FEDERAL ELECTION COMMISSION

WASHINGTON.D.C. 20463

March 15,2001

MEMORANDUM

•

•

TO:

FROM:

RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

ROBERT J. COSTA -&-

ASSISTANT STAFF D~T~ AUDIT DNISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

MICHIGAN REPUBLICAN STATE COMMITTEE

Attached please find a copy ofthe final audit report and related documents on

Michigan Republican State Committee which was approved by the Commission on

February 8,2001.

Informational copies ofthe report have been received by all parties involved and

the report may be released to the public.

Attachment as stated

cc: Office of General Counsel

Office ofPublic Disclosure

Reports Analysis Division

FEC Library
ru

ill

REPORT OF THE AUDIT DIVISION

ON

Michigan Republican State Committee

Approved February 8, 2001

FEDERAL ELECTION COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
TABLE OF CONTENTS

MICHIGAN STATE REPUBLICAN PARTY

Page

Executive Summary

Final Audit Report 3

Cj Background 3 ~F~

I"" Findings 5 !U

•

In Legal Analysis 21

/'iJi

!:~ Transmittal to Committee 25

I'"~ Chronology 27

0

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ru
FEDERAL ElECTION COMMISSION

WASHINGTON. D.C. 20463

REPORT OF THE AUDIT DIVISION

ON THE

MICHIGAN REPUBLICAN STATE COMMITTEE

EXECUTIVE SUMMARY

The Michigan Republican State Committee (MRSC) registered with the

Comptroller General ofthe United States on April 17, 1972.

The audit was conducted pursuant to Section 438(b) ofTitle 2 ofthe United States

Code which states, in part, that the Commission may conduct audits of any political

committee whose reports fail to meet the threshold level ofcompliance set by the

Commission.

The period covered by the audit was January I, 1997 through December 31, 1998.

The findings ofthe audit were presented to the MRSC at an exit conference and later, in

an Interim Audit Report. The MRSC's responses to those findings are included in the

Final Audit Report.

The following is an overview ofthe findings contained in the Final Audit Report.

SHARED EXPENSES PAID FROM NON-FEDERAL ACCOUNTS - 11 CFR

§§100.8(a)(I), 104.1O(b)(4), 106.5(a), (d), (e), (f) and (g), and 106.6(e)

The MRSC maintains an account entitled "Michigan Republican State Committee

Administrative Account" (Administrative Account). According to the MRSC, funds

expended from the Administrative Account do not impact federal, state, or local

elections, therefore, it considers such transactions to be non-campaign related. Receipt

and disbursement transactions are not included in its federal or state disclosure reports.

Approximately $383,281 in expenses were identified that are subject to allocation

between the federal and non-federal accounts. These expenses were administrative in

nature and associated with a State Convention, State Committee Meetings, RNC

Meetings/Conferences, as well as, the day-to-day operations ofthe MRSC.

A review of a second non-federal account, "Michigan Republican State

Committee State Account" (State Account) identified $648,165 in apparent allocable

administrative expenses.

Page 1 of27 Approved 2/8/01
The Interim Audit Report recommended that the MRSC reimburse the

Administrative Account $49,827 and the State Account $88,516 for the federal share of

allocable expenses paid from these accounts and file memo Schedules H4 disclosing the

shared expenses.

In response, the MRSC made a reimbursement of$3,484 to the Administrative

Account and $72,408 to the State Account for the federal share of expenses it

acknowledged were allocable. The MRSC also demonstrated that $51,848 represented

solely non-federal expenses paid from these accounts.

The Audit concluded that $39,603 is still due to the Administrative Account and

$16,I08 is still due to the State Account.

MISSTATEMENT OF FINANCIAL ACTIVITY - 2 U.S.C. §434(b)(l), (2) and (4).

A comparison ofthe Committee's reported activity to its bank account records

revealed misstatements in beginning cash, ending cash, total receipts and total

disbursements disclosed on the MRSC's 1997 and 1998 reports.

In response to the Interim Audit Report recommendations the MRSC filed

amended reports which corrected the misstatements.

Page 2 of27 Approved 2/8/01
A# 99-53

FEDERAL ELECTION COMMISSION

WASHINGTON. D.C 204&3

REPORT OF THE AUDITDIVISION

ON THE

MICHIGAN REPUBLICANSTATE COMMITTEE

I. BACKGROUND

A. AUDIT AUTHORITY

This report is based on an audit ofthe Michigan Republican State

Committee (the MRSC), undertaken by the Audit Division ofthe Federal Election

Commission (the Commission) in accordance with the provisions ofthe Federal Election

Campaign Act of1971, as amended (the Act). The audit was conducted pursuant to

Section 438(b) ofTitle 2 ofthe 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 ofthis title. Prior to conducting any audit

under this subsection, the Commission shaH perfonn an internal review ofreports filed by

selected committees to detennine ifthe reports filed by a particular committee meet the

threshold requirements for substantial compliance with the Act.

B. AUDIT COVERAGE

The audit covered the period January 1, 1997 through December 31, 1998.

During this period, the MRSC reported a beginning cash balance of$219,740; total

receipts for the period of$9,182,235; total disbursements for the period of$8,908,230;

and an ending cash balance of$510,311. 1 The Commission previously audited MRSC's

financial activity relative to the 1993-1994 and the 1995-1996 election cycles.

C. CAMPAIGN ORGANIZATION

The MRSC registered with the Comptroller General ofthe United States

as the Michigan Republican State Committee on April 17, 1972. The MRSC maintains

its headquarters in Lansing, Michigan.

The Treasurer ofthe MRSC for the period covered by the audit was

William H. Gnodtke. The current Treasurer ofthe MRSC is Mr. Chris Bachelder. Mr.

Bachelder became Treasurer on March 21, 2000.

All figures in report are rounded to the nearest dollar. Reported figures do not foot due to

mathematical discrepancies in MSRC's calculations.

Page 3 of27 Approved 2/8/01
To manage its financial activity, the MRSC maintained four federal

accounts and two non-federal accounts as well as several certificates of deposits. The

federal accounts consisted of a checking account for 100% federal activity, an allocation

account for shared federal and non-federal activity, a payroll account, and an account

entitled the "Slate Card" account which had limited financial activity during the period

covered by the audit. 2 The two non-federal accounts had deposits totaling $11,517,994

and withdrawals totaling $11,672,822 for the period covered by this audit). The MRSC

also maintained an account for activity they considered as not impacting federal, state, or

local elections. Bank activity for this account included deposits totaling $776,971 and

withdrawals totaling $757,750 during the period covered by this audit. In addition to

these accounts, the MRSC maintained a money market account for an appeal bond

relating to a court judgment from Michigan's 46th Judicial District. Also, correspondence

related to a checking account entitled the Michigan Reapportionment Fund was addressed

to MRSC headquarters.4

D. AUDIT SCOPE AND PROCEDURES

Due to the volume ofrecords related to the MRSC's financial activity, the

Audit Division requested in a letter dated March 8, 2000 that the MRSC provide records

relative to receipts and disbursements in a computerized format. A response letter from

MRSC's Counsel stated .....the MRSC does not have the present capability to convert its

existing data into either ofthe format specifications that you request and maintain an

acceptable level ofreliability." Alternatively, the MRSC provided the Audit staffwith

numerous hardcopy print-outs relative to most ofthe receipts and disbursements. As a

result, the scope oftesting for several categories covered by this audit were limited

because the aggregation ofreceipts and disbursements could not be calculated using the

available records. Although the MRSC's records met the minimum requirements ofthe

Act, the Audit staff notes that substantive testing normally undertaken could not be

performed relative to the following reviews: (1) The receipt of contributions in excess of

the statutory limitations; (2) Proper disclosure of contributions from individuals, political

committees and other entities, including the itemization ofcontributions when required;

and (3) Proper disclosure ofdisbursements including the itemization ofdisbursements

when required.

The audit included testing ofthe following general categories:

The MRSC closed three other non-federal accounts during the period covered by this audit. The

remaining balances for these accounts were transferred to the main non-federal operating account.

This non-federal activity represents unadjusted and unaudited bank account figures.

According to the MRSC, the Michigan Reapportionment Fund was established in 1989 for the

purpose of making expenditures to influence the reapportionmnent process. Advisory Opinions 1981-35,

1982-14 (requested by the MRSC), 1982-37 and 1990-23 address receipts and expenditures relative to

reapportionment activities. The Commission has maintained that funds received and disbursed from a

reapportionment account are not contributions or expenditures and thus not subject to disclosure

requirements, limitations or prohibitions ofthe Act or Regulations.

Page 4 of27 Approved 2/8101
I. The receipt of contributions or loans in excess ofthe statutory limitations;

2. The receipt of contributions from prohibited sources;

3. Proper disclosure of contributions from individuals, political committees

and other entities, to include the itemization of contributions when

required, as well as, the completeness and accuracy ofthe information

disclosed;

4.

5.

6.

7.

8.

9.

Proper disclosure ofdisbursements including the itemization of

disbursements when required, as well as, the completeness and accuracy of

the information disclosed;

Proper disclosure of campaign debts and obligations;

The accuracy oftotal reported receipts, disbursements and cash balances

as compared to bank records (see Finding IT.B.);

Adequate recordkeeping ofcampaign transactions;

Proper reporting and funding of allocable expenses (see Finding IT.A.);

and,

Other audit procedures that were deemed necessary in the situation.

II. AUDIT FINDINGS AND RECOMMENDATIONS

A. SHARED EXPENSES PAID FROM NON-FEDERAL ACCOUNTS

Section I06.5(g)(I) ofTitle 11 ofthe Code ofFederal Regulations states,

in part, committees that have established separate federal and non-federal accounts under

II CFR 102.5(a)(l)(i) shall pay the expenses ofjoint federal and non-federal activities as

follows: (i) pay the en'tire amount of an allocable expense from its federal account and

transfer funds from its non-federal account to its federal account solely to cover the nonfederal share ofthat allocable expense; or (ii) establish a separate allocation account into

which funds from its federal and non-federal accounts shall be deposited solely for the

purpose ofpaying allocable expenses. Once a Committee has established a separate

allocation account for this purpose, all allocable expenses shall be paid from thai account

for as long as the account is maintained.

Section I04.IO(b)(4) ofTitle II ofthe Code ofFederal Regulations states,

in part, a political committee that pays allocable expenses in accordance with 11 CFR

106.5(g) or 106.6(e) shall also report each disbursement from its federal account or its

Page 5 of27 Approved 2/8101
separate allocation account in payment for a joint federal and non-federal expense or

activity.

The rules regarding the percentages to be used in the allocation ofshared

expenses for administrative and generic voter drives; exempt activities; and direct

fundraising costs. are described respectively under sections 106.5(d), (e) and (f) ofTitie

II ofthe Code ofFederal Regulations. Administrative and voter drive percentages are

calculated on the ratio ofthe federal offices expected on the ballot to total federal and

non-federal offices expected on the ballot in the next general election to be held in the

committee's state. State and local party committees in states that do not hold federal and

non-federal elections in the same year shall allocate the costs ofgeneric voter drives

according to the baIlot composition method based on a ratio for that calendar year.

Exempt activities are allocated according to the proportion oftime or space devoted in a

communication to federal candidates or elections as compared to the total time or space

devoted in a communication to all federal or non-federal candidates or elections.

Fundraising costs shall be allocated based on the ratio offunds received into a federal

account to its total receipts from each fundraising program or event.

BACKGROUND

The Audit staffreviewed disbursements from the MRSC's federal and

non-federal accounts to evaluate compliance with II CFR 106.5(g) and to determine if

the federal account paid the proper share of allocable expenses. It is the opinion ofthe

Audit staffthat payments were made from both the "Michigan Republican State

Committee Corporate Administrative Account" (Administrative Account) and the

"Michigan Republican State Committee State Account" (State Account) to defray

allocable expenses associated with joint federal and non-federal activities such as state

party conventions, meetings, and conferences. The Audit staff notes that expenses

similar to those identified during the period covered by this audit were also addressed in

findings in the previous two audits ofthe MRSC.

It should also be noted that the State ofMichigan does not permit

corporate or labor union contributions to be used for non-federal elections. However, on

August 21, 1979, the Michigan Secretary ofState issued a declaratory ruling concerning

corporate expenditures at a state political party convention. A corporation proposed

spending funds for expenses related to a state convention. The expenses included but

were not limited to hotel rooms, food, beverages, telephone and travel, and were to be

made for the purpose ofinfluencing the decisions ofthe delegates to the convention with

respect to the adoption of certain resolutions and the election ofindividuals to office

within the state party. In part, the declaratory ruling stated that since none ofthe offices

at stake at this particular convention were public offices and none ofthe resolutions to be

adopted were ballot questions, the expenditures in question were not prohibited and also

did not need to be reported or recorded as expenditures under the Act (reference to the

state ofMichigan law).

Page 6 of27 Approved 2/8/01
A Manual For Political Party Committees published by the Michigan

Department ofState Bureau ofElections, April 1990, commonly referred to as the "green

book," at page 14 states political party committees may accept funds from an

incorporated source ifthe corporation clearly designates the funds for the committee's

administrative expenses. These funds must be deposited in a separate account maintained

by the committee solely for administrative purposes. Finally, another manual published

by the Michigan Department ofState Bureau ofElections in February 1990, for

independent political and ballot question committees, at page 8, states a Ballot Question

Committee may receive corporate funds or be entirely funded by a corporation. At page

40 ofthis manual, it states a corporation is allowed to spend corporate funds to support or

oppose ballot questions. The corporation must register a Ballot Question Committee

within 10 calendar days after it spends $500 or more in a calendar year to support or

oppose ballot issues.

1. Michigan Republican State Committee Comorate Administrative Account

According to the MRSC, the Administrative Account was composed mainly

of corporate contributions and was considered a non-campaign account that did not

impact federal, state, or local elections. Therefore, receipt and disbursement transactions

were not included in the MRSC's federal or state disclosure reports. The MRSC

provided the Audit staffwith a computerized disbursement file totaling $740,191 for this

account which included a classification ofthe purpose for each disbursement. In

addition, the MRSC provided materials relative to some ofthe events for which

disbursements from the Administrative Account were made.

a. Expenditures Related to Non-Federal Activity

The MRSC paid for certain legal expenses from the Administrative

Account which were not considered allocable expenses by the Audit staff. These

expenses included the continuing legal fees relative to the appeal of a libel suit brought

against the MRSC by a former elected state official. The MRSC also paid $11,203 from

this account to an entity entitled the "McManus Administrative Account". According to

documentation, "...the purpose ofthe McManus Administrative Account was to defray

those expenses associated with defending the legal sufficiency ofMichelle McManus'

nominating petitions qualifying her for the primary election ballot for the First

Congressional District in 1998." Based on the available documentation, the Audit staff

considered this expense outside the purview ofthe Act. 5

Also paid from the Administrative Account were certain

disbursements totaling $171,498 that were categorized by the MRSC as "contributions."

Advisory Opinion 1996-36 (requested by the MRSC) addresses receipts and expenditures relative

to legal acrion conresring an individual's access to the ballot. The Commission has maintained that, in

certain cases, fi.mds received and disbursed for such purposes are not subject to disclosure requirements,

limitations or prohibitions ofthe Act or Regulations .

Page 70f27 Approved 2/8/01
These disbursements included $90,000 to an organization entitled the Michigan State

Chamber Foundation as well as to other local organizations. In addition, disbursements

were made from the Administrative Account to a state party committee in Missouri and to

a non-federal candidate committee in Maryland. These "contributions" made from the

Administrative Account were not considered allocable expenses by the Audit staff.

As in prior audits ofthe MRSC, the Audit staffidentified other

expenses paid from the Administrative Account as related solely to non-federal activities.

Specifically, transfers to the MRSC's building fund for mortgage payments and expenses

relative to a training session conducted for campaign managers of non-federal candidates

were deemed as related to non-federal activities. Also expenses for good will gestures

such a memorial and sympathy gifts given to family and acquaintances ofMRSC staff

were not considered allocable expenses. In all, the MRSC paid a total of$356,910 from

the Administrative Account for expenses which the Audit staff has deemed to be for nonfederal activities.

b. Expenditures Related to Shared Federal and Non-Federal Activities

During the 1997-98 election cycle, as in prior election cycles,

expenses were paid from the Administrative Account relative to the Mackinac

Republican Leadership Conference, the annual Michigan Republican State Convention,

various MRSC state committee meetings, along with several activities with the

Republican National Committee. Expenses related to these events included mileage

reimbursements, banquet and lodging expenses, badge holders, printing costs, as well as

sound and lighting. The Audit staffidentified the existence of a federal component with

each ofthese activities.

The Mackinac Republican Leadership Conference, a biennial

event, was held the weekend ofSeptember 19, 1997. Expenses paid from the

Administrative Account, totaling $125,342 were categorized by the MRSC as related to

the 1997 conference. Attendees to this event included federal officeholders such as

United States Senator Spencer Abraham, United States Congressman Newt Gingrich,

United States Congressman John Kasich, in addition to the Republican National

Committee Chairman Jim Nicholson and major donors to the MRSC. According to an

article in The Grand Rapids Press, the conference is held every other year in nonelection years to build enthusiasm for GOP campaigns. Other news articles that covered

the Mackinac Republican Leadership Conference described various national and state

issues that were discussed including the use offederal funds for Michigan highways and

the 1998 re-election ofMichigan Governor John Engler. Based on the existence ofboth a

federal and non-federal component to the Mackinac Conference, the Audit staff

considered the expenses relative to the event to be allocable expenses. The Audit staff

notes that new articles were used to gain further information about the event because the

available MRSC's records relating to the Mackinac Conference contained limited details.

Page 8 of27 Approved 2/8/01
During the period covered by the audit, the MRSC categorized

$45,268 ($40,268 in 1997 and $5,000 in 1998) in expenses paid from the Administrative

Account for the annual state conventions. The 1997 state convention included district

caucuses to elect chairmen as well as the selection ofthe state party chair and six vice

chairs. According to the MRSC, agenda items for the 1998 state convention also

included the elections for various party positions, a fundraiser hosted by United States

Senator Abraham, an agenda item entitled the "Congressional Report", and the

nomination ofgeneral election candidates for several non-federal offices. Based on the

existence ofboth a federal and non-federal component to the state conventions, the Audit

staff considered the expenses relative to the state conventions to be allocable expenses.

The MRSC also categorized expenses totaling $66,749 in 1997

and 1998 relative to periodic state committee meetings and certain meetings held by the

Republican National Committee. According to the minutes taken from several MRSC

state committee meetings, agenda items often included a report by the National

Committee person, an item entitled the "U.S. Senate Update", and an item entitled

"Congressional Comment". Meetings relative to the Republican National Committee

included the Midwest Leadership Conference held on August 22-24,1997. According to

registration materials, one ofthe goals for this event was to "...increase our majorities in

both the U.S. House and Senate...".

,The Audit staffmaintains that these expenses represent activities

that benefited the Party as a whole and, therefore, have both federal and non-federal

components. Accordingly, the costs for these activities should be allocated between the

federal and non-federal accounts using the Administrative/Generic Voter Drive

percentage. There was no evidence provided which demonstrated that the expenses

identified by the Audit staffwere related solely to State and local elections, solely to

Federal elections, or that any candidate's election or defeat was advocated.

At the conclusion offieldwork, the Audit staffhad identified

$405,981 6 ($188,756 in 1997 and $217,225 in 1998) in disbursements that appeared to

be for shared federal and non-federal activities. At the Exit Conference, the Audit staff

provided MRSC officials with schedules that detailed those disbursements identified as

relating to both federal and non-federal activity. During the 10 day period following

fieldwork, the MRSC provided documentation relative to $27,470 ofthe disbursements

identified by the Audit staff. According to the MRSC, the documentation supported that

the identified disbursements paid from the Administrative Account did not have a federal

component. Based on review ofthis documentation, $22,700 (ofthe $27,470) in

expenses related solely to non-federal activities. Therefore, based upon the Audit staffs

review, it appears tbt expenses totaling $ 383,281 ($405,981 - $22,700) related to

shared federal and non-federal activities. The Audit staff calculated that $49,827

6 This figure represents disbursement activity for the events mentioned above as well as certain expenses

totaling $168,723 categorized by the MRSC as "Office Miscellaneous" or "Accounting and Legal" that was

considered by the Audit staff as allocable.

Page 9 of27 Approved 2/8/01
($383,281 x 130//] represented the federal share for which payment from the MRSC's

federal account to the Administrative Account was required.

2. Michigan Republican State Committee State Account

Disbursements made from the MRSC's State Account were also

reviewed by the Audit staff According to the MRSC, the State Account was used as the

main non-federal operating account and included transfers to the MRSC allocation

account for the non-federal portion ofshared expenses.

The Audit staffs review of disbursements paid from the MRSC's

State Account identified 21 disbursements totaling $648,165 made for allocable

expenses. These expenses included consulting fees for 1997, lighting expenses relative to

the state convention, expenses for GOTV phone calls, and expenses relative to absentee

voter slate pieces. The Audit staff calculated the federal share ofthese possible allocable

expenses as $88,516.

At the Exit Conference following the conclusion offieldwork, the

Audit staffprovided the MRSC with a schedule ofthose disbursements from the State

Account considered to be possible allocable expenses. The MRSC did not provide

comments or documentation regarding these disbursements.

In the Interim Audit Report, the Audit staffrecommended that the

MRSC:

• Demonstrate that the identified disbursements paid from the Administrative

Account ($383,28l) and the State Account ($648,165) are not expenditures as

defined at 11 CFR §IOO.8(a); or,

• file Schedules H4 (Joint FederallNon-Federal Activity Schedule) disclosing as

memo entries the shared expenditures paid from these accounts; and

• using funds from its federal account(s) reimburse the Administrative Account

$49,827 and the State Account $88,516 and provide evidence ofsuch

reimbursement.

• Ifthe MRSC lacked the funds to reimburse the non-federal account, then disclose

the amount owed on Schedule D (Debts and Obligations) as a debt, until such

time that funds are available to make the reimbursement. .

The allocation percentage for administrative expenses during the 1997-1998 election cycle was

13%. This percentage represents the ratio for the number offederal offices to total number of

federal and non-federal offices on the 1998 Michigan general election ballot.

Page 10 of27 Approved 2/8/01
As part ofits response to the recommendations contained in the Interim

Audit Report, the MRSC explained that the Michigan Campaign law excludes party

administrative expenses from its coverage, and suggested that the same is true under

Federal law. Included in the MRSC response is a discussion ofvarious Advisory

Opinions issued by the Commission. The MRSC correctly pointed out that in Advisory

Opinion 1982-14, the Commission concluded that the influencing ofthe reapportionment

decisions of a state legislature, although a political process, is not considered electioninfluencing activity subject to the requirements ofthe Act. Also referenced was Advisory

Opinion 1993-9 which addressed the proposal to establish a building fund, maintained as

a "separate segregated" account into which only designated contributions would be

deposited. Also, included was a reference to Advisory Opinion 1983-37 in which the

Commission determined that the Massachusetts Democratic State Committee could

establish a fund that would not be subject to the Act's limitations, prohibitions, or

disclosure requirements. The monies in this fund could be used only for the purpose of

defraying legal costs of defending legal actions brought by candidates against the

Massachusetts Democratic State Committee and would have to be maintained separately

from funds used for federal elections. Finally, the MRSC cited Advisory Opinion 1996-

39 in which the Commission determined that a legal fund could defer expenses of

defending the legal sufficiency ofthe nominating petitions qualifying a candidate for the

primary election ballot.

,Using the above cited opinions, and the analogy to Michigan law,

the MRSC concluded that the FEC has determined that such activities do not influence

any Federal election to trigger compliance with the FECA. Therefore the above cited

activity is beyond the scope ofthe FECA. The MRSC contended that, with the exception

of certain items, "the disbursements from the Account were not made for the purpose of

influencing any election for Federal office."

Although the MRSC may be correct with respect to Michigan law,

Federal law takes a different view. The Act, Commission regulations, and past Advisory

Opinions exclude from coverage specific types ofexpenses, and only those. Coverage of

the Act goes beyond those things that meet the definition ofan "expenditure". Section

434(b)(4) ofTitle 2 ofthe United States Code states that political committees are required

to report for the reporting period and for the calendar year the total amount of all

disbursements and all disbursements in a number ofcategories. Likewise, the

requirement that certain transactions be individually itemized on the disclosure reports of

committees such as the MRSC, speaks in terms of disbursements. Most relevant to this

situation, Commission regulations also use the term disbursement when speaking about

the need to allocate expenses between federal and non-federal accounts for those

committees that, as the MRSC does, fund activity in connection with both federal and

non-federal elections. Section 106.5 ofTitle 11 ofthe Code of Federal Regulations,

"Allocation of expenses between federal and non-federal activities by party committees,"

uses the terms disbursements, costs, and expenses rather than expenditure. Therefore, the

fact that many ofthe disbursements discussed above do not, in the opinion ofthe MRSC,

Page 11 of 27 Approved 2/8/01
meet the definition ofexpenditure, is not relevant to the need for allocation between the

federal and non-federal accounts.

The response then addressed specific types of expenses paid from

the Administrative Account in an effort to demonstrate that the payments questioned in

the Interim Audit Report were not subject to the requirements ofthe Act.

Conventions, Meetings, And Conferences

The Audit staff identified $237,359 in expenses associated with the

annual state convention, various committee meetings and conferences which appeared to

require allocation between the MRSC's federal and non-federal accounts as

administrative expenses. In addition, evidence gathered establishes that there was at least

some federal content at many ofthe events. The MRSC, in its response, asserted that the

Audit Division preliminarily determined that these expenses were made for the purpose

ofinfluencing an election for federal office based on newspaper articles. Citing Common

Cause v FEC8 and various Michigan campaign finance law cases, the MRSC argues that

the FEC should ignore second hand accounts in newspaper articles as reliable evidence

that the MRSC conducted electioneering activity during the conventions, meetings, and

conferences. Clearly, newspaper articles are not the evidentiary material of choice.

However, requests for materials from the MRSC produced nothing and the newspaper

accounts ofthe proceedings at some ofthe meetings and events were the only available

information. It is significant that the MRSC response did not dispute any ofthe

newspaper accounts referenced in the Interim Audit Report. Finally, the newspaper

accounts were used only to establish that the events were not entirely focused on nonfederal efforts. In many cases the costs ofthe events are allocable as administrative

expenses.

The MRSC cited numerous court cases establishing the "express

advocacy" test. It also refers to the interim report where the audit staff "indicates that

these expenses represent activities that benefit the party as a whole and therefore have

both federal and non-federal components. The MRSC suggests that the 'benefit the Party

as a whole' standard does not replace the 'express advocacy' test." The relevant

requirements are in 11 CFR 106.5 that require committees that make disbursements in

connection with both federal and non-federal elections to allocate expenses in various

categories including administrative expenses.

In the Audit staffs opinion, the "express advocacy" test that

MRSC references may be relevant for determining whether certain expenditures are

contributions to specific candidates for Federal office, but not relevant for detennining

whether a disbursement is an administrative expense or a generic voter drive expense.

Generic voter drive expenses include activities that urge the general public to register to

vote, vote or support candidates of a particular party, or are associated with a particular

8 No. 85-968, Slip Op. (D.D.C. June 25, 1986) reprinted in Federal Election Campaign Finance Guide

(CCH), ~9235.

Page 12 of27 Approved 2/8/01
issue without mentioning a specific candidate. Administrative and generic voter drive

expenses are required to be reported and allocated between the federal and non-federal

accounts without the express advocacy and clearly identified candidate test having been

met.

Next the MRSC contended, based on its reading ofthe Advisory

Opinion 1978-46, that unless there is fundraising related to a campaign for Federal office

or any communication expressly advocating the election or defeat of a clearly identified

candidate for Federal office, the activity and attendant expenses cannot be regarded as for

the purpose ofinfluencing a Federal election. The MRSC concludes that the lack of

fundraising and electioneering at internal political party gatherings, the expenses

associated with the State Convention, MRSC meetings, and the 1997 Mackinac

Conference, are not "expenditures" for the purpose ofthe Act.

The MRSC also cites Advisory Opinions 1986-6, 1982-35, 1983-

37, to support the proposition that internal political party gatherings, even though they

may directly influence Federal elections, are not subject to the FECA. According to the

MRSC, in the present situation, there is no allegation, nor can there be, that the State

k,j Convention, MRSC meetings, and the 1997 Mackinac Conference, al1 of which are

internal political party gatherings, somehow influenced Federal elections.

Most ofthe advisory opinions cited by the MRSC were issued by

the Commission prior to the effective date (January 1,1991) ofthe Commission's

regulations for al10cating expenses that jointly benefit both federal and non-federal

candidates and elections. 9 As noted above, these regulations provide for the allocation of

expenses by political party committees that make disbursements in connection with both

federal and non-federal elections. The allocable expense categories include

administrative expenses, fundraising costs, exempt activities expenses, and the cost of

generic voter drives. More specifically, party committees that make disbursements in

connection with federal and non-federal elections shall allocate expenses for

administrative expenses not attributable to a clearly identified candidate, including rent,

utilities, supplies, and salaries. Advisory Opinion 1993-21. The Commission's

Explanation and Justification for 11 CFR §106.5 contains the following guidance

regarding administrative expenses:

"Please note that all administrative expenses must be allocated

between federal and non-federal accounts, ifincurred by a

committee that makes disbursements in connection with both

federal and non-federal elections, and that chooses to pay any

portion ofsuch disbursements from its non-federal account."

9 Advisory Opinions 1992-5 (candidate's participation in cable television program), 1993-9 (preemption of

Michigan State law with respect to the prohibitions on corporate donations to the MRSC's building fund),

1996-39 ( legal fund could defer expenses in defending legal sufficiency of nominating petitions) were

issued after 1/1/91.

Page 13 of27 Approved 2/8/01
The $237,359 in expenses for various meeting and conferences

questioned in the Interim Audit Report faU into the general category of administrative

expenses and therefore are subject to the requirements ofthe Act. Further as explained

above, based on the information available, the events had federal as well as non-federal

components. These types ofexpenses were also allocated by the Commission in the audit

report covering the 1994 and 1996 election cycles.

Audit And Legal Expenses

With respect to the audit expenses questioned in the Interim Audit

Report ($33,429), the MRSC contended that payment ofsuch expenses are subject to the

Act only in the case where they (1) directly further the election of any designated

candidate for Federal office, (2) assist the political committee in its compliance with the

Act or (3) assist the MRSC to complete its FEC reports. According to the MRSC, "the

purpose ofthe audits is '" to verify to the officers and members ofthe MRSC that the

financial statements are appropriately stated and that the MRSC staff is conforming with

generally accepted accounting principles." The MRSC then concluded that there is no

basis to designate payments from the Administrative Account for these audit expenses as

subject to the Act.

Expenses related to an audit ofthe MRSC accounts, both federal

and non-federal, fall clearly into the administrative expense category, and pursuant to 11

CFR §106.5 (a)(2)(i) are allocable between the federal and non-federal accounts.

Regarding legal expenses questioned by the Audit staff($5,987),

the MRSC restated the first two criteria cited with respect to audit expenses being subject

to the Act and added a third: such expenses are associated with compliance or audit

matters under the Act. The MRSC cited examples oflegal expenses which the

Commission determined as not subject to the requirements ofthe Act, such as legal

defense: (1) to a charge ofslander; (2)of a civil action alleging violation ofthe

Appropriations Act, Hatch Act, an infringement of constitutional rights; and (3) of a

congressman charged with both criminal conduct and violations ofmles ofthe House of

Representatives. 1O In addition, according to the MRSC the FEC in Advisory Opinion

1990-6 acknowledged that state laws concerning the marmer of qualification of

candidates, dates and places ofelections, voter registration, voting fraud and candidates'

personal financial disclosure are outside the scope ofthe FECA.

The MRSC's General Counsel states that he reviewed the'

reimbursed legal expenses questioned by the Audit staff and to the best of his knowledge

an insignificant amount ofreimbursed expenses could qualify as 'expenditures,' which he

estimated to have been, at most, 5% or $299 which should be reimbursed from the federal

10 The Committee cited Advisory Opinions 1983-21, 1981-13, 1980-4. 1979-37, and 1990-6.

Page 14 of27 Approved 2/8/01
account. The remainder, $5,688 in reimbursed expenses did not concern federal

candidates or the Act. No documentation beyond an affidavit signed by the Committee's

General Counsel was provided.

While it is true the Commission, in advisory opinions, has

concluded that certain types of activity and the legal expenses related thereto are not

subject to the Act's recordkeeping, reporting and other requirements, the type of activity

was clearly defined (e.g., a possible denial ofaccess to the primary ballot ofthe state of

Massachusetts involving a party rule, AO 1982-35). Moreover, for such activity a

segregated fund would have to be established and maintained apart from other political

committee funds. For example in Advisory Opinion 1983-37, the Commission

concluded that "[t]o the extent monies in the fund will be used only for the purposes

described, and will be maintained separately from funds used for federal elections, the

Party's legal expense fund would not be subject to the Act's limitations ... "

Given that the legal expenses at issue are not identified or

documented as being for a purpose indistinguishable from any approved by the

Commission, the Audit staffviews the expenses as administrative expenses, and like the

audit expenses discussed above, are subject to the requirements ofthe Act and

Commission regulations.

:The MRSC presented almost identical explanations for these types

of expenses when questioned in the audit report covering the 1994 and 1996 election

cycles. The Commission determined that those expenses were allocable between the

federal and non-federal accounts.

Consulting Fee for Non-Electioneering Services

The Audit staffidentified a $3,000 payment to George Herstek as

an allocable expense paid from the Administrative Account. According to the MRSC,

Mr. Herstek's services concerned assistance with voter registration, prevention of voter

fraud, ballot integrity, and maintaining the purity of elections. The MRSC asserts that

these matters are not covered in the Act and there is no evidence to justify treatment of

any portion ofthis consulting fee for non-electioneering services as an "expenditure"

under the Act.

To support this position, the MRSC provided a copy ofa letter to

Mr. Herstek, outlining the terms ofhis services. The MRSC also cited Advisory Opinion

1990-6 and FEC Regulations Explanation and Justification, House Document No. 95-44,

which addresses electoral matters as interests ofthe states and not covered under the Act.

The Audit staff views the expense as an administrative expense,

and like the audit and legal expenses discussed above, is subject to the requirements of

the Act and Commission regulations.

Page 15 of27 Approved 2/8/01
MRSC Staff Social Outings

The Audit staffidentified as shared expenses, payments for meals

for the MRSC staff. Thirteen payments, totaling $1,021 are being challenged by MRSC.

The payments were made to restaurants and to individuals for reimbursement for meals.

MRSC states that no fundraising or electioneering activities in connection with any

federal election occurred during these "social gatherings." According to the MRSC, the

Commission agrees that expenses associated with its staffs social gatherings are beyond

the scope ofthe Act. The MRSC cites Advisory Opinion 1981-26 to support its position.

The MRSC contends that Advisory Opinion 1981-26 concluded that expenses paid for a

social event to honor an incumbent Congressman were not reportable because the event

was not a fund-raiser nor an attempt to influence the Congressman's reelection.

The Audit staff views the expenses as administrative expenses and

subject to the requirements ofthe Act and Commission regulations.

Miscellaneous Disbursements

The MRSC asserted that 52 expenses for holiday cards, gifts,

charities, State committee meetings, recruitment ofMichigan precinct delegates, staff

retreat, publications to the MRSC's paid members and similar types of expenses, totaling

$93,740 do not constitute expenditures under the Act. The reasoning for this position

apparently is that these expenses were either non-electioneering expenses or were not

related to federal campaigns.

The Audit staffreviewed the MRSC's specific explanations and

documentation relating to these disbursements and allowed that seven totaling $323 were

disbursements for sympathy gifts which, as previously stated were not considered

allocable expenses and eight totaling $51,525 were disbursements for publications that

only referred to non-federal candidates. The other expenses, in the Audit staffs opinion

are properly classified as administrative expenses. Thus the amount ofthese

miscellaneous disbursements viewed as administrative expenses is adjusted to $41,892

($93,740 - $323 - $51,525) and the amount reimbursable by the federal account is

reduced by $6,740 ($51,847 x .13%).

As explained above, party committees that make disbursements in

connection with federal and non-federal elections shall allocate expenses for

administrative expenses not attributable to a clearly identified candidate, including rent,

utilities, supplies, and salaries. Advisory Opinion 1993-21. The types of administrative

expenses cited are illustrative and cannot be viewed as inclusive.

As stated, it is the opinion ofthe Audit staff that expenditures for

activities such as independent reviews of committee accounts, consulting fees, legal fees,

Page 16 of27 Approved 2/8/01
staffsocial outings, holiday cards, gifts, etc., clearly fall within the general category of

"administrative expenses" as noted at 11 CFR §106.5 (a)(2)(i).

Expenditures Not Being Challenged by MRSC

The MRSC acknowledged that there were additional expenditures

totaling $24,494 which relate to shared federal and non-federal activities at the

administrative ratio (13%). The MRSC also acknowledged the previously mentioned

$299 in legal expenses. The MRSC calculated the total amount owed by the federal

account as $3,484 (($24,494 x 13%) + $299). The response states, that as an act of good

faith, MRSC's federal account reimbursed this amount to the Administrative Account.

Copies oftwo non-negotiated checks totaling $3,484 were included with the response.

Michigan Republican State Committee State Account

As previously stated, the Audit staffs review ofdisbursements

paid from the MRSC's State Account identified 21 disbursements totaling $648,165

made for allocable expenses. In its response to the Interim Report, the MRSC conceded

that 11 ofthese disbursements totaling $556,988 were indeed for shared expenses.

According to the MRSC, the remaining 10, totaling $95,1 7i 1 were exclusively for

matters to which no federal share is applicable. These 10 disbursements were made to

Hill Research Consultants (HRC).

To support that the payments to HRC were for non-federal

purposes, the MRSC provided an affidavit from David B. Hill, Ph.D., owner ofHRC, in

which Dr. Hill stated: "To the best ofmy recollection, all ofthe services rendered by

HRC to the MRSC during the 1997-1998 election cycle related solely to state (nonfederal) elections." Evidence in the form of contracts, invoices, or other vendor generated

documents detailing the particulars ofthe disbursements was not provided.

The response states, that as an act ofgood faith, the MRSC's

Federal account reimbursed $72,408 ($556,988 x 13%) to the MRSC's State account. A

copy ofthe non-negotiated reimbursement check was provided in the response.

In the Audit staffs opinion, the MRSC has not demonstrated that

the payments to HRC were solely for non-federal purposes and therefore the

disbursements totaling $91,177 are allocable expenses.

Conclusion

In conclusion, the MRSC did not comply with the

recommendations ofthe Interim Audit Report. It made a partial reimbursement to the

Administrative Account of $3,484 and the Audit staff agrees that $51,848 ($323 +

II The Audit staff agreed that $4,000 of this amount was for expenses related to State only activities and this

$4,000 was not included in the Audit stafrs total of expenses requiring allocation.

Page 17 of27 Approved 2/8/01
$51,525) in expenses are not allocable thus reducing the reimbursable amount by $6,740.

The amount still due from the federal account to the Administrative account is $39,603

($49,827 - $3,484 - $6,740). In addition, the MRSC made a partial reimbursement to the

State Account of$72,408. The amount still due from the federal account to the State

Account is $16,108 ($88,516- $72,408).

B. MISSTATEMENT OF FINANCIAL ACTIVITY

Sections 434(b)(l)(2) and (4) ofTitle 2 ofthe United States Code state, in

part, that a political committee shall disclose the amount of cash on hand at the beginning

ofthe reporting period and the total amount of all receipts and all disbursements for the

reporting period and calendar year.

The Audit staff's reconciliation ofthe MRSC's reported financial activity

to its bank activity revealed material misstatements with respect to reports covering

calendar years 1997 and 1998.

In 1997, the MRSC overstated its reported beginning cash on hand by

approximately $188,746.This overstatement was primarily due to the MRSC not

correcting its beginning cash on hand based on a 1996 comprehensive amendment filed in

Oct. 1999.

In 1998, the MRSC understated disbursements by $252,216. This net

understatement was primarily due to the MRSC not reporting the following

disbursements: four wires totaling $201,680, payroll tax payments totaling $163,993 as

well as service charges and other disbursements totaling $10,429. The $201,680 amount

for wires not reported by the MRSC included a transfer to the National Republican

Senatorial Committee ($100,000), two disbursements to media companies totaling

$78,680, and a transfer from the MRSC Slate Card Account to the MRSC State Account

($23,000). The Audit staff also identified a disbursement to the Lansing State Journal in

the amount of$117,612 which was reported on Schedule H4 ofthe 1998 October

Quarterly Report but could not be traced to the MRSC's bank activity. Ending cash on

hand for 1998 was overstated by $431,660 primarily due to the items noted above and

adjustments carried forward from prior periods.

At the Exit Conference, the MRSC was provided schedules which detailed

the reporting errors discussed above. In addition, the Audit staff advised the MRSC to

perform reconciliations between its bank activity and reported activity prior to filing

reports. This recommendation was made due to the existence of material misstatements

for financial activity in each calendar year from 1993 to 1998. MRSC officials agreed to

file amended reports to correct the errors noted above for the period covered by this audit

and stated that computer software has been purchased to help them prevent future

reporting misstatements.

Page 18 of27 Approved 2/8/01
•

r"y

itL,"

In the Interim Audit Report, the Audit staffrecommended that, the MRSC file

amendments to correct the mi~statements noted above. The amendments were to include

a Summary and Detailed Summary page as well as the supporting schedules for each of

the necessary reporting periods. In addition, the Audit staffrecommended that the MRSC

file amended Summary Pagesfor all reports filed subsequent to the period covered by this

audit to correct the misstatements in reported cash balances.

In response to the Interim Audit Report, the MRSC filed amended reports that

materially corrected the public record.

Page 19 of27 Approved 2/8/01
•

Page 20 of27 Approved 2/8/01
FEDERAL ELECTION COMMISSION

WASHINGTON. DC 204bJ

January 26, 2001

MEMORANDUM

FROM: Lois G. Lerner

Acting General Counsel

BY: Kim Leslie Bright ,t!.4\

Associate General (!Xun~el

TO: Robert J. Costa

Assistant StaffDirector

Audit Division

•

T~

i~t THROUGH: James A. Pehrkon

j<;,. StaffDirector

r6~

• 4

Lorenzo Holloway 1::1<~;J7""""---

Assistant General Counsel

Susan 1. Kay i # f" 4/.. 1L

Attorney

SUBJECT: Proposed Final Audit Report on Michigan Republican State Committee

(LRA #605)

I. INTRODUCTION

The Office ofGeneral Counsel has reviewed the proposed Final Audit Report for

the Michigan Republican State Committee ("the Committee") submitted to this Office on

December 11, 2000. The following memorandum summarizes our comments on the

proposed Report. I We concur with the findings in the proposed Report that are not

discussed in the following memorandum. Ifyou have any questions, please contact Susan

Kay, the attorney assigned to this audit.

The Office ofGeneral Counsel recommends that the Commission consider this document in open

session since the repon does not include matters exempt from public disclosure. See II C.F.R. § 2.4.

Page 21 of27 Approved 2/8/01
Memorandum to Robert J. Costa

Proposed Final Audit Report

Michigan RepUblican State Committee (LRA #605)

Page 2

II. SHARED EXPENSES PAID FROM NON-FEDERAL ACCOUNTS

(Finding II.A.)

The cover memorandum to the proposed Final Audit Report directs this Office's

attention to the issue ofshared expenses paid from two Committee accounts, the

Michigan Republican State Committee Corporate Administrative Account

("Administrative Account") and the Michigan Republican State Committee State

Account ("State Account"). The Audit Division contends that the Committee made

expenditures from these accounts that should have been allocated pursuant to 11 C.F.R.

§ 106.5. This Office agrees with the Audit staffs conclusion.

The disbursements at issue from the Administrative Account include expenses

related to the annual Michigan Republican State Conventions, the Mackinac Republican

Leadership Conference2

, state committee meetings and activities with the Republican

National Committee. These expenses included mileage reimbursements, banquet and

lodging expenses, badge holders, printing costs and sound and lighting. The Audit staff

also considered audit, legal and consulting expenses as allocable, as well as staffsocial

expenses and certain miscellaneous disbursements such as holiday cards and gifts.

According to the Audit staff, similar disbursements from the Administrative Account

made by the Committee d).lring the 1993-94 and 1995-96 election cycles were considered

to have been allocable expenses.

The Committee maintains that its Administrative Account is a non-campaign

account not subject to the Federal Election Campaign Act ("FECA") because it did not

impact federal, state, or local elections. In support ofthis argument, the Committee

references Commission advisory opinions that allow for the establishment ofspecific

non-campaign accounts in which funds may be maintained that are not subject to the

FECA. See Advisory Opinion ("AO") 1982-14 (Commission determined that receipts

and disbursements from a reapportionment account would not constitute contributions or

expenditures since influencing reapportionment decisions is not considered electioninfluencing activity subject t6 the FECA); AO 1983-37 (Commission determined that a

legal defense fund could be maintained so long as it was maintained separately from

funds used for federal elections); AO 1993-9 (Commission held that creating a building

fund is not done for the purpose ofinfluencing an election); AO 1996-39 (Commission

determined that a legal fund could be established by a candidate committee for purposes

ofdefending the legal sufficiency ofthe nominating petitions qualifying a candidate for

the primary election ballot). According to the Committee, its Administrative Account is

entitled the same status as these accounts. 3 .

This is a biennial event. Attendees at the September 1997 Conference included Senaror Spencer

Abraham, Congressman Newt Gingrich, Congressman John Kasich, Republican National Committee

Chairman Jim Nicholson and major donors to the Committee.

1 The Commission has concluded, in the context of advisory opinions, that certain types of activities

and legal expenses are not subject to the requirements of the FECA. See AOs: 1982-14, 1983-37, 1993-9,

1996-39. However, these advisory opinions appear to be limited to their particular circumstances. In

Page 22 of27 Approved 2/8/01
Memorandum to Robert J. Costa

Proposed Final Audit Report

Michigan Republican State Committee (LRA #605)

Page 3

The Committee made the same arguments in response to the earlier audits.

However, the Commission approved the Final Audit Reports for those audits that

required allocation ofsimilar expenses. Although the Committee claims that the

Administrative Account was not established to be used in connection with any election

activity, it appears that disbursements were made from this account for shared purposes.

A party committee that makes disbursements in connection with nonfederal elections and

also makes disbursements in connection with federal elections is required to allocate all

ofits administrative disbursements not directly attributable to a clearly identified

candidate. See 11 C.F.R. § 106.5(a)(2). The Explanation and Justification for 11 C.F.R.

§ 106.5 states "... all administrative expenses must be allocated between federal and

nonfederal accounts, ifincurred by a committee that makes disbursements in connection

with both federal and non-federal elections, and chooses to pay any portion ofsuch

disbursements from its non-federal account." Explanation and Justification for II C.F.R.

§ 106.5(a), 55 Fed. Reg. 26063 (January 26, 1990).

The Audit staff also identified shared expenses from one other non-federal

account, the State Account. According to the Committee, this account was used as the

main non-federal operating account and included transfers from the State Account to the

Committee's allocation,account for the non-federal ponion ofshared expenses. The

expenses at issue included consulting fees, lighting for the state convention, expenses for

GOTV phone calls, and expenses for absentee voter slate pieces. The Committee

conceded that a majority ofthese expenses were shared ($556,988 out of$648, 165). The

disbursements that the Committee did not concede were made to a consulting company. 4

Based on this Office's conversation with the Audit staff, it appears that these expenses

should also be allocated since the consulting provided appears to have been for general

party building activity. This Office advises the Audit staffto include in the proposed

Final Audit Report any additional information available that indicates that these

disbursements were for general party building activities.

addition, a separate fund would have to be established and maintained apart from other political committee

funds used for federal elections.

4 According to the Audit staff, the Committee provided an affidavit from the owner of the consulting

finn at issue indicating that to the best of his recollection, all services rendered to the Committee during the

1997-1998 cycle related solely to state elections. However, no contracts, invoices or other vendor

generated documents detailing the particulars of the disbursements were provided.

Page 23 of27 Approved 2/8/01
•

Page 24 of27 Approved 2/8/01
FEDERAL ELECTION COMMISSION

WASHINGTON. DC. 20463

February 9, 2001

Mr. Chris Bachelder, Treasurer

Michigan Republican State Committee

2121 E. Grand River

Vi', Lansing, MI 48912

r"" Dear Mr. Bachelder:

"!H.

'."- ,,

Attached please find the Final Audit Report on Michigan Republican State

Committee. The Commission approved the report on February 8, 2001.

The Commission approved Final Audit Report will be placed on the public record

on February 19,2001. Should you have any questions regarding the public release ofthe

report, please contact the Commission's Press Office at (202) 694-1220. Any questions

you have related to matters covered during the audit or in the report should be directed to

Wanda Thomas or Tom Hintermister ofthe Audit Division at (202) 694-1200 or toll free

at (800) 424-9530.

Robert J. Costa

Assistant StaffDirector

Audit Division

Attaclunent as stated

cc: Mr. Eric Doster, Counsel

Page 25 of27 Approved 2/8/01
•

Page 26 of 27 Approved 21810 I
CHRONOLOGY

MICHIGAN REPUBLICAN STATE COMMITTEE

•

Audit Fieldwork

Interim Audit Report to the

Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

April 3, 2000 - June 26, 2000

September 28, 2000

November 16, 2000

February 8,2001

Page 27 of27 Approved 2/8/01
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Fd

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