FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

May 19.2014 

MEMORANDUM 

To: 

Through: 

From: 

By: 

Subject: 

The Commission 

Alec Palmer 

Staff Director 

Patricia C. Orrock ^^^-^ ^ 

Chief Compliance Officer 

Thomas E. Hintermister""*Vx 

Assistant Staff Director 

Audit Division 

Marty Favin 

Audit Manager ^ 

Alex BoniewiczX^ j 

Audit Manager 

Randy Harris ty I [ 

Lead Auditor fVlj 

Audit Division Recommendation Memorandum on the Tennessee 

Democratic Party (TDP) (A12-03) 

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

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

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

this memorandum and concurs with the recommendation. 

Filing of Levin Schedules 

In response to the Interim Audit Report, TDP reiterated tiiat when notified by tiie 

Audit staff, die missing Levui schedules were filed with the Commission to correct 

this inadvertent omission. No additional response to the DFAR was submitted. 

The Audit staff recommends that tiie Commission find that TDP failed to file 

Levin Schedules. 

TDP did not request an audit hearing. 
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 tiie Audit Division Recommendation 

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

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

Should you have any questions, please contact Randy Harris or Marty Favin at 694-1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on tiie Teimessee Democratic Party 

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

Audit Division on the Tennessee 

Democratic Party 

(January 1, 2011 - December 31, 2012) 

Why the Audit 

Was Done 

Federal law pennits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(tiie Act). The 

Commission generally 

conducts such audits 

when a committee 

About the Committee, 

The Tennessee Democratic 

headquartered in Nashvill^ 

see the chart on the Co: 

.^7 

Contributions'^*^^'" 

Financia l 

• Receipts 

o 

o'^J^olitical Commf 

Eibutions 

o 

o 

party committee 

For more infonnation, 

tion, p. 2. 

|tivity=.^.3) 

Individuals 

appears not to have met^»^ . ^ J^ , 

v.. "lursem 

the threshold 

requirements for 

substantial compliance'^'i 

with tiie ActLa^cLaudit 

' ' ^ Total Rec%>ts 

comii^^ compile 

the li^^^ns, 

prohibitid^^d 

disclosure r^^^ments 

ofthe Act. 

Future ActioiS^ 

The Commission m^y 

initiate an enforcement 

action, at a later time, 

with respect to the matter 

discusseid in tiiis report. 

g Expenditures 

Transfers to Affiliates 

dependent Expenditures 

Coordinated Party Expenditures 

Federal Election Activity 

o Other Disbursements 

Total Disbursements 

Levin Receipts 

Levin Disbursenients 

$1,371,485 

160,483 

426,007 

647,358 

79,155 

$2,684,490 

$1,536,893 

10,185 

20,100 

975 

1,091,186 

46,828 

$2,706,167 

$1S0,000 

$137,180 

Finding and Recommendation (p. 4) 

Filing of Levin Schedules 

2U.S.C.§438(b). 
Draft Pinal Audit Report of the 

Audit Division on the 

Tennessee Democratic Party 

(January 1, 2011 - December 31, 2012) 
Table of Contents 

Page 

Parti. Background 

Autiiority for Audit 

Scope of Audit 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Partm. Summary 

Finding and Reconunendation 

Part IV. Finding and Recom 

Filing of Levin Schedules 

..•i^^^^^M^i:, 

..^^•"''••'••ii^^f^^^ 

•3.'>v 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Tennessee Democratic Party (TDP), undertaken by 

the Audit Division of the Federal Election Commission (the Commission) in accordance 

witii 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 

Conunission to conduct audits and field investigations of any poU^!^ committee that is 

required to file a report under 2 U.S.C. §434. Prior to conduc|^any-audit under this 

subsection, the Commission must perform an intemal revi^'i^iieports filed by selected 

conunittees to determine if tiie reports filed by a particuL^iiioni^^ meet the threshold 

requirements for substantial compliance with the Act.^ l^.C. §4^^}. 

Scope of Audit 

Following Commission-approved proceduresf' 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions; 

2. the disclosure of individual contri^ 

3. the disclosure of disbursements, de 

4. the disclosure of expenses allocated 

accounts; 

5. the consistency betyg 

6. the disclosure of i 

7. the completeni 

8. other committee op 

idit stp^valuated van 

* occupation1^.jpame of employer; 

ons; '"^f^" 

al, non^^stdl, and Levin 

ited fig 

expendituri 

issary to 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

Date of Registration May 19,1983 

Audit Coverage January 1,201 .UlS!|ecember 31,2012 

Headquarters Nashville. Tj#fess^ 

• Treasurer When Audit Was Conducted ^ 

,ey? January 1,2011 -October 

10,2m.... 

David C^^n : October 11,2011-

PecemberWjy^l2 . 

t Treasurer During Period Covered by Audit 

Management Information V.; . 

Attended Commission Campaign Finale 4 

Seminar ^^M ^ W 

• Who Handled /^^unting% 

Recordkeepin^^l^l^s 

IP 

Paid Staff 

^^^^ 
Overview of Financial Activity 

(Audited Amounts) 

^ TDP's ending cash-on-hand was understated by $199 due to unmaterial reporting errors. 
Part III 

Summary 

Finding and Recommendation 

Filing of Levin Schedules 

A review of Levin activity-indicated that TDP received and disbursed Levin fiinds during 

calendar year 2012 tiiat totaled $150,000 and $137,180, respecti^^«^TDP did not, 

however, disclose this activity on Schedule L (Aggregation Levin Funds), Schedule 

L-A (Itemized Receipts of Levm Funds), or Schedule L-BJ^^^ d Disbursements of 

Levin Funds). After the Audit staff brought this omissio^ TD^^ttention, IDP filed 

the missing schedules. In response to the Interim A^^.^Rlport rec^^o^dation, TDP 

stated that its omission of Levin schedules L on its^ist-ueneral repor^^^inadvertent 

i ^ compliance^|g^ for 

ita "^n^^mitted wheir^^eport was 

filed. (For more detail, see p. 5.) 

and the information for those schedules was ei^, 

inclusion on the Post-General report. Howev&t 

..JS??..;-. 

• ••. y....^.^ •iffy...: 

••''tf.-'i: •i-Iv'ii 
Part IV 

Finding and Recommendation 

Finding 1. Filing of Levin Schedules 

Summary 

A review of Levin activity indicated that TDP received and disbursed Levin fiinds during 

calendar year 2012 tiiat totaled $150,000 and $137,180, respectiv^. TDP did not, 

|n Funds), Schedule 

Disbursements of 

attention, TDP filed 

endation, TDP 

inadvertent 

for 

\^poii was 

however, disclose this activity on Schedule L (Aggregation Pa^i 

L-A (Itemized Receipts of Levin Funds), or Schedule L-B ''^ '^ 

Levin Funds). Afiier the Audit staff brought this omission, 

the missing schedules. In response to the Interim Audit 

stated that its omission of Levin schedules L on its ^^^hsp^eral 

and the infonnation for those schedules was entc»ra^nto its compliandl 

inclusion on the Post-General report. Howevecs^ data was omitted 

filed. -^^^^ 

Legal Standard , 

A. Reporting. 

If a state, district or local party commit" ^ 

for federal election activity (FEA) total 

committee must disclose receipts and disb^ 

used for FEA. IICFR^.^^ 

bmed anni 

B. Contents of LtiVti^^ 

• the amount of ci 

riod; 

and disbursements 

le calendar year, the 

fimds and Levin fiinds 

i{}disclose: 

s at the beginning and end of the 

d receipts for the reporting period and for the 

total amount 

th^^^rting perio 

certaM^atnsactions 

of Levirt . 

itemize red^f 

ivm rpd disbursements (including allocation transfers) for 

d.thd calendar year; and 

t require itemization on Schedule L-A (Itemized Receipts 

o^P^chedule L-B (Itemized Disbursements of Levin Funds) -

^:0d disbursements of $200 or more to or firom any person for 

Federal election activities. 11 CFR §300.36 (b)(2). 

Facts and Analysis 

A. Facts 

The Audit staff reviewed TDP's Levin activity and noted tiiat TDP received $150,000 

and disbursed $137,180 during tiie 2012 Post-General reporting period (October 18,2012 

- November 26,2012).^ For this period, the beginning cash balance was $0 and the 

This was TDP's only Levin activity for the period covered by the audit. 
ending cash balance was $12,820. TDP did not, however, file tiie required Schedules L, 

L-A and L-B until the Audit staff brought the omission to TDP*s attention during audit 

fieldwork. A TDP representative acknowledged that TDP did not file the schedules due 

to an error during transmission of the reports required for the reporting period. 

TDP maintained a separate bank account for its Levin fimd receipts and disbursements. 

The 2012 Levin fimd receipts consisted of transfers &om TDP's non-federal account. 

The 2012 Levin fimd disbursements consisted mainly of a transfer to TDP's non-federal 

account and payments for voter identification and get-out-the-vote programs. 

B. Interim Audit Report & Audit Division Recommendatio^'^^^ 

The Audit staff discussed this issue with TDP representativ< 

TDP representatives reiterated that TDP did not disclose 

oversight and that as soon as the Audit staff notified TD! 

missing Levin schedules with the Commission. 

The Audit staff recommended that TDP submi 

it considered relevant to the matter. 

g the exit conference, 

d activity due to an 

sion, it filed the 

additid;^ informatioh )fnments 

C. Committee Response to the Intulm Audit Repo; 

m its response, TDP reiterated that report 

omission. Further, TDP explained that^l^ng^e Levin 

reporting software for inclusion on the 

from the report when the 

several years that it had:; 

•M%.. 

irt was filed 

le Levin aci 

v^en notified ofthe 

was entered mto the 

rt, it.^^ inadvertentiy excluded 

at this was the first time in 

contributed to this oversight. 

m 

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1 

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my 

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