FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

August 10,1999

MEMORANDUM

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

RepUblican Party ofVirginia which was approved by the Commission on August 3, 1999.

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SUBJECT:

RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

ROBERT 1. COSTA /'/

ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

THE REPUBLICAN PARTY OF VIRGINIA

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 ofGeneral Counsel

Office ofPublic Disclosure

Reports Analysis Division

FEC Library
TABLE OF CONTENTS

REPUBLICAN PARTY OF VlRGINIA

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0 Page -~.

••

f''! Executive Summary 1 ill

Ul Final Audit Report 3 rh~

F'l

-• Background 3

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0 Finding 5 •

rJ Transmittal to Committee 8

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Chronology 9
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FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 204&3

REPORT OF THE AUDIT DIVISION

ON THE

REPUBLICAN PARTY OF VIRGINIA

EXECUTIVE SUMMARY

The Republican Party ofVirginia (RPV) registered with The Comptroller General ofthe

United States as the Republican Party ofVirginia on April 17, 1972 and maintains its

headquarters in Richmond Virginia. The Treasurer during the period covered by the audit was

John H. Hager. The current Treasurer is Anne P. Petera.

The audit was conducted pursuant to 2 U.S.C. §438(b), which states that the

Commission may conduct audits of any political committee whose reports fail to meet the

threshold level of compliance set by the Commission.

The one finding arising from the audit were presented to representatives ofRPV at the

completion offieldwork on May 6,1999 and later in the interim audit report. RPV's response

to the finding is contained in the audit report.

The following is an overview ofthe finding contained in the audit report.

USE OF FUNDS FROM NON-FEDERAL ACCOUNTS 11 CFR §§102.5(a)(I)(i), I06.5(g)(I)(i) &

(ii) (A) and 104.IO(b)(4).

I. Expenditures Related To A FederallNon-Federal Event Funded From a NonFederal Account.

Disbursements totaling $27,419 for expenses associated with the 1995

RPV Issues Briefmg and Presidential Straw Poll were paid from a non-federal account. This

event had both federal and non-federal components and the associated expenses should have

been paid from the federal account, with reimbursement from the non-federal for its portion. In

its response to the interim auditreport, RPV filed amended (memo) Schedules H-4 disclosing

the transactions. The response also states that the federal account had overpaid its share of

allocable expenses and, as such, RPV does not believe that any transfer from the federal

account to the non-federal account is required. The demonstrated amount ofthe overpayment

by the federal account during this period is more than enough to cover these transactions.
2. Shared Administrative Expenses Funded from a Non-Federal Account

The Republican Party of Virginia State Account, a non-federal checking

account, made payments directly to vendors for shared administrative expenses totaling $9,943.

These administrative expenses should have been paid from the federal account and reimbursed

by the non-federal for its share. The federal share of these expenditures was 43%, or $4,275.

In its response to the interim audit report, RPV filed amended (memo) Schedules H-4

disclosing the transactions. T~e response also states that the federal account had overpaid its

share of allocable expenses and, as such, RPV does not believe that any transfer from the

federal account to the non-federal account is required. The demonstrated amount ofthe

overpayment by the federal account during this period is more than enough to cover these

transactions.

3. Expenditures in Connection with the Republican National Convention Funded

by the Non-Federal Account

RPV's non-federal accounts made five expenditures, totaling $26,521 for

hotel accommodations for the Virginia delegates at the San Diego Republican National

Convention held in August 1996. In its response to the interim audit report, RPV filed

amended (memo) Schedules H-4 disclosing the transactions. The response also states that the

federal account had overpaid its share of allocable expenses and, as such, RPV does not believe

that any transfer from the federal account to the non-federal account is required. The

demonstrated amount of the overpayment by the federal account during this period is more than

enough to cover these transactions.

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A97-112

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

REPORT OF THE AUDITDIVISION

ON THE

REPUBLICANPARTY OF VIRGINIA, INC

•

I. BACKGROUND

A. AUDIT AUTHORITY

This report is based on an audit ofthe Republican Party ofVirginia, Inc.

(RPV), undertaken by the Audit Division ofthe Federal Election Commission in

accordance with the provisions ofthe Federal Election Campaign Act of 1971, 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 of

this title. Prior to conducting any audit under this subsection, the Commission shall

perform an internal review ofreports filed by selected committees to determine 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 from January 1, 1995, through December 31,

1996. During this period, RPV reported a beginning cash balance of$7,200; total receipts

of $2,268,537; total disbursements of $2,220,671; and a closing cash balance of $55,0661

C. COMMITTEE ORGANIZATION

RPV registered with the Comptroller General ofthe United States as the

Republican Party ofVirginia on April 17, 1972 and maintains its headquarters in

Richmond Virginia. The Treasurer during the period covered by the audit was John H.

Hager. The current Treasurer is Anne P. Petera.

1 All figures in this report have been rounded to the nearest dollar.

3
To manage its federal financial activity, the RPV used three bank

accounts. From these accounts RPV made approximately 2040 disbursements. Receipts

were composed of contributions from individuals ($1,674,105); contributions from other

political committees ($28,961); transfers from affiliated and other party committees

($35,900); various other receipts ($69,228) and transfers from its non-federal accounts

totaling $460,344.

D. AUDIT SCOPE AND PROCEDURES

•

1.

2.

3.

The audit included testing ofthe following general categories:

The receipt ofcontributions or loans in excess ofthe statutory limitations;

the receipt of contributions from prohibited sources, such as those from

corporations or labor organizations;

proper disclosure ofcontributions 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. proper disclosure ofdisbursements including the itemization of

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

the information disclosed;

5. proper disclosure of debts and obligations;

6. the accuracy oftotal reported receipts, disbursements and cash balances as

compared to bank records;

7. adequate recordkeeping for transactions;

8. proper disclosure ofthe allocation of costs associated with administrative

expenses and activities conducted jointly on behalfoffederal and nonfederal elections and candidates (See Findings II.A.I., 2. and 3.); and

9. other audit procedures that were deemed necessary in the

situation.

Unless specifically discussed below, no material non-compliance was

detected. It should be noted that the Commission may pursue any ofthe matters

discussed in this report in an enforcement action.

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II. AUDIT FINDINGS AND RECOMMENDATIONS

A. USE OF FUNDS FROM NON-FEDERAL ACCOUNTS

Section 102.5(a)(I)(i) ofTitle 11 ofthe Code ofFederal Regulations

states, in relevant part, ~at each organization, including a party committee, which

finances political activity in connection with both federal and non-federal elections shall

establish a separate federal account in a depository in accordance with 11 CFR part 103.

Such account shall be treated as a separate federal political committee which shall

comply with the requirements ofthe Act. Only funds subject to the prohibitions and

limitations ofthe Act shall be deposited in such separate federal account. All

disbursements, contributions, expenditures and transfers by the committee in connection

with any federal election shall be made from its federal account. No transfers may be

made to such federal account from any other account(s) maintained by such organization

for the purpose offinancing activity in connection with non-federal elections, except as

provided in 11 CFR 106.5(g).

Section 106.5(g)(I)(i) and (ii) (A) of Title 11 ofthe Code of Federal

Regulations states, in part, committees that have established separate federal and nonfederal accounts under II CFR 102.5(a)(I)(i) or (b)(l)(i) shall establish a separate

allocation account into which funds from its federal and nonfederal accounts shall be

deposited solely for the purpose paying the allocable expenses ofjoint federal and nonfederal activities; or pay the entire 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 non-federal share ofthat allocable expense.

Section 104.10(b)(4) ofTitle 11 ofthe Code ofFederal Regulations states,

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

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

separate allocation account in payment for ajoint federal and non-federal expense or

activity.

1. Expenditures Related To A Federa1lNon-Federal Event Funded From a

Non-Federal Account.

The Audit staffreviewed all disbursements made frOIl). non-federal

accounts. The review identified disbursements totaling $27,419 for expenses associated

with the 1995 RPV Issues Briefing and Presidential Straw Poll that took place between

June 16 and June 18, 1995. This event featured various workshops and presentations

such as: "U.S. Term Limits"; "Precinct Organization" and "Building a Fall Campaign

Action Plan". The $25 cost ofregistration for the conference included the right to vote in

5
the presidential straw poll. Time was scheduled during the morning ofJune 17, for a

GOP Presidential Preview attended by some ofthe 1996 Republican presidential

candidates. During the afternoon of that same day, attendees voted in the straw poll. The

results were published in a subsequent newsletter.

This event had both federal and non-federal components and the

associated expenses should have been paid from the federal account, with reimbursement

from the non-federal for its portion. Instead, the RPV non-federal paid all ofthe

expenses ($27,419).

At the exit conference, RPV representatives were advised ofthis matter

and were provided copies ofworkpapers. RPV representatives indicated they understood

the issue but offered no further comments.

The interim audit report recommended that RPV demonstrate that the

1995 RPV Issues Briefing and Presidential Straw Poll should not be considered a shared

federal/non-federal activity. Absent such a demonstration, it was recommended that RPV

file appropriate memo Schedules H-4 (by reporting period) to disclose these expenditures

and that an appropriate transfer be made to reimburse the non-federal account.

In its response to the interim audit report, RPV filed amended (memo)

Schedules H-4 disclosing the transactions. The response also states that the federal

account had overpaid its share of allocable expenses and, as such, RPV does not believe

that any transfer from the federal account to the non-federal account is required. The

demonstrated amount ofthe overpayment by the federal account during this period is

more than enough to cover these transactions.

2. Shared Administrative Expenses Funded from a Non-Federal Account

Our review of disbursements made from the Republican Party of Virginia

State Account, a non-federal checking account, identified $9,943 in payments made

directly to vendors for shared administrative expenses. The majority ofthe expenditures

related to maintenance and repair costs for RPV head quarters. These administrative

expenses should have been paid from the federal account and reimbursed by the nonfederal for its share. The federal share ofthese expenditures was 43%, or $4,275.

Further, they should have been reported on Schedules H-4, Joint FederallNon-Federal

Activity Schedule.

This matter was discussed with RPV representatives at the exit conference

and a schedule detailing the above noted expenditures was provided. RVP

representatives indicated they understood the issue but offered no further comment.

The interim audit report recommended that RPV demonstrate that these

are not shared administrative expenditures made from a non-federal account. Absent

6
such a demonstration, it was recommended that RPV file appropriate memo Schedules H4 by reporting period to disclose these expenditures and that an appropriate transfer be

made to reimburse the non-federal account.

In its response to the interim audit report, RPV filed amended (memo)

Schedules H-4 disclosing these transactions. The response also states that the federal

account had overpaid its share of allocable expenses and, as such, RPV does not believe

that any transfer from the federal account to the non-federal account is required. The

demonstrated amount ofthe overpayment by the federal account during this period is

more than enough to cover these transactions.

3. Expenditures in Connection with the Republican National Convention

Funded by the Non-Federal Account

As a result of our review of disbursements from RPV's non-federal

accounts; the Audit staff identified five expenditures, totaling $26,5212 for hotel

accommodations for the Virginia delegates at the San Diego Republican National

Convention held in August 1996.

RPV's representatives were advised ofthis matter at the exit conference

and provided a schedule detailing these expenditures. In response to the exit conference

RPV representatives agreed that the identified expenditures should have been paid by the

federal account.

The interim audit report recommended that RPV file appropriate memo

Schedules B, for each reporting period, to disclose the expenditures. It was further

recommended that an appropriate transfer be made to reimburse the non-federal account.

In its response to the interim audit report, RPV filed amended (memo)

Schedules B disclosing these transactions. The response also states that the federal

account had overpaid its share of allocable expenses and, as such, RPV does not believe

that any transfer from the federal account to the non-federal account is required. The

demonstrated amount ofthe overpayment by the federal account during this period is

more than enough to cover these transactions.

Three ofthese payments, totaling $24,271, were made in 1997.

7
FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 20463

August 5, 1999

Ms. Anne Petera, Treast¥'er

Republican Party DfVirginia

115 East Grace Street

Richmond, VA 23219

Dear Ms. Petera:

Attached please find the Report ofthe Audit Division on the Republican Party of

Virginia. The Commission approved the report on August 3,1999. As noted on page 4,

the Commission may pursue any ofthe matters discussed in an enforcement action.

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

August 10, 1999. Should you have any questions regarding the public release ofthis

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

Any questions you may have related to matters covered during the audit or in the

audit report should be directed to Philomena Brooks or Alex Boniewicz ofthe Audit

Division at (202) 694-1200 or toll free at (800) 424-9530.

A istant StaffDirector y"''',.... ~/'

Audit Division

Attachment as stated

8
CHRONOLOGY

REPUBLICAN PARTY OF VIRGINIA

•

•

Audit Fieldwork

Interim Audit Report

to the Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

9

4/19/99 - 5/6/99

6/1l/99

7/14/99

8/3/99