FEDERAL ELECTION COMMISSION 

WASHINGTON, DC. 20463 

July 22,2009 

MEMORANDUM 

To: Judith Ingram 

Press Officer 

From: Joseph F. Stol 

Assistant Staf 

Audit Divisio 

Subject: Public Issuance of the Audit Report on Edwards for President 

Attached please find a copy of the audit report on Edwards for President, which 

was approved by the Commission on July 16, 2009. 

All parties involved have received informational copies of the report and the report 

may be released to the public on July 23, 2009. 

Attachment as stated 

cc:	 Office of General Counsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library 

lTD Web 
Why the Audit 

Was Done 

Federal law requires the 

Commission to audit 

every political 

committee established 

by a candidate who 

receives public funds for 

the primary campaign. I 

The audit determines 

whether the candidate 

was entitled to all of the 

matching funds 

received, whether the 

campaign used the 

matching funds in 

accordance with the law, 

whether the candidate is 

entitled to additional 

matching funds, and 

whether the campaign 

otherwise complied with 

the limitations, 

prohibitions, and 

disclosure requirements 

of the election law. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of 

the matters discussed in 

this report. 

Report of the Audit Division on 

Edwards for President 

December 18. 2002 - April 30. 2004 

About the Committee (p. 2) 

Edwards for President is the principal campaign committee 

for Senator John Edwards, a candidate for the Democratic 

Party's nomination for the office of President of the United 

States. The committee is headquartered in Washington, DC. 

For more information, see chart on the Campaign 

Organization, p. 2. 

Financial Activity (p. 3) 

•	 Receipts 

o	 Contributions from Individuals $ 21,900,808 

o	 Matching Funds Received 6,108,375 

o	 Loans Recei ved 2,470,614 

o	 Offsets to Operating Expenditures 1,386,903 

o	 Transfers from Edwards for Senate 962,908 

o	 Other Receipts 3,994 

o	 Total Receipts $ 32,833,602 

•	 Disbursements 

o	 Operating Expenditures $ 20,045,176 

o	 Fundraising Expenditures 6,947,671 

o	 Legal and Accounting Expenditures 2,847,441 

o	 Loan Repayments 2,470,614 

o	 Contribution Refunds 174,587 

o	 Total Disbursements $ 32,485,489 

Findings and Recommendations (p. 4) 

•	 Net Outstanding Campaign Obligations (Finding 1) 

•	 Receipt of Contributions that Exceed the Limits 

(Finding 2) 

•	 Receipt of In-Kind Contributions that Exceed the Limits 

(Finding 3) 

•	 Transfer of Funds from Edwards for Senate (Finding 4) 

•	 Stale-Dated Checks (Finding 5) 

I 26 U.S.c. §9038(a). 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1
 

Scope of Audit 1
 

Inventory of Campaign Records 1
 

Part II. Overview of Campaign
 

Campaign Organization 2
 

Overview of Financial Activity 3
 

Part III. Summaries
 

Findings and Recommendations 4
 

Summary of Amounts Owed to the U.S. Treasury 5
 

Part IV. Findings and Recommendations
 

Finding 1. Net Outstanding Campaign Obligations 8
 

Finding 2. Receipt of Contributions that Exceed the Limits 11
 

Finding 3. Receipt of In-Kind Contributions that Exceed the Limits 16
 

Finding 4. Transfer of Funds from Edwards for Senate 19
 

Finding 5. Stale-Dated Checks 23
 
1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of Edwards for President (EFP), undertaken by the Audit 

Division of the Federal Election Commission (the Commission) as mandated by Section 

9038(a) of Title 26 of the United States Code. That section states "After each matching 

payment period, the Commission shall conduct a thorough examination and audit of the 

qualified campaign expenses of every candidate and his authorized committees who 

received [matching] 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. 

Scope of Audit 

This audit examined: 

1. The receipt of excessive contributions and loans. 

2. The receipt of contributions from prohibited sources. 

3. The receipt of transfers from other authorized committees. 

4. The disclosure of contributions and transfers received. 

5. The disclosure of disbursements, debts and obligations. 

6. The recordkeeping process and completeness of records. 

7. The consistency between reported figures and bank records. 

8. The accuracy of the Statement of Net Outstanding Campaign Obligations. 

9. The campaign's compliance with spending limitations. 

10. Other campaign operations necessary to the review. 

Inventory of Campaign Records 

The Audit staff routinely conducts an inventory of campaign records before it begins the 

audit fieldwork. EFP's records were materially complete and the fieldwork began 

immediately. 
2 

Part II 

Overview of Campaign 

Campaign Organization 

Important Dates Edwards for President 

• Date of Registration January 2, 2003 

• Eligibility Period 2 December 4, 2003 - March 3, 2004 

• Audit Coverage December 18, 2002 - December 31, 2006 

Headquarters 

• Until May 2004 Raleigh, NC 

• From May 2004 Washington, DC 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Five - Checking 

Treasurer 

• Treasurer When Audit Was Conducted Julius Chambers 

• Treasurer During Period Covered by 

Audit 

Julius Chambers 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Used Commonly Available Campaign 

Management Software Package 

Yes 

•	 Who Handled Accounting and Paid Staff 

Recordkeeping Tasks 

2	 The period during which the Candidate was eligible for matching funds began on the date of certification of 

eligibility and ended on the date the Candidate announced his withdrawal from the campaign. See 11 CFR §9033. 
3 

Overview of Financial Activity
 

(Audited Amounts)
 

Cash on hand @ December 18, 2002 $0 

0 Contributions from Individuals 21,900,808J 

0 Matching Funds Received 6,108,3754 

0 Loans Received 2,470,614 

0 Offsets to Operating Expenditures 1,386,903 

0 Transfers from Edwards for Senate 962,908 

0 Other Receipts 3,994 

Total Receipts $ 32,833,602 

0 Operating Expenditures 20,045,176 

0 Fundraising Expenditures 6,947,671 

0 Legal and Accounting Expenditures 2,847,441 

0 Loan Repayments 2,470,614 

0 Contribution Refunds 174,587 

Total Disbursements $ 32,485,489 

Cash on hand @ April 30, 2004 $ 348,113 

3 Approximately 81,000 contributions from 55,500 individuals. 

4 As of April 1, 2005, EFP has made 11 matching fund submissions totaling $6,835,788 and received $6,706,548 

which represents 36% of the maximum entitlement ($18,655,000). 
4 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Net Outstanding Campaign Obligations 

Based on its financial activity through December 31, 2006, and estimated winding down 

costs necessary to terminate the campaign, EFP did not receive matching fund payments 

in excess of the Candidate's entitlement. (For more detail, see p. 8) 

Finding 2. Receipt of Contributions that Exceed the 

Limits 

The Audit staff's sample review of contributions from individuals indicated that EFP 

failed to resolve a significant number of excessive contributions. The projected total 

dollar value of the unresolved excessive contributions is $239,538. The Audit staff 

recommended that EFP provide evidence that the sample errors were not excessive or 

make a payment of $239,538 to the US. Treasury. In response to the preliminary audit 

report, EFP argued that most of the contributions listed as errors in the sample were not 

excessive and therefore a payment to the US. Treasury was not warranted. EFP also 

demonstrated that notifications were sent to contributors eligible for presumptive 

reattributions totaling $64,925; and, that refunds were made to contributors for $20,535 

of the excessive amount. As a result, the revised payment owed to the US. Treasury is 

$154,078 ($239,538 - $64,925 - $20,535). (For more detail, see p. 11) 

Finding 3. Receipt of In-Kind Contributions that Exceed 

the Limits 

The Audit staff's review of the use of non-commercial aircraft for campaign travel 

identified in-kind contributions from one contributor that exceeded the limits by $22,689. 

The excessive contributions resulted from EFP'sreimbursement for the service provided 

at an amount less than required. The Audit staff recommended that EFP provide 

evidence that an excessive contribution was not received or make a payment of $22,689 

to the US. Treasury. In response to the preliminary audit report, EFP provided 

documentation which demonstrated the correct amount was reimbursed for campaign 

travel. (For more detail, see p. 16) 

Finding 4. Transfer of Funds from Edwards for Senate 

Edwards for Senate transferred a total of $962,908 to EFP of which $508,414 was 

questioned by the Audit staff as not eligible for transfer. The $508,414 included 

$414,099 in contributions that were attributed by the Senate committee to retire debt 

outstanding (candidate loans) from the 1998 Primary and General elections. These funds 

were transferred after the debt was forgiven but without written redesignations from the 

contributors. The Audit staff recommended that EFP provide evidence that the $508,414 

was eligible for transfer. In response to the preliminary audit report, EFP disagreed with 
5 

the Audit staff's conclusion that the funds were not available for transfer and asserted that 

the funds in question could be legally transferred. 

The Audit staff then recommended that the Commission determine that $508,414 was 

returnable to Edwards for Senate or payable to the U.S. Treasury. At the Open Session 

Commission Meeting held on November 13,2008, some Commissioners were of the 

opinion that Edwards for Senate could transfer funds to EFP derived from sources other than 

contributions; as asserted by EFP in its response to the preliminary audit report. The 

Commission was equally divided (3-3) on a motion to approve such a conclusion. It was 

also the opinion of some Commissioners that the Act and Commission regulations did not 

clearly prohibit the transfers as structured by EFP. As a result, there were not 4 votes to 

approve the recommendations of the Audit staff, and the Commission voted 6-0 to have the 

audit report reflect the discussion held at the Open Meeting. (For more detail, see p. 19) 

Finding 5. Stale-Dated Checks 

The Audit staff identified 53 stale-dated checks totaling $20,181 issued by EFP. It was 

recommended the EFP provide evidence that these checks were not outstanding or make 

a payment to the U.S. Treasury of $20,181. In response to the preliminary audit report, 

EFP demonstrated that as of December 31, 2006 three payees had cashed their checks 

and one check was voided. Therefore, $18,851 ($20,181 - $1,330) is payable to the U.S. 

Treasury. (For more detail, see p. 23) 
6 

Summary of Amounts Owed to the u.S. 

Treasury 

• Finding 2 Receipt of Contributions that Exceed the Limits $ 154,078 

• Finding 3 Receipt of In-Kind Contributions that Exceed the $ ° Limits 

• Finding 4 Transfer of Funds from Edwards for Senate $ ° 

• Finding 5 Stale-Dated Checks $ 18,851 

Total Due the U.S. Treasury $ 172,929 

Committee Response to the Preliminary Audit Report & Audit Staffs 

Assessment 

In response to the preliminary audit report, EFP stated that the Commission does not have 

the authority under the statue nor the regulations to require payments to the U.S. Treasury 

for "receiving excessive contributions, including in-kind contributions, as well as 

improper transfers." They stated the Commission only has the authority to require 

repayments for funds used for non-qualified campaign expenses, failure to provide 

adequate documentation, receiving payments in excess of entitlement and for receiving 

net income from an investment or other use of public funds, none of which apply to the 

issues in this report. 

EFP acknowledged that the Commission requires an amount equal to the amount of staledated checks to be paid to the U.S. Treasury and noted that there is a specific regulation 

to address this situation. 

For publicly funded campaigns, the Commission formally approved the use of 

disgorgements for both unidentifiable (e.g. those resulting from a sample projection) and 

identifiable excessive/prohibited contributions in 1992. The Commission promulgated 

regulations to specifically address these issues in 1995. 11 CPR §9038.1(f)(3) (sampling) 

.states, 

" ... the Committee shall submit a check to the United States Treasury for the 

total amount of any excessive or prohibited contributions not refunded, 

reattributed or redesignated in a timely manner in accordance with 11 CPR§ 

103.(b)(1)(2) or (3) ... " 

This regulation also applies to attempts to "cure" the error outside the specified time 

frame. "The Commission stated that disgorgement serves the following purposes: (a) it 

eliminates the need to monitor the refunds of excessive or prohibited contributions that 

have not been timely refunded; (b) it permits one payment to be made to the United 

States Treasury, rather than refunding multiple contributions; and (c) it is a practical 

solution when a sample review has revealed excessive or prohibited contributions." 
7 

Although the Commission recently determined that a refund to the contributor is an 

alternative to disgorgement, this is the regulatory authority for requiring payments for 

unresolved or untimely excessive contributions. 

EFP further argued that the Commission has been inconsistent in requiring payments for 

excessive/prohibited contributions. The examples EFP cites in their response either were 

not publicly funded campaigns or the excessive/prohibited contributions at issue were 

resolved prior to the commencement of the audit, albeit untimely. The Commission has 

determined that excessive/prohibited contributions resolved untimely prior to the 

commencement of the audit will not be subject to disgorgement. 
8 

Part IV
 

Findings and Recommendations
 

IFinding 1. Net Outstanding Campaign Obligations 

Summary 

Based on its financial activity through December 31,2006, and estimated winding down 

costs necessary to terminate the campaign, EFP did not receive matching fund payments 

in excess of the Candidate's entitlement. 

Legal Standard 

Net Outstanding Campaign Obligations (NOCO). Within 15 days after the 

candidate's date of ineligibility (see definition below), the candidate must submit a 

statement of "net outstanding campaign obligations". This statement shall contain, 

among other things: 

•	 The total of all committee assets including cash on hand, amounts owed to the 

committee and capital assets listed at their fair market value; 

•	 The total of all outstanding obligations for qualified campaign expenses; and 

•	 An estimate of necessary winding-down costs. 11 CFR §9034.5(a). 

Date of Ineligibility. The date of ineligibility is whichever of the following dates occurs 

first: 

•	 The day on which the candidate ceases to be active in more than one state; 

•	 The 30th day following the second consecutive primary in which the candidate 

receives less than 10 percent of the popular vote; 

•	 The end of the matching payment period, which is generally the day when the 

party nominates its candidate for the general election; or 

•	 In the case of a candidate whose party does not make its selection at a national 

convention, the last day of the last national convention held by a major party in 

the calendar year. 11 CFR §§9032.6 and 9033.5. 

Qualified Campaign Expense. Each of the following expenses is a qualified campaign 

expense. 

•	 An expense that is: 

o	 Incurred by or on behalf of the candidate (or his or her campaign) during the 

period beginning on the day the individual becomes a candidate and 

continuing through the last day of the candidate's eligibility under 11 CFR 

§9033.5; 

o	 Made in connection with the candidate's campaign for nomination; and 

o	 Not incurred or paid in violation of any federal law or the law of the state 

where the expense was incurred or paid. 11 CFR §9032.9. 
9 

•	 An expense incurred for the purpose of determining whether an individual should 

become a candidate, if that individual subsequently becomes a candidate, 

regardless of when that expense is paid. 11 CPR §9034.4. 

•	 An expense associated with winding down the campaign and terminating political 

activity. 11 CPR §9034.4(a)(3). 

Value of Capital Assets. The fair market value of capital assets is 60% of the total 

original cost of the assets when acquired, except that assets that are received after the date 

of ineligibility must be valued at their fair market value on the date received. A 

candidate may claim a lower fair market value for a capital asset by listing the asset on 

the NOCO statement separately and demonstrating, through documentation, the lower 

fair market value. 11 CPR §9034.5(c)(l). 

Entitlement to Matching Payments after Date of Ineligibility. If, on the date of 

ineligibility (see above), a candidate has net outstanding campaign obligations as defined 

under 11 CPR §9034.5, that candidate may continue to receive matching payments 

provided that he or she still has net outstanding campaign debts on the day when the 

matching payments are made. 11 CFR §9034.1(b). 

Facts and Analysis 

The Candidate's date of ineligibility (DOl) was March 3, 2004. The Audit staff reviewed 

EFP's financial activity through December 31,2006, analyzed estimated winding down 

costs, and prepared the Statement of Net Outstanding Campaign Obligations that appears 

on the next page: 
10
 

Edwards for President
 

Statement of Net Outstanding Campaign Obligations
 

As of March 3, 2004
 

Prepared December 31,2006
 

Cash in Bank 

Accounts Receivable 

Capital Assets 

$ 671,137 

532,876 

5,724 

[a] 

Total Assets 

Liabilities 

$1,209,737 

Accounts Payable for Qualified Campaign 

Expenses at 3/3/04 

Winding Down Costs: 

Paid 3/4/04 - 12/31/06 

Legal Fees (Incurred 1/1/05 - 12/31/06) 

Loan Payable at 3/3/04 

Amounts Payable to the u.s. Treasury for: 

Unresolved Excessive Contributions (See 

Finding 2) 

In-Kind Contributions that Exceed the 

Limits (See Finding 3) 

Transfer of Funds from Edwards for Senate 

(See Finding 4) 

Stale-Dated Checks (See Finding 5) 

$ 730,264 

207,343 

$ 154,078 

0 

0 

18,851 

$2,205,753 

937,607 

1,570,614 

172,929 

[b] 

[cJ 

Total Liabilities $4,886,903 

Net Outstanding Campaign Obligations (Deficit) as of March 4, 2004 

Footnotes to NOCO Statement: 

($3,677,166) 

[a] 

[b] 

[c] 

Adjusted for stale-dated checks totaling $10,486 issued prior to DOl. 

Does not include disputed invoices totaling $54,159. 

No additional winding down costsllegal fees were reported after 12131106 

(Based on a review of EFP's disclosure reports). 
11 

Shown below are adjustments for funds received after March 3, 2004 through March 31, 

2005, based on the most current financial information available at the close of fieldwork. 

Net Outstanding Campaign Obligations (Deficit) as of 3/3/2004 ($ 3,677,166) 

Private ContributionsReceived 3/4/04 through 3/31/05 373,201 

Matching Funds Received 3/4/04 through 3/31/05 3,137,020 

Other Receipts 3/4/04 through 3/31/05 13,980 

Net Outstanding Campaign Obligations (Deficit) Remaining ($ 152,965) 

as of 3/31/05 

As presented above, EFP has not received matching fund payments in excess of the 

amount to which the Candidate is entitled. Further, a payment of $52,297 on April 1, 

2005 was appropriate given the deficit position at that time. 

Finding 2. Receipt of Contributions that Exceed the 

Limits 

Summary 

The Audit staff's sample review of contributions from individuals indicated that EFP 

failed to resolve a significant number of excessive contributions. The projected total 

dollar value of the unresolved excessive contributions is $239,538. The Audit staff 

recommended that EFP provide evidence that the sample errors were not excessive or 

make a payment of $239,538 to the u.s. Treasury. In response to the preliminary audit 

report, EFP argued that most of the contributions listed as errors in the sample were not 

excessive and therefore a payment to the U.S. Treasury was not warranted. EFP also 

demonstrated that notifications were sent to contributors eligible for presumptive 

reattributions totaling $64,925; and, that refunds were made to contributors for $20,535 

of the excessive amount. As a result, the revised payment owed to the U.S. Treasury is 

$154,078 ($239,538 - $64,925 - $20,535). 

Legal Standard 

Authorized Committee Limits. An authorized committee may not receive more than a 

total of $2,000 per election from anyone person. 2 U.S.c. §441a(a)(l)(A) and (f); 11 

CPR §§110.1(a) and (b) and 110.9. 

Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either: 

•	 Return the questionable check to the donor; or 

•	 Deposit the check into its federal account and: 

o	 Keep enough money in the account to cover all potential refunds; 

o	 Keep a written record explaining why the contribution may be illegal; 

o	 Include this explanation on Schedule A-P if the contribution has to be 

itemized before its legality is established; 
12 

o	 Seek a reattribution of the excessive portion, following the instructions 

provided in Commission regulations (see below for an explanation of 

reattribution); and 

o	 If the committee does not receive a proper reattribution within 60 days after 

receiving the excessive contribution, refund the excessive portion to the 

donor. 11 CPR §§103.3(b)(3), (4) and (5) and 11O.1(k)(3)(ii)(B). 

Joint Contributions. Any contribution made by more than one person (except for a 

contribution made by a partnership) must include the signature of each contributor on the 

check or in a separate writing. Ajoint contribution is attributed equally to each donor 

unless a statement indicates that the funds should be divided differently. 11 CFR 

§110.1(k)(l) and (2). 

Reattribution of Excessive Contributions. Commission regulations permit committees 

to ask donors of excessive contributions (or contributions that exceed the committee's net 

debts outstanding) whether they had intended their contribution to be a joint contribution 

from more than one person and whether they would like to reattribute the excess amount 

to the other contributor. The committee must inform the contributor that: 

1.	 The reattribution must be signed by both contributors; 

2.	 The reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and 

3.	 The contributor may instead request a refund of the excessive amount. 11 CPR 

§110.1 (k)(3 )(A). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper reattribution or refund the excessive portion to the donor. 11 CPR 

§§103.3(b)(3) and 11O.1(k)(3)(ii)(B). Further, a political committee must retain written 

records concerning the reattribution in order for it to be effective. 11 CFR §110.1(1)(5). 

Notwithstanding the above, any excessive contribution that was made on a written 

instrument that is imprinted with the names of more than one individual may be attributed 

among the individuals listed unless instructed otherwise by the contributor(s). The 

committee must, within 60 days of receipt, inform each contributor: 

1.	 How the contribution was attributed; and 

2.	 The contributor may instead request a refund of the excessive amount. 11 CPR 

§110.1(k)(3 )(B). 

Sampling. In conducting an audit of contributions, the Commission uses generally 

accepted statistical sampling techniques to quantify the dollar value of related audit 

findings. Apparent violations (sample errors) identified in a sample are used to project 

the total amount of violations. If a committee demonstrates that any apparent sample 

errors are not errors, the Commission will make a new projection based on the reduced 

number of errors in the sample. 11 CFR §9038.1(f)(l) and (2) 

Within 30 days of service of the final audit report, the committee must submit a check to 

the United States Treasury for the total amount of any excessive contributions not 

refunded, reattributed, or redesignated in a timely manner. 11 CPR §9038.1 (f)(3). 
13 

Facts and Analysis 

The Audit staff's sample review of contributions from individuals indicated that EFP 

received a material number of excessive contributions. The projected dollar value of the 

unresolved excessive contributions in the sample population was $239,538. 5 Included 

among the sample errors were contributions made by credit card in response to a 

telemarketing solicitation that were attributed to more than one individual. The 

documentation provided in support of these contributions was credit card authorizations 

from one individual in amounts exceeding the $2,000 limit. The excessive portion was 

reattributed to another individual without obtaining the signature of the second individual 

acknowledging the contribution and joint liability for the credit card used to make the 

contribution. 

For contributions made by written instrument, sample errors included EFP's attribution of 

the excessive portion of contributions made on single account holder checks without a 

signed reattribution or, for contributions made on joint account holder checks, written 

notification for the action taken, including the opportunity to request a refund (See legal 

standard for reattribution of excessive contributions). EFP's receipts database indicated 

that reattribution letters had been sent for some the sample errors, although none were 

found in the files available. EFP did not respond to a request for a copy of its procedures 

for processing receipts and sample copies of documentation used to notify contributors of 

attributions and/or to request a reattribution. 

The Audit staff provided EFP representatives with a schedule of the sample errors for the 

unresolved excessive contributions at the exit conference. In response to the exit 

conference, EFP provided letters completed by the contributors in January and February 

2005 for a number of the sample errors. As a result of Commission decisions in other 

audits, the Audit staff reevaluated these errors and applied a credit to the estimate of 

unresolved excessive contributions (see further discussion on page 15). 

Regarding the excessive contributions for which no evidence was found that EFP sought 

a reattribution or refunded the excessive portion, EFP stated that in March 2004 the 

committee had compiled a list of excessive contributors requiring refunds." However, 

due to clerical error, refunds were not issued to all the identified contributors. EFP 

maintained that these sample errors should be removed from the universe of sample 

errors because: 

1.	 EFP had an adequate system in place to identify and issue refund checks for 

excessive contributions; 

5 The Audit staff used a monetary unit sample with a 95% confidence level. The projected dollar value of 

the sample exceptions was $239,538 (midpoint of range) and the dollar value of the sampling error was 

$202,813. The range was $36,725 ($239,538 - $202,813) to $442,351 ($239,538 + 202,813). 

6 This listing was not provided to the Audit staff. EFP's April 2004 Disclosure Report (Schedule B-P, 

Line 28A) lists contribution refunds to 56 individuals totaling $58,521 but did not disclose a refund 

associated with any of the errors identified in the sample. 
14 

2.	 The system functioned properly by identifying the above sample errors as 

requiring refund; and 

3.	 The refunds were not issued solely due to an "erroneous oversight." 

The Audit staff points out that, although the system may have identified the contributors 

requiring refunds, EFP did not issue the refunds. 

Preliminary Audit Report Recommendation 

The Audit staff recommended that EFP provide evidence that the contributions identified 

as sample errors were not excessive. Such evidence should have included timely 

notification of the action taken with the opportunity to request a refund; timely signed 

and dated reattribution letters; or copies of the front and back of timely negotiated refund 

checks. Absent such evidence, the Audit staff recommended that $239,538 be paid to the 

U.S. Treasury or the amount due be disclosed on Schedule D-P (Debts and Obligations) 

until paid. 

Committee Response to the Preliminary Audit Report & Audit Staff's 

Assessment 

In response to the preliminary audit report, EFP presented arguments attempting to 

demonstrate that the contributions in the sample, identified as excessive, were not errors. 

EFP argued that contributions received via credit card in excess of the limitations are 

acceptable unless the Audit staff has evidence that the cards were not jointly held by the 

contributors. The sample errors discussed in the response are addressed below: 

EFP stated that it demonstrated that six of the twelve contributions were not errors 

because signed reattribution letters were provided and some of these contributions were 

made on joint accounts. EFP argued reattribution letters obtained late7 

prove that the 

contributors' intent was to attribute the contribution to both account holders, even though 

the required signatures were not obtained timely. 

Furthermore, EFP stated these sample errors should be removed from the sample because 

it "unnecessarily penalizes the Committee for failing to adhere to the 60-day 

requirement." The EFP Compliance Director stated most contributions were only 

reattributed for "check or paper credit cards" if verbal approval was obtained or if EFP 

fundraising staff knew that a joint contribution was intended because a husband and wife 

both attended the event. 

EFP provided reattribution letters from certain contributors; however, these letters were 

dated more than sixty days after receipt of the contribution and several months after the 

audit began. Five of the reattribution letters were dated after EFP was given a schedule 

of the sample errors. Section 110.1 of the CPR states a contribution is considered 

reattributed if the treasurer asks whether the contribution is intended to be a joint 

contribution and recei ves a written reattribution from the contributor within sixty days 

from receipt of the contribution. Absent receipt of the reattribution letter within 60 days, 

the contribution is required to be refunded. 

7 These letters were dated after the start of the audit. 
15 

EFP also stated that one contribution was never excessive because the contribution was 

made on a check imprinted with both contributors' names, even though only one 

contributor signed the check. A letter advising the contributor of the reattribution and 

offering a refund would have been sufficient, if sent within 60 days of receipt. However, 

EFP did not send such a letter. Instead, they obtained an untimely signed reattribution 

letter. Because the letter was not received within 60 days, EFP was required to make a 

refund per 11 CPR §§103.3(b)(3) and llO.l(k)(3)(ii)(B). EFP believes failure to timely 

comply with the notification requirement does not prevent an excessive contribution from 

being cured. 

EFP stated that three of the unresolved excessive credit card contributions should be 

removed from the sample because the Audit staff failed to prove that these were not made 

on joint accounts. EFP contended that these contributions may have been made on joint 

accounts. Moreover, EFP believes that all credit card contributions should be removed 

from the sample regardless of whether reattribution letters were obtained. 

The signature of the second individual acknowledging joint liability for the credit card 

used to make the contribution was not provided for all credit card contributions to the 

Audit staff. It is the EFP' s responsibility, not the Commission's, to provide 

documentation that the contributions were made on joint accounts. 

EFP conceded that three contributions were excessive and should have been refunded. 

However, as stated above, these were not refunded due to a clerical error rather than a 

deficient system. Nonetheless, EFP believed these items alone "are not a valid sample." 

Clearly, three contributions are not enough items for a legitimate sample; however, this 

sample consisted of hundreds of items. A sample does not require a minimum number of 

errors to make a valid projection. 

Finally, EFP asserted it would be "manifestly unfair" to require a payment based on a 

sample that is "fundamentally flawed." It appears that by "flawed," EFP means that it 

disagrees with the definition of an error. Although there is a disagreement regarding 

which contributions should be considered errors, the sample projection is valid. 

Subsequently, as a result of Commission decisions in other audits, EFP was provided an 

opportunity to send notifications to contributors whose contributions would have been 

eligible for "presumptive reattribution" pursuant to 11 CPR §11O.I(k)(3)(B) (See Legal 

Standard above), or to make refunds. These actions would obviate the need to make a 

payment to the U.S. Treasury for such contributions. In response, EFP demonstrated that 

notifications of presumptive reattribution were sent for excessive contributions totaling 

$64,925 and provided evidence of untimely contribution refunds for excessive 

contributions totaling $20,535. Therefore, the remaining amount due to the U.S. 

Treasury is $154,078 ($239,538 - $64,925 - $20,535).8 

8 The dollar value of the unresolved excessive contributions was at least $96,110 based on the following: 

$10,650 (sample exception amounts) + $64,925 (amount of late notifications sent to contributors for 

"presumptive reattributions") + $20,535 (untimely contribution refunds for excessive contributions). 
16 

Recommendation 

The Audit staff recommends that the Commission determine that $154,078 is payable to 

the U.S. Treasury within 30 calendar days of service of this report. 

Finding 3. Receipt of In-Kind Contributions that Exceed 

the Limits 

Summary 

The Audit staff's review of the use of non-commercial aircraft for campaign travel 

identified in-kind contributions from one contributor that exceeded the limits by $22,689. 

The excessive contributions resulted from EFP's reimbursement for the service provided 

at an amount less than required. The Audit staff recommended that EFP provide 

evidence that an excessive contribution was not received or make a payment of $22,689 

to the U.S. Treasury. In response to the preliminary audit report, EFP stated that the 

aircraft was operated on a "dual usage" basis and therefore qualified for reimbursement at 

a first class rate, rather than a charter rate, which was the amount they paid. EFP provided 

documentation which demonstrated the correct amount was reimbursed for campaign 

travel. 

Legal Standard 

Contribution Defined. A gift, subscription, loan (except when made in accordance with 

11 CFR §§100.72 and 100.73), advance, or deposit of money or anything of value made 

by any person for the purpose of influencing any election for Federal office is a 

contribution. 11 CFR §100.52(a). 

In-Kind Contribution. The term anything of value includes in-kind contributions. The 

provision of services at a charge less than the usual and normal charge results in an inkind contribution. The usual and normal charge for a service is the commercially 

reasonable rate that one would expect to pay at the time the services were rendered. The 

value of such a contribution would be the difference between the usual and normal charge 

for the services and the amount the political committee was billed and paid. 11 CFR 

§100.52(d). 

Contribution Limits. No individual or group (other than a multicandidate committee) 

may contribute more than a total of $2,000, per election, to a federal candidate's 

campaign (the campaign includes the candidate and his or her agents and authorized 

committees). 2 U.S.c. §44Ia (a)(l)(A). 

Travel by Airplane - Prior to January 14, 2004. A candidate or person traveling on 

behalf of the candidate who uses an airplane owned or leased by a corporation not 

licensed to provide commercial service must reimburse the corporation the first class air 

fare for travel between cities with regular commercial service or the usual charter rate 

where no regular commercial service exists. 11 CFR §II4.9(e). 
17 

Travel by Airplane - On or After January 14, 2004. Campaign travelers who use an
 

airplane that is licensed by the Federal Aviation Administration to operate for hire under
 

11 CPR part 121, 129 or 135 are governed by the definition of a contribution at 11 CPR
 

§100.52(a) and (d). 11 CPR §100.93(a)(2).
 

Due to the change of this regulation during the election cycle, the Commission has 

decided to allow EFP to comply with whichever regulation was most beneficial in the 

period prior to January 14, 2004. 

Facts and Analysis 

As noted above, effective January 14,2004, the Commission revised its air travel 

regulations. Prior to the rule change, air travel was governed by: 

•	 11 CFR §114.9 - for travel on airplanes owned or leased by a corporation or labor 

organization and not licensed to offer commercial services between locations 

served by regularly scheduled commercial service, the service providers would be 

paid first class airfare. 

•	 11 CPR §100.52 - for travel on airplanes not owned or leased by a corporation or 

labor organization, the service providers would be paid the usual and normal 

charge (the charter rate). 

After the rule change, the revised regulations state: 

•	 11 CPR §100.93 - for travel on airplanes not licensed by the Federal Aviation 

Administration (FAA) to operate for compensation or hire under 14 CPR Part 

121, 129 or 135, the service providers would be paid first class airfare. 

•	 11 CFR §100.52 - for travel on airplanes licensed by the FAA to offer 

commercial service, the service providers would be paid the usual and normal 

charge (the charter rate). 

EFP's air travel occurred before and after the effective date of the revised regulations. 

For travel completed prior to the effective date (January 14, 2004) of the revised 

regulation, the Commission determined that EFP could take advantage of the regulation 

that was most beneficial to it. 

Travel prior to January 14,2004. EFP reimbursed G&L Aviation (a California 

partnership) $27,194 for seven campaign trips between March 1,2003 and November 13, 

2003. Reimbursement was based on the first class or coach air fare for travel between 

cities served by regularly scheduled commercial service. G&L Aviation is the registered 

owner" of the aircraft, a Gulfstream G-1189 (tail number Nl17GL), used for these trips. 

This aircraft does not qualify for treatment as corporate aircraft under 11 CPR §114.9(e) 

because it is owned by a partnership. In evaluating the flights under §100.93(a)(2) it is 

noted that the aircraft is certified for commercial service by the FAA under 14 CPR Part 

135. 

9 FAA records list Thomas V. Girardi and Walter Lack as "other owners." 
18 

The Audit staff determined that EFP should have reimbursed G&L Aviation $41,76410 

for these trips. As result, EFP received an in-kind contribution of $14,570 ($41,764 owed 

less the $27,194 paid) from G&L Aviation. The contribution is excessive because each 

partner had individually contributed the maximum allowed to EFP. 

Travel on or after January 14,2004. EFP reimbursed G&L Aviation $3,374 for two 

campaign trips on the same aircraft after January 14,2004. Based on the charter rate 

charged by Elite Aviation (the certified operator), EFP should have reimbursed G&L 

Aviation $11,493 for the trips. As result, EFP received an excessive in-kind contribution 

of $8,119 ($11,493 owed less the $3,374 paid) from G&L Aviation. 

Summary. Cost of Amount In-kind Excessive 

Travel Paid Contribution Amount 

G&L Aviation: 

Before January 14,2004 $ 41,764 $ 27,194 $ 14,570 $ 14,570 

On/After January 14, 2004 $ 11,493 $ 3,374 $ 8,119 $ 8,119 

Total G&L Aviation $ 53,257 $ 30,568 $ 22,689 $ 22,689 

The Audit staff provided EFP representatives with a summary of its analysis of the inkind contributions and resulting amount that exceeded the limits. The EFP 

representatives did not respond. 

Preliminary Audit Report Recommendation 

The Audit staff recommended that EFP provide evidence that the use of this aircraft did 

not result in excessive in-kind contributions. Such evidence should have included 

documentation that demonstrated the amount paid by EFP was the correct reimbursement 

rate for the aircraft used; that demonstrated a lower charter rate; or showed the aircraft 

provided by G&L Aviation was not certified for commercial service by the FAA under 

14 CFR Parts 121, 129 or 135. Absent such evidence, the Audit staff recommended that 

$22,689 be paid to the U.S. Treasury and the amount due be disclosed on Schedule D-P 

(Debts and Obligations) until paid. 

Committee Response to the Preliminary Audit Report & Audit Staffs 

Assessment 

In response to the preliminary audit report, EFP states that the Commission allowed EFP 

to apply whichever regulation was most beneficial, so they chose to comply with 11 CFR 

§§ 100.93 and 100.52. 

EFP states that G&L Aviation contracted in 1998 with Elite Aviation (Elite) for a "part 

time lease." Under the contract, Elite was responsible for the management of the aircraft, 

10 This amount was calculated using the advertised charter rate of $3,600 per hour for the Gulfstream G1189 listed by Elite Aviation in the Fall 2003 Air Charter Guide (the Guide), the latest version available 

at the time of these trips. Elite Aviation is certified by the FAA to operate this aircraft under 14 CFR 

Part 135 (Operating Requirements: Commuter and On Demand Operations and Rules Governing Persons 

On Board Such Aircraft). 
19 

including maintenance and FAA safety inspections. Elite used the aircraft for charter 

operations with their own 14 CFR Part 135 (Part 135) certified crew. 

According to EFP, the FAA stated that certification under Part 135 also allows an aircraft 

to be operated under 14 CFR Part 91. Thus, the aircraft used by both Elite and G&L 

Aviation was operated on a "dual usage" basis, sometimes under Part 135 of the FAA 

regulations and other times under Part 91. EFP contends that since the aircraft operated 

under Part 91 when it was used for campaign travel, the first class airfare rates were 

correct and they did not receive an in-kind contribution. 

As a result of Commission decisions in other audits, EFP was afforded an additional 

opportunity to obtain from the charter provider information concerning the certification 

under which the flights at issue were flown. Flights operated under a non commercial 

certificate (Part 91) were excluded from charter rate requirement. In response, EFP 

submitted a letter from a general partner of the aircraft provider stating that all nine 

flights were flown under Part 91. 

IFinding 4. Transfer of Funds from Edwards for Senate 

Summary 

Edwards for Senate transferred a total of $962,908 to EFP of which $508,414 was 

questioned by the Audit staff as not eligible for transfer. The $508,414 included 

$414,099 in contributions that were attributed by the Senate committee to retire debt 

outstanding (candidate loans) from the 1998 Primary and General elections. These funds 

were transferred after the debt was forgiven but without written redesignations from the 

contributors. The Audit staffrecommended that EFP provide evidence that the $508,414 

was eligible for transfer. In response to the preliminary audit report, EFP disagreed with 

the Audit staff's conclusion that the funds were not available for transfer and asserted that 

the funds in question could be legally transferred. 

The Audit staff then recommended that the Commission determine that $508,414 was 

returnable to Edwards for Senate or payable to the U.S. Treasury. At the Open Session 

Commission Meeting held on November 13, 2008, some Commissioners were of the 

opinion that Edwards for Senate could transfer funds to EFP derived from sources other 

than contributions; as asserted by EFP in its response to the preliminary audit report. The 

Commission was equally divided (3-3) on a motion to approve such a conclusion. It was 

also the opinion of some Commissioners that the Act and Commission regulations did not 

clearly prohibit the transfers as structured by EFP. As a result, there were not 4 votes to 

approve the recommendations of the Audit staff, and the Commission voted 6-0 to have 

the audit report reflect the discussion held at the Open Meeting. 

Legal Standard 

Permissible Transfers. Transfers of funds between principal campaign committees of a 

candidate seeking more than one federal office in the same election cycle are allowed if 
20 

the candidate is no longer actively seeking (see below) the nomination or election to one
 

of those offices. Transfers must meet the following guidelines:
 

•	 The transferor committee's available funds shall be considered to consist of those 

contributions most recently received that add up to the cash on hand on the date of 

transfer; 

•	 Contributions transferred must be aggregated with any contributions made by the 

same donor to the committee receiving the transfer; and 

•	 Amounts that would cause a contributor to exceed his or her per election 

contribution limit must be excluded from the transfer. 11 CPR §110.3(c)(5)(ii). 

No Longer Campaigning. A candidate will be considered to be no longer actively 

seeking the nomination or election to a federal office if the candidate: 

•	 Publicly announces that he or she will no longer seek the nomination or election 

to that office and ceases to conduct campaign activities with respect to that 

election; 

•	 Becomes ineligible for nomination or election to that office by operation of law; 

•	 Files a termination report with the Commission; or 

•	 Notifies the Commission in writing that he or she and his or her authorized 

committees will no longer conduct campaign activities with respect to that 

election. 11 CPR §11O.3(c)(5)(i). 

Contributions to General Election. Any contributions designated to a general election 

for which the candidate is no longer campaigning shall be refunded to the contributor or 

the committee can request a written redesignation to another election. 11 CPR 

§§102.9(e)(3) and 110.1(b)(5). 

Contributions to Retire Outstanding Debt. Any contributions solicited after an 

election to retire the outstanding debt from that election shall be refunded to the 

contributor if the contributions received exceed the debt or the committee can request a 

written redesignation to another election. 11 CFR §§110.1(b)(3) and 110.1(b)(5). 

Facts and Analysis 

Contributions attributed to the 2004 Primary Election. On September 7,2003, 

Senator Edwards announced that he would not seek re-election to the U.S. Senate in 

2004. On September 30, 2003, Edwards for Senate transferred $460,609 to EFP. This 

transfer was reportedly comprised of contributions attributed to the 2004 Primary 

election. 

Using the receipts database provided by Edwards for Senate and disclosure reports filed 

by both committees, the Audit staff determined the Senatorial committee's available cash 

on hand on September 30,2003 (prior to the transfer) as follows: 

Reported Ending Cash on Hand - September 30,2003 11 $ 860,398 

Add: Funds Transferred to EFP - September 30, 2003 460,609 

Cash on Hand prior to Transfer $ 1,321,007 

11 Per EFS October 2003 Quarterly Disclosure Report. 
21 

As part of the Audit staff's analysis, a portion of the cash on hand equal to the 

contributions attributed to the 2004 General election was reserved for refunds of those 

contributions. These contributions required refund or written redesignation before they 

could be transferred because the candidate was no longer running in the 2004 General 

election. Similarly, a portion of the cash on hand attributed to the retirement of the 1998 

election debt was reserved. The adjusted cash on hand on September 30,2003, 

attributable to 2004 Primary contributions was: 

Cash on Hand (from above) 

Less amounts reserved for contributions to: 

$1,321,007 

2004 General Election 

Retire 1998 Primary/General Debt l 2 

Available Cash for Transfer of 2004 Primary 

Contributions 

($ 360,085) 

( 412,899) ($ 772,984) 

$ 548,023 

Contributions received by the Senatorial committee for the 2004 Primary election were 

reviewed by the Audit staff on a last-in, first-out basis. Using the amount of cash 

available ($548,023) for the transfer, the Audit staff calculated that contributions received 

on and after April 16, 2002 could be transferred. These contributions were evaluated for 

transfer eligibility'? and contributions totaling $372,944 were identified as eligible for 

transfer. That amount was $87,665 ($460,609 - $372,944) less than was transferred on 

September 30,2003. 

Contributions attributed to the 2004 General Election. Edwards for Senate 

transferred contributions totaling $88,200 attributed to the 2004 General election to EFP. 

The Audit staff reviewed the documentation (written redesignations) provided by the 

Senatorial committee in support of these transfers, evaluated the contributions' eligibility 

for transfer, and determined that $81,550 was eligible for transfer. The remaining $6,650 

of contributions, when aggregated with prior contributions to EFP from the same donors, 

resulted in excessive contributions. 

Contributions attributed to retire 1998 Primary/General outstanding debt. After the 

1998 election, Edwards for Senate reported a debt of $6,150,000, all owed to Senator 

Edwards. The debt was forgiven on December 31,2003. On January 11,2004, the 

Senatorial committee transferred $414,099 to EFP. The receipt was disclosed as a 

transfer of excess funds by EFP. The transfer was made up of contributions that were 

solicited and received after the 1998 elections for the purpose of retiring the outstanding 

debt remaining after those elections. Once the debt had been forgiven, the Senatorial 

committee had 60 days to refund the contributions or obtain written redesignations for 

another election. Written redesignations were not obtained for any of the contributions 

transferred. 

12 Gross contributions totaling $414,099 less contribution refunds of $1,200.
 

13 1f the contribution (when aggregated with other contributions from the same donor to EFP) causes the
 

donor to exceed the limits, the contribution or the excessive portion was excluded from the transfer. 
22 

Summary of Transferred Amount Amount Eligible Amount 

Amounts Questioned: Transferred per Audit Staff Ineligible 

2004 Primary $ 460,609 $ 372,944 $ 87,665 

2004 General 88,200 81,550 6,650 

1998 Primary/General Debt 414,099 -0­ 414,099 

Totals $ 962,908 $ 454,494 $ 508,414 

The Audit staff provided EFP representatives with a summary of its analysis of the 

transfer of contributions from Edwards for Senate at the exit conference. EFP 

representatives disagreed with the analysis. 

Preliminary Audit Report Recommendation. Committee Response and 

Commission Action 

In the preliminary audit report, the Audit staff recommended that EFP provide evidence 

that the contributions transferred by Edwards for Senate were eligible for transfer and 

absent such evidence, it was further recommended that $508,414 be paid to the U.S. 

Treasury. 

In its response to the preliminary audit report, EFP asserted that the Audit staff 

misapplied the regulations allowing such transfers and miscalculated the pool of 

contributions from which the transfers were made. 

EFP stated that interest, other offsets, and asset sales should be included in the available 

funds to transfer since 11 CPR §110.3 (c)(5)(ii) states that the cash on hand from which 

the transfer is made shall be considered to consist of the funds most recently received by 

the transferor committee. EFP also argued that expenditures should be applied against 

contributions to determine the available funds for transfer. They stated that '''98 debt 

retirement contributions were expended or used up prior to the time of transfers ... and 

thus were gone by the time of the transfers at issue." 

The Audit staff considered EFP's arguments and concluded that EFP's response did not 

demonstrate that the transfers were comprised of funds eligible for transfer. It is noted 

that most non contribution receipts were payments from Edwards for Senate for goods 

and services purchased and were necessary to avoid an in-kind contribution. Also, using 

cash on hand already accounts for expenditures when calculating the available cash and 

funds raised for 1998 debt retirement were not available for 2004 expenses. As a result, 

the Audit staff recommended that $508,414 be returned to Edwards for Senate, or paid to 

the U.S. Treasury. 

At the Open Session Commission Meeting held on November 13, 2008, some 

Commissioners were of the opinion that Edwards for Senate could transfer funds to EFP 

derived from sources other than contributions; as asserted by EFP in its response to the 

preliminary audit report. These other sources included interest, amounts received from 

EFP for assets and services, and, other refunds. If these funds were deemed eligible for 

transfer, then the acceptable amount transferred would have increased by $69,633 and the 
23 

amount at issue decreased from $508,414 to $438,781. The Commission was equally
 

divided (3-3) on a motion to approve such a conclusion.
 

It was also the opinion of some Commissioners that the Act and Commission regulations 

did not clearly prohibit the transfers as structured by EFP. One Commissioner observed 

that each step in the overall transfer process seemed acceptable on its own, but that when 

these steps were viewed together by the Audit staff, it appeared to be problematic. Other 

Commissioners were of the view that the transfer process should be considered as a 

whole. As a result, there were not 4 votes to approve the recommendations of the Audit 

staff, and the Commission voted 6 to 0 to have the audit report reflect the discussion held 

at the Open Meeting. 

I Finding 5. Stale-Dated Checks 

Summary 

The Audit staff identified 53 stale-dated checks totaling $20,181 issued by EFP. It was 

recommended the EFP provide evidence that these checks were not outstanding or make 

a payment to the u.s. Treasury of $20,181. In response to the preliminary audit report, 

EFP demonstrated that as of December 31, 2006 three payees had cashed their checks 

and one check was voided. Therefore, $18,851 ($20,181 - $1,330) is payable to the u.s. 

Treasury. 

Legal Standard 

Handling Stale-Dated (Uncashed) Checks. If a committee has issued checks that the 

payees (creditors or contributors) have not cashed, the committee must notify the 

Commission of its efforts to locate the payees and encourage them to cash the 

outstanding checks. The committee must also submit a check payable to the U. S. 

Treasury for the total amount of the outstanding checks. 11 CPR §9038.6. 

Facts and Analysis 

The Audit staff's reconciliation of EFP' s bank accounts through April 30, 2004, and 

review of financial activity through March 31, 2005, identified 53 stale-dated checks 

totaling $20,181 issued by EFP. The checks were dated between May 30,2003 and 

August 17, 2004 and had not cleared the bank as of March 31, 2005. 

The Audit staff provided EFP representatives with a schedule of stale-dated checks at the 

exit conference and no response was offered. 

Committee Response to the Preliminary Audit Report & Audit Staff's 

Assessment 

The Audit staff recommended that EFP provide evidence that the checks were no longer 

outstanding by demonstrating the checks or replacement checks had cleared the bank or 

that the obligations did not exist and the checks were voided. Absent such evidence, it 

was recommended that $20,181 be paid to the U.S. Treasury or the amount should be 

disclosed on Schedule D-P (Debts and Obligations) until paid. 
24 

In response to the preliminary audit report, EFP stated that the correct amount of staledated checks was $16,872. They stated checks totaling $3,309 were either voided and 

paid in subsequent invoices, had cleared the bank or were duplicates. EFP provided 

documentation for only one voided check ($380). 

EFP stated that three reissued checks had cleared the bank. Two of the reissued checks 

they referenced cleared the bank and one had not as of December 31, 2006. EFP did not 

provide documentation for the discrepancy. The Audit staff made requests after 

receiving EFP's response for this documentation. To date no such documentation has 

been submitted. 

EFP was able to provide bank statements showing that three stale-dated checks totaling 

$916 had cleared the bank and one check was voided ($380). Thus, $18,851 ($20,181­

$1,330) is payable to the u.s. Treasury. 

Recommendation 

The Audit staff recommends that the Commission determine that $18,851 is payable to 

the U.S. Treasury within 30 calendar days of service of this report.