FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

January 4,2017 

MEMORANDUM 

To: 

Through; 

From: 

The Commission 

Alec Palmer 

Staff Director 

Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. HintermisterTT^ 

Assistant Staff Director 

Audit Division 

Kendrick Smi 

Audit Managi 

By: 

Subject: 

Lead Auditor^ 

Audit Division Recommendation Memorandum on Kind for Congress 

Committee (KFCC) (A15-02) 

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. 

Untimely Deposit of Receipts 

The Audit staff determined that KFCC failed to deposit, within 10 days of receipt, 

contributions totaling $581,719 during the 2014 election cycle. In response to the 

Interim Audit Report recommendation, KFCC acknowledged the issue and stated 

that it has proactively taken a number of steps to fix this situation in the future. 

KFCC reiterated its corrective measures in its response to the DFAR. 

The Audit staff recommends that the Commission find that KFCC untimely 

deposited contributions totaling $581,719. 

KFCC 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 the Audit Division Recommendation 

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

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

Should you have any questions, please contact Rosa Crussiah or Kendrick Smith at 694-

1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on Kind for Congress Committee 

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

Audit Division on 

Kind for Congress Committee 

(January 1, 2013 - December 31, 2014) 

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 mi 

the threshold 

requirements for 

substantial compliance 

with the ActU.-35ie.5udit 

determi 

comimtl^ complietfw 

the InhiMipns, 

prohibitii 

disclosure requirements 

of the Act. 

Future Actioi 

The Commission i 

initiate an enforcement 

action, at a later time, 

with respect to the matter 

discussed in this report. 

About the Campaign 

Kind for Congress Commi 

committee for Ronald Ki 

States House of 

Congressional District^ 

Wisconsin. For 

Organization ch£^p.2. 

; ^ncipal campaign 

i^ratic candidate for the United 

ives'hran the state of Wisconsin, 3"" 

; head^wlhered in La Crosse, 

ation, se^>t^^ampaign 

Financial A 

eipts 

o !!^on{nbutions fro 

' ihutionsfrom 

Its 

o uperatmg Expenditures 

Total Disbursements 

$ 602,932 

1,564,507 

5,001 

1,316 

$ 2,173,756 

$ 1,180,511 

$ 1,180,511 

Finding and Recommendation (p. 3) 

• Untimely Deposit of Receipts 

' 52U.S.C. §30111(b). 
Draft Final Audit Report of the 

Audit Division on 

Kind for Congress Committee 

(January 1, 2013 - December 31, 2014) 
Table of Contents 

Page 

Part 1. Background 

Authority for Audit 

Scope of Audit 

Part II. Overview of Campaign 

Campaign Organization 

Overview of Financial Activity 

Part III. Summary 

Finding and Recommendation 

Part IV. Finding and Recom 

Untimely Deposit of Receipts 

2 

2 
Parti 

Background 

Authority for Audit 

This report is based on an audit of Kind for Congress Committee (KFCC), undertaken by 

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

with the Federal Election Campaign Act of 1971, as amended (the Act). The Audit 

Division conducted the audit pursuant to 52 U.S.C. §30111(b), which permits the 

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

required to file a report under 52 U.S.C. §30104. Prior to 

subsection, the Commission must perform an internal revii 

committees to determine if the reports filed by a partici 

requirements for substantial compliance with the Act 

ly audit under this 

irts filed by selected 

meet the threshold 

le of employer; 

Scope of Audit 

Following Commission-approved procedur 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from f 

3. the disclosure of contributions i 

4. the disclosure of individual contril 

5. the consistency between reported fi£ 

6. the completeness of^ectsrds: and 

7. other committee odraafidns necessary to 

risk 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration January 30,1996 ^ 

• Audit Coverage January 1,2013/^)e^^ber 31,2014 

Headquarters La Crosse, WI^ < 

Bank Information //w 

• Bank Depositories Seven W 

• Bank Accounts On^4^e^i^, Six savin^^ 

Treasurer // \ \ 

• Treasurer When Audit Was Conducted 4 i&^Smitfr(February 10,^l^present) 

Cnarl^s,Mapr^{^uary 30,-

F^rjiaBy9,2016) 

• Treasurer During Period Covered by^Audit Charles 

Management Information 

• Attended Commission Campaign Finano^ ^ 

Seminar 

• Who Handled Accounting*aiidv 

Recordkeeping Tasla^y'' "N. \ \ 

;paid St2^ 

icial Activity 

LuditeH-^mounts) 

Cash-on-hahd^ January 1X2QI3 ^ S 458,874 

Receipts \\ 1 | 

0 Contributions Ixp^ndividqals 602,932 

0 Contributions froV^U^^ Committees 1,564,507 

0 Offsets to OperatingX^x^enditures 5,001 

0 Other Receipts ^ 1,316 

Total Receipts S 2,173,756 

Disbursements 

0 Operating Expenditures 1,180,511 

Total Disbursements S 1,180,511 

Cash-on-hand ® December 31,2014 S 1,452,119 
Part III 

Summary 

Finding and Recommendation 

Untimely Deposit of Receipts 

During audit fieldwork, a review of contributions from politicaL ittees determined 

that KFCC failed to deposit, within 10 days of receipt, cont^l^ Italing $581,719 

received during the 2014 election cycle. In response to tlu^t^ dit Report 

recommendation, KFCC acknowledged the finding and $mted tn as taken several 

measures to ensure future compliance with regard t^ti^l:^depc receipts. (For 

more detail, see p. 4.) 
Part IV 

Finding and Recommendation 

Untimely Deposit of Receipts 

Summary 

During audit fieldwork, a review of contributions from political committees determined 

that KFCC failed to deposit, within 10 days of receipt, contribi^^'^taling $581,719 

received during the 2014 election cycle. In response to the Intmm Audit Report 

reconunendation, KFCC acknowledged the finding and st^d^'tMt^t has taken several 

measures to ensure future compliance with regard to timSy dep^n^^f its receipts. 

Legal Standard 

A. Timing of Deposits. A treasurer of a 

deposits of contributions. These deposli 

receipt of the contribution. 11 CFR § 103. 

i^ee is responSimbTi^ making 

ithin 10 da^^the 

B. Receipt of Contributions. Every person who receives a contribution in excess of 

$50 for a political committee which is an authorized committee shall, no later than 

10 days after receipt of the contribution, forward to the treasurer of the committee: 

The contribution, Ae name and address of the contributor; and the date of receipt of 

the contribution. If the amount of the contribution is in excess of $200, such person 

shall forward the contribution, the identification of the contributor in accordance 

with 11 CFR 100.12, and the date of receipt of the contribution. Date of receipt 

shall be the date such person obtains possession of the contribution. 52 U.S.C. 

§30102(b)(l) and 11 CFR §102.8(a)^ 

id Anali 

A. Fac^ 

During audiIsfi%l(^ork, thd ^udit staff utilized a combination of sample testing and 

focused reviews.^identify the untimely deposit of contributions received from political 

committees. Th^^pl^esting and focused reviews identified untimely deposit errors 

totaling $581,719.^ ^is amount represents approximately 37% of all contributions from 

political committeesT On average, Ae time between receipt and deposit of these 

contributions was 26 days, ranging fix)m 14 to 100 days. 

During this review, the Audit staff asked KFCC officials which date they used on the 

FEC disclosure reports. A KFCC representative responsible for the daily input of 

contributions informed the Audit staff, on more than one occasion, that the receipt date 

^ The sample error amount was projected using a Monetary Unit Sample with a 95 percent confidence level 

plus the result of a focused review of contributions not included in the sample population. The sample 

estimate could be as low as S492,04S and as high as S62S,394. 
reported in its FEC disclosure filings was the date the contribution was received by 

KFCC. Based on this affirmation, the Audit staff used the date of receipt provided in 

KFCC's receipts database (which agreed with the date of receipt reported on the 

disclosure reports) to determine the number of days it took KFCC to deposit its 

contributions. 

However, because KFCC representatives later expressed some uncertainty about the 

validity of the actual dates of receipt (see discussion below), the Audit st^ revised its 

calculation and used the date of the contributor check (plus three days for mailing) as the 

date of receipt in determining the number of days from receipt of Jhe contributor check to 

its deposit. ^ 

B. Interim Audit Report & Audit Division Recommei 

The Audit staff discussed this matter with KFCC 

conference at the conclusion of audit fieldwork, 

detailing the untimely deposited contributions, 

contributions from political committees were 

D.C. and mailed to their Wisconsin office for 

the mail delivery from Washington, D.C. to its 

took up to 10 days. As a result, KFQQwas not able to 

Furthermore, the representatives stat 

receipt of these contributions and they i 

contributions were received in Wa 

that, in the future, they would look at vari2 

deposited. The Audit 

the deposits locally 

city. Then, the 

reporting purposes, etc? 

reduce the mail-delB(ery 

these opti^Mir 

ited that 

Utilized a 

M email a lis 

also SI 

^iseehsin. 

tibi 

itive^mng the exit 

them\(mKwork papers 

representatives stated^t the 

resentativ^n^^hington, 

ing to the remdsentatives, 

:, Wisconsin sometimes 

deposit these contributions, 

of the actual date of 

be the date the 

isconsin. They added 

'contributions were timely 

sent^pve in Washington, D.C. make 

inal bank with many locations within the 

le contributions to KFCC for 

lested the use of express shipping to 

e representatives said they would consider 

were 

^hether if 

NorTsajCros 

ation was provided in KFCC's response to the exit 

In accordaqcb>with 11 CF! 

representative;ro>Wash: 

representative r 

allowed to accept txjni 

deposits are made 

,102.8\a), the date of receipt is the day the KFCC 

D.C. obtains possession of the contribution. ® The 

, D.C. was an authorized agent of the treasurer who was 

ions on behalf of KFCC. Therefore, KFCC must ensure that 

10 days of its Washington, D.C. representative's receipt to 

comply with the requirements of 11 CFR §103.3(a). 

This method of determining a receipt date is utilized by the Audit staff when the actual receipt date is 

unknown. There was a minor decrease in the error total using this method. 

Contributions from individuals were usually mailed directly to the KFCC office in La Crosse, Wl. 

The Act and Commission regulations contemplate that the treasurer will have authorized agents to 

receive contributions and make expenditures for the committee. 11 CFR §102.9. The receipt of a 

contribution by an authorized agent is the equivalent of the treasurer's receipt and triggers the 10-day 

deposit period at 11 CFR §103.3(a). Advisory Opinion 1992-29 (Holtzman). 
The Interim Audit Report recommended that KFCC provide evidence demonstrating that 

the contributions in question were deposited timely or submit any additional conunents 

relevant to this matter. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, KFCC acknowledged the issue 

and stated that it has proactively taken a number of steps to fix this situation in the future. 

To ensure that all contributions are deposited in a timely manner, KFCC stated that it had 

made the following changes: 

• It has engaged a professional compliance firm to further ensure compliance with 

all applicable rules. 

• Wisconsin staff now makes deposits of contribution! i weekly basis to ensure 

timely deposit of all contributions received in Was^i ^D.C. 

• It has a new campaign treasurer, and campaigpvsrag ^cpiV@d additional 

training regarding compliance rules. 

• When donations are received by campaij 

contributions are now deposited ( 

institution. 

• Keeping all additional records relevant to 

including envelopes and addif 

KFCC stated "that the statute and FEC 

deposits - they could easily be read to all 

delivery to rural areas, suph-a^a Crosse, 

one-size-fits-all policy^n-tint^ess of < 

delivery in rural ar^ rs gene^l;^ much slo\ 

itributions are received. 

flear witKV^^ct to the timeliness of 

! also reiterated that mail 

isin, icmjsike weeks and that "the FEC's 

Its does ncoake into account that mail 

: than in big cities or on the coasts." 

The Audit staff acknowl 

with the 

some cpi^ittees 

establ^hmg deposit; 

conmbhtlonJs received 1 

deposited wmdn 10 days, 

timely depo^>pf^ntributo^checks. 

iges that KFCC has made to comply 

§lII3':S(-a);>While there are mail delivery challenges that 

a.y face, Ae Commission has addressed this matter by 

„ _ ,rrecgiDt of the contribution. It is not until after the 

itre^ufer or the treasurer's authorized agent that it must be 

: Commission established this guidance to promote the 

The provisions at i^su^lkthe KFCC response are 11 CFR §103.3(a), which requires that 

all receipts by a poli^dal committee be deposited within 10 days of the treasurer's receipt, 

and 11 CFR § 102.8(a), which requires every person who receives a contribution for an 

authorized political committee to forward the contribution to the treasurer no later than 

10 days afler receipt. 

The Act and Commission regulations are clear regarding the time frame for depositing 

contributions regardless of whether those contributions are received directly by the 

treasurer or by an individual acting on behalf of the committee. Contributions must be 

deposited within 10 days of receipt. 11 CFR §103.3. The Conunission has stated that 

when a committee representative or agent receives a contribution, the receipt of that 
contribution is imputed to the committee's treasurer and thus must be deposited within 10 

days of the treasurer's or agent's receipt.^ 

' Advisory Opinion 1992-29 (Holtzman) - see also footnote S.