Interim Report of the 

Audit Division on the Republican 

Party of Minnesota 

January 1, 2007 - December 31, 2008 

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.* 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) 

The Republican Party of Miimesota is a state party committee 

headquartered in St. Paul, Minnesota. For more information, see 

chart on Committee Organization, page 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o Contributions from Other 

Political Committees 

o Transfers from Affiliated and 

Other Party Committees 

o Loans Received 

o Offsets to Operating 

Expenditures 

o Other Receipts 

o Transfers from Non-Federal 

Accounts 

o Total Receipts 

• Disbursements 

o Operating Expenditures 

o Transfers to Affiliated/Other 

Party Committees 

o Contributions to Federal 

Candidates/Committees and 

Other Political Committees 

o Independent Expenditures 

o Coordinated Expenditures 

o Loan Repayments Made 

o Refunds of Contributions 

o Other Disbursements 

o Federal Election Activity 

o Total Disbursements 

$ 7,089,954 

132,390 

6,297,089 

511,101 

164,596 

356,761 

1,235,414 

$ 15,787,305 

$4,319,592 

1,262,473 

3,850 

335,266 

80,000 

417,994 

19,810 

419,223 

8,551,821 

$ 15,410,029 

Finding and Recommendation (p. 4) 

• Misstatement of Financial Activity 

2U.S.C. §438(b). 
Interim Report of the 

Audit Division on the 

Republican Party of Minnesota 

January 1, 2007 - December 31, 2008 
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 3 

Part III. Slunmary 

Finding and Recommendation 4 

Part IV. Finding and Recommendation 

Misstatement of Financial Activity 5 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Republican Party of Minnesota (RPM), 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 2 U.S.C. §438(b), which permits the 

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

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

subsection, the Commission must perform an intemal 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. 2 U.S.C. §438(b). 

Scope of Audit 

Following Commission approved procedures, the Audit staff evaluated various risk 

factors and, as a result, this audit examined: 

1. The disclosure of individual contributors* occupation and name of employer; 

2. The disclosure of disbursements, debts and obligations; 

3. The disclosure of expenses allocated between federal and non-federal accounts; 

4. The consistency between reported figures and bank records; 

5. The completeness of records; and, 

6. Other conmiittee operations necessary to the review. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates Republican Party of Minnesota 

• Date of Registration August 8,1975 

• Audit Coverage January 1,2007 - December 31,2008 

Headquarters St. Paul, Miimesota 

Banlc Information 

• Bank Depositories Two 

• Bank Accoimts Eleven 

* 

Treasurer 

• Treasurer When Audit Was Conducted Anthony Sutton ( 3/19/07 - 7/9/09) 

David E. Sturrock (7/10/09 - Present) 

• Treasurer During Period Covered by Audit Marina Taubenberger (5/8/02- 3/18/07) 

Anthony Sutton (3/19/07 - 7/9/09) 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Used Commonly Available Campaign 

Management Software Package 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 
Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1,2007 $65 

o Contributions from Individuals $7,089,954 

o Contributions from Other Political 

Committees 132,390 

o Transfers from Affiliated and Other Party 

Committees 6,297,089 

o Loans Received 511,101 

o Offsets to Operating Expenditures 164,596 

o Other Receipts 356,761 

o Transfers from Non-Federal Accounts 1,235,414 

Total Receipts $ 15,787305 

o Operating Expenditures $4,319,592 

o Transfers to Affiliated/Other Party 

Committees 1,262,473 

o Contributions to Federal 

Candidates/Committees and Other Political 

Committees 3,850 

o Independent Expenditures 335,266 

o Coordinated Expenditures 80,000 

o Loan Repayments Made 417,994 

o Refunds of Contributions 19,810 

o Other Disbursements 419,223 

o Federal Election Activity 8,551,821 

Total Disbursements $ 15,410,029 

Cash on hand @ December 31,2008 $ 377,341 
Part III 

Summary 

Finding and Recommendation 

Misstatement of Financial Activity 

A comparison of the RPM's reported fmancial activity to the bank records revealed an 

understatement of receipts in 2007 by $75,267, an imderstatement of disbursements in 

2007 by $71,446, and an understatement of ending cash on hand in calendar year 2008 

by $174,238. Most of the reporting errors can be attributed to unreported transfers to and 

from the RPM's non-federal accounts. The Audit staff recommends that the RPM file 

amended disclosure reports to correct the misstatements. (For more detail, see p. 5) 
Part IV 

Finding and Recommendation 

Misstatement of Financial Activity 

Summary 

A comparison of the RPM's reported financial activity to the bank records revealed an 

understatement of receipts in 2007 by $75,267, an understatement of disbursements in 

2007 by $71,446, and an understatement of ending cash on hand in calendar year 2008 

by $174,238. Most of the reporting errors can be attributed to imreported transfers to and 

from the RPM*s non-federal accounts. The Audit staff recommends that the RPM file 

amended disclosure reports to correct the misstatements. 

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 amoimt of receipts for the reporting period and for the calendar year; and 

• The total amount of disbursements for the reporting period and for the calendar year; 

• Certain transactions that require itemization on Schedules A (Itemized Receipts), 

Schedules B (Itemized Disbursements), Schedules H3 (Transfers from Non-federal 

Accoimts for Allocated Federal/Non-federal Activity), or Schedules H4 (Disbursements 

for Allocated Federal/Non-federal Activity). 2 U.S.C. §434(b)(l), (2), (3), (4), and (5). 

Facts and Analjrsis 

The Audit staff reconciled the RPM*s reported financial activity to its bank records for 

2007 and 2008. Below are charts that outline the discrepancies in both years followed by 

explanations of the misstatements, if known. 

2007 Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1,2007 

($28,325) $65 $28,390 

Understated 

Receipts $3,556,121 $3,631,388 $75,267 

Understated 

Disbursements $3,185,395 $3,256,841 $71,446 

Understated 

Ending Cash Balance 

@ December 31,2007 

$342,401 $374,612 $32,211 

Understated 
The beginning cash balance on January 1,2007 was understated by $28,390 and is 

unexplained, but likely resulted from prior period discrepancies. 

The imderstatement of receipts resulted from the following: 

• Three unreported transfers from non-federal accounts 

• Unexplained difference 

Understatement of Receipts 

+ $50,853 

+ 24,414 

$75,267 

+ $50,000 

+ 1,115 

+ 20,331 

$71,446 

The understatement of disbursements resulted from the following: 

• Unreported transfer to non-federal accoimt 

• Unreported Bank Fees 

• Unexplained difference 

Understatement of Disbursements 

The RPM transferred $50,000 from a federal account to a non-federal account on October 

18,2007. On October 24,2007, the RPM transferred $50,000 back to the same federal 

account. These transfers were not reported. 

The $32,211 understatement of ending cash on hand resulted from the unexplained 

beginning cash balance difference as well as the receipt and disbursement misstatements 

noted above. 

2008 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January 1,2008 

$342,401 $374,612 $32,211 

Understated 

Receipts $12,003,907 $12,155,917 $152,010 

Understated 

Disbursements $12,149,205 $12,153,188 $3,983 

Understated 

Ending Cash Balance 

@ December 31,2008 

$203,103' $377,341 $174,238 

Understated 

The net imderstatement of receipts resulted from the following: 

• Ten unreported transfers from non-federal accounts 

• Unexplained difference 

Net Understatement of Receipts 

$204,166 

52,156 

$152,010 

There was no apparent reason for the imreported transfers from RPM's non-federal 

accounts. The Audit staff notes that nine of the ten unreported transfers came from an 

account that was formerly a federal account. 

^ The RPM's beginning cash on its September Monthly 2008 report was $6,000 greater than its reported 

ending cash on the previous report. As a result of this discrepancy, the amounts in the "Reported" column 

do not total correctly. 
The understatement of disbursements resulted from the following: 

• Unreported transfer to non-federal account + $1,550 

• Unexplained difference _+ 2,433 

Understatement of Disbursements $3,983 

On December 31,2008, the cash balance was understated by $174,238 as a result of the 

errors described above. 

The matter was presented to the RPM counsel during the exit conference. The RPM 

counsel acknowledged the discrepancies in the reports and indicated that the corrections 

would be made as recommended by the auditors. 

Interim Audit Report Recommendation 

The Audit staff recommends that, within 30 calendar days of receipt of this report, the 

RPM: 

• Amend its reports to correct the misstatements for 2007 and 2008 as noted above; 

and, 

• Amend its most recently filed report to correct the cash on hand balance with an 

explanation that the change resulted from a prior period audit adjustment. 

• Further, the RPM should reconcile the cash balance of its most recent report to 

identify any subsequent discrepancies that may impact the $174,238 adjustment 

recommended by the Audit staff.