Draft Final Audit Report of the 

Audit Division on the 2012 

Democratic National Convention 

Committee, Inc. 

(September 1, 2011- September 30, 2014) 

Why the Audit 

Was Done 

Federal law requires the 

Commission to audit the 

national committee of a 

party who receives 

payments for presidential 

nominating conventions.' 

The audit examines the 

receipt and use of Federal 

funds and whether the 

committee otherwise 

complied with the 

limitations, prohibitions .. 

and disclosure ^ 

requirements of the 

election law. : . ^ 

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 2012 Democratic National Convention Committee, Inc. 

(DNCC) was responsible^for thie ^hy-to-day arrangements and 

operations of the Democratic Presidential nomination convention. 

DNCC is headquartered in Washin^on, DC. For more 

information, see chart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Federal Funds 

o Offsets to Convention 

Expenditures 

Total Heceiii^s^.;'" 

• 

• Disbursements 

o Convention Expenditures 

Total Disbui^ements 

$ 18,248,300 

495,733 

S 18,744,033 

$ 18,558,723 

S 18,558,723 

Finding and Recommendation (p. 3) 

• Net Outstanding Convention Expenses 

' 26 U.S.C. §9008(g). 
Draft Final Audit Report of the 

Audit Division on the 2012 

Democratic National Convention 

Committee, Inc. 

(September 1, 2011- September 30, 2014) 

*. A \ •. \ •• •• \ 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Inventory of Committee Records 1 

Part II. Overview of Committee 

Committee Organization . 2 

Overview of Financial Activity 2 

Part III. Summary 

Finding and Recommendation 

Part IV. Finding and Recommendation 

Net Outstanding Convention Expenses 
Part 1 

Background 

Authority for Audit 

This report is based on an audit of the 2012 Democratic National Convention Conunittee, 

Inc. (DNCC), undertaken by the Audit Division of the Federal Election Commission (the 

Conunission) as mandated by Section 9008(g) of Title 26 of the United States Code. 

That section directs the Commission to conduct an examination and audit of the 

payments for presidential nominating conventions no later than December 31 of the 

calendar year in which the presidential nominating convention involved is held. •. 

Scope of Audit 

This audit examined: 

1. the disclosure of receipts; 

2. the disclosure of disbursements, debts and obligations; 

3. the recordkeeping process and completene^ss pf records;. 

4. the consistency between reported figures and bank records; 

5. the accuracy of the Statement of Net Outstanding'^Conyention Expenses; 

6. the committee's compliance with requirements concerning expenditures for 

convention expenses; and ' -i? 

7. other committee operations necessary to the review. 

Inventory of Committee Records 

The Audit staff routjnply conducts an inventory of committee records before it begins the 

audit fieldwork. l^NCG records were materially complete and the fieldwork began 

immediately. " ' . 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration August 10,2011 

• Audit Coverage September 1,20l;l- September 30,2014 

Headquarters Washington; DC v 

Bank Information •M 

• Bank Depositories Four • • 

• Bank Accounts Six 

Treasurer 

• Treasurer When Audit Was Conducted Andrew Tobias. };• 

• Treasurer During Period Covered by Audit Andrew Tobias 

Management Information 

• Attended Commission Campaign Finance 

Seminar ^ 

.No 

' K 

• Who Handled Accounting and 

Recordkeeping Tasks 

Rmd:§t^....y 

1 ^ 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ® September 11,2011 SO 

Receipts 

o Federal Funds 18,248,300 

o Offsets to Convention Expenditures 495,733 

Total Receipts $ 18,744,033 

Disbursements 

o Convention Expenditures 18,558,723 

Total Disbursements S 18,558,723 

Casb-on-band @ December 31,2012 $ 185,310 
Part III 

Summary 

Finding and Recommendation 

Net Outstanding Convention Expenses 

DNCC received $18,248,300 in federal funds to finance the Democratic National 

Convention. The Statement of Net Outstanding Convention Expenses (NOCE), as 

calculated by the Audit staff, indicates that DNCC did not recdve paj^ents of federal 

funds in excess of its entitlement. 

In response to the Preliminary Audit Report recomineMatibn, the DNClC requested no 

adjustment and had no further comments. (For m^iSetaiil, see p. 4.)'\ 

• •• \ \ 

\ :• / 

/ 
Part IV 

Finding and Recommendation 

I Net Outstanding Convention Eitpenses 

Summary 

DNCC received $18,248,300 in federal funds to finance the Democratic National 

Convention. The Statement of Net Outstanding Convention Expenses (NOCE), as 

calculated by the Audit staff, indicates that DNCC did not receive payments of federal 

funds in excess of its entitlement. 

In response to the Preliminary Audit Report recommendation, the DNCC requested no 

adjustment and had no further comments. 

/ » Legal Standard \ 

A. Entitlement to Payments From the FundrT^e national committee of a. major pa^ 

shall be entitled to payments with respect to any presidential nominating convention, in 

amounts that, in the aggregate shall not exceed $4,000,000, as adjusted by the Consumer 

Price Index. The major party entitlement for the 2012 ndmihating convention was 

$18,248,300. 26 U.S.C. §9008(b)(l) & (5). 

B. Repayments. Any portion of the entitlement that remains unspent after all convention 

expenses have been paid^lHaU be returned to the Secretary of the Treasury. The national 

committee or convention committee shall make an interim repayment of unspent funds 

based on the financial ;jjpsition bf^the committee as of the end of the ninth month 

following the last day of ^e^cphvention, allowing for a reasonable amount as determined 

by the Commission to be withheld for imdntiCipated contingencies. The interim 

repayment shall be made no latbrjthan 30 calendar days after the end of the ninth month 

following the last day of the cohyehtipn. 11 CFR §9008.12(b)(5). 

C. Repayment Determination Procedures. The Commission will follow the same 

repayment determination procedures, and the committee has the same rights and 

obligations as are provided for repayment determinations involving publicly funded 

candidates under 11 CFR 9007.2(c) through (h). 11 CFR §9008.12(c). 

D. Net Outstanding Convention Expenses (NOCE). A convention committee shall 

file, no later than 60 days after the last day of the convention, a statement of that 

committee's "net outstanding convention expenses." This statement must contain, among 

other things: 

• The total of all committee assets including cash on hand, amounts owed to the 

committee and capital assets listed at their fair market value; 

• The total of all outstanding obligations for qualified convention expenses; and 

• An estimate of necessary winding-down costs. 11 CFR §9008.10(g). 
Facts and Analysis 

A. Facts 

For the 2012 national conventions, each major political party was entitled to receive 

federal funds of $18,248,300 to finance its national presidential nominating convention. 

The 2012 Democratic National Convention ended on September 6,2012. The DNCC 

filed a Statement of Net Outstanding Convention Expenses as of October 21,2012. The 

most recent NOCE statement was submitted on September 12,2013. The Audit staff 

reviewed the financial activity through December 31,2013, and estimated the winding 

down costs in preparing the figures shown below. 

2012 Democratic National Convention Cbqimittee, Inc 

Statement of Net Outstanding Convention E^enses 

As of October 21, 20li2 . 

Prepared Through September 30, 2014 ^ 

Assets / 

Cash in Bank $ 1,288,428 

Accounts Receivable 588,886 

Total Assets $1,877,314 

Liabilities 

Accounts Payable for Qualified. Convention 

Expenditures at 10/21/2012 ,$ 456,195 

Winding Down Costs: 

Actual j:ib/22/liiV.9/30/14) 1,419,452 

Estimated (10/1/14-3/31/15) [a] 667 1,420,119 

Tot^Ltiabilities \ $1,876.314 

Net Outstahdirig Convention Expenses 

(Surplus) as of October 21,2012 $ 1,000 

Less: Interim Repayment to the U.S. Treasury ($ 1,000) 

on 7/26/13 

Amount Repayable to the U.S. Treasury 

[a] Estimated winding down costs will be compared to actual winding down costs and adjusted accordingly. 
The NOCE as calculated by the Audit staff indicates that DNCC did not receive 

payments of federal funds in excess of its entitlement. 

At the exit conference held at the end of audit fieldwork, DNCC representatives were 

informed of the NOCE as calculated by the Audit staff. This NOCE indicated that the 

DNCC had a surplus of approximately $17,000. The Audit staff explained that 

adjustments to the NOCE calculations would be necessary based upon any additional 

documentation provided. Such documentation was provided to the Audit staff 

subsequent to the exit conference and resulted in a reduction of the initial NOCE surplus 

to a balance of $1,000. On July 26,2013, the DNCC made an interim repayment to the 

United States Treasury in the amount of $1,000 pursuant to 11 CFR-§9.008.12(b)(5). 

Subsequently, DNCC representatives were provided a copy of the NOCE updated by the 

Audit staff which indicates the amount repayable to the United States Treasury is $0. 

B. Preliminary Audit Report & Audit Division Recommendation 

The Preliminary Audit Report recommended thaJt f)NCC demonstrate if.any adjustment is 

required to any component of the NOCE statement or provide other comments-if it so 

desired. '""C' •/' 

C. Committee Response Preliminary Audit Report ^ 

In response to the Preliminary Audit Report recommendatipif, the DNCC requested no 

adjustments and had no further comments. " ^ ^