Part II
Overview of Committee
Committee Organization

Important Dates Idaho Republican Party

e Date of Registration September 19, 1983

e Audit Coverage January 1, 2001 — December 31, 2002

Headquarters Boise, Idaho

Bank Information

e Bank Depositories 2

e Bank Accounts 1 Federal and 3 Non-federal Checking
Accounts

Treasurers

e — Treasurer When Audit Was Conducted Andrew Fales

@ Treasurer During Period Covered by Audit | Lela Pumphrey

Management Information

Attended FEC Campaign Finance Seminar | Yes

e Used Commonly Available Campaign Yes
Management Software Package

e Who Handled Accounting and Paid Staff
Recordkeeping Tasks

Overview of Financial Activity

(Audited Amounts)

Cash on Hand @ January 1, 2001 $ 4,857
¢ Contributions from Individuals 402,552
Transfers from Non-federal Accounts for Joint Activity 395,706
¢ Contributions from Political Committees 18,361
e Transfers from Affiliated/Other Party Committees 42,020
© Offsets to Operating Expenditures 93,615

Total Receipts $ 952,254
© Operating Expenditures 649,080
e Transfers to Affiliated Committees 109,000
e Contributions to Federal Candidates/Committees 47,278
¢ Contribution Refunds 19,170
e Other Disbursements 119,847

Total Disbursements $ 944,375

Cash on Hand @ December 31, 2002 $ 12,736



stated that on April 15, 2005, letters were sent to contributors requesting the missing
information and they will disclose the information as responses are received. Once the
IRP discloses this information, they will have complied with the interim audit report
recommendation.

[Finding 3. Disclosure of Payroll Disbursements

Summary

The IRP did not correctly disclose the disbursements associated with 80% of the dollar
total of its disbursements for payroll. Payments disclosed were to the payroll vendor and
did not include the required memo entries with information about the staff person who
ultimately received these payments. In response to the Audit staff’s recommendation, the
IRP filed amended Schedules H4 which corrected these errors.

Legal Standard

A. Reporting Operating Expenditures. When operating expenditures to the same
person exceed $200 in a calendar year, the committee must report the:
e Amount;
e Date when the expenditures were made;
e Name and address of the payee; and
¢ Purpose (a brief description of why the disbursement was made).
2 U.S.C. §434(b)(5)(A) and 11 CFR §104.3(b)(3)(i).

B. Reporting Allocable Expenses. A political committee that allocates federal/non-
federal expenses must report each disbursement it makes from its federal account (or
separate allocation account) to pay for a shared federal/non-federal expense. Committees
report these kinds of disbursements on Schedule H-4. 11 CFR §104.10(b)(4).

Facts and Analysis

The IRP made 52 payments ($250,197) to its payroll vendor, Team America Human
Resources (TAHR), during the period covered by the audit. For 42 ($200,335) of these
52 payments, approximately 80%, the IRP did not disclose the name and address of the
staff who received the resulting payroll checks. Thirty-nine of these 42 payments
($185,025) were disclosed as being made to TAHR on Schedules H4 (Joint Federal/Non-
Federal Activity Schedule). Information about the employees that were paid should have
been disclosed as memo entries, including the employees’ name and address, as well as
the date, amount and purpose of the payments. The other three (42-39) payments
($15,310) were inadvertently disbursed from the non-federal account and were not
disclosed.*

The IRP disclosed the other 10 (52-42) payments, totaling $49,862 ($250,197-$200,335),
on Schedules B -- instead of Schedules H4. For these payments, made between July and
December 2002, the IRP disclosed the payee as TAHR; and, did include as memo entries,

4 ‘The IRP became aware of these payments being made from the non-federal account prior to audit
fieldwork and made the appropriate corrective transfers.


Part IV
Findings and Recommendations

|Finding 1. Misstatement of Financial Activity

Summary

A comparison of the IRP’s reported figures to its bank records revealed that the IRP had
misstated receipts and disbursements on its disclosure reports for calendar year 2002. In
response to the Audit staff’s recommendation, the IRP filed corrective amended reports.

Legal Standard

Contents of Reports. Each report must disclose:

e 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

e Certain transactions that require itemization on Schedules A (Itemized Receipts) or
Schedule B (Itemized Disbursements). 2 U.S.C. §434(b)(1), (2) and (4).

Facts and Analysis

The Audit staff reconciled the IRP’s reported activity to its bank records and determined
that there was a net understatement of both receipts and disbursements for calendar year
2002 in the amount of $20,834. The following chart details the discrepancies between
the Commission disclosure reports filed by the IRP and its bank records.

2002 Committee Activity
Reported Bank Records Discrepancy
Opening Cash Balance at $573 $373 ($200)
January 1, 2002 overstated
Receipts $570,084 $590,918 $20,834
understated
Disbursements $557,721 $578,555 $20,834
understated
Ending Cash Balance at $12,936 $12,736 ($200)
December 31, 2002 overstated.
Receipts
The understatement of receipts was the net result of the following:
¢ Unreported transfer from a non-federal account in April 2002 $14,312
© Unreported contributions from individuals 14,075
e Over reported transfers from non-federal accounts ( 8,910)
e Unexplained Difference 1,357

Total understatement $20,834



Part III
Summaries

Findings and Recommendations

Finding 1. Misstatement of Financial Activity

A comparison of the IRP’s reported figures to its bank records revealed that the IRP had
misstated receipts and disbursements on its disclosure reports for calendar year 2002. In
response to the Audit staffs recommendation, the IRP filed corrective amended reports.
(For more detail, see p.4)

Finding 2. Disclosure of Occupation/Name of Employer

A review of receipts indicated that the IRP did not disclose the occupation and/or name
of employer for approximately 31% of contributions from individuals itemized on its
disclosure reports and no “best efforts” to obtain, maintain and submit the information
was documented. In response to the interim audit report, the IRP stated that letters were
sent to each contributor requesting the required information. (For more detail, see p.5)

Finding 3. Disclosure of Payroll Disbursements

The IRP did not correctly disclose the disbursements associated with 80% of the dollar
total of its disbursements for payroll. Payments disclosed were to the payroll vendor and
did not include the required memo entries with information about the staff person who
ultimately received these payments. In response to the Audit staff’s recommendation, the
IRP filed amended Schedules H4 which corrected these errors. (For more detail,

see p. 7)


Legal Standard

A. Required Information for Contributions from Individuals. For each itemized
contribution from an individual, the committee must disclose the contributor’s occupation
and the name of his or her employer. 2 U.S.C. §434(b)(3)(A) and 11 CFR §100.12.

B. Best Efforts Ensures Compliance. When the treasurer of a political committee
shows that the committee used best efforts (see below) to obtain, maintain, and submit
the information required by the Act, the committee’s reports and records will be
considered in compliance with the Act. 2 U.S.C. §432(h)(2)().

C. Definition of Best Efforts. The treasurer and the committee will be considered to
have used “best efforts” if the committee satisfied all of the following criteria:
e All written solicitations for contributions included:
o Acclear request for the contributor's full name, mailing address, occupation,
and name of employer; and
o The statement that such reporting is required by Federal law.
¢ Within 30 days after the receipt of the contribution, the treasurer made at least one
effort to obtain the missing information, in either a written request or a
documented oral request.
© The treasurer reported any contributor information that, although not initially
provided by the contributor, was obtained in a follow-up communication or was
contained in the committee’s records or in prior reports that the committee filed
during the same two-year election cycle. 11 CFR §104.7(b).

Facts and Analysis

The Audit staff reviewed contributions from individuals itemized on Schedules A
(Itemized Receipts) and determined that IRP did not adequately disclose the occupation
and/or name of employer for approximately 31% of them. The word “information
requested” was filled in for 90% of these entries, but the IRP was unable to demonstrate
that it had made any follow-up requests for the missing information. Also, no samples of
solicitation devices were maintained by IRP that would have allowed the Audit staff to
verify what information had been requested initially.

An IRP representative stated that the software used by IRP automatically entered
“information requested” in the occupation and/or name of employer field when left blank
and that no further actions had been taken by IRP staff. He added that this problem has
since been corrected, and written procedures are now in place, a copy of which was
provided to the Audit staff. The Audit staff's review of these written procedures
determined that, if followed, they would be adequate.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that the IRP attempt to contact those individuals for whom
the required information was missing, in accordance with 11 CFR §104.7; provide
documentation of such effort, such as copies of letters to the contributors and/or phone
logs of oral requests; and, file amended Schedules A to disclose any information obtained
from those individuals.’ In response to the interim audit report, an IRP representative

3 See footnote 2.


FEDERAL ELECTION COMMISSION
Washington, DC 20463

June 21, 2005

MEMORANDUM

To: Robert W. Biersack
Press Officer

From: Joseph F. Stoltz ;
Assistant Staff c neéctor
Audit Division’ /
Subject: Public Issuance of the Audit Report on the Idaho Republican Party

Attached please find a copy of the audit report and related documents on
the Idaho Republican Party, which was approved by the Commission on June 15, 2005.

The report may be released to the public on June 22, 2005.

Attachment as stated

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


the employees’ name and address, as well as the date, amount and purpose of the
payments.

An IRP representative stated that, at the time, a problem with the software used by the
IRP did not allow them to create memo entries on Schedules H4. As a result, the IRP
disclosed some of the payroll disbursements on Schedules B. The Audit staff presented
this matter to the IRP representative during the exit conference. The IRP representative
stated that he thought the problem has been corrected and memo entries can now be
created on Schedules H4.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that the IRP amend its reports to include as memo entries
on Schedules H4 (Joint Federal/Non-Federal Activity) the required information for the 42
payroll disbursements noted above. It was further recommended that the 10
disbursements previously disclosed on Schedules B be included on amended Schedules

H45

The IRP filed amended schedules H4 which corrected these errors.

5 See footnote 2.


Disbursements
The understatement of disbursements was the net result of the following:

¢ Two unreported disbursements to a non-federal candidate

during May 2002 $20,278
e Disbursements not reported 17,088

Reported disbursements not supported by a check or debit memo ( 10,356)

Reported transfer to a non-federal account not supported by a

check or debit memo ( 5,966)
e Unexplained Difference (__210)

Net understatement $20,834

An IRP representative wrote that it appears that the two unreported transfers to a non-
federal candidate in May 2002 ($20,278) were “...mistakenly believed to have been
written as a transfer to our state (nonfederal) account” and that “...sometimes amounts
transferred from the federal to the nonfederal account were ‘netted’ against amounts that
were transferred from the nonfederal to the federal account and only the net transfer was
disclosed.” He further explained that it appears that these two checks were offset against
the $14,312 unreported transfer from a non-federal account in April 2002 resulting in the
reported net transfer of $5,966 ($20,278 - $14,312) from the federal account to the non-
federal account. He concluded that “[w]hen the truth about these checks was surely
discovered (probably when the applicable state report was prepared in the fall of 2002), it
must not have been properly noted that the FEC reports needed to be amended to show
the correct information.”

Interim Audit Report Recommendation and Committee Response

The Audit staff recommended that the IRP file complete amended disclosure reports for
2002, by reporting period, to correct the misstatements noted above.”

The IRP filed corrective amended reports.

[Finding 2. Disclosure of Occupation/Name of Employer

Summary

A review of receipts indicated that the IRP did not disclose the occupation and/or name
of employer for approximately 31% of contributions from individuals itemized on its
disclosure reports and no “best efforts” to obtain, maintain and submit the information
was documented. In response to the interim audit report, the IRP provided a copy of a
letter mailed to each contributor requesting the required information.

2 Since the IRP filed disclosure reports electronically beginning in calendar year 2001, complete electronic
amended reports were required.


Part I
Background

Authority for Audit

This report is based on an audit of the Idaho Republican Party (IRP) 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 conducting any audit under this subsection, the
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. 2 U.S.C. §438(b)

Scope of Audit

This audit examined:

. The receipt of excessive contributions and loans.

. The receipt of contributions from prohibited sources.

. Disclosure of contributions and other receipts.

. Disclosure of disbursements debts and obligations.

. Disclosure of expenses allocated between federal and non-federal accounts.
. Consistency between reported figures and bank records.

. The completeness of records.

. Other committee operations necessary to the review.

OAIDMNAPWNE

Changes to the Law

On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act
of 2002 (BCRA). The BCRA contains many substantial and technical changes to the
federal campaign finance law. Most of the changes became effective November 6, 2002.
Except for the period November 6, 2002, through December 31, 2002, the period covered
by this audit pre-dates these changes. Therefore, the statutory and regulatory
requirements cited in this report are primarily those that were in effect prior to November
6, 2002.


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Changes to the Law

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. Disclosure of Occupation/Name of Employer
Finding 3. Disclosure of Payroll Disbursements

Page

NN

wn


Report of the Audit Division on

the Idaho Republican Party

January 1, 2001 - December 31, 2002

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.

' 2 U.S.C. §438(b).

About the Committee (p. 2)

The Idaho Republican Party is a state party committee

headquartered in Boise, ID. For more information, see the
chart on the Committee Organization, p. 2.

Financial Activity (p. 2)
e Receipts

°
°

°

fe}

°
fe}

Contributions from Individuals
Transfers from Non-federal Accounts
for Joint Activity

Contributions from Political
Committees

Transfers from Affiliated/Other Party
Committees

Offsets to Operating Expenditures
Total Receipts

e Disbursements

°
°
fe}

fe}
fe}
°

Operating Expenditures

Transfers to Affiliated Committees
Contributions to Federal Candidates/
Committees

Contribution Refunds

Other Disbursements

Total Disbursements

$ 402,552
395,706

18,361
42,020
93,615
$ 952,254

$ 649,080
109,000
47,278

19,170
119,847
$ 944,375

Findings and Recommendations (p. 3)

© Misstatement of Financial Activity (Finding 1)

© Disclosure of Occupation/Name of Employer (Finding 2)

e Disclosure of Payroll Disbursements (Finding 3)