Attachment as stated

Informational copies of the report have been received by

all parties involved and the report may be released to the pUblic.

cc: FEC Library

RAD

~blic Records

May 8, 1981

FRED EILAND

PRESS OFFI~E~

BOB COSTA ..,A~

PUBLIC ISSUANCE OF FINAL AUDIT REPORT -

REALTORS POLITICAL ACTION COMMITTEE

WASHINGTON. 0 C 204&3

FEDERAL ELECTION COMMISSION

Attached please find a copy of the final audit report

of the Realtors Political Action Committee which was approved

by the Commission on April 6, 1981.

MEMORANDUM

l"ROM:

SUBJECT:

TO:

B. Key Personne!

-2-

-

The principal officers of the Committee during the

period covered by the audit were: Mr. Paul J. Everson, Chairman

from January 1, 1977 through January 23, 1977, Mr. Melvin L.

Mould, Chairman from January 24, 1977 through February 25, 1979,

Mr. Frank K. Halley, Jr., Chairman fro~ February 26, 1979 through

June 30, 1979, Mr. Alvin J. Wolff, Sr., Treasurer from January

1, 1977 through February 25, 1979, and Mr. James L. Helsel,

Treasurer, from February 26, 1979 through June 30, 1979.

C. Scope

The audit included such tests as verification of

total reported receipts and expenditures and individual

transactions: review of,required supporting documentation:

analysis of Committee debts and obligations: and, such other

audit procedures as deemed necessary under the circumstances.

II. Audit Findings and Recommendations

A. A matter noted during the audit was referred to the

Commission's Office of General Counsel.

B. Disclosure of Receipts

~, .

During the audit period Section 434(b) (1) and (2)

of Title 2 of the united States Code stated, in part, that

each report shall disclose the amount of cash on hand at the

beginning of the reporting period, and the full name, mailing

address (occupation and the principal place of business, if

any) of each person who has made one or more contributions to

or for such committee within the calendar year in an aggregate

amount or value in excess of $100.

Currently, Section 432(b) (2) of Title 2 of the United

States Code states that every person who receives a contribution

for a political committee which is not an authorized committee

shall:

(a) if the amount of the contribution is $50 or less,

forward to the treasurer such contribution no later than 30 days

after receiving the contribution: and

(b) if the amount of the contribution is in excess of

$50, forward to the treasurer such contribution, the name and

address of the person makinq the contribution, and the date of

receipt of the ~ontribution-no later than 10 days after receiving

the contribution.
,....

r-...

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Section 102.8{b) (2) of Title 11 6f the Code of Federal

Regulations states, in part, that if the amount of the contribution i~ in excess of $200 such person shall forward the contribution along with the contributor's identification including the

occupation and principal place of business (if any) in accordance

with 11 C.F.R. 100.12.

During the audit period Section 434{b) (4) of Title 2

of the United States Code stated, in part, that each report

shall disclose the name and address of each political committee

to which the reporting committee made any transfer of funds, toge~her with the amounts and dates.of all transfers.·

The Committee participates in joint fundraising

activities with its affiliated State PACs to solicit contributions

from its members. The contributions are raised at the state level

'and then transferred to the Committee along with an itemized

listing of contributors. In some cases, the funds are received

by the Committee without the itemized contributor listing. This

is due to processing delays at the state level. When this occurs,

the Committee deposits the funds into its account and the amount

received is reported as a debt owed by the Committee to the

State PAC making the transfer, rather than as a receipt. When

the itemized contributor listing is subsequently received, the:

Committee reports the receipt of the contributions and payment

of the debt. Payment of these debts are reported on Schedule C , only. This is to offset the reported debts owed to the State PACs"

however no debt payment occurs between the Committee and the State

PACs. In cases where the contributor information is incomplete

or never received, the questioned amount is transferred back to

the. State PAC: however the transfer is not reported. During the

audit period this method of processing receipts resulted in up to

a 16 month delay in the reporting of the receipt of funds.

Further, this method of reporting ,the jointly raised

funds results in an understatement of the Committee's beginning

and ending cash on hand for each reporting period. For the

periods the funds are actually received ,from or refunded to the

State PAC, the present process.also results in a misstatement of

reported receipts and expenditures.

The interim audit report contained a recommendation

that the Committee notifv its state PACs of the requirements of

2 U.S.C. 432(b) (2) and 11 C.F.R. l02.8{b) (2); and that the

Committee report all transfers to its State PACs as required

bv 2 U~S.C. 434(b) (4). On Februarv 23, 1981, the Committee

submitted a letter which stated that the Committee had

informed their State PACs of the contribution forwarding and

reoortinq reauirements ~s set forth in 2 U.S.C. 432(b) (2) and 11·C.F.R~ l02.8(b) (2). Further, it stated that the Committee had

revised its procedures so that all contributions, including those

received without proper contributor identification, are deposited

and reported, \'lhen' recch·ed. Finally, the Commi ttee state~ that,

they agreed to report trnnsfers back to their State' PACs ~n 1! . accordance with 2 U.S.C. 434 (b) (ol) (c), {formerly 2 U.S.C. 434 (b) ("»'1
-41' Recommendation

....

r

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The Audit staff recommends no further action on this matter.

C. Contributions

During the audit period Section 434(b) (2) of Title 2

of the United States Code stated, in part, that each report shall

disclose the full name and mailing address (occupation and principal

place of business, if any) of each person who has made one or more

contributions to or for such committee within the calendar year

in an aggregate amount or value in excess of $100, together with

the amount and date of such contributions.

As stated in finding B, the Committee and its affiliated

State PACs engage in joint campaigns to·solicit contributions

from members. These campaigns are conducted under a written

agreement which provides that contributions received will be

divided between the State PACs and the Committee on a 60% - 40%

basis. The Committee uses two (2) methods to deposit these

contributions. In the first method the Committee relied on

AO-1977-20 and established escrow accounts at the state level

into which the jointly raised funds are deposited. An escrow

agent is responsible for disbursing 60% of the funds to the State

PAC and 40% to the Committee. Accompanying the 40% transfer to

the Committee is a detailed contributor list identifying the

contributors and 100% of the amount they have contributed.

In the second method 100% of the jointly raised funds

are transferred by the State PACs directly to the Committee

along with the itemized listing of contributors. The funds are

deposited into a Committee depository and 60% of the funds are

subsequently transferred back to the State PAC. The receipt of

the individual contributions is reported by the Committee as well

as the transfer back to the State PAC.

For the period of the audit, regardless of which method

was used to deposit the funds, the Committee itemized on its

reports only contributions received in excess of or aggregating

in excess of $250.00. This was based on the fact that the

Committee's portion (40%) would then exceed $100, the threshold

for itemization at that time. Furthermore, in all cases the

Committee attributed the entire amount of the contribution to

the listed contributor on its disclosure reports, even if only

40 % of the contribution was received. This resulted in a

misstatement of both itemized and unitemized contributions.
. " .. ~-"-"'-~'_'''''-"',.,,,-,--. ....., ., ",- - "S__'.,- , "1_ ~--._~ -, .... ..

. """, -'>'-'.' ",,, ,~ -"-

>~. .,. ~~--- _ •

.:Recommendation

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

" ,~. : ·:in'~ddi'tion,'our' revieW o'f' ~he receipt record~ revealed ~,:' ,

'·that. the 'Commi:tteedid not itemize 82'other'contribtitions

'. totalinq '$39,318.63.' This amountrepresents'contrlbutions, which:·,

were'either 'de'positeddirect1y by the',Colllllittee"o'r-at-the State"

PAC level ~. ' . - > , • • - •

The: interim audi't repor't included a recommendation that

'the 'Committee establish new procedures, concerninq each method .-- ::'

,of deposit the Committee utilizes, 'which meet· the itemization .requirements. -:In.bothcases 'the $200' threshold for ,itemization-·--

should be applied,,'to· the. por'tionof ,the contribu:tion,s received.

by the Committee •." In addition,' the report included a. recommendation

'"that the ,C~m1nittee, itemize the 82 contributions .totalinq. $39~3l8.63 ..... which 'were notpreviously'!.temized.' ..:~On ,February. 23, 1981, 'the . ".

: cominlttee submittedaletter.'whichs'tated""that 'the committee adopted " " t~e 'recommended procedures contained in theinterim'audit'report- ":"'-'

'. " '.' '....·concerninq the' itemization of. contributions received •. Additionally", ~. '... 'on March 5, 1981".,the Committee filed amended ,Schedules A\'I1hich' :':~.;

. ·,,"·'1temized, .thosecontributfons previously not i tenlized. .._ . .", " •
- .

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