Attachment as ~tatcd

PUBLIC ISSUANCE OF FINAL AUDIT REPORT -

STATE REPUBLICAN EXECUTIVE COMMITTEE

OF TEXAS

FRED EILAND

PRESS OFFICE

BOB COSTA R\~ / '~ JU DY HAWKI Ns:::l.... --

WA~IIIM;r()N. DC :!04bl

FEDERAL ELECTION COMMISSION

May 20, 1980

cc: fEC Library

~?l' PUD_~C Recore1

Informational copic~ of the report have been received

by all parties involved and this report may be released to

the pUblic as of today, ~ay 20, 1980.

Attached please find a copy of the final audit report

of the state Republican Executive Committee of Texas which

was a~vroved by the Commission on May 8, 1980.

S IlB.1 ECT:

'1'0 :

MEMO RAN Dur·l

'fHROUGH:

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I. Background

FINAL REPORT' OF :THE AUDIT DIVISION

ON THE

STATE REPUBLleAN EXECUTIVE COfl1rUTTEE OF TEXAS

Overview

FEDERAL ELECTION COMMISSION

W"')ItINGIO~ DC 204hl

A.

The audit covered the period from January 1, 1976 "

through ,November 22, 1976, the final coverage date of the ter-

,mination report filed by the Committee at the time of the audit.

The Committee reported a beginning cash balance on January 1,

1976 ,of. S2,217.80; total receipts for the period of S633,789.32;

total expenditures for the period of $567,575.23; and a c10sin0

cash balance on November 22, 1976 of ~68,43l.89.

The Committee registered with the IT. S. General

Accounting Office on April' 17, 1972 as the State committee

representing the Texas Hepub1icanParty. The Committee maintained its headquarters. in Austin, Texas.

This audit report is based on documents and working

papers which support each of the factual statements. They

form part of the record upon \oJhich the Commission based its

decisions on the matters in the report and were available to

Commissioners and appropriate staff for review.

This report is based on an audit of the State

Republican Executive Committee of 't'exas (lithe Committee") ,

undertaken by the Audit Division of the Federal Election

.Commission ("the Commission"), in accordance with the

Commission's audit policy to determine whether there has

. been compliance with the provisiong of the Federal Election

. Campaign- Act of 1971, as amended ("the Act"). The audit

was conducted pursuant to Section 438(ar(8) of Title 2 of

'. the United States Code which directs the Commission to make'

from time to time audits and field investigations with respect

to reports and statements filed under the provisions of the

Act.

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A. Disclosure of Residual'F~nds

II. Description of' Audit Findings' and p.ec~mmEmdations

.' se~tion'· '433'('d) '~'fTitle 2~'of the United States Code

states, i l1 part, that any committee'.which disbands6r 'determines

it will no longer receive contributions' or ,make expenditures

during the calen(iar year.in an aggregatE.: amount exceeding~l,OOO

shall so notify the Commission.

In ~d~iticiri, S~ction 102~4(a) of Title ~l,of' the, Code

o,f Federal :Rcqulations,states, in. part,that. anypolitical commi ttee which seeks to disband or determines that .' it ,.;ill no longer

,receive contributions or make, expenditures during the, calendar'

year in an aggregate.amount·exceeding$l~OOO'shall'file,a notice of

,termination onFEC' Form '3 or by letter (containing the same information) withtheComriiission~ The notice·' shall contain a final

report of re,ceipts. and disbursements, including a statement as,to

the disposition of residual funds if the .Committee is disbanding.

Section A34(b) (4) of Title 2 ,of the united States C~de

states, in part, that each. report shall disclose the name and

address of ,each political committee to which the reporting com- .

mi ttee made any transfer of funds, together with the amounts

and dates of all transfers.

The Committee reported a closing ,cash on hand balance

of $'68,431.89 on"its, date of termination. .The Committee's

termination report, however, did not disclose the final disposition of these residual funds.' A~eview of the bank records

revealed that the Committee made nine (9) additional exnenditures

after'terminatinq totaling $13,250.42 arid did not report two,(2)

transfers totaling $55,000 .,00 made during 1976 l ,- " "... . - ' , " " -' ,'"

C. Scope

B'. Key .... Personnel

" I". :.'

,The, audifiricluded such tests as verification of total

rcport~d~receipts'andexpendituresand ~ndividual transactions;

review of required 'supporting documentation and.analysis of .'

,Commi ttee ,debts and obligations; and such other '. audit' procedures

as deemed,necessarY,underthe.circumstances.: ' • ~., '" - -"'~ ~~" • •• , , , n _, _, _.' , ,,_ .".",' •• '

,The p'r.incipal officers of:the, Committee during the"

period audited, were· Mr.' Ray Hutchinson, Chairman, and ~1r. R.· Doug

Lewis: Treasurer for the periods .Tanuary-l, 1976 through September

17,'1976, and November/12, 1976, through November 22, 1976.'· .

The Treasurer for the period September 17, 1976 ,through November

12,1976 was ,Ms. Po~~y:sowel1.: ., '.'

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Based on the Audit staff's recommendation the

Committee filed an amended report on April 21, 1980 disclosinq

th0. pxpenditures and transfers.

H(!coI1l111endation

The Audit staff recommends no further action on this

matter.

B. Disclosure of Transfers Received

Section 434(b) (4) of Title 2 of the United States

Code states, in part, that each report shall disclose the name

and address of each political committee from which the reporting committee received any transfer of funds, together with

the amounts and dates of all transfers.

In addition, Section 104.2(b) (4) of Title 11 of the

Code of Federal Regulations states, in part, that each report shall

disclose the identification of each political committee or other

political organization from which the reporting committee re- .

ceived any transfer of funds in any amount together with the

amounts and dates of all transfers.

During the course of the audit, it was determined

that the committee did not disclose approximately $14,400.00

in receipts and expenditures processed through an account which

the Committee had established for the purpose of making salary

expenditures. This account was funded by transfers from a

Committee account and from the Republican Party of Texas, an

unregistered state election committee, neither of which accepted

corporate or labor union contributions. The undisclosed activity

represents transfers-in and salaries paid related solely to the

state election committee.

Recommendation

The Audi.t staff recommends that no action be taken in this

matter based on the following facts: 1) The unreported expenditures were for state activity 2) The account was used only for

salarv expenses: 3) The account was funded onlv bv transfers

within the party: and 4) Neither committee accept~d corporate or

labor union contributions.