Draft Final Audit Report of the 

Audit Division on the Oakland 

County Democratic Party 

(January 1, 2011 - December 31, 2012) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act).' The 

Commission generally 

conducts such audits 

when a committee 

appears not to have 

the threshold 

requirements for 

substantial compliance 

with the Acti^haaudit 

deteimii 

CO 

the 

prohibit! 

disclosure 

of the Act. 

Future Actioi 

The Commission i 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committee^ 

The Oakland County Demc 

headquartered in Southfielj; 

the chart on the Commit 

is a local party conunittee 

. For more information, see 

ion, p. 3. 

Financ 

• Receipts 

o Contributioi 

o Contributions 

ittees 

o If—"Mifi— Nonaunt 

o 

Total RdVipts 

Disburseml 

cpenditures 

Isbursements 

sbursements 

$ 1,933,148 

56,849 

49,859 

7,120 

S 2,046,976 

$ 2,045,934 

14,930 

S 2,060,864 

Findings and Recommendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Disclosure of Occupation and Name of Employer (Finding 3) 

• Recordkeeping for Receipts (Finding 4) 

• Use of the Campaign Depository (Finding 5) 

' On September 1,2014, the Federal Election Campaign Act of 1971, as amended ("the Act"), was 

transferred from Title 2 of the United States Code to new Title 52 of the United States Code. 

' 52 U.S.C. §30111(b) (formerly 2 U.S.C. §438(b)). 
Draft Final Audit Report of the 

Audit Division on the Oakland 

County Democratic Party 

(January 1, 2011 - December 31, 2012) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recom 

Finding 1. Misstatementof Financial Activity 

Finding 2. Recordkeeping for Enwloyees 

Finding 3. Disclosure of Occupat^BSsd Name of 

Finding 4. Recordkeeping for 

Finding S. Use of the Campaign Di 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Oakland County Democratic Party (OCDP), 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 52 U.S.C. §30111(b) (formerly 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 under 52 U.S.C. §30104 (formerly 2 U.S.C. §434). Pj^^ conducting any audit 

under this subsection, the Commission must perform an internal ra^ww reports filed by 

selected committees to determine if the reports filed by a parti9ijraBPmmittee meet the threshold 

requirements for substantial compliance with the Act. 

52 U.S.C. §30111(b) (formerly 2 U.S.C. §438(b)). 

Scope of Audit 

This audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions receivr 

4. the disclosure of individual contributol@teH@tion and 

5. the disclosure of disbursements, debts 

6. the disclosure of expenses allocated 

7. the consistency betweei^gBi^ figures 

8. the completeness of 

9. other committee OBfttkons ne^Bary to the rekiew. 

lederal accounts; 

Commissioi lidal 

Requester Early 

Recormn^^g for 

Pursuant to t^Hommission*! 

Consideration oflfcaal Questu 

unaffiliated with O^B^eqi 

covering the 2010 eU 

sideration of a Legal. Question -

ilicy^tatement Establishing a Program for Requesting 

by the Commission," several state party committees 

early consideration of a legal question raised during audits 

ie. Specifically, the Commission ^dressed whether monthly time 

logs under 11 CFR §10£ 

funds. 

a)(l) were required for employees paid with 100 percent federal 

The Commission concluded, by a vote of 5-1, that 11 CFR § 106.7(d)(1) does require committees 

to keep a monthly log for employees paid exclusively with federal fiinds. 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 funds and reported as such. The Audit staff informed 

OCDP representatives of the payroll log requirement and of the Commission's decision not to 
pursue recordkeeping violations for failure to keep payroll logs for salaries paid and correctly 

reported as 100 percent federal. Finding 2 of this audit report (Recordkeeping for Employees) 

does not include any OCDP employees paid with 100 percent federal fiinds and reported as such. 

Directive 69 and Request for Early Commission Consideration of a Legal 

Question - Recordkeeping for Receipts 

Pursuant to Conunission Directive 69, the Commission's guidance was requested by the Office 

of Compliance and the Office of General Counsel on an issue addressing what recordkeeping 

requirements under 52 U.S.C. §30102(c) (formerly 2 U.S.C. §432(c)) and 11 CFR §102.9(a) 

applied to contributions received by OCDP during bi-weekly "bingo nights."^ A subsequent 

request was made to the Commission by OCDP on the same issue undfir the Commission's 

"Policy Statement Establishing a Program for Requesting Considen^^^^ Legal Questions by 

the Commission." Specifically, the Commission was asked wh^jj^^CDP's gaming nights 

consisted of three separate fimdraising events rather than a sia^ eimt for purposes of applying 

the recordkeeping requirements under 11 CFR § 102.9(a). 

The Commission concluded on the Directive 69 

Consideration, by votes of 6-0, that OCDP's bingj 

fimdraising events and that OCDP was required 

received during each bingo night. See Finding 4, Reco: 

on the ReqiRQ^r Legal 

constitute i 

ibutions exc^Bing S50 

ir Receipts. 

^ The term bingo is used to refer to ali OCDP gaining activity, which includes bingo, progressive bingo, and 

charity ticket saies. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration June 11.1975 

• Audit Coverage January December 31,2012 

Headquarters mm 

Bank Information 

• Bank Depositories 

• Bank Accounts A ^7^ fbderal anSAs non-federal 

Treasurer 

Treasurer When Audit Was Conducted 

Treasurer During Period Covered by Audit 

Management Information 

Attended Commission Campaign Finani 

lund: 12/2S 

Fike: 1/25 

T/28/14; 

f4 - present 

1/01/11-12/28/11; 

: 12/29/11-12/31/12 

Who Handled Accounting and Recoi 

Tasks 

bial Activity 

ounts) 

Cash-oiffl^ @ Januarvlmil $26378 

Receipts ^ 

o ContributioMUlf^m IndividHs 1,933,148 

o Contributions !W^|yoliticyCommittees 56,849 

o Transfers from NdlUysW Account 49,859 

o Other Receipts jr 7,120 

Total Receipts S 2,046,976 

Disbursements 

o Operating Expenditures 2,045,934 

o Other Disbursements 14,930 

Total Disbursements S 2,060364 

Cash-on-hand @ December 31,2012 S 12,490 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of OCDP's reported financial activity with its bank 

recorfs revealed that, for 2012, OCDP understated its reported receipts, disbursements 

and ending cash by $90,487, $60,715, and $33,279, respectivelyj^jybsequent to the exit 

conference, OCDP amended its reports and materially correc^flfts i^statements. In 

response to the Interim Audit Report recommendation, OCQ^ra||ted it has begun the 

process of complying with all recommendations. (For mSpdetH^ee p. 6.) 

Finding 2. Recordkeeping for Bi 

During audit fieldwork, the Audit staff determii^that < 

monthly payroll logs, as required, to docume 

spent in connection with a federal election. For 2C 

payments to OCDP employees totaling $107,555, for^ 

not maintained. This consisted entir^^^payroll whic 

and non-federal funds. In response totHmMim Audit! 

»es 

«DP did not mlilB|^ 

I of time eacn«ployee 

f the Audit s^ identified 

1 monthly payroll logs were 

Lallocated between federal 

lendation, OCDP 

stated it has begun the process of compl 

see p. 7.) 

^commMlations. (For more detail. 

Finding 3. 

A review of all 

contributions totaling ] 

In addition, tiusj^as no i 

informatifl^ffi[HQ||j(erciS 

recoma^dation, 

tions. (For 

iOf Occibation and Name of Employer 

individuals%|qmring itemization indicated that 35 

lisclosure^^ccupation and/or name of employer. 

srts" to obtain, maintain and submit the 

Tto the Interim Audit Report 

1 the process of complying with all 

I p. 8.) 

Findin^^^RecorKeeping for Receipts 

During audit ni^mk, itjK noted that OCDP did not maintain adequate 

documentation axflm^^^roperly report receipts from its gaming activities totaling 

$1,820,466 for the ziprelection cycle. OCDP reported gaming receipts as un-itemized 

individual contributiras in accordance with requirements for receipts from individuals 

contributing $50 or less at fimdraising events. However, the average contribution fh)m 

OCDP's bi-weekly gaming events was approximately $88 per person, which requires 

more extensive recordkeeping activities. In response to the Interim Audit Report 

recommendation, OCDP stated it has begun the process of complying with all 

recommendations. However, OCDP said it disagreed with certain unspecified aspects of 

the report that concerned its gaming activities. (For more detail, see p. 10.) 
Finding 5. Use of the Campaign Depository 

A review of OCDP's gaming operations found that OCDP did not deposit most of its 

gaming receipts into its designated campaign depository as required. During the audit 

period; OCDP collected $1,820,466 from its bi-weekly gaming activities but only 

deposited $450,162 into its campaign depository. OCDP disbursed the majority of these 

cash receipts ($1,370,304) directly to prize winners and game workers. In response to the 

Interim Audit Report recommendation, OCDP stated it has begun the process of 

complying with all recommendations. However, OCDP said it disagreed with certain 

unspecified aspects of the report that concerned its gaming activities. (For more detail, 

SM p. 12.) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Fliiancial Activity 

Summary 

During audit fieldwork, a comparison of OCDP's reported financial activity with its bank 

records revealed that, for 2012, OCDP understated its reported receipts, disbursements 

and ending cash by $90,487, $60,715 and $33,279, respectively^^equent to the exit 

conference, OCDP amended its reports and materially coirecte^tenmstatements. In 

response to the Interim Audit Report recommendation, OQg^^^ed it has begun the 

process of complying with all recommendations. 

Legal Standard 

Contents of Reports. Each report must disclc 

• the amount of cash-on-hand at the beginnftlM^nd oteu reporting ] 

• the total amount of receipts for the reporting pe^n|ffl^ionhe cale 

• the total amount of disbursement§Jbr the reportm^Qgpd and for the calendar year; 

and 

• certain transactions that require itei^fl^^m ScheduldV|||^ized Receipts) or 

Schedule B (Itemized Disbursementl|kS?i%|^30104^1(1), (2), (3), (4) and (5) 

(formerly 2 U.S.C. §434(b)(l), (2), (3W4)j 

Facts and 

A. Facts 

During audi^^dg;grk, i 

with its 1 

for 201^1 receipts,^ 

disQ^^^es and si 

the misstiftients. 

fed OCDP's reported financial activity 

; thftlWliijdar year^Ol 1 and 2012 and identified misstatements 

tiding cash. The following chart outlines the 

I explain, to the extent possible, the reasons for 

2012 Activity^®^ 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January 1,2012 $5,356 $8,863 $3,507 Understated 

Receipte $937,760 $1,028,247 $90,487 

Understated 

Disbursements $963,905 $1,024,620 $60,715 

Understated 

Ending Cash Balance 

@ December 31,2012 ($20,789) $12,490 $33,279 

Understated 
The understatement of receipts resulted from the following. 

• Gaming receipts not reported^ 

• Transfers from non-federal account not reported 

• In-kind contributions not reported 

Understatement of Receipts 

The understatement of disbursements resulted from the following. 

• Gaming expenditures not reported 

• Operating expenditures not reported 

• Expenditures reported twice 

• Operating expenditures incorrectly reported 

• Unexplained difference 

Net Understatement of Disbursements 

The understatement of the begiiming and ending cash 

misstatements and the misstatements described 

$ 76,233 

12,178 

2,076 

LMm 

$ 36,229 

33,899 

(10,056) 

167 

476 

from prior year 

B. Interim Audit Report & Audit Divisioi 

At the exit conference, the Audit staff explained 

schedules to OCDP representatives. The 

Subsequent to the exit conference, < 

misstatements. The Interim Audit ] 

additional comments it considered rele 

C. Committee Respo 

In response to the I^ffm A 

information reeardffflus mi 

and pro\ 

to amend their reports. 

materially corrected its 

provide any 

idation, OCDP provided no additional 

ing for Employees 

Sum: 

During 

monthly pa; 

spent in co: 

payments to OCD! 

not maintained. 

udit staff determined that OCDP did not maintain any 

, to document the percentage of time each employee 

election. For 2011 and 2012, the Audit staff identified 

lyees totaling $107,555, for which monthly payroll logs were 

listed entirely of payroll which was allocated between federal 

and non-federal funds. In response to the Interim Audit Report recommendation, OCDP 

stated it has begun the process of complying with all recommendations. 

Legal Standard 

Maintenance of Monthly Logs. Committees must keep a monthly log of the percentage 

of time each employee spends in connection with a federal election. Allocations of 

salaries, wages, and fringe benefits are to be undertaken as follows; 

See Finding 4, page 10. 
8 

• Employees who spend 25 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or have their pay allocated as administrative costs; 

• Employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be pud only from a federal account; and, 

• Employees who spend none of their compensated time in a given month on 

federal election activities may. be paid entirely with funds that comply with State 

. law. 11 CFR§ 106.7(d)(1). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements foj 

maintain any monthly logs or equivalent records to doo 

employee spent in connection with federal election acti 

document the proper allocation of federal and nonsalaries and wages. For 2011 and 2012, logs 

payroll. The total of $107,555 consisted entir^^ 

federal and non-federal funds. 

itained for 

which was 

B. Interim Audit Report & Audit ^vision RecomJ 

At the exit conference and during au^fel^ork, the Ai! 

recordkeeping issue with OCDP repre^R^^|&Tlie repre^ 

did maintain some records for one indiv^a^B^y^t keep] 

individuals. No records were provided. 

jlL^OCDPdidnot 

I of time each 

I are required to 

ly employee 

'555Mn 

discussed the payroll 

indicated that they 

irds for all required 

For OCDP emploj 

the Interim Audit ^ 

• evidence that m^ 

timei 

lid with I 

1 that I 

ss were: 

^location of federal and non-federal funds, 

^provide the following: 

ned to document the percentage of 

llh a federal election; or 

I in the future. 

InteiWAudit Report 

it R^ort recommendation, OCDP agreed to comply with 

ent a plan to maintain monthly payroll logs in the future. 

Finding 3. D^closttre of Occupation and Name of Employer 

Summary 

A review of all contributions from individuals requiring itemization indicated that 35 

contributions totaling $7,389 lacked disclosure of occupation and/or name of employer. 

In addition, there was no evidence that "best efforts" to obtain, maintain and submit the 

information had been exercised. In response to the Interim Audit Report 

' See Part I, Background, Commission Guidance, Request for Early Commission Consideration of a 

Legal Question - Recordkeeping for Employees, Page 1. Payroll is stated net of taxes and benefits. 
recommendation, OCDP stated it has begun the process of complying with all 

recommendations. 

Legal Standard 

A. Itemization required for Contributions from Individuals. A political committee 

other than an authorized conunittee must itemize any contribution from an individual if it 

exceeds $200 per calendar year, either by itself or when combined with other 

contributions from the same contributor. 52 U.S.C §30104(b)(3)(A) (formerly 2 U.S.C. 

§434(b)(3)(A)). 

B. Required Information for Contributions from Individuals. For each itemized 

contribution from an individual, the committee must provide th 

The contributor's full name and address; 

The contributor's occupation and the name of 

The date of receipt (the date the committee reived 

The amount of the contribution; and 

The calendar year-to-date total of all odRbibutions from th^ 

11 CFR §§100.12 and 104.3(a)(4)j4^ U.S.^30104(b)(3 

U.S.C. §434(b)(3)(A)). 

wing information: 

employer; 

Ltribution); 

individual. 

ierly2 

C. Best Efforts Ensures Compliant 

shows that the conunittee used best i 

the information required by the Act, i 

considered in compliance with the Act. 

When the tre^Mk^f a political committee 

below) tou^^, maintain, and submit 

l^s reportsmgif^cords will be 

U.lS^ttUp2(i) jSmerly 2 U.S.C. §432(i)). 

D. Definition of Best, 

have used "best 

• All wrii 

o A clear reqi 

Within 30 da> 

t to obtain i 

ddS^BCnted oral: 

Thei 

provic 

contained i! 

1 the C(;^mittee will be considered to 

if thelApiittee satiKed all of the following criteria: 

ions BT contributio^^^luded: 

iitor'sjml name, mailing address, occupation, 

[reporting is required by Federal law. 

' theTlnB^f the contribution, the treasurer made at least one 

^ssing Viormation, in either a written request or a 

i any contributor information that, although not initially 

nbutor, was obtained in a follow-up communication or was 

littee's records or in prior reports that the committee filed 

during the sa^two-year election cycle. 11 CFR § 104.7(b). 

Facts and Ansdysis 

A. Facts 

During fieldwork, the Audit staff reviewed all reported contributions from individuals to 

determine if the required contributor information was disclosed. The review indicated 

that OCDP did not adequately disclose both the occupation and the name of the employer 

for nearly all identified errors. There were 35 errors equaling $7,389. All of the errors 

disclosed a notation, "Information Requested" on the Schedule A, Itemized Receipts, 

filed with the Commission. 
10 

Although requested, OCDP did not provide any records to demonstrate evidence of any 

best efforts procedures or follow-up requests for missing contributor information. As a 

result, OCDP did not make "best efforts" to obtain, maintain and report the missing 

occupation and name of employer information. 

B. Interim Audit Report & Audit Division Recommendation 

Prior to the exit conference, OCDP was provided schedules of the contributions requiring 

additional disclosure information. One of OCDP's representatives stated that missing 

contributor information was partly due to problems with its database. He also stated that 

the provided schedules would be reviewed and any comments conceming OCDP's best 

efforts procedures would be submitted in writing. No documents supporting OCDP's 

best efforts were submitted. 

The Interim Audit Report recommended that OCDP take 

• provide documentation such as phone logs, retumed 

contributor contact information sheets or other 

efforts were made to obtain, maintain, and 

information; or 

• absent such documentation, make an eff( 

required information was missing or incompli 

contacts (such as copies of letter^ the contri 

OCDP's reports to disclose any iiMBaation ob 

C. Committee Response to Interim A 

In response to the Interim Audit Report 

the reconunendation tosflj^temonstrate 

to obtain the missine^mitiibmBlnformatio: 

conformity with 

Pint 

action: 

completed 

Lted that best 

individuals fflrwhom 

'cumentation of such 

phone logs), and amend 

those contacts. 

)P agreed to comply with 

Tt had ex^Gsed best efforts or to attempt 

its disclosure reports in 

Sul 

During auAfieldwork, it Ws not^ that OCDP did not maintain adequate 

documentan^ra|d did not noperly report receipts from its gaming activities totaling 

$1,820,466 foraB^12 eMtion cycle. OCDP reported gaming receipts as un-itemized 

individual contribiiftu^accordance with requirements for receipts from individuals 

contributing $S0 or IK at fimdraising events. However, the average contribution from . 

OCDP's bi-weekly Riming events was approximately $88 per person, which requires 

mote extensive recordkeeping activities. In response to the Interim Audit Report 

reconunendation, OCDP stated it has begun the process of complying with all 

recommendations. However, OCDP said it disagreed with certain unspecified aspects of 

the report that concerned its gaming activities. 

Legal Standard 

A. Recordkeeping. Political committees must keep records of: 

• All contributions received by or on behalf of the committee; 

• The name and address of any person who makes a contribution in excess of $50, 

together with the date and amount of the contribution; and 
11 

• The occupation and name of employer of any individual whose contributions 

aggregate more than $200 during a calendar year, together with the date and 

amount of any such contributions. 52 U.S.C. §30102(c) (formerly 2 U.S.C. 

§432(c)). 

B. Retention of Check Copies. For contributions in excess of $50, committees must 

maintain a photocopy or digital image of the check or written instrument. 11 CFR 

§102.9(a)(4). 

C. Preserving Records and Copies of Reports. Committees must preserve these 

records for 3 years after a report is filed. 52 U.S.C. §30102(d) (fojjpierly 2 U.S.C. 

§432(d)). 

Facts and Analysis 

A. Facts 

OCDP did not maintain adequate documentation 

its bi-weekly gaming activities totaling $1,82^ 

Michigan state law governs Michigan gamin^spKies 

Accordingly, records were kept of the number of i 

gaming cards, books and tickets sold (all gaming sale 

3t properly 

L2012 electiot! 

receipts for 

However, federal election laws and reg 

committees and those rules require a dif 

requirements for contributions. The level 

committees is a function^M&contributic 

sing rafOirements. 

I quantity^d price of 

tions are for cash). 

ply to th?[^^j^s of federal political 

and reporting 

the records and reports of 

!ts for idUK^dual contributors. 

During the audit _ 

did not exceed the $5 

name of the event and th 

receipts 

requir^i^ts for 

I OCDP ev 

approxii!in^$88 per 

provided tni^^viduals 

Accordingly, ro^^ply 

more contributor 

UCDnmntained ^and filed reports as if contributions 

>nly requires records to identify the 

for the event. OCDP reported gaming 

jun-itBBhgd indivlQBhl contributions in accordance with 

ini^nhvidu^s contributing $50 or less. However, based on 

^the AolMtafF calculated that contributions averaged 

per^^t. As such, no reasonable assurance could be 

ling the gaming activities contributed $50 or less, 

the recordkeeping requirements, OCDP needs to collect 

for its gaming events. 

The Commission cofSidered OCDP's position that each gaming activity held during a 

night was a separate event for aggregation purposes and that their records and reporting 

were adequate. As part of its consideration, the Commission sought information about 

separation of gaming activities and their administrative functions. In anticipation of these 

questions, the Audit staff held a teleconference with Committee persormel and were told 

This amount does not include errors in recordkeeping for checks deposited into Oakland's accounts that 

were not associated with gaming activities projected to total $1,970. 

In addition to the improper reporting of gaming receipts, OCDP did not report $76,233 mentioned 

in Finding 1, Misstatement of Financiai Activity. 

This recordkeeping threshold is discussed in the Federal Election Commission Campaign Guide for 

Political Party Committees and in Advisory Opinions 1981-48 and 1980-99. 
12 

that they had only one hall for all gaming activities; separate personnel were not used for 

the different gaming activities; and all gaming activity tickets could be purchased at any 

of the ticket purchase locations. No additional information was provid^ that would 

indicate separation of gaming activities. As previously noted, the average gaming night 

contribution was approximately $88 per person, so OCDP could not reasonably assure 

that contributions received aggregated to amounts of $50 or less a night. Based on the 

above information, the Conunission concluded^ that OCDP's bingo nights were not 

separate fundraising events, but were one event, and that OCDP was required to obtain 

the name and address of any person who made contributions in excess of $50 during a 

gaming night, and then identify and report those contributors whose aggregate 

contributions exceeded $200 during a calendar year. As a result, the Audit staff 

calculated that OCDP did not properly record and account for cg^Hs^tions totaling 

$1,820,466, or.89% of OCDP's total contributions. 

B. Interim Audit Report & Audit Division Recommi 

At the exit conference, the Audit staff presented thia 

representatives as an open issue for which additiq^i^^i 

sought. It was subsequently presented to OCD 

The Interim Audit Report reconunended that OCD 

its gaming night contributions did no^ceed $50 per 

OCDP should develop and implemenvBl^ to obtain 

to OCDP 

would be 

• the name, address, date and amot 

and 

• the occupation aaflBBl|||e of emplo> 

aggregate moi^an ^M^during a ( 

amount of^ffluch conlBbutions. 

rds demoilstrating that 

ibutor. Absent such records, 

itain a record of: 

iting more than $50; 

any indj^dual whose contributions 

year, together with the date and 

C. Commii 

In inunendation, OCDP stated it has begun the 

ions. However, OCDP said it disagreed with 

that concerned its gaming activities. 

I Finding ^ ,e Campaign Depository 

Summary 

A review of OCDP'^^pming operations found that OCDP did not deposit most of its 

gaming receipts into its designated campaign depository as required. During the audit 

period, OCDP collected $1,820,466 from its bi-weekly gaming activities but only 

deposited $450,162 into its campaign depository. OCDP disbursed the majority of these 

cash receipts ($1,370,304) directly to prize wiimers and game workers. In response to the 

Interim Audit Report recommendation, OCDP stated it has begun the process of 

complying with all recommendations. However, OCDP said it disagreed with certain 

unspecified aspects of the report that concerned its gaming activities. 

' See Pan I, Background, Comtnission Guidance, Directive 69 and Request for Early Commission 

Consideration of a Legal Question - Recordkeeping for Receipts, Page 2. 
13 

Legal Standard 

A. Depositories. Each political committee shall designate one or more state banks, 

federally chartered depository institutions (including a national bank), or depository 

institutions, the deposits or accounts of which axe insured by the Federal Deposit 

Insurance Corporation, Federal Savings and Loan Insurance Corporation, or the National 

Credit Union Administration, as its campaign depository or depositories. Each political 

committee shall maintain at least one checking account or transaction account at one of 

its depositories. All receipts received by such committee shall be deposited in such 

accounts. No disbursements may be made (other than petty cash disbursements) by such 

committee except by check drawn on such accounts in accordance with this section. 

52 U.S.C. §30102(h)(l) (formerly 2 U.S.C. §432(h)(l)) and 11 CTO §103.2. 

B. Deposit of Receipts and Disbursements. All receipts 

be deposited in account(s) established pursuant to 11 

contribution may be, within 10 days of the treasurer's 

without being deposited. The treasurer of the com: 

such deposits. All deposits shall be made within^aays 

committee shall make all disbursements by chs^yr simil 

its designated campaign depository, except fc 

petty cash fund maintained pursuant to 11 CFR § ll 

the depository for investment purposes, but shall be i 

such fimds are used to make expendi»^^l 1 CFR §10^ 

ntain a i 

olitical committee shall 

except that any 

[pt, rdl^^ to the contributor 

be tSftasible for making 

if the treasu^^kreceipt. A 

drafts drawrM|u^count at 

$100 or lessjKe from a 

may be traiuferred from 

to the depository before 

C. Petty Cash Fund. A political cor 

which it may make expenditures not in i 

transaction. 

It is the duty of 

disbursements. The 

Ni 

cash fund out of 

L per purchase or 

written journal of all petty cash 

bom any disbursement is made. 

le fdf a candidate, the journal shall include the name of that 

Ice (including State and Congressional district) sought by 

:FR §102.11. 

Facts and Anal; 

A. Facts 

The Audit staff reviewed OCDP's recoids of its bi-weekly g^ing events and found that 

OCDP did not deposit most of its gaming receipts into its designated campaign 
14 

depository as required by 11 CFR §I03.3(a)."' During the audit period, OCDP collected 

funds from 204 gaming events totaling $1,820,466. However, OCDP only deposited 

funds totaling $450,162 to its campaign depository, after having disbursed the majority of 

funds collected ($1,370,304) to prize winners and to game workers. These cash 

payments did not utilize a petty cash fund for cash payments of $100 or less and checks 

(or similar drafts) for amounts disbursed over $100. 

For the audit period, OCDP made total expenditures of $2,060,864 with gaming 

expenditures comprising $1,711,394 of this amount (83% of tot^^^nditures). As 

discussed above, cash payments comprised the majority of gumg expenditures. 

However, for most recurring expenses, checks were used.J|^H^|gements by check were 

made for hall rentals, gaming supplies, advertising and ite^ftataling $341,090. 

The table below summarizes cash payment activii 

payment. Disbursements 

to individuals and 

lount and purpose for 

Records w^|^t mainflHR of individual payments. 

isbursemeK were repmted as lump sum payments to "Non 

bucher Bing^rizes $50 or Less" (no individual payee' 

lation wln^vided). 

illaneous gaming expenses paid to gaming 

rkers in^Ol 1 were not maintained. These disbursements 

[eluded as un-itemized expenditures in reported totals. 

B.. Interim Audit^n^^& Audit Division Recommendation 

At the exit conferenra^e Audit staff initially presented an open issue for recordkeeping 

for amounts of $50 m less to OCDP representatives. This issue was later expanded to 

include all cash disbursements and subsequently presented to OCDP representatives as a 

finding for failure to utilize a campaign depository for all cash transactions. 

The Commission noted in a prior audit of OCDP, approved on March 28,2001, that OCDP paid prizes 

using cash received from the sale of bingo cards. As a result of the prior audit, matters were refened to 

the Office of General Counsel for further enforcement (See MUR 5236). In that matter, the 

Commission found that OCDP had violated the requirement to deposit all its receipts and that it failed 

to properly itemize gaming disbursements. In the conciliation agreement with the Commission, OCDP 

agreed to correctly disclose all financial activity related to its bingo account, deposit ail receipts from its 

bingo games into its designated depository and properly itemize disbursements that aggregate in excess 

of $200 fiem its bingo account. 
15 

In subsequent discussions about cash disbursements, OCDP responded that it complied 

with the Act's required use of a check or "similar draft" by using a "voucher system." 

Under the voucher system, prire winners fill out and redeem vouchers for cash. OCDP 

stated that it has used this system for years and the Michigan State Lottery Bureau was 

aware of it and permitted its use. 

In addition, OCDP cited two Advisory Opinions, 1982-25 and 1993-04, where the 

Conunission allowed wire transfers and computerized bill paying, respectively, to satisfy 

the requirement of a similar draft. OCDP stated that, as in those opinions, the vouchers 

are not "operative commercial instruments" like checks, but they are documentation of 

the prize payment transaction, which is the goal of the regulatioi^fe^CDP indicated that 

the vouchers satisfy the requirements of a "similar draft" whj|^voiding the practical 

problems of writing and processing thousands of checks. 

Although OCDP cited wire transfers and compi 

draft requirement, the Audit staff noted the re; 

requirements and that they specifically reqi 

above. Using a campaign depository ens 

a 3"* party payor/record keeper and provides for a 

purposes. 

DP develc 

iptS( 

The Interim Audit Report recommi 

to ensure that a campaign depository is 

gaming transactions made with cash. 

C. Committee Res 

In response to the. 

process of complying 

certain unspecifiet^pec 

as eitrntions to the similar 

beyond sirn|ft^cumentation 

campaign de|ftkom as cited 

1 linking disoBroments to 

losure histd^ for audit 

iplement procedures 

sbursements, including 

ion, OCDP stated it has begun the 

bwever, OCDP said it disagreed with 

its gaming activities. 

" See Advisory Opinions 1993-04 and 1986-18.