donatelli Group and should have reported the debt oh Schedule D of its 

July 2012 Quarterly report. In addition, COA should have reported on Schedule D of its 

October 2012 Quarterly report a debt totaling $13,762 owed to Mass Relevance that was 

incurred between August 27 and. September 12,2012, a debt totaling $162,811 owed to 

Smart Source that was incurred between July 16 and September 17,2012, and a debt 

totaling $15,012 owed to Vente Networks that was incurred on September 10,2012. The 

number of days outstanding for the debts ranged, from 43 days to 93 days. It should be 

noted that COA did hot report any debts during the audit period. \ • • • • 

B. Preliminary Audit Report & Audit Division Recommendation 

The Audit staff discussed the reporting of debts and obligations with COA 

representatives and provided schedules detailing the transactions requiring disclosure. 

COA representatives had no comment on this ihatter. In response to the exit conference, 

COA wrote that if disagreed with the basis for a finding that it failed to itemize debts. 

COA rioted that it promptly paid all invoices following a diligent internal review process 

in which the invoices were ireviewed for accuracy, legitimacy, approved by the 

designated committee personnel and extinguished during the subsequent reporting period. 

Nevertheless, COA agreed tp file amended Schedules D, to disclose the four items 

identified by the Audit staff. 

The Preliminary Audit Report recommended that absent documentation demonstrating 

that these expenditures did not require reporting on Schedule D, COA amend its 

disclosure reports to properly disclose these debts. 

C. Committee Response to Preliminary Audit Report 

In response to the Preliminary Audit Report recommendation, COA filed amended 

Schedules D to itemize these debts and obligations. In addition, COA stated that it 

disagreed with the basis for the finding but provided no further explanation.