FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

April 5, 2010 

MEMORANDUM 

To:	 Judith Ingram 

Press Officer 

(j :f) From:	 Jos~ph F. Stoltz U~ Assistant Staff iV~tor Audit Division v 

Subject:	 Public Issuance of the Audit Report on the Committee to Elect Alan 

Grayson 

Attached please find a copy of the audit report on the Committee to Elect Alan 

Grayson, which was approved by the Commission on March 25,2010. 

All parties involved have received informational copies of the report and the report 

may be released to the public April 5,2010. 

Attachment as stated 

cc:	 Office of General Counsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library 

ITDW~fi
Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that 

is required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act. I The audit 

determines whether the 

committee complied 

with the limitations, 

prohibitions and 

disclosure requirements 

ofthe Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of 

the matters discussed in 

this report. 

Report of the Audit Division on the 

Committee to Elect Alan Grayson 

January 1, 2007 - December 31, 2008 

About the Campaign (p.2) 

The Committee to Elect Alan Grayson is the principal campaign 

committee for Alan Grayson, Democratic candidate for the U.S. House 

of Representatives from the state of Florida, 8th District, and is 

headquartered in Orlando, Florida. For more information, see the chart 

on the Campaign Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o	 Loans from Candidate $2,650,000 

o	 Contributions from Other Political 

Committees 244,400 

o	 Contributions from Individuals 213,166 

o	 Other Receipts 8,900 

o	 Other Loans 7,680 

o	 Total Receipts $3,124,146 

• Disbursements 

o Operating Expenditures	 $3,015,309 

o Loan Repayments	 97,184 

o Contribution Refunds	 10,150 

o Other Disbursements	 1,778 

o Total Disbursements	 $3,124,421 

Finding and Recommendation (p. 3) 

•	 Misstatement of Financial Activity 

12 U.S.C. §438(b). 
-:,Reportof the -Audit Division on the 

..Committee to Elect Alan Grayson 

January 1,2007 - December 31,2008
 

. '­

"~ ":. ' . 
Table of Contents
 

Page 

Part I. Background
 

Authority for Audit I
 

Scope of Audit
 

Part II. Overview of Campaign
 

Campaign Organization 2
 

Overview of Financial Activity 2
 

Part III. Summary 

Finding and Recommendation 3
 

Part IV. Finding and Recommendation 

Misstatement of Financial Activity 4
 
1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the Committee to Elect Alan Grayson (CTEAG), 

undertaken by the Audit Division ofthe Federal Election Commission (the Commission) in 

accordance with 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 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report under 2 U.S.C. §434. Prior to conducting any audit under this 

subsection, the Commission must perform an internal review of reports filed by selected 

committees to determine ifthe reports filed by a particular committee meet the threshold 

requirements for substantial compliance with the Act. 2 U.S.C. §438(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk factors 

and as a result, the scope of this audit was limited to the following: 

1. The receipt and permissibility of loans. 

2. The consistency between reported figures and bank records. 

3. The disclosure of individual contributors' occupation and name of employer. 

4. The disclosure of purposes for disbursements. 
2 

Part II 

Overview of Campaign 

Campaign Organization 

Important Dates Committee to Elect Alan Grayson 

• Date of Registration May 24,2006 

• Audit Coverage January 1,2007 - December 31, 2008 

Headq uarters Orlando, Florida 

Bank Information 

• Bank Depositories One 

• Bank Accounts One checking account, two savings accounts 

. Treasurer 

• Treasurer When Audit Was Conducted Paul Ashcraft 

• Treasurer During Period Covered by Audit Paul Ashcraft 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Used Commonly Available Campaign 

Management Software Package 

Yes 

•	 Who Handled Accounting, Recordkeeping Paid staff and volunteers 

Tasks and Other Day-to-Day Operations 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand fa? January 1,2007 $ 6,276 

$ 2,650,000 

244,400 

213,166 

8,900 

7,680 

$ 3,124,146 

Receipts 

0 Loans from Candidate 

0 Contributions from Other Political Committees 

0 Contributions from Individuals 

0 Other Receipts 

0 Other Loans 

0 Total Receipts 

Disbursements 

0 Operating Expenditures $ 3,015,309 

0 Loan Repayments 

0 Contribution Refunds 

0 Other Disbursements 

0 Total Disbursements 

97,184 

10,150 

1,778 

$ 3,124,421 

Cash on hand @ December 31, 2008 $ 6,001 
3 

Part III 

Summary 

Finding and Recommendation 

Misstatement of Financial Activity 

A comparison ofCTEAG's reported financial activity to its bank records revealed that cashon-hand, receipts and disbursements had been misstated for calendar years 2007 and 2008. 

For 2007, CTEAG overstated beginning cash on hand by $71,286, overstated receipts by 

$4,734, overstated disbursements by $8,308 and overstated ending cash on hand by $67,712. 

In 2008, receipts were overstated by $178,396, disbursements were overstated by $77,779 

and the ending cash on hand was overstated by $168,329. In response to the interim audit 

report, CTEAG amended its reports and materially corrected the misstatements. (For more 

detail, see page 4.) 
4 

Part IV 

Finding and Recommendation 

IMisstatement of Financial Activity 

Summary 

A comparison ofCTEAG's reported financial activity to its bank records revealed that cashon-hand, receipts and disbursements had been misstated for calendar years 2007 and 2008. 

For 2007, CTEAG overstated beginning cash on hand by $71,286, overstated receipts by 

$4,734, overstated disbursements by $8,308 and overstated ending cash on hand by $67,712 . 

. In 2008, receipts were overstated by $178,396, disbursements were overstated by $77,779 

and the ending cash on hand was overstated by $168,329. In response to the interim audit 

report, CTEAG amended its reports and materially corrected the misstatements. 

Legal Standard 

Contents of Reports. Each report must disclose: 

•	 The amount of cash on hand at the beginning and end of the reporting period; 

•	 The total amount of receipts for the reporting period and for the election cycle; 

•	 The total amount of disbursements for the reporting period and for the election cycle;
 

and
 

•	 Certain transactions that require itemization on Schedule A (Itemized Receipts) or
 

Schedule B (Itemized Disbursements). 2 U.S.c. §434(b)(1), (2), (3), (4), and (5).
 

Facts and Analysis 

The Audit staff reconciled reported financial activity to bank records for calendar years 2007 

and 2008. The following charts outline the discrepancies for the beginning cash balance, 

receipts, disbursements and the ending cash balance for each year. 

2007 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

(ci} January 1, 2007 

$77,562 $6,276 $71,286 

Overstated 

Receipts $55,325 $50,591 $4,734 

Overstated 

Disbursements $40,656 $32,348 $8,308 

Overstated 

Ending Cash Balance 

@J December 31, 2007 

$92,231 $24,519 $67,712 

Overstated 

The $71,286 overstatement of the beginning cash balance on January 1,2007, was primarily 

due to a $75,000 overstatement of reported cash-on-hand at December 31,2006. Beginning 
5 

cash on the year-end report was inexplicably increased by $75,000 over the ending cash 

balance of the previously filed report. 

The overstatement of receipts resulted from the following: 

•	 Reports adjusted incorrectly for voided checks $ (5,319) 

•	 Unreported refunds received 585 

Net overstatement of receipts $ (4,734) 

The overstatement of disbursements resulted from the following: 

•	 2008 disbursements reported but not supported by check or debit $ (8,442) 

•	 Three unreported disbursements 134 

Net overstatement of disbursements $ (8,308) 

The $67,712 overstatement of ending cash on hand resulted from the unexplained beginning 

cash difference as well as the receipt and disbursement misstatements noted above. 

2008 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January 1,2008 

$92,231 $24,519 $67,712 

Overstated , 

Receipts $3,251,951 $3,073,555 $178,396 

Overstated 

Disbursements $3,169,852 $3,092,073 $77,779 

Overstated 

Ending Cash Balance 

@ December 31, 2008 

$174,330 $6,001 $168,329 

Overstated 

The overstatement of receipts resulted from the following: 

•	 Credit card debt erroneously reported as loan receipts 

•	 Credit card contributions from individuals reported twice 

•	 Loans from Candidate reported incorrectly 

•	 Other deposits reported incorrectly 

•	 Unexplained difference 

Net overstatement of receipts 

The overstatement of disbursements resulted from the following: 

•	 Disbursements reported but not supported by check or debit 

(see further explanation below) 

•	 Unreported loan payment to Candidate 

•	 Unreported disbursements 

•	 Disbursements reported incorrectly 

Net overstatement of disbursements 

$(137,596) 

(34,859) 

(5,000) 

937 

(1,878) 

$(178,396) 

$(169,231) 

80,000 

12,297 

(845) 

$( 77,779) 
6 

CTEAG reported disbursements ($169,231) that were not supported by a check or debit. 

Most of these discrepancies were due to credit card transactions for which the payment was 

not made by year-end 2008. As such, no reporting of disbursements on Schedule B was 

required. In addition, several disbursements were incorrectly reported twice. 

The $168,329 overstatement of ending cash on hand resulted from the misstatements noted 

above. 

At the exit conference, the Audit staff provided CTEAG's representatives with schedules 

detailing these discrepancies. CTEAG's representatives agreed to review the spreadsheets 

and expressed a willingness to file amended reports. 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that CTEAG: .	 . 

•	 Amend its reports to correct the misstatements noted above. 

•	 Amend its most recently filed report to correct the cash on hand balance with an 

explanation that the change resulted from a prior period audit adjustment. Further, 

CTEAG should reconcile the cash balance of its most recent report to identify any 

subsequent discrepancies that may impact the $168,329 adjustment recommended 

by the Audit staff. 

In response to the interim audit report, CTEAG amended its reports and materially corrected 

the misstatements. In addition, CTEAG amended its most recently filed reports to correct 

the cash on hand balance. 
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