Draft Final Audit Report of the 

Audit Division on the Pallas 

County Republican Party 

(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 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold .,,:!>;o::;::.::: 

requirements fb^^fjipSi^^x^l 

substantial cps^pliiance 

with the 4^f^*^ The audit 

determijp^;^hether the 

coni;l]ii^ltel^^;^plied vnih 

the limitati5£$^.;:. 

prohibitions aii%'^|.. 

disclosure requir^^^, 

of the Act. 

About the Committee (p. 2) 

The Dallas County RepubJjiC|i|^ai|^ isfk local party committee 

headquartered in Dallas^Tibxas. F||||pre information, see the 

chart on the Committee;i:Organizatiii$'h»i||^^ 

'-'•-ii'. 

yy'f 

Financial Activity 

• Receipts '^^ii^S;.... 

o ContributiQtf|'f^m IndividS&^;;>^' 

o Transfere froifr^v||oii-federal 

Acco^. Jf '^^Silj^^s.-I 

o Qtjier^plerii Rec^g^? 

To|jSlJS.eceipt|S;. ^ | "'" 

• JiO^jilbursemenfill^^ 

.^i-^^I^Pperating Expenditures 

o'''=^fi|tj[giral Election Activity 

o Omi^-IJisbursements 

v,i/.»;.c;.;.-.:.". ••;•:•.••;•!•',"!•• 

••••i;^i:5ii;Total DiiiiDursements 

$350,116 

196,000 

1,009 

$ 547,125 

$ 480,625 

36,372 

31,000 

$ 547,997 

]||ddings and Recommendations (p. 3) 

Misstatement of Financial Activity (Finding 1) 

:i^e Recordkeeping for Employees (Finding 2) 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

' 2 U.S.C. §438(b). 

' On August 16,2011, the Dallas County Republican Party changed its name to Dallas County Republican 

Party - Primary. 
Draft Final Audit Report of the 

Audit Division on the 

Dallas County Republican Party 

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

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recommendations' 

Finding 1. Misstatement of Financial Activity ;: :;;::.. 

Finding 2. Recordkeeping fbr Employeesi:.;' 

W 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Dallas County Republican Party (DCRP), 

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 cond^^ngmy audit under this 

subsection, the Commission must perform an internal reyie^''6f reij^oi^ filed by selected 

committees to determine if the reports filed by a particidar commip^||i[eet the threshold 

requirements for substantial compliance with the Act. ?i^i,S.Qfti§438(bj^^^^^^^^^ 

^ •s:;j;::i^^>::;;»: 

Scope of Audit #"'^11-::. 

Following Commission-approved procedures, the Audit staff^|i|a{ked various risk 

factors and as a result, this audit examined: "^Mmv.? ' 

1. the disclosure of individual contributors' oc.6upa|i|3^.and name 6)prnployer; 

2. the disclosure of disbursements, debts anj^X}bliga|i'6i^::^ 

3. the disclosure of expenses allocated betv||||p fepral 'i||;^^0^l-f^ accounts; 

4. the consistency between reported fi||^s'Md \0ik recbmsi 

5. the completeness of records; aijd 

6. other conunittee operations n^c^^&s^jry to the r^|\5ji^i:'' 

CommissiQxi|@ii|qptt .••sv.-;-, 

Vi?:::0:::¥;*-

Requesfljlibr E^rly Comiiiil|||||on Ccjinsideration of a Legal Question 

Pursuan|||:?th^ Commission Statement Establishing a Program for Requesting 

Consmeiti|()^j|'u^^^ Questioi^iily the Commission," several state party committees 

unaffiliated '^jli^CRP request^-'early consideration of a legal question raised during an 

audit. Specifii^^i|||i|ij|he CommS'sion addressed whether monthly time logs under 11 CFR 

§ 106.7(d)(1) wer^^if^||ire4/^^^ employees paid with 100 percent federal funds. 

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

committees to keep a monthly log for employees paid exclusively with federal fiinds. 

Exercising its prosecutorial discretion, however, die Commission decided not to pursue 

recordkeeping violations for the failure to keep time logs or to provide affidavits to 

account for employee salaries paid v^th 100 percent federal funds and reported as such. 

Audit staff informed DCRP's representative of the payroll log requirement and ofthe 

Commission's decision not to pursue recordkeeping violations for failure to keep payroll 

logs for salaries paid and correctly reported as 100 percent federal, excluding amended 

filings. Finding 2 of this audit report (Recordkeeping for Employees) does not include 

any DCRP employees paid with 100 percent federal funds and reported as such. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Dateof Registration February 5,1999 

• Audit Coverage January l,.?pp9^.pecember 31,2010 

Headquarters Dallas..^^- i$i|i:#' 

Bank Information 

• Bank Depositories 

• Bank Accounts One felfi^:^%ee non-j^ttMj,^he 

Levin . Jife:.. "^li^ " 

Treasurer ••:s*^:::-;-.. 

• Treasurer When Audit Was Conducted Honorable Wad^|^^^ ' 

• Treasurer During Period Covered by Audit.; 'SJciiifl^ NeermaiS^I;?'*"" 

Management Information 4 

• Attended Commission Campaign Financ^i;^^:, 

Seminar 

/.''M-S":-:-" 

•:'•:< si" 

• Who Handled Accounting and 5^-" 

Recordkeeping Tasks . 

QVex^^ l^llphcial Activity 

'liidited''Amounts) 

Cash-on-li^iij^ January 1,21019 $ 1374 

Receipts ^"W^ . .# 

o Contribution?'i^^::Indiy33uals 350,116 

o Transfers irom !^^ipderal Account 196,000 

o Other Federal Reci^pts 1,009 

Total Receipts $ 547,125 

Disbursements 

o Operating Disbursements 480,625 

o Federal Election Activity 36,372 

o Other Disbursements 31,000 

Total Disbursements $ 547,997 

Cash-on-hand @ December 31,2010 $ 502 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of DCRP's reported financial activity with its bank 

records revealed that, for 2010, DCRP understated its reported repeipts and 

disbursements by $31,817 and $32,201, respectively. In r^si|0ns^|i^..1^^^ Audit 

Report recommendation, DCRP amended its reports an4^niateriall^;.^p^ its 

misstatements. (For more detail, see p. 4.) iii " ''^iiiiSs^. 

Finding 2. Recordkeeping ibr Emplojri|gi^ 

During audit fieldwork, the Audit staff determined that PCi^J|i^. not maintain any 

monthly payroll logs, as required, to document the percentage o||p^ eac]ht employee 

spent on federal election activity. For 2009 and 2.(^lJ^j|>:the Audit s'f^^peiitified payments 

to DCRP employees totaling $85,520^ for whicli'ffioii|^^payroll lop%ere not 

maintained. This consisted of $70,520, for vyihich Dd!F^^loca]ted payr^ between 

federal and non-federal funds, and $15,000 ll^ - DCi&P plllj^i^iusively with non-federal 

fimds. 4 ^ M •"'•^^•^ 

In response to the Interim Audit recommeiiidalL^ DCRP agreed to maintain 

monthly payroll log5.;|t!3::|s;^k fedfei^^^ activity for non-federal payroll and payroll 

allocated betwej^f^ef|i^|^|?^pn-fed^ The Audit staff considers the matter 

resolved. (F!^ji?&re detaili'^i^^iii;;^ ^^^llp^^' 

^ This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such. (See Part I, Background, Commission Guidance, Request for Early Consideration of a Legal 

Question on Page 1). 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of DCRP's reported financial activity with its bank 

records revealed that, for 2010, DCRP understated its repp|ti^^pii^6iptsi^d 

disbursements by $31,817 and $32,201, respectively. Ii|;vresp^nse;||i^^ Interim Audit 

Report recommendation, DCRP amended its reports aiii| materialll^'dQi^^ its 

misstatements. . •:i?5^is> 4^-

Legal Standard '"''^•^ 

Contents of Reports. Each report must disclose: '"'iilli^v.. 

• the amount of cash-on-hand at the beginning and,end of the rep^i^g'beriod; 

• the total amount of receipts for the reportiiig |)6n:od;:a^ for the c^l^ndar year; 

• the total amount of disbursements for the^ceporti^^gl ||!:i^^ and for the calendar year; 

and ..f ''^i^f: 

• certain transactions that require ite.iil|^ti6h on::Schedui&'A (Itemized Receipts) or 

Schedule B (Itemized DisburscipeMs). 2 U.S;i|;|§|f.^)(l), (2), (3), (4) and (5). 

Pacts and Analysis, 

A. Facts '/lilt During au^it fieldwork, the Aii^iiStaff reconciled reported financial activity with bank 

records.:^icalendar years 2009 2010 and identified a misstatement of receipts and 

disb:i^^tn|^||g.^for 2010. The foftf^ng chart outlines the discrepancies. 

2010 Activity'-^ii:fex# 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January 1,2010 $1,178 $2,045 $867 

Understated 

Receipts $287,185 $319,002 $31,817 

Understated 

Disbursements $288,344 $320,545 $32,201 

Understated 

Ending Cash Balance 

©December 31,2010 $19 $502 $483 

Understated 
The underetatement of receipts resulted fi'om the following. 

• Credit card deposit not reported $ 24,277 

• March 2010 deposits not reported 5.995 

• On-line deposit not reported 1.720 

• Miscellaneous identified amounts (175^ 

Net Understatement of Receipts $ 31.817 

The understatement of disbursements resulted fi:om the following. 

• Transfers to non-federal account not reported $ 31,000 

• Miscellaneous identified disbursements not reported 1,341 

• Unidentified difference .^,^Mh %rr-rM^ 

Net Understatement of Disbursements ';i;l?::=32.2Ql 

B. Interim Audit Report & Audit Division Recommenll^n 

At the exit conference, the Audit staff explained the misst^telnj^nts and provia^H 

schedules to DCRP representatives. The representatives bffei'^lll^.comments during or 

subsequent to the exit conference. • - • • 

The Interim Audit Report recommended that |)CRP"^:|^d its repoifg to correct the 

misstatements noted above. i^.^ 0 '^^W$h...^ 

# IIP' 

C. Committee Response to Interim^ipuoit Repdilt 

In response to the Interim Audit Hi^^jrt reconimei^|||0^^lDCRP filed amended reports 

for 2010 that materially correcte^:4^^;m;isstatements. 

Findingg!3[. Recordii|j^ing f^l%mployees 

During audi|]^]tj^work, the Au(^:istaff determined that DCRP did not maintain any 

monthly payr§i|||]^, as requir;^, to document the percentage of time each employee 

spent on federal'eig|fepn actiivity. For 2009 and 2010, the Audit staff identified payments 

to DCRP employe6^'!||i&.i:tig $85,520^ for which monthly payroll logs were not 

maintained. This consisted of $70,520. for which DCRP allocated payroll between 

federal and non-fedei^l funds, and $15,000 that DCRP paid exclusively with non-federal 

funds. 

In response to the Interim Audit Report recommendation, DCRP agreed to maintain 

monthly payroll logs to track federal election activity for non-federal payroll and payroll 

allocated between federal and non-federal activity. The Audit staff considers the matter 

resolved. 

^ This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such. (See Part I, Background, Commission Guidance, Request for Early Consideration of a Legal 

Question on Page 1). 
Legal Standard 

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

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 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or have their pay allocated as administrative costs; 

• employees who spend more than 25 percent of their compensated time in a given 

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

• employees who spend none of their compensated tir^^jn ^.^vei]L,nionth on federal 

election activities may be paid entirely vnih funds^w^oim^^^ih state law. 11 

CFR§106.7(d)(l). f l^i,. 

Facts and Analysis 

'5i:>s:5vfflf:?-

" H.. -w- -y^.-- . r~/j5 — 

id:;|l^,000 that wi^:;^^^6xclusively with non-federal 

A. Facts "Ni-I^iilii. 

During fieldwork, the Audit staff reviewed disbursements for pa$||.lJ;.. DCRP did not 

maintain any monthly logs or equivalent recordsL:,toi$0^p.ument the p^||ntage of time each 

employee spent in connection with federal elation ij|||^t^. These .f^gs are required to 

document the proper allocation of federd ani^non-f^eiri||i|i4nds used to pay employee 

salaries and wages. For 2009 and 2010^ogs:|^^re not mali|||Qisd for $85,520^' in 

payroll. The $85,520 consisted of $7()i|t6, for w^ph paj^oif was allocated between 

federal and non-federal funds, and:f"" '^'^'^ ' ' ' 

funds. 

. ^>s:;-.:.v....,. •" • •:.v::'S^::>. 

.•.•:••:^s3y.^^^;s••'•V:•^^^<^ ••.••?v:S>>-

B. Interim Aijfdit^iiitefj^^ Divi|iion.J^jecommendation 

At the exit pc^i^ierence and at^|i£>^udit fieli|pork. the Audit staff discussed the payroll 

recordke^^iig issue vnih DCRl^|^|)resentafives. The representatives offered no 

additiq|ii|l:i;c|Q,mments or documei^ption to support the expenses. 

For DCRP ej^]t;o3(ees that wer^paid with exclusively non-federal funds or an allocation 

of federal and ii^|^eral f[xii0y the Interim Audit Report recommended that DCRP 

provide the follov</^i^|:::. 

••>:v:'"' 

• evidence that DCRP had maintained monthly time logs to document how much 

time the employee had spent on federal election activity; 

or 

• provide and implement a plan to maintain monthly payroll logs to track the 

percentage of time each employee spends on federal election activity. 

^ Amounts are net of payroll taxes and benefits totaling $22,896. 

^ This total does not include payroll for employees paid with 100 percent federal fimds and reported as 

such. (See Part [, Background, Commission Guidance, Request for Early Consideration of a Legal 

Question on Page 1). 
C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, DCRP agreed to maintain 

monthly payroll logs to track federal election activity for non-federal payroll and payroll 

allocated between federal and non-federal activity. Such action is consistent with 

Commission guidance with respect to payroll logs. The Audit staff considers the matter 

resolved. 

••^:•.••:•;^••i• m 

' S-'.-N';;.'.;-. 

^^^^