Draft Final Audit Report of the 

Audit Division on 

Tony Cardenas for Congress 

(January 1, 2015 - December 31, 2016) 

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 Campaign (p. 2)

Tony Cardenas for Congress is the principal campaign committee 

for Tony Cardenas, Democratic candidate for the United States 

House of Representatives from the state of California, 29th 

District, and is headquartered in Washington, DC. For more 

information, see the Campaign Organization chart, p. 2. 

Financial Activity (p. 2)

 Receipts

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Other Receipts 

Total Receipts

$ 678,652 

1,011,140 

3,883 

$ 1,693,675 

 Disbursements

o Operating Expenditures 

o Contribution Refunds 

o Other Disbursements 

Total Disbursements

$ 1,544,050 

6,520 

23,435 

$ 1,574,005 

Findings and Recommendations (p. 3) 

 Misstatement of Financial Activity (Finding 1) 

 Receipt of Contributions in Excess of the Limit (Finding 2) 

 

1

 52 U.S.C. §30111(b). 
Draft Final Audit Report of the 

Audit Division on 

Tony Cardenas for Congress 

(January 1, 2015 - December 31, 2016) 
Table of Contents 

 Page

Part I. Background 

 Authority for Audit 1 

 Scope of Audit 1 

 

Part II. Overview of Campaign 

Campaign Organization 2 

 Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 4

Finding 2. Receipt of Contributions in Excess of the Limit 6
 1

 

Part I 

Background 

Authority for Audit 

This report is based on an audit of Tony Cardenas for Congress (TCFC), undertaken by 

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

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

Division conducted the audit pursuant to 52 U.S.C. §30111(b), which permits the 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report under 52 U.S.C. §30104. Prior to conducting any audit under this 

subsection, the Commission must 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. 52 U.S.C. §30111(b). 

Scope of Audit 

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

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

4. the disclosure of individual contributors’ occupation and name of employer; 

5. the consistency between reported figures and bank records; 

6. the completeness of records; and, 

7. other committee operations necessary to the review. 
 2 

Part II 

Overview of Campaign 

Campaign Organization 

Overview of Financial Activity 

(Audited Amounts) 

 

Cash-on-hand @ January 1, 2015 $ 203,155 

Receipts 

o Contributions from Individuals 678,652 

o Contributions from Political Committees 1,011,140 

o Other Receipts 3,883 

Total Receipts $ 1,693,675 

Disbursements 

o Operating Expenditures 1,544,050 

o Contribution Refunds 6,520 

o Other Disbursements 23,435 

Total Disbursements $ 1,574,005

Cash-on-hand @ December 31, 2016 $ 322,825 

 

 

2

 During pre-audit, the Audit staff asked TCFC to complete an internal control questionnaire, which included these 

questions. To date, the questionnaire has not been returned by TCFC. 

Important Dates 

 Date of Registration July 13, 2011 

 Audit Coverage January 1, 2015 - December 31, 2016 

Headquarters Washington, DC 

Bank Information 

 Bank Depositories One 

 Bank Accounts One Checking 

Treasurer 

 Treasurer When Audit Was Conducted Jennifer May (March 6, 2017 – Present) 

 Treasurer During Period Covered by Audit David Gould (September 16, 2011 - 

March 5, 2017) 

Management Information2

 Attended FEC Campaign Finance Seminar Not Available 

 Who Handled Accounting and 

Recordkeeping Tasks 

Not Available 
 3

 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity

During audit fieldwork, a comparison of TCFC’s reported financial activity with its bank 

records revealed misstatements of the ending cash balance for 2015 and the 

disbursements and ending cash balance for 2016. For 2015, TCFC understated the 

ending cash balance by $10,237. For 2016, TCFC overstated disbursements by $40,568, 

and understated the ending cash balance by $38,999. In response to the Interim Audit 

Report recommendation, TCFC demonstrated that an over-reported disbursement was 

actually an outstanding check which was later reissued by TCFC. As such, TCFC 

provided evidence that no adjustment was needed to 2016 disclosure reports for this 

matter. In addition, TCFC amended its most recently filed disclosure report to correct its 

cash balance.		(For more detail, see p. 4.) 

Finding 2. Receipt of Contributions in Excess of the Limit 

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review indicated that TCFC 

received apparent excessive contributions totaling $74,302. These errors occurred as a 

result of TCFC not resolving the excessive portions of contributions by forwarding 

presumptive redesignation or reattribution letters to its contributors, obtaining signed 

redesignation letters from its contributors, or issuing refunds of the excessive portions of 

contributions in a timely manner. In response to the exit conference, TCFC materially 

resolved, albeit untimely, the apparent excessive contributions. In response to the Interim 

Audit Report recommendation, TCFC provided documentation which demonstrated that 

the refund check had been negotiated and stated that it has fully complied with the 

auditors’ recommendations as to this finding. (For more detail, see p. 6.) 
 4

 

Part IV 

Findings and Recommendations

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of TCFC’s reported financial activity with its bank 

records revealed misstatements of the ending cash balance for 2015 and the 

disbursements and ending cash balance for 2016. For 2015, TCFC understated the 

ending cash balance by $10,237. For 2016, TCFC overstated disbursements by $40,568, 

and understated the ending cash balance by $38,999. In response to the Interim Audit 

Report recommendation, TCFC demonstrated that an over-reported disbursement was 

actually an outstanding check which was later reissued by TCFC. As such, TCFC 

provided evidence that no adjustment was needed to 2016 disclosure reports for this 

matter. In addition, TCFC amended its most recently filed disclosure report to correct its 

cash balance. 

Legal Standard 

Contents of Reports. Each report must disclose:

 the amount of cash-on-hand at the beginning and end of the reporting period; 

 the total amount of receipts for the reporting period and for the election cycle-todate; 

 the total amount of disbursements for the reporting period and for the election 

cycle-to-date; and 

 certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104(b)(1), (2), (3), (4) and 

(5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled TCFC’s reported financial activity with 

its bank records for calendar years 2015 and 2016. The 2015 ending cash balance was 

understated by $10,237. This discrepancy resulted from misstatements prior to 2015 as 

the beginning cash balance for 2015 was also understated. 

The following chart outlines the 2016 discrepancies between TCFC’s disclosure reports 

and its bank records, and the succeeding paragraphs explain why the discrepancies 

occurred. 

 
 5

 

2016 Campaign Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1, 2016 

$182,458 $192,695 $10,237 

Understated 

Receipts $1,087,161 $1,075,355 $11,806 

Overstated 

Disbursements $985,793 $945,225 $40,568 

 Overstated 

Ending Cash Balance 

@ December 31, 2016 

$283,826 $322,825 $38,999 

Understated 

The overstatement of disbursements resulted from the following: 

 Media expenses reported but never cleared bank $39,498 

 Unexplained difference 1,070 

Overstatement of Disbursements $40,568 

The $38,999 understatement of the 2016 ending cash balance resulted from the reporting 

discrepancies described above, as well as prior period reporting differences. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatements for 2015 and 2016 with TCFC 

representatives during the exit conference and provided copies of relevant work papers 

detailing the misstatements. In response, TCFC representatives stated that they intended 

to file amendments. 

The Interim Audit Report recommended that TCFC amend its disclosure reports to 

correct the misstatements for both 2015 and 2016. In addition, TCFC should have 

amended its most recently filed disclosure report to correct the cash balance with an 

explanation that the change resulted from the prior period audit adjustment. It was 

further recommended that TCFC reconcile the ending cash balance of its most recent 

report to identify any subsequent discrepancies that would affect the adjustment 

recommended by the Audit staff. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, TCFC characterized the overreported media expense of $39,498 as an outstanding check at year end. TCFC 

representatives stated that the check was written on November 10, 2016 and was never 

cashed by the payee. When TCFC realized that the check had not been negotiated, it 

reissued a new check which was processed by the bank on January 10, 2017. This 

explanation had not been presented to the Audit staff prior to the issuance of the Interim 

Audit Report. However, the Audit staff believes the documentation and explanation 

support TCFC’s position. As such, the Audit staff adjusted the bank reconciliation and 

re-categorized the disbursement as an outstanding check at year end. Since TCFC did not 

report the second disbursement in its disclosure reports, overall disbursements and the 

current cash-on-hand was not misstated. Therefore, in light of this clarification, no 

adjustment was needed to disclosure reports for this matter. 
 6

 

TCFC representatives also clarified other immaterial adjustments presented by the Audit 

staff in the bank reconciliation. Specifically, they stated that over-reported receipts 

totaling $11,200 were reversals of contributions made in previous election cycles and one 

disbursement made in 2015 that was not cashed by the payee.		This explanation had not 

been presented to the Audit staff prior to the issuance of the Interim Audit Report. 

However, the Audit staff believes the documentation and explanation support TCFC’s 

position, but the Audit staff does not agree with the manner in which TCFC reported the 

reversals. While the manner in which TCFC reported the reversals did result in a correct 

cash balance, it also resulted in TCFC overstating its receipts and disbursements in its 

disclosure reports. TCFC agreed that it should have disclosed the reversals as negative 

disbursements on Schedule B (Itemized Disbursements). To correct this matter, TCFC 

amended its disclosure report in the manner recommended by the Audit staff.

Finding 2. Receipt of Contributions in Excess of the Limit 

Summary 

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review indicated that TCFC 

received apparent excessive contributions totaling $74,302. These errors occurred as a 

result of TCFC not resolving the excessive portions of contributions by forwarding 

presumptive redesignation or reattribution letters to its contributors, obtaining signed 

redesignation letters from its contributors, or issuing refunds of the excessive portions of 

contributions in a timely manner. In response to the exit conference, TCFC materially 

resolved, albeit untimely, the apparent excessive contributions. In response to the Interim 

Audit Report recommendation, TCFC provided documentation which demonstrated that 

the refund check had been negotiated and stated that it has fully complied with the 

auditors’ recommendations as to this finding. 

Legal Standard 

A. Authorized Committee Limits. An authorized committee may not receive more 

than a total of $2,700 per election from any one person or $5,000 per election from a 

multicandidate political committee. 52 U.S.C. §30116; 11 CFR §§110.1(a) and (b) 

and 110.9. 

B. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either: 

 Return the questionable check to the donor; or 

 Deposit the check into its federal account and: 

 Keep enough money in the account to cover all potential refunds or 

establish a separate account in a campaign depository for such 

contributions; 

 Keep a written record explaining why the contribution may be illegal; 

 Include this explanation on Schedule A if the contribution has to be 

itemized before its legality is established; 
 7

 

 Seek a reattribution or a redesignation of the excessive portion, following 

the instructions provided in the Commission regulations (see below for 

explanations of reattribution and redesignation); and 

 If the committee does not receive a proper reattribution or redesignation 

within 60 days after receiving the excessive contribution, refund the 

excessive portion to the donor. 11 CFR §§103.3(b)(3), (4) and (5) and 

110.1(k)(3)(ii)(B). 

C. Joint Contributions. Any contribution made by more than one person, except for a 

contribution made by a partnership, must include the signature of each contributor on 

the check, money order, or other negotiable instrument or in a separate writing. A 

joint contribution is attributed equally to each donor unless a statement indicates that 

the funds should be divided differently. 11 CFR §110.1(k)(1) and (2). 

D. Reattribution of Excessive Contributions. The Commission regulations permit 

committees to ask contributors of excessive contributions (or contributions that 

exceed the committee’s net debts outstanding) whether they had intended their 

contribution to be a joint contribution from more than one person and whether they 

would like to reattribute the excess amount to the other contributor. The committee 

must inform the contributor that: 

 The reattribution must be signed by both contributors; 

 The reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and 

 The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper reattribution or refund the excessive portion to the donor. 11 CFR 

§§103.3(b)(3) and 110.1(k)(3)(ii)(B). Further, a political committee must retain 

written records concerning the reattribution in order for it to be effective. 11 CFR 

§110.1(l)(5). 

Presumptive Reattribution - Notwithstanding the above, any excessive contribution 

that was made on a written instrument that is imprinted with the names of more than 

one individual may be presumptively attributed among the individuals listed unless 

instructed otherwise by the contributor(s). The committee must inform each 

contributor: 

 How the contribution was attributed; and 

 The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3)(B). 

E. Redesignation of Excessive Contributions. When an authorized candidate 

committee receives an excessive contribution (or a contribution that exceeds the 

committee’s net debts outstanding), the committee may ask the contributor to 

redesignate the excess portion of the contribution for use in another election. The 

committee must inform the contributor that: 
 8

 

 The redesignation must be signed by the contributor; 

 The redesignation must be received by the committee within 60 days after the 

committee received the original contribution; and 

 The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(b)(5). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper redesignation or refund the excessive portion to the donor. 11 CFR 

§§103.3(b)(3) and 110.1(b)(5)(ii)(A). Further, a political committee must retain 

written records concerning the redesignation in order for it to be effective. 11 CFR 

§110.1(l)(5). 

Presumptive Redesignation - When an individual makes an excessive contribution to 

a candidate’s authorized committee, the campaign may presumptively redesignate the 

excessive portion to the general election if the contribution: 

 Is made before that candidate’s primary election; 

 Is not designated in writing for a particular election; 

 Would be excessive if treated as a primary election contribution; and 

 As redesignated, does not cause the contributor to exceed any other contribution 

limit. 11 CFR §110.1(b)(5)(ii)(B)(1)-(4). 

The committee is required to notify the contributor by any written method, including 

electronic mail, of the redesignation within 60 days of the treasurer’s receipt of the 

contribution, and must offer the contributor the option to receive a refund instead. 11 

CFR §110.1(b)(5)(ii)(B)(5) and (6). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff utilized sample testing and reviews of other 

contributions not included in the sample population to identify apparent excessive 

contributions from individuals. 
 9

 

Excessive Contributions – Testing Method 

Sample Projection Amount3 $51,802

Review of contributions not in the sample (error 

amount) $6,900

Review of contributions redesignated to the 2018 

Primary election (error amount) $15,600 

Total Amount of Excessive Contributions $74,302

Reasons for Excessive Contributions 

Contributions not resolved via presumptive letter 

or refund $58,702

Contributions not resolved via signed 

redesignation letter or refund $15,600

Total Amount of Excessive Contributions $74,302

B. Additional Information 

The errors totaling $6,900 were the result of TCFC not sending a presumptive letter to its 

contributors informing them how their contribution had been attributed or designated by 

TCFC. The errors totaling $15,600 were the result of TCFC designating contributions to 

the 2018 Primary election without authorization from its contributors. 

TCFC did not maintain a separate account for questionable contributions. However, 

based on its cash-on-hand at the end of the audit period ($322,825), it appears that TCFC 

did maintain sufficient funds to make refunds of the apparent excessive contributions. 

C. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with TCFC representatives at the exit conference 

and provided schedules of the apparent excessive contributions. TCFC representatives 

asked questions regarding the documentation needed to resolve the excessive 

contributions. The Audit staff explained that the presumptive letters sent in response to 

the exit conference would untimely resolve most of the excessive contributions. For 

others, obtaining a signed redesignation letter would untimely resolve the excessive 

contributions. 

In response to the exit conference, TCFC submitted the following documentation: 

 

3

 The sample error projection ($51,802) is based on a Monetary Unit Sample with a 95 percent confidence 

level. The sample estimate could be as low as $34,528 or as high as $74,141. A review of other 

contributions not included in the sample population identified excessive contributions totaling $6,900. 
 10

 

Corrective Action Taken in Response to Exit Conference 

Presumptive Letters Sent Untimely $47,500 

Signed Redesignation Letters Obtained Untimely $13,000 

Refund Issued Untimely $2,600 

The Audit staff concluded that, of the $74,302 in excessive contributions, TCFC 

demonstrated that it resolved contributions totaling $63,100 in an untimely manner. As 

such, TCFC has materially resolved the excessive contributions, albeit untimely. 

The Interim Audit Report recommended that TCFC provide documentation which 

demonstrated that the refund check had been negotiated for the untimely refund of 

$2,600. It was further recommended that TCFC provide any comments it deemed 

relevant to this matter. 

D. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, TCFC provided documentation 

which demonstrated that the refund check of $2,600 had been negotiated. In addition, 

TCFC stated it has fully complied with the auditors’ recommendations as to this finding.