Draft Final Audit Report of the 

Audit Division on the Vermont 

Democratic Party 

(January 1, 2009 - December 31, 2010) 

Why the Audit 

Was Done 

Federal law permits the 

Conunission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(tiie Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold .«i«-»toK... 

requirements fo^^^^ ^ 

substantial ^^iance 

with the The audit 

determ^^^hether the 

conpllT^^^ciplied with 

the limitati 

prohibitions 

disclosure requirl 

of the Act. 

Future Action'' 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any matter 

discussed in this report. 

About the Committee |p. 2) 

The Vermont Democratic^^pis^tat^arty committee 

headquartered in Montpgl^^v eri^^C For more information, 

see the chart on the Coi&iittee O^^^^ipn, p. 2. 

Financial Activil 

• Receipts 

• Contribuj^^iEpm Individi 

• Trans^^ froi 

Com^ttees. 

^Smmitte 

s| Other Rec 

ital Receip 

ts 

Expenditures 

Federal Election Activity 

All Other Disbursements 

Total Disbursements 

$ 544,077 

332,494 

219,000 

89.791 

S 1,185,362 

$ 762,858 

238,300 

175,576 

$ 1,176,734 

Finding and Recommendation (p. 3) 

• Recordkeeping for Employees 

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

Audit Division on the 

Vermont Democratic Party 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Cruidance 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summary 

Finding and Recommendation 

Part IV. Finding and Recommendation 

Recordkeeping for Employees 

i 

11 

SfiS .« 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Vermont Democratic Party (VDP), 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 

field investigations of any political committee that is required to file a report imder 2 U.S.C. 

§434. Prior to conducting any audit under this subsection, the C^in^sioiimust perform an 

internal review of reports filed by selected committees to dc^^ ^ v^^i ^ the reports filed by 

a particular committee meet the threshold requirements for^ubstantia^^^iance with the Act. 

2 U.S.C. §438(b). 

I 

Scope of Audit ^P^^, ^^^ ^ 

Following Conunission-approved procedures, the Audit sta* ev83Pi^4,^^^o^s risk factors and 

as a result, this audit examined: ' 

1. the disclosure of individual contributors* occupi 

2. the disclosure of disbursements, debts and o 

3. the disclosure of expenses allocated betweei 

4. the consistency between reported fii 

5. the completeness of records; 

6. the disclosure of independent expi 

7. other committee operations nece^i 

Commissio 

Request 

Pursuant^ 

Consideration 

legal question rai 

under 11 C.F.R. §1 

eral accoimts; 

;ures; and 

the reviewT^*' 

Consideration of a Legal Question 

tatement Establishing a Program for Requesting 

e Commission," VDP requested early consideration of a 

VDP questioned whether the monthly time logs required 

to employees paid with 100 percent federal funds. 

The Commission conclud^oy a vote of 5-1, that 11 C.F.R. § 106.7(d)(1) does require 

committees to keep a monthly log for employees paid exclusively with federal fimds. Exercising 

its prosecutorial discretion, however, the Commission decided it will not pursue recordkeeping 

violations for the failure to keep time logs or to provide affidavits to account for employee 

salaries paid with 100 percent federal fimds and reported as such. The Audit staff informed VDP 

Counsel of tiie Commission's decision on VDP's request. The finding presented in this audit 

report does not include VDP employees paid with 100 percent federal funds and reported as 

such. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

Date of Registration October 20,1976 

Audit Coverage January 1,2009,- December 31,2010 

Headquarter •§5 .•«Si' s Montp 

Bank Information 

Bank Depositories Two 

Bank Accounts Five 

Treasurer 

Treasurer When Audit Was Conducted Lind 

Treasurer During Period Covered by Audit 

Management Information 

• Attended Commission Campaign Fini 

Seminar 

Who Handled Accounting and R^ 

Tasks 

Michael Innef^^Od ^ 4/2009) 

rdFrey(4i^^^6/2009) 

Ll^touchette (^009 - 8/2009) 

(8^009-2/2011) 

Patastaff and volimteers 

OvervieWf Ffiiancial Activity 

(4»dited Amounts) 

Cash-on-hand ^ If WS^ $ 37,901 

Receipts 

o Contributions from Iii^^duals 544,077 

o Affiliated Conunitte€fi^ 332,494 

o Other Political Conunittees 219,000 

o All Other Receipts 89,791 

Total Receipts S 1,185362 

Disbursements 

o Operating Expenditures 762,858 

o Federal Election Activity 238,300 

o All Other Disbursements 175.576 

Total Disbursements $ 1,176,734 

Cash-on-hand @ December 31,2010 $ 46,529 
Part III 

Summary 

Finding and Recommendation 

Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that VDP did not maintain any 

monthly logs, as required, to dociunent the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the Audit staff identified payments to VDP 

employees totaling $203,472, for which monthly payroll 

of tiie VDP employees were originally disclosed as having been pj 

of federal and non-federal funds. Afier the exit confer^^, VD 

disclose payments to employees as federal election acti' 

In response to the Interim Audit Report recommendation 

all employees with 100 percent federal fiinds. Further, VDP sl 

monthly timesheets for all employees paid with f^^^non-fedei^ 

order to track the percentage of time each emplsVee^^ds on fede^election activity. 

The Audit staff considers this matter resolve^ (For.pfe|^fctaite, sfee p. 4.) 

intained. All 

th an allocation 

ts reports to 

mitted a pisai to pay 

ould,;naintain 

ited funds, in 

W 

^ This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such. (See Part I, Background, Commission Guidance, Request for Early Commission Consideration of a 

Legal Question, p. 1.) 
Part IV 

Finding and Recommendation 

I Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that VDP did not maintain any 

monthly logs, as required, to document the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the Audit s 

employees totaling $203,472^, for which monthly payr 

of the VDP employees were originally disclosed as ha 

of federal and non-federal funds. Afier the exit confere: 

disclose pa3niients to employees as federal election activ 

yments to VDP 

maintained. All 

an allocation 

repptsto 

In response to the Interim Audit Report recommendation, VDFl^|mitted a plan to pay 

all employees with 100 percent federal funds. Ftngyaer. VDP said^^Bk|Jiia niaintain 

monthly timesheets for all employees paid withwill^H|Bon-federalyBcat^ funds, in 

order to track the percentage of time each en^oyee Jp^lHiiPn gsderal election activity. 

The Audit staff considers this matter resolve 

Legal Standard 

Maintenance of Monthly Logs. committe^Siil^keep a monthly log ofthe 

percentage of time ft^Am??!^ connection with a federal election. 

Allocations of safea^MMMto frin^B||ciefi^ts are to be determined as follows: 

lercento^Ksof their compensated time in a given 

tivities^ust be paid either from the federal account 

tive costs; 

than 25 percent of tiieir compensated time in a given 

tivities must be paid only from a federal accoimt; and 

of their compensated time in a given month on federal 

election tiSUfcs v^^Pot paid entirely with funds that comply with state law. 11 

CFR §106 

Facts and AnalyCis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements for payroll. VDP did not 

maintain any monthly logs or equivalent records to document the percentage of time each 

employee spent in connection with federal election activity. For 2009 and 2010, the 

^ This total does not include payroll for employees paid with 100 percent federal fimds and reported as 

such. (See Part I, Background, Commission Guidance, Request for Early Commission Consideration of 

a Legal Question, p. 1.) 
Audit staff identified payments to VDP employees totaling $203,472^'^ for which payroll 

logs were not maintained. All of these individuals were originally disclosed as having 

been paid with an allocation of federal and non-federal funds. VDP had no employees 

paid with exclusively non-federal funds. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the pa.yro\\ recordkeeping matter with VDP representatives 

during audit fieldwork and at the exit conference. VDP representatives stated that they 

were unable to locate the documentation requested and explained that these payroll 

expenditures were reported erroneously as shared federal/] 

solely federal. Further, they stated plans to correct this 

amending their reports and disclosing these expendituri 

Audit staff verified that the VDP had sufficient federal 

and non-federal share of payroll costs. Afier the exit o 

reports to disclose the payroll as federal election activity 

The Interim Audit Report recommended tiiat VDP provide 

maintain monthly payroll logs to track the percesl^^!^ time each* 

federal election activity. 

C. Committee Response to Interim 

In response to the Interim Audit Rep 

with 100 percent federal funds ani 

Schedule B, line 30b (Itemized 

with Federal Fim< 

employees wi 

funds. VD^^ovided a sanij 

to occuTjJ^e contingency pl 

keepsj^^ l logs, makes propd 

consfUlts^^^pP Counsel to e; 

consistent \^^^mmission 

vity, instead of 

ensively 

activity. The 

ral 

ed 

funds. 

plan to 

yee spends on 

den 

considers this resolvec 

DP sub^ttedjg}lan to pay all its employees 

all itffl^^ees' salaries and benefits on 

ments- Fed^WElection Activity Paid Entirely 

ontingency, in the event VDP ever has to pay 

ederal funds or solely with non-federal 

roll logV5e used if such payment to employees were 

requiies the Executive Director to ensure that VDP 

rts, maintains a reference file for continuity, and 

payment with the appropriate funds. Such action is 

ce with respect to payroll logs. The Audit staff 

* Payments to VDP employees paid with 100 percent federal funds and reported as such are not included in 

this finding. (See Part I, Background, Commission Guidance, Request for Early Commission 

Consideration of a Legal Question, p. 1.) 

^ Payroll is stated net of taxes and benefits.