Draft Final Audit Report of the 

Audit Division on the New 

Hampshire Republican State 

Committee 

January 1, 2007 - December 31, 2008 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political conunittee that is 

required to file reports 

under the Federal Election 

Campaign Act (the Act). 

The Conunission 

generally conducts such 

audits when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compl 

witii tiie Act.* The 

determines Avhcihcr ihc 

committ^ complied with 

the limilaiions, 

proHibiiions and 

disclosure requirements ol 

ttie Act. 

Future Action 

The Commission m ^ 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committe^^N), 

The New Hampshire Republi^i State Committee is a state party 

committee headquartered^^ . New Hampshire. For more 

information, see the chai^a the G^irnnittee Organization, p. 2. 

Financial Activity (p. 2) 

Receipts / 

o Contributions from^^n ji^iduals 

o Contributions from Other 

Political Conuniii 

o Transfers from Afhii:iicil-()ther 

Puri\ Cumiiiiiices _ 

o TransferN rnnn Nou-federal 

Ac^uniF 

OffscivOther Federal Receipts 

Total Rec|pts 

nis 

ederal Operating 

Expenditures 

efimds/Other Disbursements 

Federal Election Activity 

Transfers to Affiliated/Other 

Party Conunittees 

Total Disbursements 

$ 427,091 

295,028 

1,538,140 

10,494 

9,758 

$2,280,511 

$ 679,235 

12,961 

1,395,099 

176,375 

$2,263,670 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Reporting of Debts and Obligations (Finding 2) 

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

Audit Division on the 

New Hampshire Republican State 

Committee 

January 1, 2007 - DecenffBer 31, 2008 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Limitations . " 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity ^ v ^ 

Part III. Summaries v 

Findings and Recommendations ^ ^ 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financi:il.\cii\ ity > 4 

Finding 2. Reportingof Debts and i^ligailcMTi 6 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the New Hampshire Republican State Committee 

(NHRSC), undertaken by the Audit Division of the 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 ficlcl 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 Commissiq|^nlu^l perform an internal 

review of reports filed by selected committees to determii^fif tho reports filed by a 

particular committee meet the threshold requirement ftu aubstaniinl ctmipliance with the 

Act. 2U.S.C.§438(b). ^ 

Scope of Audit ^ ^ . 

Following Commission approved procedures, the .\utlii >tlLfl evaluated varies risk 

factors and as a result, this audit examined: 

1. The disclosure of disbursements,^cbis and obligatiopN. . 

2. The disclosure of expenses allocated between federal and noii-l'ederal accounts. 

3. TTiedisclosureof individualcontrib^rs- .K:!ru,M.iouandna„,c of employer. 

4. The consistency between reported figu^s and h:iiik ri:i-or(^. 

5. The completeness of records. 

6. Otiier committee opcrai itiiis necessary tu 11 se review; 

Limitations ^ 

In maintaining its disbursciiK^fii iccoids. NI IR^ satisfied the minimum recordkeeping 

requiren^ts ol' 11 CFR §102,9: however,lH[e Audit staffs testing of disbursements was 

limited hy the lack of'^extcrnal documentation, such as invoices. This lack of third party 

reco^K Jimiied testing of the nature of the expenditures and the adequacy of disclosure 

information, such as, payee itddresl^d purpose for disbursements. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration October 2,1980 

• Audit Coverage January 1,2007--D^ember 31,2008 

Headquarters Concord, Ne^ysrHi^lT1pshire 

Bank Information 

• Bank Depositories 

• Bank Accounts F9,#Federal, Two Non-Fi^f^al 

Treasurer * ^ sr 

• Treasurer When Audit Was Conducted Robl'F^^^^f 

• Treasurer During Period Covered by Audit Robert Stott. 

Management Information 

• Attended FEC Campaign Finance Seminar % N" W 

• Who Handled Accounting and Recordkeeping 

Tasks ^ 

P.iiil .inJ X'oluAteer Staff 

'^^ ^ ^ 

Ov^^ew of Fin 

^ (Audi^^ 

isibial Activity 

l^ounts) 

Cash-on-<l^n(d;@ January 1,^^81^ $ 39,293 

o Contributf^^om Individull^ ^ 427,091 

o Contributioif^i^m Other PolSal Committees 295,028 

o Transfers fromipiliated/Otiil^ Party 

Committees „ 

1.538,140 

o Transfers from Non-fjJj (^''Account 10.494 

0 Offsets/Other Federal Rlceipts 9.758 

Total Receipts $2,280,511 

0 Other Federal Operating Expenditures 679,235 

o Refunds/Other Disbursements 12.961 

o Federal Election Activity 1.395.099 

o Transfers to Affiliated/Other Party Committees 176.375 

Total Disbursements $2,263,670 

Cash-on-hand @ December 31,2008 $ 56,134 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of NHRSC s reported figures with bank records 

revealed a misstatement of receipts, disbursements and ending 9|i^^-hand in 2007, and 

receipts and ending cash-on-hand in 2008. For 2007, NHRSC understated receipts by 

$17,444, disbursements by $29,263 and overstated endin^sh-c^hand by $9,929. In 

2008, receipts were understated by $59,317 and ending e^h-on-Mid was understated by 

$26,142. In response to tiie Interim Audit Report, NHR.SC^endcd ii^ reports to 

materially correct the misstatements. ^ 

(For more detail, see p. 4) <^ 

4 

Finding 2. Reporting of Debts and Obligations ^ 

During audit fieldwork, tiie Audit sta^oted that Nl^^^i d not disclose debts 

outstanding as of January 1,2007, in the amount of $37^^2 Tor legal services. 

In response to tiie Interim Audit Report. Nl li^SC amended iiNjoRj^s to materially 

correct the disclosure of these debts. 

(For more detail, see p. 6) 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of NHRSC*s reported figures with bank records 

revealed a misstatement of receipts, disbursements and ending cush-on-hand in 2007, and 

receipts and ending cash-on-hand in 2008. For 2007, NHRSQ^indcrstated receipts by 

$17,444, disbursements by $29,263 and overstated ending cash-on-hand by $9,929. In 

2008, receipts were understated by $59,317 and ending c.i^li-on-haiid was understated by 

$26,142. ^ ' ^ 

. \ ^ 

Legal Standard ^ ' 

Contents of Reports. Each report must discjn>c: 

• The amount of cash-on-hand at the beginning mit ciul olhQie reporting period; 

• The total amount of receipts for the reporting penojjLl and for the calendar year; 

• The total amount of disbiursemenS^ for the reporting pci itul and for the calendar year; 

and 

• Certain transactions that require itemi/aiioi^^^hedule A (itemized Receipts) or 

Schedule B (Itemized Disbursements^ U,^^434fb).cf), (2), (3), (4) and (5). 

Facts and Analysis 

A. Facts ^ 

As part of tills audit, the .Xutlii ^lalT u\-tiiici1i:d reported activity with bank records for 

calendar years 2()()7 and 2008. I lie Inllowiiig charts outiine the discrepancies for the 

begimiiii!; cash lialaiK-c>. icccipiN. dishursements, and the ending cash balances for each 

yea^.Succeeding paragraphs addrc>\ 0e reasons for the misstatements, if known. 

2007 Comnliltee Activity 

Reported Bank Records Discrepancy 

Begiiming Cash B^Iancd^ 

January 1,2007 

$37,403 $39,293 $1,890 

Understated 

Receipts ^ $298,127 $315,571 $17,444 

Understated 

Disbursements $299,428 $328,691 $29,263 

Understated 

Ending Cash Balance @ 

December 31,2007 

$36,102 $26,173 $9,929 

Overstated 

The beginning cash-on-hand was understated by $1,890, and is unexplained, but is 

likely the result of prior period discrepancies. 
The net imderstatement of receipts was the result of the following: 

• Unreported transfers from non-federal account $10,000 

• Reported intra-account transfer as a transfer from a non-federal account (500) 

• Unreported deposit 3,851 

• Unexplained difference 4.093 

Net understatement of receipts $17.444 

The understatement of disbursements was the result of the following: 

• Unreported disbursements 

• Unreported transfers to non-federal accounts ^ ^ 

• Unexplained difference 

Understatement of disbursements <^ N 

The $9,929 overstatement of the ending cash-on-ha^^ls^e result of ihc 

misstatements described above. 

$14,451 

12,375 

2.437 

$29.263 

2008 Committee Activity 

Reported Blik Records 

r 

Discrepancy 

Beginning Cash Balance @ 

January 1,2008 

sUi.102 s:fi.l73 $9,929 

Overstated 

Receipts $i:^, ^ Sl,9^4^,940 $59,317 

Understated 

Disbursements , $1,911^3 ^$1,934,979 $23,246 

Understated 

Ending Cash BalaiKi^) ' 

December 31,2008 ^ 

$29,992 $56,134 

1 

$26,142 

Understated 

The net understatemf iii tn reccipi> resulted from the following: 

Uiureported tr.iii^rcr> from R^nilblican National Conunittee (RNC) 

U^ported intercut from a^^ificate of deposit 

Unre^^rted receipt Trom non-federal accoimt 

Transrc^jgm RNC reported incorrectly 

Unreport£||^emt^jS:om a political party committee 

Reported rec^tfnot supported by deposits 

Receipts erroneously linked to committee 

Unexplained difference 

Net understatement of receipts 

The understatement of disbursements in the amount of $23,246 resulted from 

disbursements that were not reported $12,674, disbursements reported incorrectly 

($2,706) and an unexplained under reporting of disbursements $13,278. 

The $26,142 understatement of the ending cash-on-hand was the result of the 

misstatements described above. 

$30,100 

672 

3,394 

900 

40,000 

(5,000) 

(10,000) 

(749) 

$59.317 
B. Interim Audit Report & Audit Division Recommendation 

The Audit staff presented this matter during the exit conference and provided work 

papers detailing the adjustments. NHRSC representatives made no conunent on the 

issue. 

The Audit staff recommended tiiat NHRSC: 

• Amend its reports to correct the misstatements for 2007 and 2008 as noted above; 

and, 

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

explanation that the change resulted from a prior perioi^udii'^adjustment. Further, 

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

subsequent discrepancies that may impact the $26,142 adin^inient recommended 

by the Audit staff. ^ . 

C. Committee Response to Interim Audit Repdrl 

In response to the Interim Audit Report, NHRSC filed amended reports thai inut^rially 

corrected the misstatements. \^ ^ 

In addition, NHRSC demonstrated that some adjustments ^u^zgested in the Interim Audit 

Report were not necessary. The amounts shown in the table almve have been revised to 

reflect these changes. ^ 

Finding 2. RepgH^g of Deb% and opiigations 

Summary ^ k ' 

During audit fieldwork;^the Audit staff noted t^ i NHRSC did not disclose debts 

outstanding as of January 1, 2007. in ihc^^gtmt of $375,082 for legal services. 

In respoi^^lo the Iniei nn Auliit Report, N^S C amended its reports to materially 

correct^^ disclosure oi' ihe>e dehh. 

Legal Standard ^ 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature ol oijistanding debts and obligations until those debts are extinguished. 

2 U.S.C §434(b)(8i ami VI CFR §§ 104.3(d) and 104.11(a). 

B. Itemizing Debts^nd Obligations. 

• A debt of $500 or less must be reported once it has been outstanding 60 days from 

the date incurred; the committee reports it on the next regularly scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on 

which tiie debt was incurred. 11 CFR §104.11(b). 
Facts and Analsrsis 

A. Facts 

During audit fieldwork, the Audit staff identified debt outstanding for legal services as of 

January 1,2007, totaling $375,082, not disclosed by NHRSC. During tiie audit period, 

NHRSC made payments, which reduced the outstanding balance to $305,082, as of 

December 31,2008. None of the reports filed during the audit period included the 

outstanding balance of tiiis debt. 

B. Interim Audit Report & Audit Division Recommendation -

The Audit staff presented this matter during the exit conferenc||{intl pQsvided work 

papers detailing the debts. NHRSC representatives made nn ctminient on the issue. 

The Audit staff reconunended that NHRSC amend its reports to disclose this debt and 

corresponding debt payments on Schedule D. '^J*^ 

C. Committee Response to Interim Auditplport ^ ^ 

In response to tiie Interim Audit Report, NHRSC i^iled amendi^ reports thaun.iierially 

corrected the disclosure of these debts. 

r