BERKE FARAH 

ATTORNEY S AT LAW 

UP 

1200 New Hampshire Ave. NW | Suite 8001 Washington, DC 20036 |www.beil(efarah.coni 1202-5177230 

March 30,2015 

Re: Audit of Kevin McCarthy for Congress 

Federal Election Commission 

Audit Division 

Kendrick Smith 

999 E Street. NW 

Washington, DC 20463 

Dear Mr. Smith: 

The purpose of this letter is to respond to the Audit Division's Draft Final Audit Report 

("DFAR") regarding Kevin McCarthy for Congress ("Committee") during the period January 1, 

2011 - December 31,2012. This response is sent within the requested 30 days of receipt. 

The Audit Division reached two findings in the DFAR. Those findings are repeated below 

along with our comments. 

Finding 1. Receipt of Contributions in Excess of the Limit 

As stated in the DFAR, Audit staff identified apparent excessive contributions from 

individuals totaling S77,094. According to the Audit staff, all excessive contributions were the 

result of the Committee not resolving the excessive portion of contributions by timely forwarding 

a presumptive letter to its contributors informing them how their contribution had been 

redesignated and/or reattributed,, or refunding the excessive contribution. 

As noted in the DFAR, the Committee's representatives submitted presumptive 

reattribution and redesignation letters that were sent to the contributors relative to the apparent 

excessive contributions. The DFAR concluded that the Committee resolved the excessive 

contributions, but determined its actions were untimely. 

The Committee believes that it did indeed timely forward presumptive letters to its 

contributors informing them how their contribution had been redesignated and/or reattributed. 

NAVicniuc IRE Liw OF POLITICS. 
However, because such efforts would have been undertaken by its prior treasurer, the Committee 

could not prove so with a degree of acceptable certainty. Audit staif originally told the Committee 

that if its donation and solicitation forms included the proper disclaimers it would serve to 

sufficiently notify donors as to where their funds would be contributed. The Conunittee under its 

prior administration did not retain copies of donation forms and solicitations, so the Committee 

could not prove such information with certainty to the Audit staff, notwithstanding the recollection 

of Committee volunteers that the donation and solicitation forms included the tequiied 

information. Therefore, the Committee sent and fully tracked presumptive reattribution and 

redesignation letters, which resulted in resolving the excessive contributions to the Audit staffs 

satisfaction. The Committee nevertheless disagrees that such actions were untimely as determined 

by Audit staff, as notwithstanding the lack of documentary evidence, the recollection of Committee 

volunteers, remains that such efforts were made on a timely basis. 

Finding 2. Misstatement of Financial Activity 

During audit fieldwork, the Audit staff reconciled the Committee's reported activity with 

its bank records for 2011 and 2012. The Audit staff discussed this matter during the exit 

conference at the conclusion of the fieldwork and provided Committee representatives with 

reconciliations for 2011 and 2012 based on disclosure reports filed by the Committee prior to audit 

notification and amended reports filed subsequently. The Audit staff informed the representatives 

that the amendments filed after audit notification materially corrected the misstatements. 

It should be noted for the record that prior to Audit notification on April 23, 201.3, the 

Committee on its own began to take corrective and prophylactic action regarding this finding. It 

had adopted new internal procedures and safeguards to minimize future administrative issues. A 

more detailed chronology appears below: 

May 2012: K.MFC meets with Campaign Financial Services (CFS) to engage 

new financial management and compliance firm services. Schedules and plans 

internal financial review by CFS to reconcile, review, and identify any issues with 

financials and FEC reporting; 

June-July 2012: Assistant Treasurer Conn! Brunni begins to send records and 

documents to CFS for review. Most records are incomplete, and the process takes 

several more months for all of the data required for the internal review to be 

received; 
July 5,2012: CFS files F99 on behalf of KMFC and Treasurer Raymond Karpe, 

notifying FEC and public records that the committee has begun an internal review 

and anticipates the adoption of new procedures and the filing of amendments 

forthcoming. CFS also spoke with FEC analyst Christopher Whyrick directly and 

discussed foe process the committee was undertaking; 

July 2012-Current: KMFC employs new procedures to maintain accurate 

financials, proper compliance and reporting, and adhere to FEC Safe Harbor 

policies; 

October 12,2012: KMFC engages a new treasurer, Jill Thomson, to ensure new 

policies and procedures are being followed; 

June 2012-May 2013: KMFC and CFS conduct a line by line reconciliation and 

review using as many back up documents and records available to ensure 

financial and reporting accuracy. The process requires review of all transactions, 

edits made when necessary, and the preparation of amendments for filing to 

correct foe public record. Throughout this process, CFS communicates via phone 

multiple times with analyst Christopher Whyrick, keeping him informed of the 

process and what is being done; 

April 24,2013: CFS files F99 on behalf of KMFC and Treasurer Jill Thomson to 

further inform public record that amendments are forthcoming; 

May 2-May 3,2013: Amendments of all reports from Year End 2009 through 

April Quarterly 2013 are filed with the FEC. 

The steps taken above and foe adoption of new procedures and the commencement of a financial 

review beginning in July 2012 resulted in the amendments filed to correct the misstatements of 

financial activity discussed herein. The vast majority of actions taken preceded the April 23, 

2013 audit notification, and corrective amendments were filed within days thereafter. 

In conclusion, the Committee was well on its way to correcting the two matters identified by Audit 

staff, and as noted in foe DFAR, has completely done so to Audit staffs satisfaction. The 

Committee had engaged a new treasurer and new representatives, including regular outside counsel 

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and a new compliance firm prior to the commencement of the Audit. Because both findings have 

been corrected, the Audit staff make no further recommendations, the engagement of a new 

treasurer and new representatives, and the adoption of internal procedures and safeguards, we urge 

you to close this matter without further action. 

Should you have any additional questions, please do not hesitate to contact me. 

Very truly yours, 

Elliot S. Berke