Cc. DISCLOSURE OF DEBTS AND OBLIGATIONS

Sections 104.11(a) and (b) of Title 11 of the Code of Federal Regulations
state, in relevant part, that debts and obligations owed by a political committee which
remain outstanding shall be continuously reported until extinguished. A debt or
obligation, the amount of which is $500 or less, shall be reported as of the time payment
is made or not later than 60 days after such obligation is incurred, whichever comes first.
A debt or obligation, the amount of 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 reoccurring administrative expense shall not be reported as a debt
before the payment due date.

The review of debts and obligations incurred during the audit period
revealed that DRIVE failed to disclose debts to 11 vendors that totaled $224,303. No
Schedules D (Debts and Obligations) were filed to disclose debts owed by DRIVE during
the audit period. The vendors provided such services as legal, telemarketing, and
promotions. Most of the debts were outstanding for one or more reporting periods from
the date that they were incurred. From the documentation that was available, debts
totaling $50,916 remained outstanding as of December 31, 2000. These outstanding
debts were all paid during 2001.

At the exit conference, this matter was discussed with DRIVE
representatives and a schedule detailing the debt errors was provided. DRIVE
representatives stated that they would file Schedules D and amended Summary Pages.

Subsequent to the exit conference, DRIVE filed amended Summary Pages
and Schedules D that corrected the disclosure of debts and obligations. In the interim
audit report, the Audit staff recommended no further action.

Page 8 of 11
Approved October 4, 2002


DEMOCRAT REPUBLICAN INDEPENDENT VOTER EDUCATION

TABLE OF CONTENTS
Page
Executive Summary 1
Final Audit Report 3
Background 3
Findings 5
Transmittal to Committee 9

Chronology 11




To manage its financial activity, DRIVE used five federal bank accounts
along with a non-federal education and legislative account. From the federal accounts,
DRIVE made approximately 3,500 disbursements totaling $8,999,600'. DRIVE received
contributions from individuals totaling $7,886,323, the majority of which were received
through payroll deduction, a bank loan of $1,000,000, transfers from affiliated
committees totaling $105,364, interest from investment and savings accounts of $84,780,
refunds of contributions made to candidates and committees of $26,662, and offsets to
operating expenditures of $19,634. DRIVE utilized common accounting software and
campaign management software to prepare and file its reports. Accounting,
recordkeeping and reporting functions were performed by paid staff, one member of
which attended a Commission seminar.

D. AUDIT SCOPE AND PROCEDURES

The audit included testing of the following general categories:

1. the receipt of contributions or loans in excess of the statutory
limitations;
2. the receipt of contributions from prohibited sources, such as those

from corporations or labor organizations;

3. proper disclosure of contributions from individuals, political
committees and other entities, to include the itemization of
contributions when required, as well as the completeness and
accuracy of the information disclosed (see Finding II.B.);

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, including loans (see
Finding I.C.);
6. the accuracy of total reported receipts, disbursements and cash

balances as compared to bank records;
7. adequate recordkeeping for all transactions (see Finding II.A.); and

8. other audit procedures that were deemed necessary in the situation.

As part of the Commission’s standard audit process, an inventory of
DRIVE records was conducted prior to the audit fieldwork to determine if its records
were materially complete and in an auditable state. Based on our review of the records

' The Audit staff noted minor discrepancies between bank activity and reported activity for both
disbursements and receipts.

Page 4 of 11
Approved October 4, 2002


FEDERAL ELECTION COMMISSION
WASHINGTON, DC 20463

DEMOCRAT REPUBLICAN INDEPENDENT VOTER EDUCATION
EXECUTIVE SUMMARY

Democrat Republican Independent Voter Education (DRIVE) registered with the Clerk of
the House of Representatives on April 17, 1972. It is the separate segregated fund of the
Intemational Brotherhood of Teamsters.

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 audit findings summarized below were presented to DRIVE at the completion of
fieldwork on June 11, 2002 and later in the interim audit report. DRIVE’s responses to the
findings are contained in the audit report.

FAILURE TO MAINTAIN CONTRIBUTOR AUTHORIZATIONS - 11 CFR §104.14(b)(1). DRIVE
failed to maintain written contributor authorizations for approximately 12% of its contributors.
The majority of DRIVE’s contributions are received through payroll deduction.

In response to the interim audit report, DRIVE representatives provided most of the
missing contributor authorizations to correct this matter, and stated that it has instituted specific
filing and flagging procedures to ensure that all contributor authorizations are properly
maintained, which includes the use of electronic imaging of contributor authorization cards.

DISCLOSURE OF RECEIPTS — 11 CFR §§104.3(a)(4)(i) and (v), 100.12. DRIVE did not itemize
approximately 15% of total contributions from individuals that required itemization. In addition,
12% of the itemized contributions from individuals were disclosed with incorrect aggregate year-
to-date amounts. Finally, DRIVE received refunds totaling $13,250 that were disclosed as from
Amalgamated Bank rather than the name of the committees making the refunds.

In response to the interim audit report, DRIVE representatives filed amended Schedules
A which corrected the problems noted above, and stated that it has instituted changes in its
accounting procedures to ensure that DRIVE will contact contributors to obtain required
information when contributions are received without accompanying contributor detail.

DISCLOSURE OF DEBTS AND OBLIGATIONS ~ 11 CFR §§104.11(a) and (b). DRIVE failed to
disclose debts to 11 vendors that totaled $224,303. No Schedules D were filed to disclose debts
owed by DRIVE during the audit period. Subsequent to the exit conference, DRIVE
representatives filed amended Summary Pages and Schedules D that corrected the disclosure of
debts and obligations. In the interim audit report, the Audit staff recommended no further action.

Page 1 of 11
Approved October 4, 2002




FEDERAL ELECTION COMMISSION
WASHINGTON, DC 20463

AR#01-30

REPORT OF THE AUDIT DIVISION
ON
DEMOCRAT REPUBLICAN INDEPENDENT VOTER EDUCATION

I. BACKGROUND

A. AUDIT AUTHORITY

This report is based on an audit of Democrat Republican Independent
Voter Education (DRIVE), the separate segregated fund of the International Brotherhood
of Teamsters, undertaken by the Audit Division of the Federal Election Commission (the
Commission) in accordance with the provisions of the Federal Election Campaign Act of
1971, as amended (the Act). The audit was conducted pursuant to Section 438(b) of Title
2 of the 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 of this title. Prior to conducting any audit under this subsection, the
Commission shall 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.

B. AUDIT COVERAGE

The audit covered the period January 1, 1999 through December 31, 2000.
During this period, DRIVE reported a beginning cash balance of $400,564; total receipts
for the period of $9,126,040; total disbursements for the period of $9,000,574; and an
ending cash balance of $526,030.

Cc. COMMITTEE ORGANIZATION

DRIVE registered with the Clerk of the House of Representatives on April
17, 1972. At the beginning of the audit period, Tom Sever was its Treasurer. On March
30, 1999, he was succeeded by C. Thomas Keegel. Mr. Keegel continues as Treasurer.
DRIVE maintains its headquarters in Washington, D.C. and it achieved multi-candidate
status on April 30, 1975.

Page 3 of 11
Approved October 4, 2002


FEDERAL ELECTION COMMISSION
WASHINGTON, D.C. 20463

October 16, 2002

MEMORANDUM

TO: Ron M. Harris
Press Officer
Press Office

FROM: Joseph F. Stoltz

Assistant Staff Director
Audit Division

SUBJECT: Public Issuance of the Final Audit Report on Democrat Republican
Independent Voter Education

Attached please find a copy of the final audit report and related documents on
Democrat Republican Independent Voter Education that was approved by the
Commission on October 4, 2002.

Informational copies of the report have been received by all parties involved and
the report may be released to the public on October 16, 2002.

Attachment as stated

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



This matter was discussed with DRIVE representatives at the exit
conference. DRIVE representatives stated that they would continue working to resolve

this matter.

In the interim audit report, the Audit staff recommended that DRIVE
either locate the missing contributor authorizations and provide them to the Audit staff, or
demonstrate that it has identified all contributors for which a contributor authorization is
not available, and has obtained for its files a contributor authorization for each
contributor. Further, it was recommended that DRIVE re-evaluate its filing system and
describe changes to be made to address this problem.

In response to the interim audit report, DRIVE was able to locate and
provide for our review most of its missing contributor authorizations. Further, DRIVE’s
response stated that it has instituted procedures to ensure that all contributor
authorizations are properly maintained, including the use of electronic imaging of
contributor authorization cards and specific filing and flagging procedures to ensure that
each contributor has on file an up to date and complete authorization card.

B. DISCLOSURE OF RECEIPTS

Section 104.3(a)(4)(i) of Title 11 of the Code of Federal Regulations
states, in relevant part, that the identification of each contributor and the aggregate year-
to-date total for such contributor shall be reported for each person who makes a
contribution to the reporting committee during the reporting period, whose contribution
or contributions aggregate in excess of $200 per calendar year, together with the date of
receipt and amount of any such contributions.

Section 104.3(a)(4)(v) of Title 11 of the Code of Federal Regulations
states, in relevant part, that the identification of each contributor and the aggregate year-
to-date total for such contributor shall be reported for each person who provides a refund
to the reporting committee in an aggregate amount in excess of $200 within the calendar
year, together with the date and amount of any such receipt.

Section 100.12 of Title 11 of the Code of Federal Regulations defines
identification, in the case of an individual, as his or her full name, including: First name,
middle name or initial, if available, and last name; mailing address; occupation; and the
name of his or her employer; and, in the case of any other person, the person’s full name
and address.

1. Reporting of Contributions from Individuals

The Audit staff reviewed all contributions from individuals
requiring itemization and determined that DRIVE did not itemize $24,618, or
approximately 15% of the $163,512 total contributions that required itemization.

Page 6 of 11
Approved October 4, 2002


presented, it was concluded that they were materially complete and fieldwork began
immediately. 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.

Il. AUDIT FINDINGS AND RECOMMENDATIONS

A. FAILURE TO MAINTAIN CONTRIBUTOR AUTHORIZATIONS

Section 104.14(b)(1) of Title 11 of the Code of Federal Regulations states
that each political committee required to file any report or statement under this subchapter
shall maintain records, including bank records, with respect to the matters required to be
reported, including vouchers, worksheets, receipts, bills and accounts, which shall
provide in sufficient detail the necessary information and data from which the filed
reports and statements may be verified, explained, clarified, and checked for accuracy and

completeness.

Sample reviews of contributions from individuals revealed that DRIVE
was missing contributor authorizations for approximately 39% of its contributors. The
contributor authorization cards are the members’ written authorizations to have
contributions deducted from their payroll check. DRIVE files its contributor
authorization cards first in numerical order by union local. Then, within each local, the
cards are sorted alphabetically by employer name. Finally, within each company, the
cards are sorted alphabetically by member name. DRIVE does not require new
contributor authorization cards whenever a member changes union local or employer. It
updates this information on its database.

It appears that the missing authorizations could have resulted from
misplaced cards, cards not filed, or cards that were not moved to the new file location for
members who have either changed their union local or employer. The lack of a complete
set of contributor authorization cards resulted in the Audit staff being unable to verify that
some contributions were permissibly received, to determine the quality of the data entry
of DRIVE’s receipts database, and to fully test the disclosure of information on the
reports filed with the Commission.

During fieldwork, DRIVE took action to correct this problem. DRIVE
contacted its local affiliates and had them fax their copies of the contributor
authorizations. Local union affiliates have also sent new contributor authorization cards
to DRIVE to replace those that were missing. Also, DRIVE representatives were also
able to locate some of the missing contributor authorizations of members that were filed
by their previous employer or local. These efforts by DRIVE reduced the error rate to

approximately 12%.

Page 5 of 11
Approved October 4, 2002



Page 2 of 11
Approved October 4,2002




FEDERAL ELECTION COMMISSION

WASHINGTON DC 20463

October 8, 2002

Mr. C. Thomas Keegel, Treasurer

Democrat Republican Independent Voter Education
25 Louisiana Avenue, N.W.

Washington, DC 20001

Dear Mr. Keegel:

Attached, please find the Report of the Audit Division on Democrat Republican
Independent Voter Education. The Commission approved this report on October 4, 2002.

The Commission approved Final Audit Report will be placed on the public record
on October 14, 2002. Should you have any questions regarding the public release of this
report, please contact the Commission’s Press Office at (202) 694-1220.

Any questions you may have related to matters covered during the audit or in the
report should be directed to Bill Antosz or Alex Boniewicz of the Audit Division at (202)
694-1200 or toll free at (800) 424-9530.

Sincerely,
Sincerely,

} hy
/” ‘Joseph F. Stoltz “

: / Assistant Staff Director
/ Audit Division

Attachment as stated

ec: Cory Rubin, Counsel for DRIVE

Page 9 of 11

Approved, R180 th 2002
Approved October 4,2002


DEMOCRAT REPUBLICAN INDEPENDENT VOTER EDUCATION

CHRONOLOGY
Audit Fieldwork April 15, 2002 — June 11, 2002
Interim Audit Report to Committee August 5, 2002
Response Received to the Interim Audit Report September 23, 2002
Final Audit Report Approved October 4, 2002
Page 11 of 11

Approved October 4, 2002


REPORT OF THE AUDIT DIVISION
ON

DEMOCRAT REPUBLICAN
INDEPENDENT VOTER EDUCATION

Approved on October 4, 2002

FEDERAL ELECTION COMMISSION
999 E STREET, N.W.
WASHINGTON, D.C.





In addition, for $16,062, or approximately 12% of the $138,894 in
contributions from individuals that were itemized, DRIVE incorrectly disclosed the
aggregate-year-to-date amount.

These errors appear to have resulted primarily from the following.
DRIVE did not itemize some contributions in which the wording “Batch Import Receipt
On ‘Date’” was entered in the comment column on its receipts database. Further, some
contributions with such a comment were excluded from aggregate totals for contributors,
causing additional itemization errors as well as disclosure errors. It appears that the
checks from the local unions and companies transmitting these contributions were not
accompanied by detailed contributor information. The missing detail was apparently
submitted after the affected disclosure reports were prepared and, although the
information was entered into the database, DRIVE’s disclosure reports were not
amended’. In addition, DRIVE did not disclose any contribution that was required to be
itemized which had been deposited on either August 10 or December 15, 2000. Further,
the amounts of these contributions were not included in the aggregate year-to-date totals
for those contributors requiring itemization.

2. Disclosure of Refunds of Contributions Made to Federal
Candidates and Other Political Committees

DRIVE received five refunds totaling $13,250 that were disclosed
as Amalgamated Bank rather than the name of the committees making the refund.

At the exit conference, the Audit staff advised DRIVE
representatives of the above matters and provided schedules that detailed the disclosure
errors. DRIVE’s representatives could offer no explanation for these disclosure errors.

In the interim audit report, the Audit staff recommended that
DRIVE file amended Schedules A (Itemized Receipts) by reporting period to correct the
itemization and disclosure problems noted above. Further, it was recommended that
DRIVE describe changes it has made to obtain and disclose contributions that are
received without the accompanying contributor detail.

In response to the interim audit report, DRIVE filed amended
Schedules A to correct the itemization and disclosure problems. Further, DRIVE stated
that it has instituted changes in its accounting procedures to ensure that DRIVE will
contact contributors to obtain required information for contributions received without
accompanying contributor detail.

. DRIVE apparently disclosed all contributions submitted without detail as unitemized on its
disclosure reports.

Page 7 of 11
Approved October 4, 2002