Interim Audit Report of the 

Audit Division on the Oklahoma 

Democratic Party^ 

(January 1, 2011 - December 31, 2012) 

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. 

About the Conunittee (p. 2) 

The Oklahoma Democratic Party is a state party committee 

headquartered in Oklahoma City, Oklahoma. For mole information, 

see the chart on Committee Organization, p. 2. 

Financial Activity (p. 3) 

• Receipts 

Contributions from Individuals 

Contributions from Political 

Committees 

Transfers from Affiliated/Other 

Party Committees 

Offsets to Operating Expenditures 

Transfers from Non-federal & 

Levin Funds 

Total Receipts 

Disburseinents 

Operating Expenditures 

Transfers to Affiliated/Other Party 

Committees 

Federal Election Activity 

Other Disbursements 

o 

o 

o 

o 

o 

o 

o 

o 

Total Disbursements 

Levin Receipts 

Levin Disbursements 

$2S2,6S1 

144,946 

289,642 

416 

119,124 

$806,779 

$803,118 

7,000 

17,219 

350 

$ 827,687 

$54,222 

$63,754 

Findings and Reconunendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Misstatement of Financial Activity - Levin Fund (Finding 2) 

• Reporting of Debts and Obligations (Finding 3) 

• Recordkeeping for Employees (Finding 4) 

' On May 18,2011, the Commission received a Statement of Organization from the Democratic Party of 

Oklahoma officially changing its name to Oklahoma Democratic Party. 

' On September 1,2014, the Federal Election Campaign Act of 1971, as amended ("the Act"), was 

transferred from Title 2 of the United States Code to the new Title 52 of the United States Code. 

^ 52 U.S.C. §3011 Kb) (formerly 2 U.S.C. §438(b)). 
Interim Audit Report of the Audit 

Division on the 

Oklahoma Democratic Party 

(January 1, 2011 - December 31, 2012) 
Table of Contents 

Page 

Parti. Background 

AuAority for Audit 1 

Scope of Audit 1 

Conunission Guidance 1 

Part n. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 3 

Part III. Summaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 6 

Finding 2. Misstatement of Financial Activity - Levin Fund 9 

Findings. Reporting of Debts and Obligations 11 

Finding 4. Recordkeeping for Employees 12 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Oklahoma Democratic Party (GDP), 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 S2 U.S.C. §30111(b) (formerly 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 52 U.S.C. §30104 (formerly 2 

U.S.C. §434). Prior to conducting any audit under this subsection, Ae 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. 52 U.S.C. §30111(b) (formerly 2 U.S.C. §438(b)). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the disclosure of individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; 

3. the disclosure of expenses allocated between federal, non-federal, and Levin 

accounts; 

4. the consistency between reported figures and bank records; 

5. the completeness of records; and 

6. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission's "Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission," several state party committees 

unaffiliated with GDP requested early consideration of a legal question raised during 

audits covering the 2010 election cycle. Specifically, the Commission addressed whether 

monthly time logs under 11 CFR § 106.7(d)(1) were required for 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 funds. 

Exercising its prosecutorial discretion, however, die Commission decided it will not 

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

to account for employee salaries paid with 100 percent federal funds and reported as 

such. The Audit staff informed GDP representatives of the payroll log requirement and 

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

payroll logs for salaries paid and correctly reported as 100 percent federal. This audit 

report does not include any findings or recommendations with respect to GDP employees 

paid with 100 percent federal funds and reported as such. 
Partn 

Overview of Cominittee 

Committee Organization 

Important Dates 

• Date of Registration October 9,1984 

• Audit Coverage January 1,2011 - December 31,2012 

Headquarters Oklahoma City, Oklahoma 

Bank Information 

• Bank Depositories One 

• Bank Accounts Three Federal; One Non-federal; One 

Levin 

Treasurer 

• Treasurer When Audit Was Conducted Donna Russell 

e Treasurer During Period Covered by Audit Donna Russell May 14,2011 - Present 

Linda Gray Murphy March 20,2008 -

May 13,2011 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 
Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1,2011 $28,041 

Receipts 

o Contributions from Individuals 252.651 

o Contributions from Political Committees 144,946 

o Transfers from Affiliated/Other Party 

Committees 

289.642 

o Offsets to Operating Expenditures 416 

o Transfers from Non-federal & Levin Funds 119.124 

Total Receipts $806,779 

Disbursements 

o Operating Expenditures 803.118 

o Transfers to Affiliated/Other Party 

Committees 

7.000 

o Federal Election Activity 17.219 

o Other Disbursements 350 

Total Disbursements $827,687 

Cash-on-hand @ December 31,2012 $7,133 

Levin Cash-on-hand @ January 1,2011 $10,705 

Total Levin Receipts $54,222 

Total Levin Disbursements $63,754 

Levin Cash-on-hand @ December 31,2012 $1,173 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

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

records revealed a misstatement for the beginning cash balance in 2011 and receipts and 

disbursements in 2011 and 2012. Beginning cash on January 1,2011, was understated by 

$7,537. For 2011, OOP understated its receipts by $6,977 and its disbursements by 

$12,759. In 2012, ODP understated its receipts by $12,889 and its disbursements by 

$10,450. Subsequent to the exit conference, ODP amended its reports which materially 

corrected the misstatement for 2011 but not for 2012. The Audit staff recommends that 

ODP amend its disclosure reports to correct the remaining misstatement for 2012. 

(For more detail, see p. 6.) 

Finding 2. Misstatement of Financial Activity - Levin 

Fund 

During audit fieldwork, a comparison of ODP's reported Levin activity with bank records 

revealed a misstatement of its cash balance, receipts and disbursements for 2011 and 

2012 Levin activity. For 2011, ODP understated its Levin receipts by $6,015 and its 

Levin disbursements by $8,624. The beginning cash balance for the Levin account in 

2011 was also understated by $5,705. In 2012, ODP understated its Levin receipts by 

$31,000 and its Levin disbursements by $15,422. The ending cash balance for 2012 was 

overstated by $3,984. The Audit staff recommends that ODP amend its disclosure 

reports to correct the Levin misstatements. 

(For more detail, see p. 9.) 

Finding 3. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff determined that ODP failed to report debts and 

obligations owed to five vendors totaling $56,387 on Schedule D (Debts and 

Obligations). Subsequent to the exit conference, ODP amended its reports whidi 

correctly disclosed $17,953 in debts and obligations previously not reported on Schedule 

D. Therefore, the Audit staff recommends that ODP amend its reports to correctly 

disclose the remaining $38,434 in debts and obligations on Schedule D. 

(For more detail, see p. 11.) 

Finding 4. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that ODP did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2011 and 2012, the Audit staff originally 

identified payments to ODP employees totaling $201,551, for which ODP did not 

maintain monthly payroll logs. This consisted of payroll which was allocated with 

federal and non-federal funds. There was no payroll paid exclusively with non-federal 

funds. Subsequent to the exit conference, ODP amended its reports to disclose $79,437 
of the employees salaries, previously reported as allocated expenses, as 100 percent 

federal expenses. 

The Audit staff verified the change in ODP's amended reports, and in light of the 

Commission's guidance with respect to recordkeeping for employees paid with 100 

percent federal funds and reported as such, the Audit staff concludes that no further 

action is necessary for the $79,437 in employees salaries. 

For the remaining salaries of $122,114 paid with an allocation of federal and non-federal 

funds, the Audit staff recommends that ODP provide monthly payroll logs that indicate 

the time spent in connection with a federal election. Absent the submission of 

amendments or the provision of monthly time logs, the Audit staff recommends that ODP 

implement a plan to maintain such monthly payroll logs in the future. 

(For more detail, see p. 12.) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity 

Summary 

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

records revealed a misstatement for the beginning cash balance in 2011 and receipts and 

disbursements in 2011 and 2012. Beginning cash on January 1,2011, was understated by 

$7,537. For 2011, ODP understated its receipts by $6,977 and its disbursements by 

$12,759. In 2012, ODP understated its receipts by $12,889 and its disbursements by 

$10,450. Subsequent to the exit conference, ODP amended its reports which materially 

corrected the misstatement for 2011 but not for 2012. The Audit staff recommends that 

ODP amend its disclosure reports to correct the remaining misstatement for 2012. 

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; 

• the total amount of disbursements for the reporting period and for the calendar year; 

and 

• certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104(b)(l), (2), (3), (4) and (5)) 

(formerly 2 U.S.C. §434(b)(l), (2), (3), (4) and (5)). 

Facts and Analysis 

A. Facts 

As part of audit fieldwork, the Audit staff reconciled ODP's rqiorted fmancial activity 

with its bank records for 2011 and 2012. The reconciliation identified that ODP 

misstated its cash balance, receipts and disbursements for 2011 and 2012. The following 

charts outline the discrepancies between ODP's disclosure reports and its bank records, 

and the succeeding paragraphs explain why these discrepancies occurred. 
2011 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2011 

$20,504 $28,041 $7,537 

Understated 

Receipts $305,062 $312,039 $6,977 

Understated 

Disbursements $310,126 $322,885 $12,759 

Understated 

Ending Cash Balance @ 

December 31,2011 

$15,490'' $17,195 $1,705 

Understated 

The beginning cash balance was understated by $7,S37 and is unexplained but likely 

resulted from prior period discrepancies. 

The understatement of receipts resulted from the following: 

• Contributions from individuals not reported 

• Transfers from Levin/Non-federal accounts not reported 

or amount incorrectly reported 

• Reported contributions from individuals not supported by 

deposit 

Net Understatement of Receipts 

+ 

+ 

$1,765 

5,602 

390 

The understatement of disbursements resulted from the following: 

• Bank fees, other disbursements and cash withdrawal not reported + $2,443 

• Payments for insurance, event expenses, phone, 

financial services, and taxes not reported + 6,740 

• Payments for salaries and wages not reported + 1,591 

• Contribution refunds not reported + 5,010 

• Reported payments for taxes, consultant, telephone services, 

and other disbursements not supported by a check or debit ; 3.025 

Net Understatement of Disbursements + $12.759 

The $1,705 understatement of the ending cash balance resulted from the misstatements 

described above. 

2012 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2012 

$15,490 $17,195 $1,705 

Understated 

Receipts $481,851 $494,740 $12,889 

Understated 

Disbursements $494,352 $504,802 $10,450 

Understated 

Ending Cash Balance @ 

December 31,2012 

$3,670' $7,133 $3,463 

Understated 

* ODP miscalculated Its ending cash balance by reporting a beginning cash balance In one report different 

than the ending cash balance of the previous report. This created a mathematical discrepancy of $S0. 

^ ODP miscalculated its ending cash balance by rqiortlng a beginning cash balance In one report different 

than the ending cash balance of the previous report. This created a mathematical dlscrq)ancy of $681. 
The understatement of receipts resulted from the following: 

• Contributions from individuals not reported 

• Transfers from Non-federal account not reported 

• Reported offsets not supported by deposit 

• Unexplained differences 

Net Understatement of Receipts 

The understatement of disbursements resulted from the following: 

• Bank fees and credit card payments not reported 

• Payments for rent, insurance, event expenses, telephone services, 

taxes and other disbursements not reported 

• Payments for salaries & wages not reported 

• Contribution to a political party and travel reimbursement 

not reported 

• Transfer to Non-federal account not reported 

• Reported bank fees, credit card and tax payments not supported 

by a check or debit 

• Reported payment for salaries and wages not supported by a 

check or debit 

• Reported payments for office supplies, shipping, telephone, 

consulting services, and other disbursements not supported by 

a check or debit 

Net Understatement of Disbursements 

8 

+ $5,387 

+ 13,135 

- 6,005 

+ 372 

+ 

+ $4,112 

+ 15.494 

+ 5,772 

+ 2,680 

+ 500 

- 5,495 

- 1,442 

11.171 

mm 

The $3,463 understatement of the ending cash balance resulted from the misstatements 

described above. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatements with ODP representatives at the exit 

conference. ODP representatives stated that they would respond after having time to 

review each issue. The Audit staff provided workpapers detailing all misstatements of 

financial activity to ODP representatives after the exit conference. Subsequent to the exit 

conference, ODP filed amended reports that materially corrected its financial activity for 

2011. For 2012, ODP filed amended reports but did not materially correct its financial 

activity. The amended reports did not preclude this matter from the audit report because 

the amendments were filed after the notification of the audit. 

The Audit staff recommends that, within 30 calendar days of service of this report, ODP 

amend its disclosure reports to correct the remaining misstatements noted above for 2012. 

ODP should adjust the cash-on-hand balance as necessary on its most recent report, 

noting that the adjustment is the result of prior-period audit adjustments. The Audit staff 

further recormnends that ODP reconcile the ending cash-on-hand balance of its most 

recent report to identify any subsequent discrepancies that may affect the recommended 

adjustment. 
Finding 2. Misstatement of Financial Activity - Levin 

Fund 

Summary 

During audit fieldwork, a comparison of ODP's reported Levin activity with bank records 

revealed a misstatement of its cash balance, receipts and disbursements for 2011 and 

2012 Levin activity. For 2011, ODP understated its Levin receipts by $6,015 and its 

Levin disbursements by $8,624. The beginning cash balance for the Levin account in 

2011 was also understated by $5,705. In 2012, ODP understated its Levin receipts by 

$31,000 and its Levin disbursements by $15,422. The ending cash balance for 2012 was 

overstated by $3,984. The Audit staff recommends that ODP amend its disclosure 

reports, to correct the Levin misstatements. 

Legal Standard 

Contents of Levin Reports. Each report must disclose: 

• The amount of cash-on-hand for Levin funds at the beginning and end of the 

reporting period; 

• The total amount of Levin fund receipts and disbursements (including allocation 

transfers) for the reporting period and for the calendar year; 

• Certain transactions that require itemization on Schedule L-A (Itemized Receipts of 

Levin Funds) or Schedule I^B (Itemized Disbursements of Levin Ftuids). 11 CFR 

§300.36 (b)(2)(B). 

Facts iand Analsrsis 

A. Facts 

As part of the audit fieldwork, the Audit staff reconciled ODP's reported Levin fimd 

financial activity with its Levin bank records for 2011 and 2012. The reconciliation 

identified that ODP misstated its cash balances, receipts and disbursements for 2011 and 

2012. The following charts outline the discrepancies between ODP disclosure reports 

and its Levin bank records, and the succeeding paragraphs explain why these 

discrepancies occurred. 

2011 Committee Levin Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2011 

$5,000 $10,705 $5,705 

Understated 

Receipts $17,207 $23,222 $6,015 

Understated 

Disbursements $20,583 $29,207 . $8,624 

Understated 

Ending Cash Balance @ 

December 31,2011 

$4,720° $4,720 $0 

The beginning cash balance was understated by $5,705 and is unexplained but likely 

resulted from prior period discrepancies. 

' ODP miscalculated its ending cash balance by reporting a beginning cash balance in one report different 

than the ending cash balance of the previous report. This created a mathematical discrepancy of $3,096. 
The understatement of receipts resulted from the following: 

• Transfer from a Federal account not reported 

• Contribution from an individual not reported 

Understatement of Levin-frmds Receipts 

The understatement of disbursements resulted from the following: 

• Transfer to a Federal account not reported 

• Transfer to the Non-federal account not reported 

• Payment to a vendor not reported 

Understatement of Levin-funds Disbursements 

10 

+ $1,015 

+ 5.000 

+ 

+ $5,600 

+' 2,009 

+ 1.015 

2012 Committee Levin Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2012 

$4,720 $4,720 $0 

Receipts $0 $31,000 $31,000 

Understated 

Disbursements $19,125 $34,547 $15,422 

Understated 

Ending Cash Balance @ 

December 31,2012 

$5,157' $1,173 $3,984 

Overstated 

The understatement of receipts resulted from the following: 

• Contributions from individuals not reported 

• . Receipt not reported 

Understatement of Levin-funds Receipts 

The understatement of disbursements resulted from the following: 

• Payments for event expenses and bank fees not reported 

• Transfers to a Federal account not reported 

• Reported transfer to the Federal account reported twice and 

not supported by a check or debit 

• Reported payment to a vendor reported twice and 

not supported by a check or debit 

Net Understatement of Levin-funds Disbursements 

+ $30,000 

+ 1.000 

± 

+ 

+ 

$10,015 

14,969 

4,562 

.5,000 

The $3,984 overstatement of the ending cash balance resulted from the misstatements 

described above. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the Levin fund misstatements with ODP representatives at the 

exit conference. ODP representatives stated that they would respond after having time to 

^ ODP miscalculated its ending'cash balance by reporting a beginning cash balance in one report different 

than the ending cash balance of the previous report. This created a mathematical discrepancy of $19,562. 
11 

review each issue. The Audit staff provided workpapers detailing the misstatements of 

Levin fund financial activity to ODP representatives after the exit conference. 

The Audit staff recommends that, within 30 calendar days of service of this report, ODP 

amend its disclosure reports to correct the Levin misstatements noted above. ODP should 

adjust the Levin cash balance as necessary on its most recent report, noting that the 

adjustment is the result of prior-period audit adjustments. The Audit staff further 

recommends that ODP reconcile the Levin cash balance on its most recent report to 

identify any subsequent discrepancies that could affect the recommended adjustment. 

I Finding 3. Reporting of Debts and Obligations 

Summfuy 

During audit fieldwork, the Audit staff determined that ODP failed to report debts and 

obligations owed to five vendors totaling $56,387 on Schedule D (Debts and 

Obligations). Subsequent to the exit conference, ODP amended its reports which 

correctly disclosed $17,953 in debts and obligations previously not reported on Schedule 

D. Therefore, the Audit staff recommends that ODP amend its reports to correctly 

disclose the remaining $38,434 in debts and obligations on Schedule D. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

52 U.S.C. §30104(b)(8) (formerly 2 U.S.C. §434(b)(8)), 11 CFR §§104.3(d) and 

104.11(a). 

B. Itemizing Debts and Obligations. 

• Once it has been outstanding 60 days from the date incurred, a debt of $500 or less 

must be reported on the next regularly scheduled report. 

• A debt excUding $500 must be disclosed in the report that covers the date on which 

the debt was incurred. 11 CFR §104.11(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit sta^ reviewed disbursement records and disclosure 

reports for proper reporting of debts and obligations. This review identified debts owed 

to five vendors totaling $56,387^ that ODP failed to report on Schedule D. Of these 

debts, $24,848 was owed to a credit card company; $17,953 was owed to two vendors 

relative to catering charges for a single event; $7,188 was owed to a printing company; 

and $6,398 was owed for the rental of a facility for an event in April 2012. These debts 

were outstanding for a range of 45 to 227 days from invoice to payment date. As of 

December 31,2012, $24,708 of this debt remained outstanding. ODP did not report any 

debt on Schedule D during the audit period. 

' Each debt in this amount was counted once, even if it required disclosure over multiple periods. In order 

for ODP to correctly file amended reports, schedules were provided that included the amount of each debt 

required to be reported for eadi reporting period. 
12 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the reporting of debts and obligations with ODP representatives 

and provided schedules detailing the transactions requiring disclosure. ODP 

representatives had no comments on this matter. Subsequent to the exit conference, ODP 

filed amended reports to correctly disclose $17,953 in debts and obligations on Schedule 

D; thus leaving $38,434 to be itemized on Schedule D. The amended reports did not 

preclude this matter from the audit report because the amendments were filed after 

notification of the audit. 

The Audit staff recommends that, within 30 calendar days of service of this report, ODP 

provide documentation demonstrating that the remaining $38,434 in debts and 

obligations discussed above did not require reporting on Schedule D. Absent such 

documentation, the Audit staff recommends ODP amend its disclosure reports to disclose 

these debts totaling $38,434 on Schedule D. 

Finding 4. Recordkeeping for Employees " 

Summary 

During audit fieldwork, the Audit staff determined that ODP did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2011 and 2012, the Audit staff originally 

identified payments to ODP employees totaling $201,551, for which ODP did not 

maintain monthly payroll logs. This consisted of payroll which was allocated with 

federal and non-federal funds. There was no payroll paid exclusively with non-federal 

funds. Subsequent to the exit conference, ODP amended its reports to disclose $79,437 

of the employees salaries, previously reported as allocated expenses, as 100 percent 

federal expenses. 

The Audit staff veriHed the change in ODP's amended reports, and in light of the 

Commission's guidance with respect to recordkeeping for employees paid with 100 

percent federal fiinds and report^ as such, the Audit staff concludes that no further 

action is necessary for the $79,437 in employees salaries. 

For the remaining salaries of $122,114 paid with an allocation of federal and non-federal 

funds, the Audit staff recommends that ODP provide monthly payroll logs that indicate 

the time spent in cormection with a federal election. Absent the submission of 

amendments or the provision of monthly time logs, the Audit staff recorrunends that ODP 

implement a plan to maintain such monthly payroll logs in the future. 

Legal Standard 

Maintenance of Monthly L(^. Party corrunittees must keep a monthly log of the 

percentage of time each employee spends in connection with a federal election. 

Allocaitions 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 be allocated as administrative costs; 
13 

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

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

• employees who spend none of their compensated time in a given month on federal 

election activities may be paid entirely with funds that comply with state law. 11 

CFR § 106.7(d)(1). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements for payroll. ODP did not 

maintain any monthly payroll logs or equivalent records to document the percentage of 

time each employee spent in connection with a federal election. These logs are required 

to document the proper allocation of federal and non-federal funds used to pay employee 

salaries and wages. For 2011 and 2012, ODP did not initially maintain monthly logs for 

$201,551^ in payroll.'^ This amount includes payroll for employees initially reported on 

Schedule H4 (Payments for Allocable Expenses) and paid with an allocation of federal 

and non-federal ^ds during the same month. Tliere was no payroll paid exclusively 

with non-federal funds. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the recordkeeping requirement with ODP representatives 

during the audit fieldwork and at the exit conference. ODP representatives asked 

questions for clarification and said they would respond after having time to review this 

issue. Subsequent to the exit conference, ODP representatives responded that these 

payroll expenditures were erroneously reported as shared federal/non-federal activity, 

instead of federal activity only. Further, ODP representatives stated that they plan to 

correct this error by comprehensively amending ODP's reports and disclosing these 

expenditures as strictly federal activity. Subsequent to the exit conference, ODP filed 

amended reports to disclose $79,437 in payroll on Schedule B, Line 30b (Federal 

Election Activity Paid Entirely with Federal Funds); thus, leaving $122,114 still on 

Schedule H4. The Audit staff verified that ODP had not made the transfers from its nonfederal account to cover the $79,437 now reported as ICQ percent federal riection 

activity. As such, no further action is necessary with respect to the payroll totaling 

$79,437 paid with 100 percent federal funds." The amended reports did not preclude this 

matter from the audit report because the amendments were filed after notification of the 

audit. 

' This amount includes unreported salary payments totaling $7,172 to empioyees that also received other 

salary payments during the audit period that were reported on Schedule H4. This amount is $1,111 

higher than the $200,440 salary presented in LRA 978 due to calculations based on salary transactions 

reported on Schedule H4 rather than salary transactions in ODP's database. 

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 Corrunission Consideration of a 

Legal Question, Page 1). Payroll amounts are stated net of taxes and fringe benefits. 

'' See Part I, Background, Commission Guidance, Request for Early Commission Consideration of a Legal 

Question.Page I. 
14 

The Audit staff lecommends that, within 30 calendar days of service of this report, ODP 

do the following for the remaining $122,114 in payroll report^ on Schedule H4: 

• provide evidence that it maintained monthly time logs to document the percentage 

of time an employee spent in connection with a federal election; or 

• implement a plan to maintain monthly payroll logs in the future.