FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 February 6,2015 

MEMORANDUM 

To: 

Through: 

From: 

The Commission 

Alec Palmer 

Staff Director 

Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. Hintermister ' 

Assistant Staff Director 

Audit Division 

Martin L. Favin 

Audit Manager 

Rickida Morcomb dZjfTV. 

Audit Manager 

By: 

Subject: 

Camilla Reminsky A 

Lead T Auditor AiiHitor 

Audit Division Recommendation Memorandum on the 2012 Democratic 

National Convention Committee, Inc. 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presents its recommendation below and discusses the finding in the 

attached Draft Final Audit Report (DFAR). The Office of General Counsel has reviewed 

this memorandum and concurs with the recommendation. 

Net Outstanding Convention Expenses 

In response to the Preliminary Audit Report, 2012 Democratic National 

Convention Committee, Inc. (DNCC) requested no adjustments to the NOCE and 

had no further comments. DNCC had no further response to the DFAR. 

The Audit staff recommends that the Commission find that DNCC did not receive 

payments of federal funds in excess of its entitlement. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 

30 days of the Commission's vote. 
In case of an objection, Directive No. 70 states that the Audit Division Recominendation 

Memorandum will be placed on the next regularly scheduled open session agenda. 

1 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. ' 

Should you have any questions, please contact Camilla Reminsky or Marty Favin at 694-

1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on the 2012 Democratic National 

Convention Committee, Inc. 

cc: Office of General Counsel 
Draft Final Audit Report of the 

Audit Division on the 2012 

Democratic National Convention 

Committee, Inc. 

(September 1, 2011- September 30, 2014) 

Why the Audit 

Was Done 

Federal law requires the 

Commission to audit the 

national committee of a 

party who receives 

payments for presidential 

nominating conventions.' 

The audit examines the 

receipt and use of Federal 

funds and whether the 

committee otherwise 

complied with the 

limitations, prohibitions 

and disclosure 

requirements of the 

election law. 

Future. 

The! 

initia ^ 

action,1^1ater time, 

with respeiS^hLthe :ter 

discussed in i 

About the Committeiy^^ 

The 2012 Democratic Natioi.ai Convention Committee, Inc. 

(DNCC) was responsible^ ::.v ^|^to-day arrangements and 

operations of the Democ^c nomination convention. 

DNCC is headquai^^lii^ashingf^^. For more 

information, see on the Committe^|gimization, p. 2. 

Financiaf 

• Receipts 

o -^Federal Funds 

o 

Total 

to Conventi^ii'' 

DIsb 

o Con 

rutal Disb 

Expenditures 

lents 

$ 18,248,300 

495,733 

$ 18,744,033 

$ 18,558,723 

$ 18,558,723 

Finding and Recommendation (p. 3) 

• 'flet Outstanding Convention Expenses 

I. 

•26U.S.C.§9008(g). 
Draft Final Audit Report of the 

Audit Division on the 2012 

Democratic National Convention 

Committee, Inc. 

(September 1, 2011- Septenrilbr 30, 2014) 
Table of Contents 

Page 

Parti. Background 

Authority for Audit 

Scope of Audit 

Inventory of Committee Records 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summary 

Finding and Recommendation 

Part IV. Finding and Reco: 

Net Outstanding Convention Expenses 

2 

2 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the 2012 Democratic National Convention Committee, 

Inc. (DNCC), undertaken by the Audit Division of the Federal Election Commission (the 

Commission) as mandated by Section 9008(g) of Title 26 of the United States Code. 

That section directs the Commission to conduct an examination and audit of the 

payments for presidential nominating conventions no later than D^^nber 31 of the 

calendar year in which the presidential nominating convention^^woh^ is held. 

Scope of Audit 

This audit examined: 

1. the disclosure of receipts; 

2. the disclosure of disbursements, debts and i 

3. the recordkeeping process and comple 

4. the consistency between reported figures and I 

5. the accuracy of the Statement of Net Outstanding^ifi~r:'. sntion Expenses; 

6. the coirunittee's compliance withV.-i|iii!-ements con.jr:-nj expenditures for 

convention expenses; and " . ' 

7. other committee operations necessi 

Inventory of 

The Audit staff 

audit fieldwork. 

immediately. 

ihc ii- r 

of committee records before it begins the 

iete and the fieldwork began 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

Date of Reeistration 

Audit Coverage 

Headquarters 

Bank Information 

Bank Depositories 

Bank Accounts 

Treasurer 

• Treasurer When Audit Was Conducted 

• Treasurer During Period Covered by Audit 

Management Information 

• Attended Commission Campaign Fi 

Seminar 

• Who Handled Accounting and 

Recordkeeping Tasks 

OV^!^e^|of Fin%i!ibial Activity 

lounts) • • 

Cash-OD^^II^® Seutemlii-r 11,2Ui 1 $0 

Receipts / 

o Federal FuiH^^ 18,248,300 

o O^ets to Con^ttlon Exp^ditures 495,733 

Total Receipts $ 18,744,033 

Disbursements 

o Convention Expendimres 18,558,723 

Total Disbursements $ 18,558,723 

Cash-on-hand @ December 31,2012 $ 185,310 
Part III 

Summary 

Finding and Recommendation 

Net Outstanding Convention Expenses 

DNCC received $18,248,300 in federal funds to finance the Democratic National 

Convention. The Statement of Net Outstanding Convention (NOCE), as 

calculated by the Audit staff, indicates that DNCC did not XVL JI-. S parents of federal 

funds in excess of its entitlement. 

In response to the Preliminary Audit Report recot 

adjustment and had no further comments. (For inc 

the requested no 

I, see p. 4.) "%,. 
Part IV 

Finding and Recommendation 

Net Outstanding Convention Expenses 

Stuumaiy 

DNCC received $18,248,300 in federal funds to finance the Democratic National 

Convention. The Statement of Net Outstanding Convention Expenses (NOCE), as 

calculated by the Audit staff, indicates that DNCC did not recei^^^ents of federal 

fimds in excess of its entitlement. 

In response to the Preliminary Audit Report 

adjustment and had no further comments. 

Legal Standard 

A. Entitlement to Payments From the Fund. ! 

shall be entitled to payments with respect to any 

amounts that, in the aggregate shall qot exceed $4,1 

Price Index. The major party entitlei^tJor the 2012 

$18,248,300. 26U.S.C. §9008(b)(l) 

[CC requested no 

B. Repayments. Any portion of the enti 

expenses have been pa^^^^e retumed 

committee or convei^n coml^ee shall 

based on the finaneia^qsition ^the commit 

following the last day of J&ie co^ention. alio 

littee of a ifliajor party 

colavention, in 

as adjusted by the Consumer 

itiki'-ing convention was 

by the 

unspent after all convention 

of the Treasury. The national 

an interim repayment of unspent funds 

the end of the ninth month 

for a reasonable amount as detennined 

contingencies. The interim 

days after the end of the ninth month 

II CFR §9008.I2(b)(5). 

<!.• '• .••r 

C. RepayriiCTt DeterminajiQn Prbcedures. The Commission will follow the same 

repayment d^i^ination p^cedures, and the committee has the same rights and 

obligations as at^^vide^lor repayment determinations involving publicly funded 

candidates under ^^1^9007.2(c) through (h). II CFR §9008.I2(c). 

D. Net Outstanding Convention Expenses (NOCE). A convention committee shall 

file, no later than 60 days after the last day of the convention, a statement of that 

committee's "net outstanding convention expenses." This statement must contain, among 

other things: 

• The total of all committee assets including cash on hand, amounts owed to the 

committee and capital assets listed at their fair market value; 

• The total of all outstanding obligations for qualified convention expenses; and 

• An estimate of necessary winding-down costs. 11 CFR §9(X)8.10(g). 
Facts and Analysis 

A. Facts 

For the 2012 national conventions, each major political party was entitled to receive 

federal funds of $18,248,300 to finance its national presidential nominating convention. 

The 2012 Democratic National Convention ended on September 6,2012. The DNCC 

filed a Statement of Net Outstanding Convention Expenses as of October 21,2012. The 

most recent NOCE statement was submitted on September 12,2013. The Audit staff 

reviewed the financial activity through December 31,2013, and estimated the winding 

down costs in preparing the figures shown below. ^ 

2012 Democratic National Conven 

Statement of Net Outstanding 

As of October 

Prepared Through Septe^Siow^O, 

Cash in Bank 

Accounts Receivable 

Total Assets 

Liabilities 

Accounts Payable^ 

Expenditures at lO^^^Ol 

Winding Dowii Costs: 

A(iii:il ( 

E-iiM.iiwlriO/l.-l'l 

Tot^^t^tjlities 

Net Outstahfflm Conventi.'-. Expenses 

(Surplus)^^^ctob^^l, 2012 

Less: Interim Repavi:ii-iii lo the U.S. Treasury 

on 7/26/13 

S 1,288,428 

«^v.f,h,S88,886 

$ 456,195 

1,419,452 

m 1.420,119 

$1,877,314 

$1.876.314 

$ 1,000 

($1,000) 

Amount Repayable to the U.S. Treasury 

[a] Estimated winding down costs will be compared to actual winding down costs and adjusted accordingly. 
The NOCE as calculated by the Audit staff indicates that DNCC did not receive 

payments of federal funds in excess of its entitlement. 

At the exit conference held at the end of audit fieldwork, DNCC representatives were 

informed of the NOCE as calculated by the Audit staff. This NOCE indicated that the 

DNCC had a surplus of approximately $17,000. The Audit staff explained that 

adjustments to the NOCE calculations would be necessary based upon any additional 

documentation provided. Such documentation was provided to the Audit staff 

subsequent to the exit conference and resulted in a r^uction of the initial NOCE surplus 

to a balance of $1,000. On July 26,2013, the DNCC made an inte^ repayment to the 

United States Treasury in the amount of $1,000 pursuant to 1 l^lHg008.12(b)(S). 

Subsequently, DNCC representatives were provided a copyS^e NOCE updat^ by the 

Audit staff which indicates the amount repayable to the Un^^Bates Treasury is $0. 

B. Preliminary Audit Report & Audit Division l^diitQ^ihendat 

The Preliminary Audit Report reconunended that^CC demonstrate ] 

required to any component of the NOCE stattp^or provj^e other < 

: adjustment is 

<ifitso 

C. Committee Response Preliminai^Audit Report 

In response to the I^iminary Audit 

adjustments and had no fiulher 

le DNCC requested no