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FEDERAL ELECTION COMMISSION

LN8/l2l587

• WASHINGTON, 0 C 20463

MEMORANDUM

TO: FRED EILAND

CHIEF, PRESS OFFICE

FROM: ROBERT J. COSTA ~./ ASSISTANT STAFF D{~~ AUDIT DIVISION

A87-4

December 15, 1987

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SUBJECT: PUBLIC ISSUANCE OF FINAL AUDIT REPORTCOMMITTEE TO ELECT ROBERT B. (ROB) SCRIBNER

Attached please find a coP1 of the final audit report on the

Committee to Elect Robert B. (Rob) Scribner which was approved by the Commission on December 7, 1987.

Informational copies of the report have been received by all

parties involved and the report may be released to the pUblic.

Attachment as stated

cc: FEC Library

" RAn ~ublic Disclosure

C' Office of General Counsel

ct:!'

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LN8/ll3087

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FEDERAL ELECTION COMMISSION

WASHINCTON, D.C 20463 A87-4

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REPORT OF THE AtDIT DIVISION

ON THE

COMMITTEE TO ELECT ROBERT B. (ROB) SCRIBNER

I. Background

A. Overview

This report is based on an audit of the Committee to

Elect Robert B. (Rob) Scribner ("the Committee"), undertaken by

the Audi t Division of the Federal Election Commission in

accordance with the Commission's audit policy to determine

whether there has been compliance with the provisions of the

'.n Federal Election Campaign Act of 1971, as amended ("the Act"). The audit was conducted pursuant to Section 438(b) of Title 2 of

o the Onited States Code which states, in part, that the Commission

may conduct audits and field investigations of any political committee required to file a report uneer Section 434 of this

title. Prior to conducting any audit under this section, the

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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.

The Committee registered with the Clerk of the House of

Representatives on April 5, 1984 and maintains its headquarters

in Santa Monica, California. . The audit covered the period January 1, 1985, through December 31, 1986. The Committee reported a cash balance on

January 1, 1985 of $660. 60 ·total receipts for the period of $390,979.70~ total disbursements for the period of $390,911.70~

and a closing cash balance on December 31, 1986 of $788.31.!!

This report is based on documents and working papers supporting each of its factual statements. They form part of the

record upon which the Commission based its decisions on the

matters in this report and were available to Commissioners and

appropriate staff for review.

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Reported totals do not calculate correctly due to the

reporting discrepancies noted in Finding II.A•
The Treasurer of the Committee during the period

coverea by the audit was Mr. Harrison W. Saumer (-the '1'reasurer W ) •

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B. Itey Personnel

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C. Scope

The audit included such tests as verification of total

reportea receipts and disbursements and individual transactionsJ

review of required supporting documentationJ analysis of

Committee debts and ob1igationsJ and such other audit procedures as' deemed necessary under the circumstances.

II. AucUt Findings and Recommendations

A. Misstatement of Financial Activity

Sections 434 (b) (1), (2) and (4) of Title 2 of the

Un! ted States Code state, in part, that each report shall

disclose the amount of cash-on-hand at the beginning of each

reporting period, the total amount of all receipts, and the total

amount of all disbursements for the period and calender year.

1. 1985 Bank Reconciliation

• The Audit staff performed a reconciliation of __ Committee bank accounts to reports filed and noted the following discrepancies. For the period January 1, 1985 through December

31, 1985, the reported disbursements were overstated by $2,796.55

and ending cash-on-hand was understated by $3,171.17• .......

c The misstatements relative to reported activity for calendar year 1985 resulted from: (a) $9,069.27 in

disbursements reported twice, lb) $6,272.72 in disbursements

(NET) not reported, and (c) 374.62 in receipts (NET) not

reported. .

2. 1986 Bank Reconciliation

The Audit staff performed a reconciliation of

Committee bank accounts to reports filed and noted the following discrepancies for the period January 1, 1986 through December 31,

1986. Beginning cash-an-hand was understated a net amount of

$3,171.17 (See Finding II.A.l.). Additionally, total receipts

vere overstated a net amount of $3,654.87J total disbursements

were overstated by a net amount of $175.68J and ending cash-onhand was overstated .by a net amount of $307.72 • . These misstatements were the result of numerous

.errors on several reports. In the case of receipts and
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aisbursements, reportea totals were found to be inaccurate on

several reports. Although the net differences are relatively small, the Audit staff laentified reporting errors (both

overstatements and understatements) of approximately $18,000.00

with respect to disbursements and approximately $19,000 and

$16,000, for receipts.

The Treasurer was providea with schedules

aetai1ing all of the above misstatements ana agreed to file the

necessary amendments.

In the Interim Audit Report, the Audit staff

recommended that the Committee submit comprehensive amendments

for 1985 and 1986 correcting these misstatements. On November 3,

1987, the Committee filed the requisite amendments for 1985 and

1986 correcting the misstatements.

Recommendation 11

The Audit staff recommends no further action on this matter.

M B. Disclosure of Contributions Received

from Individuals

• Section 434 (b) (3) of Title 2 of the Uni ted States Codestates that each report under this section shall disclose the

identification of each person who makes a contribution to the

reporting committee whose contribution or contributions have an

C" aggregate amount or value in excess of $200 wi thi n the calendar

:-.... year, or in any lesser amount if the reporting committee should

so elect, together with the date and amount of any such

t: contribution. Section 431(13) (A) of Title 2 of the United States

Code defines the term Widentification" to mean, in the case of

any individual, the name, the mailing address, and the occupation of such individual, as well as the name of his or her employer.

In addition, 11 C.F.R. 5 104.3(a) (4) provides, in

relevant part, that the itemization of receipts for authorized

committees shall include the aggregate year-to-date total for

each person, other than a committee, whose contribution or

contributions aggregate in excess of $200 per calendar year.

The Committee maintained copies of contributor checks

ordered by deposit. A review of these records revealed material

problems with respect to the adequacy of disclosure and the

itemization of contributions received from individuals.

Additionally, these ~ecords were not maintained in a manner which

allowed for testing.the Committee's aggregation system. The

Audit staff requested contributor histories for the audit period

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in order to complete our review. This information was provided for 1986, and, separately, at a later date, for 1985.
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The Audit staff identifiea the following problems relatea to itemization ana disclosure after a review of tbe

contributor histories provided the Committee.

The Committee did not itemize 47 contributions from

individuals, totaling $14,670, as required. Additionally, the

Audit staff determined that for those contributions which the

Committee did itemize, the disclosure information was inadequate

or missing for 68 contributions totaling $28,355. For the

majority of these disclosure errors, the Committee baa

incorrectly disclosed the aggregate year-to-date information.

The Audit staff believes that the noted errors resulted

primarily from the Committee's lack of a reliable consolidated

recordkeeping system for contributions from individuals.

The Committee was provided with copies of workpapers

detailing the errors noted above.

As part of the Interim Audit Report, the Audit staff

recommended that the Committee submit Schedules A, as part of

comprehensive amendments for 1985 and 1986, to correct the

irregularities detailed above.

q' On November 3, 1987, the Commi ttee submi tted

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comprehensive amendments for 1985 and 1986 which included the

requisite Schedules A correcting the irregularities noted above.

Recommendation 12

The Audit staff recommends no further action on this matter.

C. Disclosure of Expenditures

a':' Section 434(b) (5) of Title 2 of the United States Code

states, in relevant part, that each report under this section

shall disclose the name and address of each person to whom an

expenditure in an aggregate amount or value in excess of $200

within the calender year is made by the reporting committee to

meet a candidate or committee operating expense, together with

the date, amount, and purpose of such operating expenditure.

During the course of the audit it was noted that 143

expenditures totaling $26,183.34 were not itemized as required. The Audit staff believes these errors resulted primarily from the

Committee's lack of a reliable system for aggregating expendi tures.

Additionally, the Audit staff determined that for those

expenditures which the Committee did itemize, the disclosure

.information was inadequate or missing for 42 expenditures
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totaling $57,152.03. Por the majority of these items the

Committee failed to provide a complete address, other problems included incorrect or inadequate amounts, purposes and/or payees.

The Treasurer was provided schedules detailing these

errors and agreed to file amendments.

In the Interim AueSit Report the Audit staff recommendecS

that the Committee submit Schedules B, as part of comprehensive amendments for 1985 and 1986, to correct the irregularities detailed above. On November 3, 1987, the Commi ttee file"

comprehensive amendments for 1985 and 1986 correcting the

irregularities.

Recommendation '3

The Audit staff recommends no further action on this matter.

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D. Disclosure of Contributions Received from Political

committees

Section 434(b) (3) (B) of Title 2 of the United States

Code states that each report under this section shall disclose

the identification of each political committee which makes a

contribution to the reporting committee during the reporting period, together with the date and amount of any such

contribution. Identification is defined at 2 U.S.C. S 431(13) (B)

as meaning, in the case of any person, the full name and address

of such person. Purther, 2 U.S.C. S 431(11) defines person to

o include a committee. Section 104.3(a) (4) (1i) of Title 11 of the

Code of Federal Regulation specifies the itemization of all " committee (including political committees and committees which do

not qualify as political committees under the Act) which make

n contributions to the reporting'oommittee during the reporting

C""' pe r iod • . . During the course of ~he ~udit staff's review of

contributions received from political committees/organizations, it was determined that the Committee failed to itemize 22 such

contributions, totaling $3,285.91.

Additionally, the Audit staff noted that for those

contributions which the Committee did itemize, nine(9) items,

totaling $3,489.25, were inadequately disclosed, lacking a full

address in all instances.

The Treasurer, who was provided with a schedule

detailing these err9Ts, agreed to file the necessary amendments.
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• In the Interim Audit Report the Audit staff recommended

that the Committee, as part of comprehensive amendments for 1985

and 1986, submit Schedules A to correct the errors detailed

above. On November 3, 1987, the Committee filed the requisite amendments correcting these errors.

Recommendation 14

The Auait staff recommends no further action on this matter.

E. Disclosure of Debts and Obligations

Section 434 (b) (8) of Title 2 of the United States Code

states, in relevant part, that each report under this section

shall disclose the amount and nature of outstanding debts and

obligations owed the committee. Section 104.11(a) of Title 11

of the Code of Federal Regulations provides, in relevant part, that debts and obligations owed a political committee which

remain outstanding shall be continuously reported until

C) extinguished. Additionally, 11 C.F.R. 5 l04.11(b) states, in

relevant part, that any loan, debt or obligation, the amount of

which is over $500.00 shall be reported as of the time of the :'~ transaction. Section 104.3 (d) of '1'1 tle 11 of the Code of Federal

Regulations provides that outstanding debts and obligations be

'i" disclosed on Sched ule C or D as appropriate.

• During the course of the audit it was determined that __ the Committee failed to report the receipt of a $7,000.00 loan,!/

received from the candidate on June 11, 1986, on either Schedule

C or Schedule A. Further, it appears that in an attempt to rectif~ this, the Committee overstated the amount of loans

received on a later report.

Addi ti onally, the Aud'i t staff noted 4 debts to vendors,

totaling $5,799.10, which were ~ot disclosed as outstanding at <X" December 31, 1986. The Treasurer was provided wi th workpapers detailing these items and agreed to file amendments as needed.

I n the Interim Audi t Report the Audi t staff recommended

that the Committee submit appropriate schedules disclosing the

items noted above. On November 3, 1987, the Committee submitted

amendments adequately disclosing these items.

Recommendation 15

The Audit staff recommends no further action on this matter.

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See Finding II.A.2. The amount of this loan is included in

the understatement of receipts•
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Itemization of Refunds/Rebates

Section 104.3(a) (4) (V) of Title 11 Code of Federal

Regulations states that each report shall disclose the

identification of each person who provides a rebate, refund or

other offset to operating expenditure to the reporting committee

in an aggregate amount or value in excess of $200 within the

calendar year, together with the date and amount of any such

receipt.

The Audit staff's review of refunds and rebates received by the Committee revealed that refunds/rebates totaling $2,246.43

were not itemized as required. These items accounted for 100' of

the dollar amount and number of refunds/rebates requiring i temi zation.

In the Interim Audit Report the Audit staff recommended

that the Committee itemize the refunds/rebateD noted above on

Schedules A, as part of the comprehensive amendments for 1985 and

1986. The Committee's response, received November 3, 1987,

SUbstantially complied with this request.

Recommendation 16

The Audit staff recommends no further action on this matter.

G. Matters Referred to the Office of General Counsel

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Certain matters were referred to the Commission's

Office of General Counsel.

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