FEDERAL ELECTION COMMISSION

WASHINGTON. DC 20463

August 3, 2000

MEMORANDUM

TO: RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

FROM: ROBERT J. COSTA 1P-~ ASSISTANT STAFF DIRlCTOR

AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON THE DEMOCRATIC

STATE CENTRAL COMMITTEE OF MARYLAND

Attached please find a copy ofthe audit report and related documents on the

Democratic State Central Committee of Maryland, which was approved by the

Commission on July 26, 2000.

InfonnationaI copies ofthe report have been received by all parties involved and

the report may be released to the public.

Attachment as stated

cc: Office ofGeneral Counsel

Office ofPublic Disclosure

Reports Analysis Division

FEC Library
REPORT OF THE AUDIT DIVISION

ON THE

DEMOCRATIC STATE CENTRAL

COMMITTEE OF MARYLAND

Approved July 26, 2000

FEDERAL ELECTION COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
REPORT OF THE AUDIT DIVISION

ON THE

DEMOCRATIC STATE CENTRAL

COMMITTEE OF MARYLAND

Approved July 26, 2000

FEDERAL ELECTION COMMISSION

999 E STREET, N.W.

WASHINGTON, D.C.
TABLE OF CONTENTS

DEMOCRATIC STATE CENTRAL COMMITTEE OF MARYLAND

Page

Executive Summary

Final Audit Report

Background

Finding

Transmittal to Committee

Chronology

3

3

5

7

9
FEDERAL ELECTION COMMISSION

WASHINGTON. D.C. 204b3

REPORT OF THE AUDIT DIVISION

ON THE

DEMOCRATIC STATE CENTRAL COMMITTEE OF MARYLAND

EXECUTIVE SUMMARY

The Democratic State Central Committee ofMaryland (DSCCM) registered with the

Federal Election Commission (the Commission) on May 11,1981, and maintains its

headquarters in Annapolis, Maryland. The Treasurer during the period covered by the audit,

and currently, is Kenneth O. Wilson.

The audit was conducted pursuant to 2 U.S.c. §438(b), which states that the

Commission may conduct audits of any political committee whose reports fail to meet the

threshold level of compliance set by the Commission.

The one finding arising from the audit was presented to representatives ofDSCCM at

the completion offieldwork on April 7, 2000 and later in the interim audit report. DSCCM's

response to the finding is contained in the audit report.

The following is an overview ofthe finding contained in the audit report.

Debts and Obligations - 2 U.S.c. Section 434(b)(8); IICFR Section 104.11 (a) and (b).

The DSCCM failed to itemize obligations totaling $33,927. The DSCCM complied with the

interim audit report recommendation by filing debt schedules to correctly disclose outstanding

obligations.

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AR99-55

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 204&3

I.

REPORT OF THE AUDITDIVISION

ON THE

DEMOCRATIC STATE CENTRAL COMMITTEE OF MARYLAND

BACKGROUND

This report is based on an audit of the Democratic State Central

Committee ofMaryland (DSCCM), undertaken by the Audit Division of the Federal

Election Commission in accordance with the provisions ofthe Federal Election

Campaign Act of 1971, as amended (the Act). The audit was conducted pursuant to

Section 438(b) ofTitle 2 ofthe United States Code which states, in part, that the

Commission may conduct audits and field investigations of any political committee

required to file a report under section 434 ofthis title. Prior to conducting any audit

under this subsection, the Commission shall perform an internal review ofreports filed by

selected committees to determine ifthe reports filed by a particular committee meet the

threshold requirements for substantial compliance with the Act.

A. AUDIT AUTHORITY

B. AUDIT COVERAGE

The audit covered the period from January 1, 1997, through December 31,

1998. During this period, DSCCM reported a beginning cash balance of$II,162; total

receipts of $2,230,335; total disbursements of$2,230,834; and a closing cash balance of

$10,663 1

•

C. COMMITTEE ORGANIZATION

DSCCM registered with the Commission on May 11, 1981, and maintains

its headquarters in Annapolis, Maryland. The Treasurer during the period covered by the

audit, and currently, is Kenneth O. Wilson.

To manage its federal financial activity, DSCCM used four bank accounts.

From these accounts, DSCCM made approximately 1,280 disbursements. Receipts were

All figures in this report have been rounded to the nearest dollar.

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composed of contributions from individuals ($267,389); contributions from other

political committees and transfers from affiliated and other party committees ($355,252);

offsets to operating expenditures received ($28,717); interest income ($737); and

transfers from its non-federal accounts ($1,569,557).

During the audit period, the DSCCM maintained six non-federal bank

accounts, with total receipts of$2,083,879, disbursements of$2,140,024, and one

certificate of deposit ($10,000).

D. AUDIT SCOPE AND PROCEDURES

Although the DSCCM's contributions met the minimum recordkeeping

requirements of 11 CFR §102.9, the testing ofreceipts from individuals with respect to

limitations, and occupation and name of employer information was limited due to a lack

of external source documentation. With the above limitation considered, the audit

included testing of the following general categories:

1. The receipt of contributions or loans in excess ofthe statutory limitations;

2. the receipt of contributions from prohibited sources, such as those from

corporations or labor organizations;

3. proper disclosure of contributions £i'om individuals, political committees

and other entities, to include the itemization of contributions when

required, as well as, the completeness and accuracy of the infornlation

disclosed;

4. proper disclosure of disbursements including the itemization of

disbursements when required, as well as, the completeness and accuracy of

the information disclosed;

5. proper disclosure of debts and obligations (see Finding ILA.);

6. the accuracy oftotal reported receipts, disbursements and cash balances as

compared to bank records;

7. adequate recordkeeping for transactions;

8. proper disclosure ofthe allocation of costs associated with administrative

expenses and activities conducted jointly on behalf of federal and nonfederal elections and candidates; and

9. other audit procedures that were deemed necessary in the

situation.

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Unless specifically discussed below, no material non-compliance with

statutory or regulatory requirements was detected. It should be noted that the

Commission may pursue further any of the matters discussed in this report in an

enforcement action.

II. AUDIT FINDING AND RECOMMENDATION

A. DEBTS AND OBLIGATIONS

Section 434(b)(8) ofTitle 2 ofthe United States Code states, in part, that

each report filed under this section shall disclose the amount and nature of outstanding

debts and obligations owed by a political committee.

Sections 104.11(a) and (b) ofTitle 11 ofthe Code ofFederal Regulations

state, in part, that debts and obligations owed by or to a political committee which remain

outstanding shall be continuously reported until extinguished. These debts and

obligations shall be reported on separate schedules together with a statement explaining

the circumstances and conditions under which each debt and obligation was incurred or

extinguished. A debt or obligation, the amount ofwhich is $500 or less, shall be reported

as ofthe time payment is made or not later than 60 days after such obligation is incurred,

whichever comes first. A debt or obligation which is over $500 shall be reported as of

the date on which the debt or obligation is incurred, except that any obligation incurred

for rent, salary or other regularly reoccun'ing administrative expense shall not be reported

as a debt before the payment due date.

The DSCCM did not file any Schedules D during the period covered by

the audit. Its disbursements were reviewed to determine if it had incurred any obligations

that required reporting. In order to derive the total obligations, each outstanding

obligation was counted only once, even ifit was outstanding for several periods. The

review identified obligations totaling $33,927.

At the exit conference, the Audit staff discussed this issue with the

DSCCM and stated that a detailed schedule would be forthcoming. The DSCCM did not

comment during the conference.

The Interim Audit Report recommended that, within 30 calendar days of

service ofthis report, the DSCCM file amended Schedules D for the Mid Year 1997

Report through the Year End 1998 Report to disclose outstanding obligations.

In response to the recommendation, the DSCCM filed the required

schedules. These amended schedules materially corrected the disclosure problems noted

above.

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FEDERAL ELECTION COMMISSION

WASHINGTON. DC 20463

July 27, 2000

Mr. Kenneth O. Wilson, Treasurer

Democratic State Central Committee ofMaryland

188 Main Street, Suite 1

Annapolis, MD 21401

Dear Mr. Wilson:

Attached please find the Final Audit Report on the Democratic State Central

Committee ofMaryland. The Commission approved the report on July 26,2000.

The Commission approved Final Audit Report will be placed on the public record

on August 3, 2000. Should you have any questions regarding the public release of the

report, please contact the Commission's Press Office at (202) 694-1220. Any questions

you have related to matters covered during the audit or in the report should be directed to

Ms. Nicole Clay or Mr. Russ Bruner ofthe Audit Division at (202) 694-1200 or toll free

at (800) 424·9530.

Sincerely,

Robert . Costa

Assistant Staff Director

Audit Division

cc: Ms. Delphine Hall-Anderson, Assistant Treasurer

Attachment as Stated

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CHRONOLOGY

DEMOCRATIC STATE CENTRAL COMMITTEE OF MARYLAND

Audit Fieldwork

Interim Audit Report

to the Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

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February 28 -

April 7,2000

June 16,2000

July 13,2000

July 26, 2000
•

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