,\. .~. ""

AKOQ3864

~~une 15, 1993

KEMORANDUM

TO:

FROK:

FRED EILAND

CHIEF, PRESS OFFICE

ROBERT J. COSTA

ASSISTANT STAFF DI:E~;;--­ AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

AGRAN FOR PRESIDENT 92

r - Attached please find a copy of_ thefinalaudit:!eporton

Agran for President 92 which was approved by the Commission- - . :, on June 8, 1993.

Informational copies of the report have been received by

all parties involved and the report may be released to the

public.

> - "" Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure

Reports Analysis Division

FEC Library
I -

. -

REPORT Of THE AUDIT DIVISION

ON

AGRAN fOR PRESIDENT 92

I. Background

A. Audit Authority

This report is based on an audit of Agean for President

92 (the Committee). The audit is mandated by Section 9038{a) of

Title 26 of the United States Code. That section states that

"after each matching payment period, the Commission shall conduct

a -tnorough-exaaina-tion- and_ aU~it of the qualified campaign

expenses of every candidate and his alfthor-it~d C'oIDitt..- who

received payments under Section 9037." Also Section 9039{b) of

the United States Code and Section 9038.1(a)(2) of the

Commission's Regulations state that the Commission may conduct

other examinations and audits from time to time as it deems

necessary.

In addition to examining the receipt and use of Federal

funds, the audit seeks to determine if the campaign has materially

complied with the limitations, prohibitions and disclosure

requirements of the Federal Election Campaign Act of 1971, as

amended.

B. Audit Coverage

The audit covered the period from the Committee's

inception, August 21, 1991*/, through July 31, 1992. During this

period, the Committee reports reflect an opening cash balance of

$-0-, total receipts of $630,442, total disbursements of

$593,253, and a closing cash balance of $37,189. In addition, a

limited review of the Committee's transactions and dis:l:sure

reports was conducted through March 31, 1993, for purpcs~s cf

jetermining the Committee's remaining matching fund en~lt:emer.t

based on its financial position.

~/ The original Statemen: of Organization was filed with the

Federal Election Commission August 21, 1991. The Committee

opened its bank account August 6, 1991, which was the start

of reported activity.
2

c. Campaign Or9aniza~i~n

The Committee req~s~ered with the Federal Election

Commission on August 21, 199:. The Treasurers of the Committee

during the perlod covered ty :he a~dit were Peter J. Van Susteren

frcm Aug'..;st 21, 1991 to Marc:: 31, :992 and Christopher H. Kln::

frcm Mar~~ 31, 1992 to the present. .

The campaign established :~s national headquarters in

Irvine, California.

To handle its finan~ial a~tivity, the campaign used o~ly

one bank account. From this account the campaign made

appr0ximately 1,023 disbursements. Approximately 5,728

contributions were received from 4,417 persons. These

contributions totaled $335,488. (Per Committee's magnetic tape

files. )

In addition to cc~tributlons, the campaign received

$269,691 in matching funds from the United States Treasury. This

amount represents 1.95\ of the S13,810,000 maximum entitlement

that any candidate could receive. The candidate was deterained

eligible to receive matching funds on May 14, 1992. To date, the

- campaign has made 2 matching funds requests. The Commission has

certified 99.53\ of the requested amount. For matchingfu-nd

~c~ purposes, the Commission determined that Mr. Agran's candidacy

ended July 15, 1992. This determination was based on Commission

regulations which specify the matching payment period ends ".~.on

the date on which the national convention of the party whose

nomination a candidate seeks nominates its candidate for the

office of President of the United States, ... " 26 u.s.c. S9032(6 1 :

see also 11 C.F.R. S9032.6. The campaign has continued to

receive matching fund payments to defray expenses incurred before

July 15, 1992 and to help defray the cost of winding down the

"~ campaign.

A:tachment 1 to this report is a copy of the

Commission's most recent Report on Financial Activity for this

campaign. The amounts shown are as reported to the Commission by

the campaign.

As part of the Commiss~:n/s s~andard audit process, a~

i:;''''entory of the Committee's :e'::2:ds was conducted prior t~ t~~

audit fieldwork. This inven~o~y .as to determine :f the

Committee's records were mater:a::y ~omplete and in an aud:ta~:e

s~ate. The inventory lndl~a~ej ~~a: ~~e recQrds ~e:e c0mp:e:e 3~=

by agreement wlth the Comm:::ee. ~~e aud:t :ommenced lmmed:a:e:y

:~llowing t~e inventory.

~. Audit Scope and Proced~:es

In addition to a :ev:e~ :~ ~he quallfied campaig~

expe~ses lr.cucred by the ca~~a~g~, ~~e audit cQvered the f~l:~-:-:

genera: categories:
,

... .

...

3

The receipt of cc~tr:buti~ns or loans l~ excess of the

statutory limitatlons . s~e Fin:jing II .P... \;

the receipt of ccntr:b~tl=~S fr~m ~roh:b:ted sources,

such as those from cor~=:ations or laber ~:ganizati=ns;

3. proper disclosure of cc~tributions from individuals,

political committees and other ~ntities, to include the

1temization of contributions when requ:red. as well as,

the completeness and ac~uracy of the 1nformation

disclosed;

4. proper disclosure of d:sbursements including the

itemization of disbursements when required, as well as,

the completeness and a~curacy of the information

disclosed;

s. proper disclosure of ca~~aign debts and obligations;

6. the accuracy of total reported receipts, disbursements

and cash balances as compared to campaign bank records;

,--

,

--

7.

8.

adequate recordkeeping for campaign transactions;

accuracy of the Statement of Net Outstanding campaign

Obligations filed by the campaign to disclose its

financial condition and establish continuing matching

fund entitlement (see Section III.A.};

9. the campaign'S compliance with spending limitations; and

10. other audit procedures that were deemed necessary in the

situation.

Unless specifically discussed below, no material

non-compliance was detected. It should be noted that the

Commission may pursue any of the matters discussed in this

report in an enforcement actior..

II. Findings and Recommendations - Non-repayme~: Matters

A. Apparent Excess:ve :=~:::but:cns

Section 441a,a': A :~ !:tle : c~ :~@ U~::ed States

Code states, in part, t~at n~ re:s~n sha:: ma~e ::ntributic~s ~~

any candidate with respect ~: 3~Y elect1cn f:r Federa: offi:e

which, in the aggregate, exceed S:,~CO.CC.

Section 116.5 I b' of 7:t:e 1: cf the Code cf Federal

Regulations states, in part, t~e ~ayment by an :nd:vidual frem h:s

or her personal funds, includ:~q a Fersonal :rectlt card. for t~e

costs incurred 1n prov1dlng g~:ds or serVlces t=, or obta1n:ng q:=~s

or services that are used ty =: :n teha:f of. a candldate cr
.... i -.

4

political committee 15 a contribution un:ess the payme~: is exempte=

from the definition of ccntrib~tian under 11 erR 100.7~bl(8i.

:f the pay~ent is ~~~ exempted, l~ sha:l b@ :onsidered a

c8n~r:~ution unless it ~s fer :~~ indivldual's transportation and

norma: s~bsistence exper.ses in~~rred by an individual, other than

a volunteer, while travellng cn be~alf of a candidate; and, the indi~ldual is reimbursed with:~ s:xty days after the closing date

of the billing statement cn which the charges first appear if the

payment was made using a personal credit card, or within thirty

days after the date on which the expenses were incurred If a

personal credit card was not used. "Subsistence expenses" include

only expenditures for personal living expenses related to a

particular individual traveli~g en committee business such as food

or lodging.

During the review of the Committee's disbursements the

Audit staff noted a number of reimbursements to individuals that

were for various kinds of campaign activity. For subsistence and

transportation expenses, the Committee did not reimburse the

individuals within the time periods required by 11 erR 116.S~

Individuals were also reimbursed for ether kinds of campaign

experidi tures, such as adve-r ti-sing,. supplies # telephone, _postage,

copying, tape production, and secretarial services. It was also

noted, that a number of individuals paid the transportation,

travel, and other campaign expenses incurred by other individuals,

including the candidate's expenses.

Contributions resulting from the untimely reimbursement

of expenses incurred by individuals were added to contributions

made by these individuals. The review revealed that one person

made apparent excessive contributions. The individual was in

excess of the limit for most of the period August 21, 1991 through

January 17, 1992. The amount in excess varied depending upon when

reimbursements were received. The largest amount in excess was

$6,419 on November 5, 1991. At the time of fleldwork, there were

no expense reimbursements outstanding. A review of FEC disclosure

reports filed subsequent to fleldwork revealed no other debt to

this person was reported.

This matter vas d:sc~ssed wlth ~he Committee durlng ~he

eXlt conference. They were ~:~ a.are cf ~~e ~eq~lrements :f ::

C.F.R. 116.5.

:n the :nter:m Audlt Rep2:~ :~e A~d:: s:a:: recommer.~e~ :~3:

the Committee submlt addit:~~a: 1~cume~~a::c~ to es~a~:lsh ~~a:

the lnd:vidual did not exceed :~e ~2~trlb~t:~:1 limits of 2 U.S.:.

S441ata),1)(A), or provlde a~y ~:~e~ :omments :r documentat:c~

that the Committee believed ~e:e :elevant. 7he Committee's

response stated that all docuree~~a~:c~ c: t~e Committee's

1isbursements was provided a~ :he t~~e 0: t~e audit and that :~ey

have nothing further t= pr=~:~e. 7~e response goes en to sta:e
5

that ... the Ccmmittee, bct~ d~rl~; and s nee the con~lusicn cf

the campaign, has complied ~~ the best 0: ts ability wlth the

requlrements of the Federal Ele~ti~~ Cam~a gn Act, as amended, and

tr-.e :egulations relevant theretc."

Given that the Commit~ee's =es~2~se provided ~c additional

information, there is no change In the analysis presented in the

Interim Audit Report.

1::. Findings and Recommendations Related to Title 26 of the

United States code

A. Determination of ~et Outstanding Campaign obligati~~s

Section 9034.5(a) of Title 11 of the Code of Federal

Regulations requires that within 15 days of the candidate's date

of ineligibility, the candidate submit a Statement of Net

Outstanding Campaign Obligatlons (NOCO) which contains, among

other items, the total of all outstanding obligations for

qualified campaign expenses and an estimate of necessary winding

down costs.

Section 9034.1~b) cf Title 11 of the Code of Federal

Regulations stat-es, in part, that if on the date of ineligibility

a candidate has net outstanding obligations as defined undet ~1­

C.F.R. 59034.5, that candidate may continue to receive matching

payments provided that on the date of payment there are remaining

net outstanding campaign obligations.

The NOeO statement is the basis for determining further

matching fund entitlement. Mr. Agran's date of ineligibility was

July 15, 1992. Consequently, he may only receive matching

payments to the extent that he has net outstanding campaign

obligations as defined in 11 C.F.R. S9034.S.

The Committee filed a Statement of Net Outstanding

Campaign Obligations (NOCO) which reflected the Committee's

financial position at July 15, 1992. The Audit staff analyzed the

Coaaittee's NOCO Statement and made adjustments to properly

reflect the Candidate's cash position and to correct other

misstatements. The Audit staff also took lnto account receip:s

that occurred between July :5, 1992 and August 31, 1992; winding

dewn expenses between July :6, :~92 and March 3:, :993. The

Committee's NOCO as adjus~ed t"/ :~~e Audit staff at:'pears belc.".,·.

"-1'-'-'-:'-'_·-

.--':>

I
6

Agran For President 92

Statement of Net Outstandin9

Campaign Obligations as of July 15, 1992

ASSETS

Cash on hand

Accounts Receivable

capital & Other Assets

TOTAL ASSETS

LIABILITIES

Accounts Payable for Qualified

Campaign Expenses as of 7/15/92

and Winding Down Expenses

between 7/15/92 and 3/31/93

TOTAL LIABILITIES

Net outstanding Campaign

Obligations

Conclusion

$ 42,341.00

2,970.00

-0-

S 45,311.00

66,071.00) !/

is 29,760,00)

., : '"""'

Between July 16, 1992 and August 31, 1992 the Committee

received matching funds, individual contributions, and interest

totaling $20,389.00. As of Auqust 31, 1992, the candidate's

maximum remaining matching fund entitlement was $371.00. No

matching funds were received after August 31, 1992. This analysis

is subject to change based on future adjustments to the NOCO

statement.

a Winding down expenses for September 1, 1992 through March 3:.

1993 are based on Committee disclosure reports and are

subject to audit verification.
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