FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 June 29,2016 

MEMORANDUM 

To: 

Through: 

From: 

The Commission 

Alec Palmer 

Staff Director 

Patricia C. Onock 

Chief Compliance Officer 

Thomas E. Hintermister 

Assistant Staff Director 

Audit Division 

ZuZaha O. Pdcii 

Apdit Manager 

By: 

Subject: Audit Division Recommendation Memorandum on the Oklahoma 

Leadership Council (OLC) (A 13-13) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presents its recommendations below and discusses the findings in the 

attached Draft Final Audit Report (DFAR). The Office of General Counsel has reviewed 

this memorandum and concurs with the recommendations. 

Finding 1. Misstatement of Financial Activity 

The Audit staff determined that, for 2011, OLC understated its receipts and 

disbursements by $28,491 and $73,543, respectively; and overstated its ending 

cash-on-hand by $44,550. In response to the Interim Audit Report (lAR) 

recommendation, OLC filed a Form 99 (Miscellaneous Text) and disclosed all 

2011 receipt and disbursement misstatements with an appropriate reference to the 

pertinent disclosure reports. Because of the 2011 misstatements affecting the cash 

balance, OLC also fil^ an amended 2012 Year-End disclosure report and 

reconciled its ending cash-on-hand balance. OLC has complied with the 

recommendation and did not file an additional response to the DFAR. 

The Audit staff recommends that the Commission find that OLC misstated its 

financial activity for the calendar year 2011 as stated above. 
Finding 2. Misstatement of Financial Activity - Levin Fund 

The Audit staff determined that, for 2011, OLC understated its disbursements by 

$15,039 and overstated its ending cash-on-hand by $12,229. For 2012, OLC 

understated its receipts by $10,000. In response to the lAR recommendation, OLC 

filed a Form 99 and disclosed all previously undisclosed 2011 disbursements, 

effectively correcting its 2011 ending cash-on-hand balance. In response to the 

DFAR, OLC filed a Form 99 and disclosed the receipt of $10,000 in 2012. As 

such, OLC has complied with the recommendation. 

The Audit staff recommends that the Commission find that OLC misstated its 

Levin disbursements and ending cash-on-hand for the calendar year 2011 and its 

Levin receipts for the calendar year 2012 as stated above. 

Finding 3. Recordkeeping for Employees 

For the period covered by the audit, OLC did not maintain monthly payroll logs, as 

required, to document the percentage of time each employee spent in connection 

with a federal election. For calendar years 2011 and 2012, the Audit staff 

identified payments to OLC employees totaling $178,305 for which OLC did not 

maintain monthly payroll logs. This consisted entirely of payroll which was 

allocated with both federal and non-federal funds. In response to the lAR 

recommendation, OLC provided details of the system it has implemented that 

requires employees to complete monthly logs detailing the percentage of time 

spent in connection with federal elections. OLC did not provide any additional 

comments in its response to the DFAR. 

The Audit staff recommends that the Commission find that OLC failed to maintain 

monthly payroll logs totaling $178,305 to document the time employees spent in 

coimection with federal election activity. 

Finding 4. Contributions from Unregistered Political Organizations 

OLC received contributions from five unregistered political organizations totaling 

$8,150 for which the Audit staff requested documentation to support the 

permissibility of the funds used to make the contributions. In response, OLC 

transferred $8,150 of these contributions to its non-federal and Levin accounts but 

not in a timely manner. In response to the DFAR, OLC submitted copies of the 

state;campaign.finance-reports filed with the state of Qklahomai &r.f6ar 

unregistered'cornmitt^s. The Audit staff venfied th'at suffidibnt peim^^ 

federal funds totaling $7,150 were available to make federal contributions to OLC 

and therefore OLC did not receive any impermissible contributions from these 

political organizations. 

The Audit staff recommends that the Commission find that OLC did not receive 

impermissible contributions totaling $7,150 from unregistered political 

organizations and untimely resolved the remaining $1,000. 

' The Audit staff was not ablc to locate campaign finance reports for the fifth committee on the Oklahoma 

Secretary of State's website. 
The Committee did not request an audit hearing.. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 

30 days of the Commission's vote. 

In case of an objection, Directive No. 70 states that the Audit Division Recommendation 

Memorandum vdll be placed on the next regularly scheduled open session agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Terry O'Brien or Zuzana Pacious at 694-

1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on the Oklahoma Leadership 

Council 

cc: Office of General Counsel 
Draft Final Audit Report of the 

Audit Division on the Oklahoma 

Leadiership Council 

(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 mqt 

the threshold 

requirements for 

substantial compliance 

with the Act.' The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committee (p. 2) 

The Oklahoma Leadership Council is a state party committee 

headquartered in Oklahoma City, Oklahoma. For more 

information, see the chart on the Committee Organization, p. 2. 

Financial Activity (p. 3) 

• Receipts 

o Contributions from Individuals 

o Contributions from Other Political 

Committees. (PACs) 

o Transfers from Affiliated/Other Party 

Committees 

o Transfers from Non-federal and 

Levin AccoiiiTts 

o Oflsets and Other Receipts 

• Total Receipts 

•' Disbursements 

b Operating Expenditures 

o Transfers to Affiliated/Other Party 

Committees 

o Federal Election Activity 

o Other Disbursements 

Total Disbursements 

• Levin Receipts 

• Levin Disbursements 

SS70.198 

99,942 

9,336,908 

106,953 

1,432 

S 10,115,433 

$918,520 

9,131,482 

96,855 

12,451 

S 10,159,308 

$85,332 

$89,078 

Findings and Recommendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Misstatement of Financial Activity - Levin Fund (Finding 2) 

• Recordkeeping for Employees (Finding 3) 

• Contributions from Unregistered Political Organizations (Finding 4) 

' 52 U.S.C. §30111(b). 
Draft Final iSepnrt of the Audit 

Division on the 

OMahomu l^eudetahip Couneil 

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

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit I 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 3 

Part III. Summaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity , = 6 

Finding 2. Misstatement ofFinancM Activity-Le.v|n Fund 8 

Finding 3. Recordkeeping for Employees 10 

Finding 4. Contributions from Un^gistered Rotiiticai B^nizations 12 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Oklahoma Leadership Council (OLC), 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 S2 U.S.C. §30111(b), which permits the 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report under S2 U.S.C. §30104. Prior to conducting any audit under this 

subsection, the Commission must perform an internal review of reports filed by selected 

committees to determine if the reports filed by a particular committee meet the threshold 

requirements for substantial compliance with the Act. S2 U.S.C. §30111(b). 

Scope of Audit 

Following Commission approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined; 

1. the receipt of contributions from prohibited sources; 

2. the disclosure of individual contributors' occupation and name of employer; 

3. the disclosure of disbursements, debts and obligations; 

4. the disclosure of expenses allocated between federal and non-federal accounts; 

5. the consistency between reported figures and bank- record's; 

6. the completeness of records; and , .. 

7. other committee operations necessary to the review. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration May 13.1983' 

• Audit Coverage January 1,201| - Decerriber 31,2012 

Headquarters Oklahoma City, Oklahoma 

Bank Information 

• Bank depositories Two 

• Bank Accounts ' Four Federali One Levin, Two Nonfederal • 

Treasurer 

• Treasurer When Audit Was Conducted Peter L. Hodges (9/14/201S - present) 

Anthony J. Ferate (6/20/2010 -

snajaaiB 

• Treasurer During Period .Cbvei^ by Audit' ' Anlhony ^Terate 

Management Information '• 

• Attended Commission Campaign Finance 

Seminar 

YefS. 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 
Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand January 1.2011 S:80.801 

o Contributions from Individuals 570.198 

o Contributions from Other Political 

Committees (PACs) 99,942 

o Transfers from Affiliated/Other Party 

Committees 9,336,908 

o Transfers from Non-federal and Levin 

Accounts 106.953 

o Offsets and Other P:eceipts 

i-f. 

s 

Total Receiots S 10,I15i433 

o Oeerating Expenditures 918.520 

o Transfers to Affiliated/Other Party 

Committees 9.131.482 

o Federal Election Activity . 96iSS5-. 

o Other Disbursements 12-.451 

Total Disbursements 510,159^08 

Cash-on-hand.® December 31,2012 $36;926 

Levin Cash-on-hand j®JanuaRy 1,2011 S 15,687 

Total Levin Receipts' I-- -85,3^ 

Total Levin Disbursements 89;078 

. Levin Cash-on-hand ®l>kembeF 31.2012 5 11,941 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

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

records revealed a misstatement of receipts, disbursements and ending cash-on-hand 

balance for calendar year 2011. OLC understated its 2011 receipts and disbursements by 

$28,491 and $73,543, respectively; and overstated its ending cash-on-hand by $44,550. 

In response to the Interim Audit Report recommendation, OLC filed a Form 99 

(Miscellaneous Text) and disclosed all misstatements with an appropriate reference to 

individual disclosure reports. Likewise, OLC filed an amended 2012 Year End report 

and corrected its ending cash-on-hand balance. (For more detail, see p. 6.) 

Finding 2. Misstatement of Financial Activity - Levin Fund 

During audit fieldwork, a comparison of OLC's reported Levin Fund activity with its 

bank records revealed a misstatement of disbursements and ending cash-on-hand for 

calendar year 2011, and a misstatement of beginning cash-on-hand and receipts for 

calendar year 2012. For 2011, OLC understated its disbursements by $15,039 and 

overstated its ending cash-on-hand by $12,229. For 2012, OLC understated its receipts 

by $10,000. In response to the Interim Audit Report recommendation, OLC filed a Form 

99 (Miscellaneous Text) and disclosed all previously undisclosed 2011 transfers made 

from its Levin Fund to its federal account. However, OLC did not disclose the 

unreported $10,000 receipt from 2012 in its response to the Interim Audit Report, nor has 

it adjusted its Levin cash-on-hand balance. (For more detail, see p. 8.) 

Finding 3. Recordkeeping for Employees 

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

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

spent in connection with a federal election. For calendar years 2011 and 2012, the Audit 

staff identified payments to OLC employees totaling $178,305 for which OLC did not 

maintain monthly payroll logs. This entire amount consisted of payroll that was allocated 

with both federal and non-federal funds. In response to the Interim Audit Report 

recommendation, OLC provided details of the system it has implemented that requires 

employees to complete monthly logs detailing the percentage of time spent in connection 

with federal elections. (For more detail, see p. 10.) 

Finding 4. Contributions from Unregistered Political 

Organizations 

During audit fieldwork, a review of all contributions from unregistered political 

organizations indicated that OLC received contributions totaling $8,150 that may not 

have been made with permissible funds. OLC transferred $7,150 of these contributions 

to its non-federal and Levin accounts but not in a timely manner. In response to the 

Interim Audit Report recommendation, OLC stated it had transferred $1,000 from its 
federal account to its state account and indicated that the transfer would be disclosed in 

OLC's 2016 April Monthly report. (For more detail, see p. 12.) 
Part IV 

Findings and Reconunendations 

Finding 1. Misstatement of Financial Activity 

Summary 

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

records revealed a misstatement of receipts, disbursements and ending cash-on-hand 

balance for calendar year 2011. OLC understated its 2011 receipts and disbursements by 

$28,491 and $73,543, respectively; and overstated its ending cash-on-hand by $44,550. 

In response to the Interim Audit Report recommendation, OLC filed a Form 99 

(Miscellaneous Text) and disclosed all misstatements with an appropriate reference to 

individual disclosure reports. Likewise, OLC filed an amended 2012 Year End report 

and corrected its ending cash-on-hand balance. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• the amount of cash-on-hand at the beginning and end of the reporting period; 

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

• the total amount of disbursements for the reporting period and for the calendar year; 

and 

• certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemiited Disbursements), 52 U.S.C. §30l64(b)(l), (2), (3), (4) and (5). 

Facts and Analysis 

A. Facts 

As part of audit fieldwork, the Audit staff reconciled OLC's reported financial activity 

with its bank records for calendar years 2011 and 2012. The reconciliation revealed that 

OLC misstated its receipts, disbursements, and ending cash-on-hand for 2011. The 

following chart outlines the discrepancies between OLC's disclosure reports and its bank 

records. The succeeding paragraphs explain why the discrepancies occurred. 

2011 Committee Activity . 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

(^January 1,2011 

$80,299 $80,801 $502 

Understated 

Receipts $276,679 $305,170 $28,491 

Understated 

Disbursements $238,640 $312,183 $73,543 

Understated 

Ending Cash Balance 

@ December 31,2011 

$118,338 $73,788 $44,550 

Overstated 
The beginning cash balance was understated by $S02 and is unexplained, but likely 

resulted from prior-period discrepancies. 

The understatement of receipts resulted from the following: 

• One transfer from non-federal account not reported^ 

• Four transfers from Levin account not reported^ l-5,039' 

• Unexplained difference iiOiS 

Understatement of Receipts .S!2fc491-

The understatement of disbursements resulted from the following: 

• NetUnder Reporting of Pay roll Expenses $61,867 

• Unreported disbursements clearing bank records 15,889 

• Non-federal account disbursements reported as federal (3.259) 

• Other reported disbursements not traced to bank records (11204) 

• Incorrect disbursement amount reported 250 

Net Understatement of Disbursements .$73.543 

The $44,550 overstatement of the ending cash-on-hand balance was the result of the 

receipt and disbursement reporting discrepancies described above along with a $502 

understatement of beginning cash-on-hand for 2011. 

B. Interim Audit.^port-4^ Audit Division ^pmmeh^gtion 

at the exit conference and provided work papers detailing the differences. OLC Counsel 

responded to the exit conference by explaining that a portion of the under-reporting of 

payroll expenses seems to be attributable-.to payroll taxes and payroll vendor 

administration fees. The Audit staff agrees with Counsel that most of the differences are 

likely related to taxes and fees paid to its payroll vendor in 2011. However, it should also 

be noted that there were several periods in 2011 where OLC did not report any payments 

to its payroll yendor, which would include salaries as well as taxes and fees. 

The Interim Audit Report recommended that OLC amend its disclosure reports to correct 

the misstatements noted above and reconcile the cash balance on its most recent report to 

identify any subsequeh1:.d8crepancies that could affect the recommended adjustments. 

The Interim Audit Report further recommended that OLC adjust the cash balance as 

necessary on its most recent report, noting that the adjustment is the result of prior-period 

audit adjustments. 

C. Committee Response tolnterim Audit Report 

In response to the Interim Audit Report recommendation, OLC filed a Form 99 

(Miscellaneous Text) and disclosed all 2011 receipt and disbursement misstatements with 

' This transfer was for allocable activity and did not result in over-funding of federal activity by a nonfederal account. 
8 

an appropriate reference to individual disclosure reports. Likewise, OLC filed an 

amended 2012 Year-End disclosure report and corrected its ending cash-on-hand balance, 

As such, OLC has materially complied with the Interim Audit Report recommendation. 

Finding 2. Misstatement of Financial Activity - Levin 

Fund 

Summary 

During audit fieldwork, a comparison of OLC's reported Levin Fund activity .with its 

bank records revealed a misstatement of disbursements and ending cash-on-hand for 

calendar year 2011, and a misstatement of beginning cash-on-hand and receipts for 

calendar year 2012. For 2011, OLC understated its disbursements by $15,039 and 

overstated its ending cash-on-hand by $12,229. For 2012, OLC understated its receipts 

by $10,000. In response to the Interim Audit Report recommendation, OLC filed a Form 

99 (Miscellaneous Text) and disclosed all previously undisclosed 2011 transfers made 

from its Levin Fund to its federal account. However, OLC did not disclose the 

unreported $10,000 receipt from 2012 in its response to the Interim Audit Report, nor has 

it adjusted its Levin cash-on-hand balance. 

Legal Standard 

A. Contents of Levin Reports. Each report must disclose: 

• the amount of cash-on-hand for Levin funds at the beginning and end of the reporting 

period; 

• the total amqiiHt'Of Levin fund receipts anjl;d.Uburser^ents (including allocation 

transfers) for the reporting period and fbr the calendar year; and, 

• certain transactions that require itemization on Schedule L-A (Itemized Receipts of 

Levin Funds) or Schedule L-B (Itemized Disbursements of Levin Funds). 11 CFR 

§300.36 (b)(2). 

B. Levin Fund Transfers. A State, district, or local committee of a political party must 

not use any Federal funds transferred to it from or otherwise accepted by it from any 

other State, district, or local committee as the Federal component of an expenditure or 

disbursement for Federal election activity under 11 CFR §300.32. A State, district, or 

local comniittee of a political party must itself raise the Federal component of an 

expenditure or disbursement allocated between federal funds and Levin funds under 

11 CFR §§300.32 and 3D0.33. 11 CFR §300.34(a). 

Levin funds must be raised solely by the State, district, or local committee of a 

political party that expends or disburses the funds. A State, district, or local 

committee of a political party must not use as Levin funds any funds transferred or 

otherwise provided to the committee by any State, district, or local committee of a 

political party of the national committee of any political party. 11 CFR §300.34(b). 
Facts and Analysis 

A. Facts 

As part of the audit fieldwork, the Audit staff reconciled OLC's reported Levin activity 

with its Levin bank records for 2011 and 2012. The reconciliation revealed that OLC 

misstated its disbursements and ending cash for 2011, and misstated its beginning cashon-hand and receipts for 2012. The following charts outline the discrepancies between 

OLC's disclosure reports and its Levin bank records, and the succeeding paragraphs 

explain why these discrepancies occurred. 

2011 Committee Levin Fund Activity 

. .. Reported Banli Records Discrepancy 

Beginning Cash Balance 

(^January 1,2011 

$17,877 $15,687 . $2,190 

Overstated 

Receipts $40,332 $45,332 $5,000 

Understated 

Disbursements $30,922 $45,961 $15,039 

Understated 

Ending Cash Balance 

^December 31,2011 

$27,287 $15,058 $12,229 

Overstated 

The understatement .of disbursements resulted from-four unreported transfers totaling 

$15,039 that OLC m§de frpni its Levin Fund to its.'f(^e.ral acepunj;.^ 

OLC's ending cash-ori-hand was overstated by $12,229. this difference resulted from 

the understated disbursements along with smaller differences in beginning cash-on-hand 

and receipts in the chart above. 

2012 Committee Levin Fund Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

^ January L 2012 

$27,287 $15,058 $12,229 

Overstated 

Receipts $30,000 $40,000 $10,000 

Understated 

Disbursements $40,730 $43,117 $2,387 

Understated 

Ending Cash Balance 

@ December 31,2012 

$16,557 $11,941 $4,616 

Overstated 

' OLC transferred these Levin funds to its federal allocation account for the'purpose of paying allocable 

payroll expenses in accordance with 11 CFR §300.33. Also, all Levin fends were raised by OLC in 

accordance with 11 CFR § 300.34. Therefore, the transfers of Levin funds did not present any funding 

issue related to the Levin account. 
i 

! 10 

Notwithstanding the incorrect cash balance carried over from 2011, OLC's 

understatement of receipts was the result of an unreported deposit in the amount of 

$10,000. The $4,616 overstatement of ending cash resulted from the discrepancies in 

beginning cash, receipts, and disbursements displayed in the chart above. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatements with OLC representatives at the exit 

conference and provided work papers detailing the misstatements. In response to the exit 

conference, OLC Counsel explained that the differences identified are small sums and 

constitute a minimal portion of OLC's overall activity during the audit period. 

The Interim Audit Report recommended that OLC: 

• amend its 2011 disclosure reports to include the four transfers totaling $15,039 

that OLC made fiom its Levin Fund to its federal account; 

• amend its 2012 disclosure report to include the unreported deposit of $10,000; 

and 

• adjust the Levin cash balance as necessary on its most recent report, noting that 

the adjustment is the result of prior-period audit adjustments. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, OLC filed a Form 99 

(Miscellaneous Text) and disclosed all previously undisclosed 2011 transfers totaling 

$15,039 made from its Levin Fund to its.federal apcount. Althpugh OLC materially 

corrected its 2011 abfivify,. if did not disclose the tinfOjibrted $1 OjOOO receipt from 2012, 

nor did it adjust its-Levin cashsbn-hand balance.'Until the appropriate amendments are 

filed to correct the remaining misstatements, .the Audit staff considers the matter 

outstanding. 

Finding 3. Itecordkeeping f^ttEihplPyees j 

Summary 

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

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

spent in connection with a federal election. For calendar years 2011 and 2012, the Audit 

staff identified payinents to OLC employees totaling $178,305 for which OLC did not 

maintain monthly payroll.logs. This entire amount consisted of payroll that was allocated 

with both federal and non-federal funds. In response to the Interim Audit Report 

recommendation, OLC provided details of the system it has implemented that requires 

employees to complete monthly logs detailing the percentage of time spent in connection 

with federal elections. 

Legal Standard 

Maintenance of Monthly Logs. Party 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: 
\ 

I 

• employees who spend 2S percent or less of their compensated time in a given 

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

or be 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 paid 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 Anal]rsis 

A. Facts 

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

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

time each employee spent in connection with a federal election. These logs were 

required to document the proper allocation of fdderal and non-federal funds used to pay 

employee salariesahd wag^^. For-2.^:11 and 2012, OLC djd not mdidf^'monthly logs 

for $178,305 in payroll.^ This aifiQufit is made up exclusively of expenditures reported 

on Schedules H4 (Disbursements for Allocated Federal/Non-federal Activity)iand paid 

with a mixture of federal and non-federal funds during the same month. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the recordkeeping requirement with OLC representatives 

during audit fieldwofk dnd at the exit confercnccrin response to the exit conference, 

OLC Counsel stated that affer the 2012 election cycle arid'prior to the commencement of 

the audit, OLC implemented timekeeping protocols in response to the Commission 

memorandum concerning timekeeping requireiAents. OLC's Chairman instructed its 

employees to comply with the Sidelines set forth in this memorandum. The response 

further stated that OLC will continue to work with its staff to ensure payroll 

recordkeeping requirements are followed. 

The Interim Audit Report recommended that OLC; 

• provide evidence that it maintained monthly time logs to document the percentage 

of time an employee spent in connection with a federal election; or 

• provide details of its plan to maintain monthly payroll logs in the future. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, OLC stated that it has 

implemented timeketepih|prQtQfe.ols in respo'nse-tft the Commissicfn-^s DecembsrSQX? 

'melrnorandum^ concerning timekeeping requirements. QLC's response further stated.that 

its Chairman verbally instructed employees to comply with the guidelines set forth in the 

OLC did not report or pay any payroll consisting of 100 percent federal funds. All payroll-related 

expeiises were allocated and reported on Schedules H4. Payroll amounts are stated net of taxes and 

fringe benefits. 

' Request for Consideration of a Legal Question (LRA 917), issued, on October 23,2012, and the 

Commission's policy conclusion issued on November 28,2012. 
12 

Commission's memorandum. OLC provided a copy of its employee recordkeeping 

policy, along with a memorandum OLC sent to its entire staff explaining the 

recordkeeping requirements and instructions detailing how employees are expected to 

comply. OLC also provided a copy of the time allocation sheet its employees will 

complete each month documenting their time spent on federal and state election 

activities. As such, OLC has complied with the Interim Audit Report recommendation 

by providing details of its plan to maintain monthly payroll logs in the future. 

Finding 4. Contributions from Unregistered Political 

Organizations 

Summary 

During audit fieldwork, a review of all contributions from unregistered political 

organizations indicated that OLC received contributions totaling $8,150 that may not 

have been made with permissible funds. OLC transferred $7,1 SO of these contributions 

to its non-federal and Levin accounts but not in a timely manner. In response to the 

Interim Audit Report recommendation, OLC stated it had .transferred $1,000 from its 

federal account to its state account and indicated that the transfer would be disclosed in 

OLC's 2016 May Monthly report. 

Legal Standard 

A. Party Committee Limits. A par^ committee may not receive more than a total of 

$10,000 per year from any person except that a multicandi'date political committee 

may not contribute more.than $5,000. ^2 U.S:C. §30L16(a)(l)(D) and 11 CFR 

§§110.1(a) and (6)(5), 1 lb.2(d) and 110.9. 

B. Handling ContribationsThat Appear Impermissible or Excessive. If a 

committee receives a contribution that appears to be impermissible or excessive, the 

committee must either: 

1. Return the questionable check to the donor; or 

2. Deposit the check into its federal account and: 

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

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

• Include this explanation on Schedule A if the contribution has to be itemized 

before'its legality is established. 11 CFR §103.3(b)(3), (4) and (5). 

C. Questionable Contfibutions. If a committee receives a contribution that appears to 

be prohibited (a questionable contribution), it must follow the procedures below: 

1. Within 10 days after the treasurer receives the questionable contribution, the 

committee must either: 

• Retum the contribution to the contributor without depositing it; or 

• Deposit the contribution (and follow the steps below). 11 CFR § 103.3(b)(1). 

2. If the committee deposits the questionable contribution, it may not spend the 

funds and must be prepared to refund them. It must therefore maintain sufficient 

funds to make the refunds or establish a separate account in a campaign 

depository for possibly illegal contributions. 11 CFR §103.3(b)(4). 
13 

3. The committee must keep a written record explaining why the contribution may 

be prohibited and must include this information when reporting the receipt of the 

contribution. 11 CFR§ 103.3(b)(5). 

4. Within 30 days of the treasurer's receipt of the questionable contribution, the 

committee must make at least one written or oral request for evidence that the 

contribution is legal. Evidence of legality includes, for example, a written 

statement from the contributor explaining why the contribution is legal or an oral 

explanation that is recorded by the committee in a memorandum. 11 CFR 

§103.3(b)(l). 

'5. Within these 30 days, the committee must either; 

• Confirm the legality of the contribution; or 

• Refund the contribution to the contributor and note the reRind on the report 

covering the period in which the refund was made. 11 CFR §103.3(b)(2). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff identified five contributions totaling $8,150 from 

five state and local political organizations. OLC re'ceived three of these conbributions 

totaling $2,150 in January 2011, and transferred them to its non-federal account in June 

2011. Along with its entry on its FEC disclosure report of the transfer, OLC included a 

memo text stating that an employee who handled OLC banking was asked to transfer 

funds in February 2011. OLC stated that this request occurred during a transitional time 

and it later discovered that the transfer had. never been .processed. Upon discovery that 

the funds had not been transferred, OLC frwsfened the'-fliih'ds from its federai account to 

a state account and provided bank statements to the Commission in support of this 

transaction. 

OLC also received a $5,000:cOntribution from an unregistered committee in September 

2012, which was transferred to ite Levin Fund account in January 2013. Along with its 

entry on its FEC disclosure report of the transfer, OLC included a memo text stating that 

the contribution was erroneously deposited into the federal account. Both the $2,150 and 

$5,000 contributions above are considered untimely resolved since the transfers from the 

federal account were made beyond thirty days of each contributions receipt. 

Lastly, OLC received a $1,000 contribution from an unregistered committee in April 

2011, which has not been transferred or refunded from its federal account. This 

contribution is considered unresolved. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC's representatives during the exit 

conference and provided copies of relevant work papers. Prior to audit fieldwork, OLC 

transferred $7,150 of the $8,150 referred to in the section above from its federal account 

to its non-federal and Levin Fund accounts. In response to the exit conference, OLC 

Counsel stated that the committee will research the remaining contribution of $1,000 and 
14 

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provide additional information regarding the permissibility of the funds as it becomes 

available. 

The Interim Audit Report recommended that OLC: 

• provide evidence that the transfers for the contributions totaling $7,1 SO were 

niade timely; and 

i • provide evidence demonstrating that the remaining contribution of $ 1,000 was 

I made with permissible funds; or 

I refund the remaining impermissible funds ($1,000) and provide evidence of such 

I refund (a copy of the front and back of the negotiated refund check); or 

• if funds are not available to make the necessary ^nd, disclose the refund due on 

Schedule D (Debts and Obligations) until funds become available to make the 

refund. 

• C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, OLC stated it had transferred 

; $1,000 from its federal account to its state ac^unt on March 1,2016, )io>yever, no bank 

[ activity documentation to support this transfer was provide OLC furihw-stated that it 

[ plans to disclose this transfer in its. 2016 April Monthly report. As such, the. Audit staff 

considers $7,1 SO untimely resolved. In addition, the $1,000 that OLC transferred to its 

state account will remain outstanidlng until bank documentation is provided to 

substantiate the transfer.