Part I
Background

Authority for Audit

This report is based on an audit of the American Academy of Ophthalmology Inc.
Political Committee (AAOP), 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 under 2 U.S.C. §434. 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. 2 U.S.C. §438(b).

Scope of Audit

This audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The disclosure of disbursements, debts and obligations.
The consistency between reported figures and bank records,
The completeness of records.

Other committee operations necessary to the review.

NANEYWNS

Changes to the Law

On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act
of 2002 (BCRA). The BCRA contains many substantial and technical changes to the
federal campaign finance law. Most of the changes became effective November 6, 2002.
Except for the period November 7, 2002, through December 31, 2002, the period covered
by this audit pre-dates these changes. Therefore, the statutory and regulatory
requirements cited in this report are those that were in effect prior to November 7, 2002.


Part IV
Finding and Recommendation

| Misstatement of Financial Activity

Summary

A comparison of AAOP’s reported financial activity to bank records revealed a material
misstatement with respect to beginning cash on hand, disbursements and ending cash on
hand in calendar year 2001. In response to the recommendation in the interim audit
report, AAOP filed amended disclosure reports that materially corrected the public
record.

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 calendar year; and

¢ The total amount of disbursements for the reporting period and for the calendar year.
2US.C. §434(b)(1), (2) and (4).

Facts and Analysis

The Audit staff reconciled the reported activity to the bank records and determined
AAOP misstated beginning cash on hand, disbursements and ending cash for calendar
year 2001. The following chart details the discrepancies between the totals on AAOP’s
disclosure reports and the bank records.

2001 Activity
Reported Bank Records Discrepancy
Beginning Cash Balance $294,648 $308,048 $13,400
@ January 1, 2001 Understated
Receipts $326,994 $327,344 $350
Understated
Disbursements $396,082 $405,931 $9,849
Understated
Ending Cash Balance @ $225,560 $229,461 $3,901
December 31, 2001 Understated

The understatement of beginning cash on hand was the result of AAOP reducing its cash
balance by the amount of outstanding accounts payable ($9,799) and not reporting prior
period receipts ($3,601 )2

? AAOP provided workpapers detailing unidentified deposits that were not teported in calendar year 2000.


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Changes to the Law

Part II. Overview of Committee
Committee Organization
Overview of Financial Activity

Part III. Summary
Finding and Recommendation

Part IV. Finding and Recommendation
Misstatement of Financial Activity

Page


Part II |
Overview of Committee

Committee Organization

Important Dates AAOP

e Date of Registration July 1, 1985

e Audit Coverage January 1, 2001 — December 31, 2002
Headquarters San Francisco, California

Bank Information

e Bank Depositories 1

e Bank Accounts 1 Checking, 1 Money Market
Treasurer

e Treasurer When Audit Was Conducted Carol Beatty

¢ Treasurer During Period Covered by Audit | Paula E. Lent (until May 21, 2001)
Carol Beatty (from May 21, 2001 to
Present)

Management Information

¢ Attended FEC Campaign Finance Seminar _| Yes

¢ Used Commonly Available Campaign Yes
Management Software Package

¢ Who Handled Accounting and Paid staff
Recordkeeping Tasks

Overview of Financial Activity
(Audited Amounts)

Cash on hand @ January 1, 2001 $ 308,048
© Contributions from Individuals 983,963
o Other Receipts 1,602
Total Receipts $ 985,565
o Operating Expenditures 140,562
© Contributions to Federal Candidates 633,630
© Contributions to Party Committees 198,000
o Refunds 5,618
Total Disbursements $ 977,810
Cash on hand @ December 31, 2002 $ 315,803


The understatement of disbursements resulted when AAOP disclosed two disbursements,
totaling $9,849, as memo entries (non-cash transactions); rather than actual
disbursements.

The understatement of ending cash on hand was the cumulative result of the
adjustments identified above along with unreported receipts of $350.

During the exit conference, the Audit staff provided AAOP representatives with
workpapers detailing the misstatements discussed above. In order to bring the cash
figures into balance, workpapers detailing minor differences noted in calendar year 2002
were also provided.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that AAOP submit amended reports for the audit period to
correct the above misstatements. In response, AAOP filed the necessary amended reports
which materially correct the misstated activity.


FEDERAL ELECTION COMMISSION

WASHINGTON. DC 20464

June 24, 2004

MEMORANDUM

TO: ROBERT W. BIERSACK
PRESS OFFICER
PRESS OFFICE

FROM: JOSEPH F. STOLTZ j
ASSISTANT STAFF PD
AUDIT DIVISION V

SUBJECT: | PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON
AMERICAN ACADEMY OF OPHTHALMOLOGY INC. POLITICAL

COMMITTEE

Attached please find a copy of the final audit report on American Academy of
Ophthalmology Inc. Political Committee, which was approved by the Commission on
June 10, 2004.

Informational copies of the report have been received by all parties involved and
the report may be released to the public on June 24, 2004.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library
Web Manager


Part III
Summary

Finding and Recommendation

Misstatement of Financial Activity

A comparison of AAOP’s reported activity to bank records revealed a material
misstatement with respect to beginning cash on hand, disbursements and ending cash on
hand in calendar year 2001. In response to the recommendation in the interim audit
report, AAOP filed amended disclosure reports that materially corrected the public
record. (For more detail, see p.4)


Report of the Audit Division

on the
American Academy of
Ophthalmology Inc. Political

Committee

January 1, 2001 ~ December 31, 2002



Report of the

Audit Division on the
American Academy of
Ophthalmology Inc. Political

Committee
January 1, 2001 - December 31, 2002

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.

' 2U.S.C. §438(b).

About the Committee (p. 2)

The American Academy of Ophthalmology Inc. Political
Committee is a separate segregated fund headquartered in San
Francisco, California. For more information, see chart on the
Committee Organization, p. 2.

Financial Activity (p. 2)

° Receipts
o Contributions from Individuals $ 983,963
o Other Receipts 1,602
o Total Receipts $ 985,565
¢ Disbursements
o Operating Expenditures $ 140,562
o Contributions to Federal 633,630
Candidates
© Contributions to Party 198,000
Committees
o Refunds 5,618
o Total Disbursements $ 977,810

Finding and Recommendation (p. 3)
¢  Misstatement of Financial Activity