Interim Audit Report of the 

Audit Division on the Tennessee 

Democratic Party 

(January 1. 2011 - December 31, 2012) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political conunittee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(tiie Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

witii tiie Act.' The audit 

determines whetiier the 

committee complied witii 

the limitations, 

prohibitions and 

disclosure requirements 

of tiie Act. 

Future Action 

The Conunission may 

initiate an enforcement 

action, at a later time, 

with respect to the matter 

discussed in tiiis report. 

About the Committee (p. 2) 

The Tennessee Democratic Party is a state party committee 

headquartered in Nashville, Teimessee. For more information, 

see the chart on the Committee organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o Political Committee 

Contributions 

o Transfers from Affiliates 

o Transfers from Non-federal and 

Levin Accounts 

o Otiier Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

Transfers to Affiliates 

Independent Expenditures 

Coordinated Party Expenditures 

Federal Election Activity 

Otiier Disbursements 

o 

o 

o 

o 

o 

Total Disbursements 

• Levin Receipts 

• Levin Disbursements 

$1,371,485 

160,485 

426,007 

647,358 

79,155 

$2,684,490 

$1,536,893 

10,185 

20,100 

975 

1.091.186 

46,828 

$2,706,167 

$150,000 

$137,180 

Finding and Recommendation (p. 4) 

Filing of Levin Schedules 

2 US.C. §438(b). 
Interim Audit Report of the Audit 

Division on the 

Tennessee Democratic Party 

(January 1, 2011 - December 31, 2012) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Conunittee Organization 2 

Overview of Financial Activity 3 

Part III. Summary 

Finding and Reconunendation 4 

Part IV. Finding and Recommendation 

Filing of Levin Schedules 5 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Tennessee Democratic Party (TDP). undertaken by 

the Audit Division of the Federal Election Commission (the Conmiission) in accordance 

with the Federal Election Campaign Act of 1971, as amended (the Act). The Audit 

Division conducted the audit pursuant to 2 U.S.C. §438(b), which permits tiie 

Conunission to conduct audits and field investigations of any political committee tiiat is 

required to file a report under 2 U.S.C. §434. Prior to conducting any audit imder this 

subsection, the Commission must perform an intemal review of reports filed by selected 

conunittees to determine if the reports filed by a particular committee meet tiie threshold 

requirements for substantial compliance with tiie Act. 2 U.S.C. §438(b). 

Scope of Audit 

Following Commission-approved procedures, tiie Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions; 

2. the disclosure of individual contributors' occupation and name of employer; 

3. the disclosure of disbursements, debts and obligations; 

4. the disclosure of expenses allocated between federal, non-federal, and Levin 

accounts; 

5. the consistency between reported figures and bank records; 

6. the disclosure of independent expenditures; 

7. the completeness of records; and 

8. other committee operations necessary to the review. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration May 19.1983 

• Audit Coverage January 1,2011 - December 31.2012 

Headquarters Nashville. Tennessee 

Banlc Information 

• Bank Depositories Two 

• Bank Accounts Five federal. Three non-federal. One 

Levin 

Treasurer 

• Treasurer When Audit Was Conducted Wade Munday 

• Treasurer During Period Covered by Audit Matt Langley: January 1,2011-October 

10.2011 

David Garrison: October 11,2011-

December 31.2012 

Management Information 

• Attended Commission Campaign Fmance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 
Overview of Financial Activity 

(Audited Amoimts) 

Cash-on-hand @ January 1,2011 $45,680 

Receipts 

o Contributions from Individuals 1,371,485 

o Political Committee Contributions 160,485 

o Transfers from Affiliates 426,007 

o Transfers from Non-federal and Levin 

Accounts 

647.358 

o Other Receipts 79,155 

Total Receipts $2,684,490 

Disbursements 

o Operating Expenditures 1,536.893 

o Transfers to Affiliates 10.185 

o Independent Expenditures 20.100 

o Coordinated Party Expenditures 975 

o Federal Election Activity 1,091.186 

0 Other Disbursements 46,288 

Total Disbursements $2,706,167 

Cash-on-hand @ December 31,2012 $23,804^ 

Levin Cash-on-hand @ January 1,2011 $0 

Total Levin Receipts $ 150,000 

Total Levin Disbursements $ 137,180 

Levin Cash-on-hand @ December 31,2012 $ 12,820 

' The Committee's ending cash on hand was understated by $199 due to immaterial reporting errors. 
Part III 

Summaiy 

Finding and Recommendation 

Filing of Levin Schedules 

A review of Levin activity indicated that TDP received and disbursed Levin funds during 

calendar year 2012 tiiat totaled $150,000 and $137,180, respectively. TDP did not. 

however, disclose this activity on Schedule L (Aggregation Page: Levin Funds). Schedule 

L-A (Itemized Receipts of Levin Funds), or Schedule L-B (Itemized Disbursements of 

Levin Funds). After tiie Audit staff brought tiiis omission to TDP's attention. TDP filed 

the missing schedules. The Audit staff reconunends that TDP submit any additional 

information or comments it considers relevant to the matter. (For more detail, see p. 5.) 
Part IV 

Finding and Recommendation 

Finding 1. Filing of Levin Schedules 

Summary 

A review of Levin activity indicated that TDP received and disbursed Levin funds during 

calendar year 2012 tiiat totaled $150,000 and $137,180. respectively. TDP did not. 

however, disclose this activity on Schedule L (Aggregation Page: Levin Funds). Schedule 

L-A (Itemized Receipts of Levm Funds), or Schedule L-B (Itemized Disbursements of 

Levin Funds). After the Audit staff brought this omission to TDP's attention, TDP filed 

the missing schedules. The Audit staff recommends tiiat TDP submit any additional 

information or conunents it considers relevant to the matter. 

Legal Standard 

A. Reporting. 

If a state, district or local party conunittee's combined annual receipts and disbursements 

for federal election activity (EEA) total $5,000 or more during the calendar year, the 

committee must disclose receipts and disbursements of federal funds and Levin funds 

used for FEA. 11 CFR §300.36(b)(2). 

B. Contents of Levin Reports. Each report must disclose: 

• tiie amount of cash-on-hand for Levin funds at the begiiming and end of the 

reporting period; 

• the total amount of Levin fund receipts for the reporting period and for the 

calendar year; 

• the total amount of Levin fund disbursements (including allocation transfers) for 

the reporting period and the calendar year; and 

• certain transactions that require itemization on Schedule L-A (Itemized Receipts 

of Levin Funds) or Schedule L-B (Itemized Disbursements of Levin Funds) -

itemize receipts and disbursements of $200 or more to or from any person for 

Federal election activities. 

11 CFR §300.36 (b)(2). 

Facts and Analysis 

A. Facts 

The Audit staff reviewed TDP's Levin activity and noted tiiat TDP received $150,000 

and disbursed $137,180 during tiie 2012 Post-General reporting period (October 18.2012 

- November 26,2012).^ For this period, the beginning cash balance was $0 and tiie 

ending cash balance was $12,820. TDP did not, however, file tiie required Schedules L, 

L-A and L-B until tiie Audit staff brought tiie omission to TDP's attention during audit 

' This was TDP's only Levin activity for the period covered by the audit. 
6 

fieldwork. A TDP representative acknowledged tiiat TDP did not file tiie schedules due 

to an error during transmission of tiie reports required for the reporting period. 

TDP maintained a separate bank account for its Levin fund receipts and disbursements. 

The 2012 Levin fund receipts consisted of transfers from TDP's non-federal accoimt. 

The 2012 Levin fund disbursements consisted mainly of a transfer to TDP's non-federal 

account and payments for voter identification and get-out-the-vote programs. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed tiiis issue witii TDP representatives during the exit conference. 

TDP representatives reiterated tiiat TDP did not disclose the Levin fund activity due to an 

oversight and that as soon as the Audit staff notified TDP of this omission, it filed tiie 

missing Levin schedules with the Conmiission. 

The Audit staff recommends that, within 30 calendar days of service of this report, TDP 

submit any additional information or conunents it considers relevant to the matter. 
Attachment 1 

Summary of Previous Audits 

Name of Committee: Teimessee Democratic Party 

Election Cycle Audited: 2005-2006 

Final Audit Report Release Date: April 20,2011 

Finding 1- Non-allocable Federal Election Activity Disclosed on Schedule H6 

During audit fieldwork, a review of disbursements identified what appeared to be non-allocable 

federal election activity that was reported on Schedule H6 (Disbursements of Federal and Levin 

Funds for Allocated Federal Election Activity). Payments, totaling $98,321—^for polls 

($24,500), automated phone banks ($36,400), and campaign rallies ($37,421, includmg $900 for 

custom-labeled bottied water)—were reportedly allocated 21% federal and 79% Levin. 

However, the telephone scripts for tiie automated phone banks referred to a clearly identified 

candidate running for federal office, as did documentation associated with the other programs. 

In response to the Interim Audit Report, TDP agreed that the automated phone banks were not 

allocable federal election activity, but maintained tiiat tiie rallies were correctiy classified. TDP 

also amended its reports to reflect the cost of the polls as allocable operating costs. In addition to 

its response to tiie Interim Audit Report and the Draft Final Audit Report, TDP was granted a 

hearing for Conmiission consideration of the issues. 

The Conunission: 

• approved the finding of the Audit Division with respect to automated phone banks and 

custom-labeled water bottles; 

• concluded tiiat the cost of the polls were properly reported on Schedule H4 

(Disbursements for Allocated Federal/Nonfederal Activity) as shared operatmg 

expenditures as TDP had done in response to the Interim Audit Report; and. 

• concluded tiiat. witii tiie exception of the invoice for custom-labeled bottled water that 

identified a specific federal candidate, there was insufficient evidence regarding tiie 

rallies to determine tiiat they were not allocable federal election activity. 

Finding 2- Disclosure of Disbursements 

During audit fieldwork, a sample review of itemized expenditures revealed that for 

approximately 18% of tiie items tested. TDP did not disclose the payee's address. In response to 

the Interim Audit Report. TDP filed amended reports that materially disclosed the missing 

information. The Commission approved this fmding.