Report of the

Audit Division on

Communications

Workers of America - COPE PCC

January 1, 2005 - December 31, 2006

Why the Audit

Was Done

Federal law permits the

Commission to conduct

audits and field

investigations of any

political committee that is

required to file reports

under the Federal

Election Campaign Act

(the Act). The

Commission generally

conducts such audits

when a committee

appears not to have met

the threshold

requirements for

substantial compliance

with the Act.1 The audit

determines whether the

committee complied with

the limitations,

prohibitions and

disclosure requirements

of the Act.

Future Action

The Commission may

initiate an enforcement

action, at a later time,

with respect to any of the

matters discussed in this

report.

About the Committee (p. 2)

Communications Workers of America - COPE Political

Contributions Committee is a separate segregated fund

headquartered in Washington, DC. For more information, see

chart on the Committee Organization, p. 2.

Financial Activity (p. 2)

• Receipts

o From Individuals

o Refunds from Federal Candidates

& Other Political Committees

o Other Receipts

o Total Receipts

• Disbursements

o Contributions to Federal & NonFederal Candidates and

Committees

o Operating Expenditures

o Transfers to Affiliated Committee:

o Other Disbursements

o Total Disbursements

$ 6,720,647

69,225

4,014

$ 6,793,886

$5,654,187

1,029,491

300,000

15,800

$ 6,999,478

Findings and Recommendations (p. 3)

• Transfers Made to AFL-CIO COPE PCC (Findingl)

2 U.S.C. §438(b).
Report of the

Audit Division on

Communications Workers of

America - COPE PCC

January 1, 2005 - December 31, 2006
Table of Contents

Page

Part I. Background

Authority for Audit 1

Scope of Audit 1

Part II. Overview of Committee

Committee Organization 2

Overview of Financial Activity 2

Part III. Summary

Finding and Recommendation 3

Part IV. Finding and Recommendation

Finding 1. Transfers Made to AFL-CIO COPE PCC 4
Parti

Background

Authority for Audit

This report is based on an audit of Communications Workers of America - COPE

Political Contributions Committee (CWA-COPE PCC), undertaken by the Audit

Division of the Federal Election Commission (the Commission) in accordance with the

Federal Election Campaign Act of 1971, as amended (th

conducted the audit pursuant to 2 U.S.C. §438(b), whi

conduct audits and field investigations of any politj

report under 2 U.S.C. §434. Prior to conductingjusJfaTidit

Commission must perform an internal review^^^ports filed

determine if the reports filed by a particul

for substantial compliance with the Act.

Scope of Audit

Following Commission approv

factors and as a result, the scope

1. The receipt and transfer of c

2. The disclosure of certain disburs

3. The

4.

5.

ittee meet the

. §438(b).

The Audit Division

its the Commission to

ittee that is required to file a

this subsection, the

ected committees to

old requirements

evaluated various risk

following:
Part II

Overview of Committee

Committee Organization

Important Dates

Date of Registration

Communications Workers of

AmericafeCOPE PCC

Audit Coverage 2005 - December 31,2006

Headquarters

Bank Information

Bank Depositories

Bank Accounts

Treasurer

Treasurer When Audit Was Condw '

Treasurer During Period Covered by A

Management Info

Attended FEC C

Used Commonly A'

Software Package

Who

of Financial Activity

(Aiiclited Amounts)

Cash on hand @|Tanuary 1, 200|

o From mdividuals?S\ Hi

o Refunds from Canditjites & FfplMcal Committees

o Other Receipts

 x*l^|^r

Total Receipts

 NW

o Contributions to Federal & Non-Federal Candidates

and Committees

o Operating Expenditures

o Transfers to Affiliated

o Other Disbursements

Total Disbursements

Cash on hand @ December 31, 2006

$ 1,555,818

6,720,647

69,225

4,014

$ 6,793,886

5,654,187

1,029,491

300,000

15,800

$ 6,999,478

$ 1,350,226
Part III

Summary

Finding and Recommendation

Finding 1. Transfers Made to AFL-CIO

CWA-COPE PCC made transfers totaling $300,000 to

2006. Based on the available information, CWA-CQ

and recordkeeping requirements of a collecting ag

longstanding and current joint fundraiser/collecjmg^ent

separate segregated funds is in accordance wj^Rmmission

recommended CWA-COPE PCC amend pj||p|)orts and implerri

ensure the proper accounting, reporting, anl^cjordkeeping require;

contributions and transfers. In response to

amended reports for the period cohered by the

not implement the Audit staffs'

current plans to make further

COPE. CWA-COPE PCC also

contributions are in ace

PE PCC

O COPE PCC in 2005 and

has not met the transmittal

OPE PCC contends the

ent between the two

dons. The Audit staff

w procedures to

ibr these

reports because if has no

ontributions to AFL-CIO

edures for such

ationll&For more detail, see p. 4)

it would
Part IV

Finding and Recommendation

| Finding 1. Transfers Made to AFL-CIO COPE PCC

Summary

CWA-COPE PCC made transfers totaling $300,000 to

2006. Based on the available information, CWA-CO

and recordkeeping requirements of a collecting ag

longstanding and current joint fundraiser/collect!

separate segregated funds is in accordance with^mmission

O COPE PCC in 2005 and

has not met the transmittal

COPE PCC contends the

ement between the two

ations. The Audit staff

recommended CWA-COPE PCC amend pasjfepkts and implemintnew procedures to

ensure the proper accounting, reporting, an|i|ecordkeeping requirements for these

contributions and transfers. In response to tferateri

*^rf^[Wgy^ jyJt&W m audit reportk "

, CW&--COP * ^*j* ^ "^E PCC

amended reports for the period covered by the au||t as r^eoriimended and stated it would

not implement the Audit staffs r^lornmendation fo^f@i|ri reports because ifeas no

current plans to make further transfers|0|y ojnt fundraMng contributions to AFL-CIO

COPE. CWA-COPE PCC also ml^^S^latits cuirefetocedures for such

contributions are in accordance withXlpmmiss

Legal Stan

A. Affiliated

organization. Affi

and/orHts loca

"

lished,fi

'.committe

ittees

controlled

bordinat*

nal

bodies'

organiza

resumed to

of national

maintainWor controlled by the same

considered one political committee for

ed to be affiliated include those

single national or international union

izations. Also committees established

ofvihternationarunions and/or all its State or local central

liatl«A.ffiliation is not presumed between unions and

LtematSlal unions.l 1 CFR §§100.5(g) and 110.3(a).

B. Collectingf^gent Defint^n. A collecting agent is an organization or committee that

collects and 1ransM|s>conMjSutions to one or more separate segregated funds to which

the collecting agentlijfe|a|ed: A collecting agent may be the separate segregated fund's

connected organization; ari organization or committee affiliated with the SSF, or a local,

national, or international union collecting contributions on behalf of the separate

segregated fund of any federation with which the local, national, or international union is

affiliated. 11 CFR§102.6(b)(l).

C. Requirements of Collecting Agent. The separate segregated fund is responsible for

ensuring that the recordkeeping, reporting, and transmittal requirements are met.

1. Collecting agent may solicit only those individuals who are eligible for

solicitation under the law, and pay the expenses of soliciting.

2. Collecting agent may include a solicitation for contributions to an SSF in a bill for

another payment.
3.

4.

5.

6.

Collecting agent may establish a separate transmittal account solely for the SSF's

contributions or use its own account for the temporary deposit and transmittal of

contributions to the SSF. The agent must keep separate records of all receipts and

deposits that represent contributions to the SSF.

Collecting agent must transfer the funds within 10 days for all contributions over

$50 and within 30 days for contributions $50 or less.

Collecting agent must forward the required recordkeeping information to the SSF

along with the collected contributions, and maintain records of SSF contribution

deposits and transmittals for three years.

The SSF is responsible for reporting the contribM£op?collected through the

collecting agent as contributions from the o:

from the collecting agent. 11 CFR §§102.

nors rather than as a transfer

didate committees

year, either

mtributor;

D. When to Itemize. Political committees oilier ihan autho:

must itemize:

• Any contribution from an individual I i I* i t exceeds $200 per ca

by itself or when aggregated with olherviiirihiiiKH&fiom the

and

• Every contribution fromM||j||||ical cornmitte||regardless of the amount.

• Every transfer from anotheSMm®|Darty comn^fe, regardless of whether the

committees are affiliated. 2 f&cTPB^SXAVWdiid (D).

E. Definition of

recipient commi

• The amouri

• Thi

irihuii

Sale, th?

eived means that the

'owing information:

cupation an

calendar y

100.12 an

received the contribution);

.S88-H8&&. -5.£=i£i.\

ssoJ

"

>

*$$SW£SSb:- ^ ins from iffijlgual contributors, the contributor's

his or her employer; and

date tojakof all contributions from the same contributor.

.3(a)(1|lffld 2 U.S.C. §434(b)(3)(A) and (B).

11

Facts and

CWA-COPE PC piinite segregated fund of the international union

»f America (CWA). CWA is a collecting agent for CWAIO COPE PCC, the separate segregated fund of the federation

Communications W

COPE PCC and for

of unions AFL-CIO. CWA-COPE PCC and AFL-CIO COPE PCC are not considered

"affiliated" within the meaning of 11 CFR §110.3 and, therefore, are subject to separate

contribution limitations and reporting.

CWA-COPE PCC received and deposited contributions for both organizations via

contributor checks and payroll deduction authorizations. Based on available solicitation

material, contributors were informed that an unspecified portion of their contribution

would go to AFL-CIO COPE PCC. CWA-COPE PCC reported the receipt of the

contributions primarily as unitemized contributions. CWA-COPE PCC and AFL-CIO

COPE PCC periodically agreed on an amount to be transferred to AFL-CIO COPE PCC.
AFL-CIO COPE PCC reported this lump sum transfer without information regarding the

individuals contributing the funds.

During the period covered by the audit, CWA-COPE PCC made four transfers to AFLCIO COPE PCC totaling $300,000 ($100,000 in 2005 and $200,000 in 2006). To fulfill

the requirements as a collecting agent, CWA-COPE PCC must:

• Have a separate transmittal account solely for AFL-CIO COPE PCC contributions

or keep separate records of all such receipts and deposits if using its own account;

• Transfer the funds within 10 days for all contributions over $50 and within 30

days for contributions $50 or less;

• Forward the recordkeeping information to ^pPCI^pQPE PCC and maintain

records of the deposits and transmittals|fo|pAFL-CIO &&IE PCC for three years.

During audit fieldwork, CWA-COPE PC(ffip'not demonstrate that^above

requirements were met during calendar yearlitoflS and 20J3g. CWA-(Sl|p PCC did not

furnish the Audit staff with documentation that^ndfiefip individuartbnteibutions (or

portions thereof) supporting the Amounts transferrdfe|&FL-CIO COPE P(?(lor any

documentation that detailed the timing^prvcalculation' ofethe amounts transferred.

sentatives during the exit

the conclusion of the

and argues that the requirements at 11

for contributions over $50, and 30

the situation because of the joint

r

-COPE PCC and AFL-COPE PCC.

The Audit staff presented this matter!

?

n

f

ferenc£ ^V^^^S!861 for

Audit staff with Mlallowing^rgument

t fundraising^agrsement!

hat if I'MFR §102.6(c)(4) was applicable the transfers did

ents. In support of his argument, counsel computed that

However^ounsel conten

conform taifetiming reqi

CWA-COPE P(^receivedpkverage of $90,000 in individual contributions every 10

days and $270,<M||?ery jylflys in 2005; and, $100,000 every 10 days and $300,000

every 30 days in 20^^^PrCWA-COPE PCC received contributions that were

predominately $50 or lessi^counsel believes that, within the 30 days prior to each of the

four transfers to AFL-CIO COPE PCC, CWA-COPE PCC received far more

contributions from individuals than was transferred.

Based on its own analysis, the Audit staff concurs that CWA-COPE PCC received

sufficient receipts within 30 days prior to each of the four transfers to fund the transfer.

However, based on the available records, the Audit staff was not able to identify which

contributions were included in the transfers. The Audit staff maintains that the

requirements at 11 CFR §102.6(c)(4) and 11 CFR §102.8(b) are applicable and the

amount of each contribution being transferred is required to be provided to AFL-CIO
COPE PCC within the appropriate time frame along with the required records supporting

the contributions.

Second, counsel discusses the issue of having a separate account solely for AFL-CIO

COPE PCC contributions. Counsel confirms that CWA-COPE PCC did not maintain a

separate account solely for AFL-CIO COPE PCC contributions, did not keep separate

records of contributions attributable to its transfers, or give that information to AFL-CIO

COPE PCC. Again, counsel argues that such requirements are not applicable to CWACOPE PCC since 11 CFR §102.6 does not recognize its du,Aole as a collecting agent for

AFL-CIO COPE PCC and a separate segregated fund solifpng and receiving

contributions for itself. According to counsel, CWAf^^K^PCC records and reports all

disclosure information for AFL-CIO COPE PCC cdMfbufi%ii|because the "contributors

authorize the remittance of the contributions ow^jU) uWA-C^EJ'CC" via standard

payroll deduction authorization cards. Thes^^ps also inform tonMbutors of the joint

fundraising arrangement between CWA-G^pTCC and AFL-CIOWPE PCC and

acknowledge that contributions will be usedlfor^'politicaljpurposes."

Counsel further explains that

individual contributors is suffici

not plainly require a shift to AFL

individual contributors. According

these transfers are

to any particular

of them".

ately vi

The Audit staff belie

hcMJi detailing the asff elated

.) and that the regulations do

onsibility to report the

ice "underscores that

it are not attributable

iggregate portion of all

requires CWA-COPE PCC to record

is turtner>noted that by

, *«#•&. . . j'*

each contribution instead

transfer wo'uTchlikely not s

^"ift'^r.v-..

f of AFL-CIO COPE PCC. Such

to specil^M triack what amounts are contributed to the

to momloTlitemization and limitation requirements. It

g tHIftrgnsfer amount as being comprised of a portion of

e ruirarnount of those contributions received prior to the

xxijy"

>rt the argument that the transfers were made timely.

Finally, counsel explains hoMthe proposed changes would cause a significant

administrative buro«^organizations and would ultimately result in a reduction of

contributor mfonnation|pWie public record. According to counsel, the number of

individual contributors itemized by CWA-COPE PCC would be fewer since a portion of

their contributions would be attributed to AFL-CIO COPE PCC.

In summary, the Audit staff accepts that the CWA-COPE PCC can function as a

collecting agent for AFL-CIO COPE PCC. However, as a collecting agent, CWA-COPE

PCC must abide by the rules governing collecting agents at 11 CFR §102.6(c). During

the period covered by the audit, CWA-COPE PCC did not have a separate transmittal

account or keep separate records of all receipts and deposits that represent contributions

to AFL-CIO COPE PCC, or distinguish these contributions at the individual level. Given
that these records were not kept, the arrangement between AFL-CIO COPE PCC and

CWA-COPE PCC did not satisfy the requirements of the collecting agent regulations.

Interim Audit Report Recommendation and Committee Response

The Audit staff recommended that, within 30 calendar days of service of the interim

report, CWA-COPE PCC document that procedures have been implemented to ensure the

proper accounting, reporting, and recordkeeping in accordance with 11 CFR §102.6(b)(l)

and (c). • ,

Past Reporting

Reports covering the audit period should be correct

been forwarded to AFL-CIO COPE on Line

22 (Transfers to Affiliated/Other Party Co;

also suggested that reports for the period

well.

10

er Dist

all

s). Toclari

it to the au

amounts that have

ents) instead of on Line

ublic record, it was

(1 be amended as

Future Reports

On the next report due following-i lie r||Donse to thil

reports thereafter; the following \^IN recoOTiended:

dit p

rim audit report and for all

CWA-COPE PCC

COPE PCC's cont

COPE PCC as k

contributions colle

|$hoose to estafjfoh a sc

ISf||so, thosi%ntril

the acc^Qt is usec

>nbehltofAFL-<

itransnii^account for AFL-CIO

.notie reported by CWAfbr the li|pit and transmittal of

:OPE PCC. 11 CFR §102.6(c)(4)(ii)(A).

te accounting9

" CWA-C(

COPE Fmon Line 17 ((

PCC shoull^reported c

Schedule B aP^gjiisfer of:

as collecting age^»)nly

should be reported

Schedule A as necessi

^('("mj'iv ckopse 10 continue to use its own accounts to

fe^,pWA-COPE PCC should maintain a

iQPE PCcliontributions or portions thereof, being

'CClSuld disclose contributions received for AFL-CIO

The transfer of the funds to AFL-CIO COPE

e 29 (Other Disbursements), itemizing the transfer on

s received on behalf of AFL-CIO COPE PCC in their role

butions received by and intended for CWA-COPE PCC

[a) (Receipts from Individuals/Persons) and itemized on

Under either alternative, as a collecting agent, CWA-COPE PCC is required to forward

the contributions and all contributor and date of receipt information to AFL-CIO COPE

PCC within 10 or 30 days depending on the contribution amounts. Records for such

contributions are required to be retained for three years. 11 CFR §§102.6(c)(5) and 102.8.

2

 CWA-COPE could apply any consistent accounting method to identify the individual contributions

transmitted to AFL-CIO COPE including calculating a percentage of contributions transferred or

assuming that the transferred contributions are those most recently received.
In response to the interim audit report, CWA-COPE PCC amended reports for the period

covered by the audit to include all amounts that have been forwarded to AFL-CIO COPE

on Line 29, (Other Disbursements) instead of on Line 22 (Transfers to Affiliated/Other

Party Committees).

CWA-COPE PCC stated it would not comply with the Audit staffs recommendation for

future reports because it has no current plans to make further transfers of joint fundraising

contributions to AFL-CIO COPE PCC.

x.?lfeb

CWA-COPE PCC does agree with the Audit staff that C|p^COPE PCC can act as a

collecting agent for AFL-CIO COPE PCC and that C^l^pPE

 PCC

 received sufficient

funds within 30 days prior to each of the four trans|ijsl;s

f

:ftiw|ever, CWA-COPE PCC 1F^£&>'-i? •T^' - Hrt.

does not concur that 11 C.F.R. §§102.6(c)(4) and>lOO(b) arejapplicable to funds

with AFL-CIO COPE PCC and in reportin

Commission" complies fully with the Federal'

Commission's regulations.

associated transactions;^,the

ignActan^w