fCDCRAl flfCTION COMMISSIoN

\\'A~H'NC10~. 0 C 20663

A83-47

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rREPORT OF THE AUDIT DIVISION

ON CORR

I. Background

A. Overview

This report is based on an audit of CORK ("the . Committee ft ), 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 (ftthe Act ft ). Th~ 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 fiela

investigations of any political committee required to file a

report under section 43' of this title. Prior to conducting any audit under this section, the Commission shall perform an

internal revie~ of reports filed by selected committees to

determine if the reports filed by a particular committee meet the

threshold requirement~ for substantial compliance with the Act.

The Committee registered with the Federal Election

Commission on November 14, 1980 as Citizens Organized to Replace Kennedy. On April 1, 1983, the Committee amended its statement

of organization to delete the reference to Senator Kennedy's name

from its title by changing the organization's official name to . CORK. The Committee maintains its headquarters in Garrisonville,

Virginia.

The audit covered the period January 1, 1981, through

December 31, 1982. The Committee reportee a cash balance on

January 1, 1981 of $500; total receipts for the period of

$412,316.95; total disbursements for the period of $410,144.39;

and a cash balance on December 31, 1982 of $2,532.501/·

This audit report is based on documents and working

papers which support 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 the

Commissioners and appropriate staff for review.

1/ The reported totals do not foot due to computational and

other reporting errors. In addition, see Finding II.A.

regarding unreported receipts and aisbursements.
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B. Rey Personnel

The Treasurers of the Committee during the period

covered by the audit were Mr. Paul Brown from January 1, 1981

through September 10, 1981; Mr. James Deger from September 10,

1981 through June 1, 1982; ana Mr. Paul Bxo~n cgain ttom June 1,

1982 through the present.

c. Scope

The audit included such tests as verification of total

reported receipts and disbursements and individual transactions;

review of required supporting documentation; analysis of

Committee debts and obligations; and such other audit procedures

as deemed necessary under the circumstances.

II. Audit Findinas and Recommendations

A. Misstatement of Financial Activity (Unreported Receipts and Disbursements)

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Sections 434(b) (1), (2), and (4) of Title 2 of the

United States Code require that each report disclose the amount

of cash on hand at the beginning of the reporting period as well

as the total amount of all receipts and disbursements for the

reporting period and the calendar year •

. Section 434(b) (5) of Title 2 of the United States Code

requires that each report disclose the name and address of each

person to whom an expenditure is made which in the aggregate

exceeds $200 within the calendar year, together with the date,

amount, and purpose of the expenditure.

In reconciling the Committee's financial activity from

the bank recoras to their FEe disclosure reports, it was noted

that the Committee failed to disclose $17,555.87 in receipts, $17,415.65 in disbursements, and $140.22 in cash on hand.

The Committee maintained what was termed an "escrow"

account intc which contributions were deposited before being

transferred to the operating account. Committee practice is to

report receipts when deposited into the operating account. There

are to be no expenditures made from the escrow account otber than

transfers to the operating account. Bowever, in February and . March of 1982, expenditures of $6,357 and $10,875 for postage

were made directly from the escrow account. Neither the receipt

nor the disbursement of these funds was disclosed.
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The balance of unreported receipt and disbursement

activity consisted of bank charges for airect wires, check

printing and other services.

It should be noted that all receipts and disbursements

should be disclosed when the transactions occur. The practice of

not reporting contributions until they ar~ transferred to the

operating account results in an understatement of receipts and

cash on hand by an amount equal to the balance in the escrow

account as of the date of the close of books for the preparation

of FEe reports.

On September 23, 1983, the Committee filed a

comprehensive amendment which properly disclosed the above

financial activity.

Recommendation

The Audit staff recommends no further action on this matter.

B. Itemization of Contributions

rSection 434(b) (3) of Title 2 of the United States Code

requires that each report disclose the identification of each

person who makes a contribution or contributions to the reporting

committee which in the aggregate exceed $200 within the calendar

year, together with the date and amount of the contribution.

A review of the Committee's contribution records

revealed that the Committee failed to itemize 32 contributions

totalling $29,165 which required itemization. This represents

53' of the number (60) and 36\ of the dollar value ($81,370) of

contributions requiring itemization.

The Committee's January 31, 1982 Year End Report, filed

on March 28, 1983, included 2S of the contributors previously not

itemized. These itemization schedules were denoted "entire year cumulation". Although these schedules contained the

contributors' names, addresses, and aggregate year-to-date totals, they did not disclose the dates and amounts of the

individual contributions.

On September 23, 1983, the Committee filed an amendment

which itemized the required contributions.

Recommendation

The Audit staff recommends no further action on this matter.