•

FEDERAL ELECTION COM,vllSSIOS

;"83-117

•-

o

"-

o

'T

en

REPORT OF THE AUDIT DIV!SIO~

ON THE

DEMOCRATIC STATE COMMITTEE, SPECI~~ ACCOL~T (DE)

I. . Background

A. Overview

This report is based on an audit of the Democratic

state Committee, Special Account (DE) ("the Cocmitteetr )

undertaken by the Audit Division of the Federal Election

Commission in accordance with the Commission's audit policy to

determine whether there has been compliance with the Drovisions

of the Federal Election Campaign Act of 1971, as amended ("the

Act"). The audit was conducted pursuant to Section 438(b) of

Title 2 of the United States Code which states, in part, that the

Commission may conduct audits and field investigations of any political committee requited to file a report under Section 434

of this title. Prior to conducting any audit under this

subsection, the Commission shall petform an internal review of

reports filed by selected committees to determine if the reports filed by a particular committee meet the threshold r~q~irements

for substantial compliance with the Act.

The Committee registered with the Pederal Election

Commission on October 15, 1980 and maintains its headquarters in

Wilmington, Delaware.

The audit covered the period January 1, 1981 through December 31, 1982. The Committee reported a beginning cash

balance on Januarv 1, 1981 of $34.23; total recei~ts for the

period of $84,469:00; total disbursements for the· period of

$84,864.00 and an ending cash balance on December 31, 1982 of

$932.00. 11

•

1/ The Committee filed a report covering January 1, 1981

through June 30, 1981 disclosing a cash balance of $34.23

and no financial activity. No report was filed for the

period July 1, 1981 through December 31, 1981. During the

course of the audit the Committee Dresented the auditors a

copy of the report filed with the State of Delaware covering January 1, 1981 through December 31, 1981 disclosing a

beginnin9 cash balance of $770.21; total receipts of

$20,969.00; and total expenditures of $20,412.33. The Audit

staff verified that Committee reports filed with the

Commission for 1982 materially reflect the Committee's

financial activity for 1982 (also see Section II,

Introduction to Findings, concerning 1981 activity).
• This report is based on aocum!nts &~C ~otkpa~ers

supporting eac~ of its factual statemen:s. Th~y form part of the

record upon WhlCh the Commission' based lts decisions on the

matters in this report and were available to Co~missioners and

appropriate staff for review.

B. Key Personnel

~he Treasurer of the Committee during the period cov~red by the audit was Mr. Clifford B. Hearn, Jr.

C. Scope

The audit included such tests as verification of total

reported receipts and disbursements and individual transactionsJ

review of required supporting documentation; analysis of

Committee debts and obli9ationsJ and such othe: audit procedures deemed necessary under the circumstances.

II. Audit Findings and Recommendations

•....

•

Introduction to Findings

The Committee supplied the Audit staff with all bank

records, supporting documentation, cancelled checks, reports filed with the State of Delaware, and audit workpapers ptepared

by an accounting ~irm for calendar years 1981 and 1982. The

Audit staff reviewed these Committee records and verified that

for the period January 1, 1981 through September 30, 1982, the

Committee did not make any expenditures in connection with

Federal elections. Expenditures consisted of administrative

expenses such as telephone, printing, photocoping, and

accounting; support of state and local.~andidatesi and

expenditures in connection with their annual fundraising dinner

held in May 1981 and again in May 1982. The majority of the Co~~ittee's receipts were proceeds resulting from ticket sales

for these dinners.

During the exit conference with the Audit staff, Committee

officials stated that the Committee had registered in 1980 to

support President Carter, but the bank account used for that

activity had been closed. Officials said they should have

terminated after the 1980 campaign, but had not because of an

oversight. Based on the review of records and assertions made by

the Committee, it is the opinion of the Audit staff that the

Committee should not be treated as a political committee until

October, 1982. Therefore all findings noted below only pertain

to Committee activity from October 1, 1982 through December 31,

1982 •
•

• A.

-3-

Matters Referred to the Office of General Counsel

•....

•

I

certain other matters noted during the audit were

referred to the Commission's Office of General Counsel•