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MEMORANDUM

TO:

FROM:

SUBJECT:

FEDERAL ELECTION COMMISSION

WASHINGTON, 0 C 204&3

A85-20

November 12, 1985

FRED EILAND

PRESS

ROBERT

OFFICER

J. COSTA

ttY

ASSISTANT STAFF DIRE TOR

AUDIT DIVISION

PUBLIC ISSUANCE OF PINAL AUDIT REPORT - MAINE DEMOCRATIC STATE COMMITTEE

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Attached please find a copy of the final audit report of

Maine Democratic State Committee which was approved by the

Commission on November 1, 1985.

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

RAD - ~ic Record

Office of General Counsel
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FEDERAL ELECTION COMMISSION

WASHINGTON 0 C .!04bJ

A85-20

Report of the Audit Division

on the

Maine Democratic State Committee

I. Background

A. Overview

This report is based on an audit of the Maine

Democratic State Committee ("the Committee") undertaken by the

Audit Division of the Federal Blection Commission in accordance

with the Commission's audit policy to determine whether there has

been compliance with the provisions of the Pederal 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.

The Committee registered with the Federal Election

Commission on March 19, 1984, and maintains its headquarters in

Augusta, Maine.

The audit covered the period, January 1, 1984 through

« December 31, 1984. The Committee reported a beginning cash

balance on January 1, 1984, of $19,874.94: total receipts for the

period of $232,617.58: total disbursements for the period of

$251,770.05 and an ending cash balance on December 31, 1984, of

$722.47.

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This report is based on documents and work 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.

B. Key Personnel

The Treasurers of the Committee during the period covered by the audit were: Mr. Anthony Buxton from inception to

October 17, 1984 and Mr. David McKellar from October 17, 1984 to

December 31, 1984.
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C. Scope

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The audit included .uch te.t. a. verification of total

reported receipts, disbur.ement. and individual transactions, review of required supporting docu.entation, analy.is of

Committee debts and obli9atlon., and .uch other audit procedures

as deemed necessary under the circu••~anc.s. Bowever, the

receipt records made avallable for the Audit staff's review were

not maintained in a manner which allowed te.ting for correct

aggregate contribution total., proper itemization and

contribution limitations.

II. Audit Findings and Recommendation.

Introduction to Findings

The Committee provided the Audit staff with bank records,

supporting documentation, cancelled checks, and ledgers of

contributions and disbursements for both its Pederal and nonFederal accounts. The Audit staff reviewed those records and

verified that for the period, January 1, 1983 through July 31,

1984, the Committee did not participate in activity connected

with any Federal elections. The initial Pederal activity occurred on August 17, 1984, with a $1,000.00 contribution to a

Congressional candidate. An additional $1,535.00 was contributed

to the same candidate on September 26, 1984.

The Audit staff reviewed all federal activity occurring after July 31, 1984. Therefore, all findings noted below pertain

to Federal activity from August 1, 1984 through December 31,

1984, processed through the Committee's three Federal accounts.

A. Recordkeeping

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Section 432 (c) (1), (2), (3) and Cd) of Title 2, of the

United States Code, states that the treasurer of a political committee shall keep an account of all contributions received by

or on behalf of such political committee, the name and address of

any person who makes any contribution in excess of $50, together with the date and amount of such contribution by any person, the

identification of any person who makes a contribution or

contributions aggregating more than $200 during a calendar year, together with the date and amount of any such contribution. The

treasurer shall preserve all records required to be kept by this

section and copies of all reports required to be filed by this

subchapter for 3 years after the report is filed •
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Section 431(13) (A) of Title 2 of the United States Code

states that the term "identification" means - in the case of an

individual, the name, the mailing address, and the occupation of

such individual, as well as the name of his or her employer.

Section 102.17(c) (4) (ii) of Title 11, Code of Pederal

Regulations requires the fundraising representative to collect

and retain contributor information with regard to gros8 proceeds

as required under 11 C.P.R. 5102.8 and to forward such

information to participating political committees.

The auditors review of the Committee's bank statements

for the period August 1, 1984 through December 31, 1984,

disclosed $106,902.61 in receipts, however, a review of the

Committee's ledger and other supporting documentation for

receipts revealed $90,424.71. Committee officials could not

provide the auditors with an explanation for the $16,477.90

difference, which represents.1S.4' of total receipts.

The Committee participated in a joint fundraiser with

the Democratic National Committee (DNC) during which house

parties were held on behalf of Mondale-Ferraro throughout the

state to raise GOTV funds. The gross proceeds from the

fundraisers were not deposited into any Committee accounts but

were forwarded to the DNC.' The Committee could not provide the

auditors a complete listing of contributions raised at the

fundraising events.

Committee officials stated that they would make an

effort to obtain the required information from the DNC.

In the interim report the Audit staff recommended that

the Committee provide copies of receipt records to support the

difference of $16,477.90. In addition, the Audit staff

recommended that the Committee provide documentation regarding contributions received from the fundraising event.

On September 24, 1985, the Committee provided records

to substantially support the $16,477.90 in receipts. The

Committee also provided supporting documentation regarding contributions raised at the fundraising events.

Recommendation

The Audit staff recommends no further action on this matter •
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B.

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Reporting of Receipts and Expenditures

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

States Code states, in part, that each report shall disclose for

the reporting period and calendar year, the total amount of all

receipts and disbursements.

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

Code, requires disclosure of the identification of each person (other than a political committee) who makes a contribution to

the reporting committee during the reporting period, whose

contribution or contributions have an aggregate amount or value

in excess of $200 within the calendar year, together with the

date and amount of any such contribution.

Section 431(13) (A) of Title 2 of the United States Code

states that the term "identification" means - 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.

Section l02.17(c) (8) (i) (8) of Title 11, Code of Federal

Regulations states, in part, that after distribution of net

proceeds from a joint fundraiser, each participating political committee shall report its share of net proceeds received as a

transfer-in from the fundraising representative. Each

participating political committee shall also file a memo Schedule

A itemizing its share of gross receipts as contributions from

original contributors to the extent required under 11 C.F.R. 5

104.3(a).

Section 434(b) (5) (A) of Title 2 of the United States

Code states, in part, that each report 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 calendar year is

made by the reporting committee together with the date, amount,

and purpose of such operating expenditure.

The Audit staff's review of the Committee's bank

statements disclosed adjusted receipts and disbursements totaling $106,902.61 and $138,032.08 respectively. A portion ($15,031.85)

of the total receipts represents the Committee's share of the

proceeds from the joint fundraiser with the ONC (See Finding A).

The Committee's disclosure reports filed for the period

January 1, 1984 through December 31, 1984 contained incomplete information regarding the Committee's financial activity during that period •
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In the interim report the Audit staff recommended that

the Committee file comprehensive reports disclosing receipts and

disbursements for the period January 1, 1984 through December 31,

1984. In addition, the Audit staff also recommended that the

Committee disclose its share of the net proceeds received from

the fundraising representative as a transfer-in, alon9 with a

memo schedule A disclosing the contributions as required by 11

CFR S 102.17(c) (8)(i)(8).

On September 24, 1985 and October 17, 1985, the

Committee filed a comprehensive report disclosin9 the receipts and disbursements as required. In ad6ition, the Committee

disclosed the transfer-in of the net proceeds along with

supporting Schedules A as required.

Recommendation

The Audit staff recommends no further action on this matter.

C. Reporting of Beginning Cash on Rand

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Section 104.3(a) (1) of Title 11, Code of Federal

Regulations states, in part, that each report filed shall

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

reporting period.

Under 11 C.F.R. S 104.12 political committees which

have cash on hand at the time of registration shall/disclose on

their first report the source(s) of such funds including the

information required by 11 CFR § 104.3(a) (1). The cash on hand

balance is assumed to be composed of those contributions most

recently received by the committee. The committee shall exclude

from funds to be used for Federal elections any contributions not

permissible under the Act.

The Committee's April 15th Quarterly report (January 1,

1984 - March 31, 1984) indicated a cash on hand balance of

$19,874.94. In a letter dated January 23, 1985, the Commission's

Reports Analysis Division asked the Committee to disclose the

source of the cash on hand. The Committee responded by filing a

disclosure report covering the period January 1, 1983 through June 30, 1983, which did not disclose the source of the cash on

hand.

The Audit staff reviewed contributions received by the

Committee and determined that the cash on hand balance on January 1, 1984 was comprised of contributions permissible under the Act•
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In the interim audit report the Audit staff recommended

that the Cam.ittee file a comprehensive report di8closing the

source of the cash-on-hand at January 1, 1984. In addition, the

Audit staff recommended that the report should contain a memo

Schedule A identifying the source of the $19,814.94.

On September 24, 1985, the Committee filed a

comprehensive report disclosing the source of cash on hand on

January 1, 1984, along with the requisite Schedules A.

Reco_endation

The Audit staff recommends no further action on this matter •