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MEMORANDUM

TO:

PROM:

SUBJBCT:

FEDERAL ELECTION COMMISSION

WASHINGTON, 0 C 204&3

A85-49

July 15, 1986

FRED EILAND

CHIEF, PRESS OFFICE

ROBERT J. COSTA t=D~ 1LAC .,[,sllt, ASSISTANT STAFF DIRECTOR \

AUDIT DIVISION

PUBLIC ISSUANCE OF FINAL AUDIT REPORT - MAINE FREEZE VOTER

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Attached please find a copy of the final audit report of

Maine Freeze Voter which was approved by the Commission on July 2, 1986.

Informational copies of the report have been received by all

parties involved and the report may be release to the public.

Attachment as stated

cc: FEC Library

RAD

Of!Jce of General Counsel

.......P1iblic Record
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• FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

A8S-49

REPORT OF THE AUDIT DIVISION

ON

MAINE FREEZE VOTER

I. Background

A. Overview

This report is based on an audit of Maine Freeze Voter

("the Committee") 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

provisions of the Federal Election Campaign Act of 1971, as

amended (Wthe 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 required to file a

report under Section 434 of this title. Prior to conducting any audit under this subsection, the Commission shall perform an

internal review of reports filed by selected committees to

determine if the reports filed by a particular committee meet the

threshold requirements for substantial compliance with the Act.

The Committee registered with the Commission on March

19, 1984 and maintains its headquarters in Augusta, Maine.

The audit covered the period from the Committee's

inception on March 12, 1984 through December 31, 1984. The

Committee reported a beginning cash balance of $-0-1 total

receipts for the period of $50,921.407 total disbursements for

the period of $47,171.947 and an ending cash balance on December

31, 1984 of $3,749.46. 11

This report is based on documents and workpapers supporting each of its factual statements. They form part of the

record upon which the Commission based its decisions on the

matters in the report and were available to Commissioners and

appropriate .staff for review.

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1/ The Summary Page of the Committee's Year-End report for 1984

disclosed an ending cash balance of $3,857.95 in the -this

period" column and an ending cash balance of $3,749.46 in

the ·ca1endar year to date· column. The Committee's cashon-hand at December 31, 1984 is addressed in Finding II.A.
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The Treasurer of the Committee from inception through .~

May 28, 1984 was Mr. Joseph Steinberger. The Treasurer from May 29, 1984 through the present is Mr. Robert Greely.

c. Scope

The audit included such tests as verification of total

reported receipts and disbursements and individual transactions,

analysis of Committee debts and obligations, review of required supporting documentation, and such other audit procedures deemed

necessary under the circumstances.

II. Audit Findings and Recommendations

A. Misstatement of Financial Activity

The Act, at 2 U.S.C. S 434(b) (1), (2), and (4) requires

a Committee to report the amount of cash-on-hand and the total

amount of receipts and disbursements for each reporting period as

well as the calendar year.

The Audit staff performed a bank reconciliation for the

year 1984 comparing the financial activity reflected on bank

records to the reported activity. It was noted that the

Committee's reports overstated total receipts by a net amount of

$2,522.05, and understated total disbursements by· a net amount of

$991.14. The discrepancies resulted in net overstatement of

cash-on-hand at December 31, 1984. The actual cash-on-hand at

December 31, 1984 as verified by the Audit staff was $236.27. As

detailed below, the discrepancies resulted from improper reporting and mathematical errors.

The Committee did not properly report an in-kind loan

of $3,152.50 received from an affiliated committee, the purpose of which was to defray television production costs. Only $3,000

of this in-kind loan was reported as being received and the

corresponding expenditure was not disclosed. In addition, the

Committee overstated unitemized contributions on their Year-End

report by $2,506.65. There were also minor discrepancies in

unitemized contributions for other reporting periods causing a

net overstatement of receipts totaling $24.40. Unitemized

receipts were overstated by an additional $143.50 because the

Committee did not properly adjust for NSF checks and deposit ticket errors•
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In addition to the in-kind expenditure noted above, the

Committee did not report various office expenses, telephone . commissions, reimbursements, and bank charges totaling $2,282.73':

Several other expenditures were reported improperly causing an

overst,tement of $1,871.75. Finally, mathematical errors on the

Year-End and July Quarterly reports caused expenditures to be

overstated by $2,571.34 and $1.00 respectively. The Committee's

Treasurer responded that he agreed with the Audit staff's

calculations. Be said he was unfamiliar with accounting procedures and FEC reporting procedures. On December 2, 1985, a

comprehensive amendment was filed for 1984 correcting the

discrepancies.

Recommendation

Since an appropriate amendment has been filed, the Audit

staff recommends no further action on this matter.

The Act at 2 U.S.C. S 434(b) (6) (B) (iii) requires a

political committee other than an authorized committee to report the name and address of each person who receives any disbursement

during the reporting period in an aggregate amount or value in

excess of $200 within the calendar year in connection with an

independent expenditure by the reporting committee, together with

the date, amount, and purpose of any such independent expenditure and a statement which indicates whether such independent expenditure is in support of, or in opposition to, a candidate,

as well as the name and office sought by such candidate, and a

certification, under penalty of perjury, whether such independent expenditure is made in cooperation, consultation, or concert,

with, or at the request or suggestion of, any candidate or any authorized committee or agent of such committee.

All Committee disbursements were reported as operating expenditures. The Audit staff reviewed documentation in support of these expenditures and discussed their purpose with Committee

officials. It was learned that the Committee ran TV and radio

commercials, advertised in various newspapers, and paid for the

printing and distribution of brochures that supported one

candidate each for the Presidency, Senate, and House. In total,

the Committee made 41 expenditures totaling $20,799.52 on behalf

of these three (3) clearly identified candidates. Committee

officials advised that these expenditures were made independent of any of the campaign committees of the candidates supported•

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B. Disclosure of Independent Expenditures
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The Committee's Treasurer responded that he reported the

expenditures as operating expenditures because he thought only," direct contributions to federal candidates should be reported otherwise. On December 2, 1985, the Committee filed a

comprehensive amendment for 1984 disclosing these payments as

independent expenditures on Schedule E.

Recommendation

Since the Committee has filed an amendment properly disclosing the independent expenditures, the Audit staff

recommends no further action on this matter.

C. Itemization of Loan Receipts

Section 434(b) (3) (E) of Title 2 of the United States

Code states, in part, that each report shall disclose the

identification of each person who makes a loan to the reporting committee during the reporting period.

The Act at 2 U.S.C. § 431(13) defines identification as

in the case of any individual, the name, the mailing address, and

the occupation of such individual, as well as the name of his or

her employer and in the case of any other person, the full name

and address of such person.

The Committee received 9 loans totaling $9,727.50 which

were not itemized as receipts on Schedule A as required. All but

$152.50 of the loans was included in the detailed summary page

totals. Committee officials did not realize they were /required

to itemize these receipts on Schedule A when received.l On

December 2, 1985, the Committee filed a comprehensive amendment

for 1984 itemizing the loan receipts as required.

Recommendation

Since the Committee filed an amendment disclosing the loan

receipts as required, the Audit staff recommends no further

action on this matter.

D. Matter Referred to the Office of General Counsel

A matter noted during the audit was referred to the

Office of General Counsel.

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1/ The Committee did itemize these loans properly on Schedule

c.
.f)