Interim Audit Report of the 

Audit Division on the 

State Democratic Executive 

Committee of Alabama 

(January 1, 2009 - December 31, 2010) 

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 

imder 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 die Act.* The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Conunission may 

initiate an enforcement 

action, at a later time,. 

with respect to the matter 

discussed in this report. 

About the Committee (p. 2) 

The State Democratic Executive Committee of Alabama is a state 

party committee headquartered in Montgomery, Alabama. For 

more information, see the chart on the Committee Organization, 

p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals $ 342.232 

o Transfers from Affiliated 

Committees 413,892 

o Contributions from Other 

Political Committees 225.377 

o Transfers from Non-federal 

Accoimts 316,171 

o All Other Receipts 173,243 

Total Receipts $ 1,470,915 

• Disbursements 

o Operating Expenditures 

o Federal Election Activity 

o All Other Disbursements 

Total Disbursements 

$ 950.626 

456,345 

72.274 

$ 1,479,245 

Finding and Recommendation (p. 3) 

• Recordkeeping for Employees 

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

Audit Division on the 

State Democratic Executive 

Committee of Alabama 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 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 

Recordkeeping for Employees 4 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the State Democratic Executive Committee of 

Alabama (SDA), undertaken by the Audit Division of die Federal Election Commission 

(the Commission) in accordance wiUi 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 die Commission to conduct audits and field investigations of any 

political committee that is required to file a report under 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 whether die 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 disclosure of independent expenditures; 

6. die completeness of records; and 

7. other committee operations necessary to die review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Piusuant to die "Policy Statement Establishing a Program for Requesting Consideration 

of Legal Questions by the Commission," SDA requested early consideration of a legal 

question raised during the audit. SDA questioned whether the monthly time logs required 

under 11 C.F.R. § 106.7(d)(1) applied to employees paid widi 100 percent federal funds. 

(See Finding, page 4.) 

The Commission concluded, by a vote of 5-1, that 11 C.F.R. § 106.7(d)(1) does require 

committees to keep a mondily log for employees paid exclusively with federal fimds. 

Exercising its prosecutorial discretion, the Commission decided, however, that it would 

not pursue recordkeeping violations for the failure to keep time logs or to provide 

affidavits to accotmt for employee salaries paid widi 100 percent federal funds and 

reported as such. The Audit staff informed SDA Coimsel of the Commission's decision 

on SDA's request. This audit report does not include any finding or recommendation 

with respect to SDA*s employees paid with 100 percent federal fimds and reported as 

such. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration July 10,1976 

• Audit Coverage January 1,2009 - December 31,2010 

Headquarters Montgomery, Alabama 

Bank Information 

• Bank Depositories Two 

• Bank Accotmts Three Federal, Two Non-federal, One Levin 

Treasurer 

• Treasurer When Audit Was Conducted Mr. Edgar C. Gentle, III (1/31/11 - 7/8/12) 

Mr. James B. Davidson (7/9/12 - 12/5/12) 

Mr. James D. Tumer (12/6/12 - Present) 

• Treasurer During Period Covered by 

Audit 

Mr. Brannon Walden (5/22/08-1/30/11) 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1,2009 $ 13,139 

Receipts 

o Contributions from Individuals 342,232 

o Transfers firom Affiliated Committees 413,892 

o Contributions from Other Political 

Committees 225,377 

o Transfers fi:om Non-federal Accounts 316,171 

o All Other Receipts 173,243 

Total Receipts $ 1,470,915 

Disbursements 

o Operating Disbursements $ 950.626 

o Federal Election Activity 456,345 

o All Other Disbursements 72,274 

Total Disbursements $ 1,479,245 

Cash-on-hand @ December 31,2010 $ 4,809 
Part III 

Summary 

Finding and Recommendation 

Recordkeeping for Employees 

During audit fieldwork. the Audit staff determined diat SDA did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent on federal election activity. For 2009 and 2010, the Audit staff identified payments 

to SDA employees totaling $279,429, for whom SDA was required to maintain monthly 

payroll logs. This consisted of $248,930, for which payroll was allocated between 

federal and non-federal funds, and $30,499, for which payroll was exclusively nonfederal. Prior and subsequent to the exit conference, SDA representatives provided the 

Audit staff widi affidavits for most of the employees attesting to die percentage of time 

spent on federal election activity. For die SDA employees paid witfi an allocation of 

federal and non-federal ftmds or exclusively non-federal funds, the Audit staff 

recommends that SDA implement a plan to maintain monthly payroll logs to track the 

percentage of time each employee spends on federal election activity. 

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

Part IV 

Finding and Recommendation 

Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined diat SDA did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent on federal election activity. For 2009 and 2010, the Audit staff identified payments 

to SDA employees totaling $279,429, for whom SDA was required to maintain monthly 

payroll logs. This consisted of $248,930, for which payroll was allocated between 

federal and non federal funds, and $30,499, for which payroll was exclusively nonfederal. Prior and subsequent to die exit conference, SDA representatives provided the 

Audit staff widi affidavits for most of die employees attesting to die percentage of time 

spent on federal election activity. For the SDA employees paid widi an allocation of 

federal and non-federal funds or exclusively non-federal funds, the Audit staff 

recommends that SDA implement a plan to maintain mondily payroll logs to track the 

percentage of time each employee spends on federal election activity. 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a monthly log of die 

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows: 

• employees who spend 25% or less of dieir compensated time in a given mondi on 

federal election activities must be paid either from the federal account or be 

allocated as administrative costs; 

• employees who spend more dian 25% of their compensated time in a given mondi 

on federal election activities must be paid only from a federal account; and, 

• employees who spend none of their compensated time in a given month on federal 

election activities may be paid entirely with funds that comply with State law. 11 

CFR §106.7(d)(l). 

Facts and Analysis 

A. Facts 

During fieldwork, die Audit staff reviewed disbursements for payroll. SDA did not 

maintain any monthly payroll logs or equivalent records to document the percentage of 

time its employees spent in coimection with federal election activity. These logs are 

required to document the proper allocation of federal and non-federal fimds used to pay 

employees. For 2009 and 2010, logs were required for $279,429 in payroll.^ ^ All of 

^ Payroll is stated net of taxes and benefits. 

^ Payments to SDA employees paid with 100 percent fiederal funds and reported as such are not included in 

this finding. (See Background section, page 1 - Request for Early Commission Consideration of a Legal 

Question.) 
diese individuals were disclosed as having been paid with an allocation of federal and 

non-federal funds ($248,930) or exclusively non-federal funds ($30,499). 

The Audit staff requested diat SDA provide documentation to verify die time employees 

spent on federal election activity. In response. SDA provided signed affidavits for five of 

the 11 employees noted above. The affidavits stated die employee name, job titie and 

responsibilities, die time period covered by the affidavit and die funding used. They also 

included a brief statement concerning die time spent on federal election activity. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter again with SDA representatives at die exit 

conference. SDA did not provide the requested monthly time logs during the response 

period; SDA did, however, submit additional affidavits from diree employees and another 

after the response period. Each of diese affidavits stated the employee name, job title and 

responsibilities, the time period covered by die affidavit and die funding used, and 

included a brief statement regarding the time spent on federal election activity. 

The Audit staff recommends diat, within 30 calendar days of service of this report, SDA 

provide: 

• evidence that it maintained mondily time logs to document how much time each 

employee spent on federal election activity; or 

• a plan to maintain monthly payroll logs to track the percentage of time each 

employee spends on federal election activity.