Attachments as stated

BOB COSTA

PUBLIC ISSUANCE OF FINAL AUDIT REPORTS -

UAW-VOLUNTARY COMMUNITY ACTION PROGRAH

AND THE COMMITTEE FOR GOOD GOVERNMENT

FRED EILAND

PRESS OFFICE

WASHINGTON. 0 C 2114&3

FEDERAL ELECTION COMMISSION

cc: FEC Library

RAD

~blic Record

June 8, 1981

Informational copies of the reports have been received by

all parties involved and these reports may be released to the

pub lic .

Attached please find a copy of the final audits reports

of the UAW-Vo1untary Community Action Program and The Committee

for Good Government.

SUBJECT:

FROH:

MEMORANDUM

TO:

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A. Overvie\'l

I. Background

WAStllN<;:TOS. 0 C 204&3

FEDERAL ELECTION COMMISSION

']'110 reported fi~;urc for e:':?(:::1ditures \,'as overstated by

$100. 00 clue to an .:1:.:·parent ndding error in September, 1977.

y

The audit covered the period January 1, 1977, t~rough

March 31, 1979, the final coverage date of the latest re?ort

filed by the Committee at the tine of the audit. T~e Cc~~ittee

reported a beginning cash balance of $555,210.42, total receipts

of $1,510,647.71, total expenditures of $1,281,919.71 an~ a

closing cash balance at ?-larch 31, 1979 of $784,038 ..;2. ~/

The Corr~ittee is the separate segregated =~nd or

the International Union, United Automobile, Aerospace an~

Agricultural Implement Workers of America (Url~1) and registered

with:tbe U.S. General Accounting Office on April 17, 1972. The

Committee maintains its headquarters in Detroit, Mic~iga~. UAWV-CAP's administrative and solicitation costs are paid =or by

the VAlv. The Co~ittee solicits voluntary cash contributions

from members of that union in factories and union halls.

REPORT OF THE AUDIT DIVISION

ON THE

UAW-VOLUNTARY CO~~UNITY ACTION PROGRAM

This audit report is based on documents and working

papers supporting each o~ its factual statements. T~ey =orm part

of the record upon \."hic:1 the Co::u:lission bused its decisic:1s on the

matters in this report and ~ere nvailub1e to Commissioners and

appropriate staff for re~ie~.

This report is based on an audit of the UAW-V01untary

Community Action Program (UAW-V-CAP) (lithe Committee"), undertaken

by the Audit Division of the Federal Election Commission in

accordance with the Commission's audit policy to determi~e

whether there has been compliance with the provisions of the

Federal Election Campaign Act of 1971, as amended (lithe Act").

The audit was conducted pursuant to Section 438(a) (8) of Title 2,

United States Code, which, at the time of the audit, directed

the Commission to make from time to time audits and fielc

investigations with respect to reports and statements filed under

the provisions of the Act. .....
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B. Key Personnel

The key pe~sonnel of the committee during the period

covered by the audit were Mr. Douglas Fraser, Chairman,

Mr. Emil Mazey, Treasurer, and Mr. Donald Moll, Assistant

Treasurer.

C. Scope

The audit included such tests as verification of total

reported receipts and expenditures and individual transactionsJ

review of required supporting documentation and analysis of

Committee debts and obligations: and, such other audit procedures

as deemed necess~ry under the circumstances.

II. Audit Findings and Recommendations

A. National Office Activity

1. Notices Required on Solicitation'Material

Section l14.5(a) (5) of Title 11, Code of Federal

Regulations, requires that any written solicitation for

contributions to a separ~te'segregatedfund 'contain'statements

which inform thernember of-the political purpose of the fund

and also infor~ the rnenber that his contribution is voluntary

and that he/she may refuse to contribute without fear of ,reprisal.

In addition, Section l14.5(a) (2) of Title 11, Code

of Federal Regulations requires that if a· guideline for'contri-",

butions to a labor union's segregated fund is suggested, the labor

union ~ust in=or~ the member being solicited:

1. the guidelines are merely suggestions: and

2. the individual is free to contribute more

or less than the suggested guidelines and the labor union will

not favor or disadvantase anyone by reason of the an:ount of

the ~ontribution.

}!ost of the Committee's funds ,·:ere solicited during

annual "dollar drives" ,·:hich encouraqed each member to contribute

one dollar. The Committee uses flyers, posters, and tickets

to solicit contributions from union members. The Audit Division

reviewed exarn?les of these materials at all levels of the

Committee and none revico..:ec1 contained all of the required

notices.
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The Audit staff recommended that the Committee include

the required statements on all solicitation material, advise regions "" and locals to do the same, and submit a copy of this written

requirement to the Audit staff for review.

OnAprills, 19"8l,the,Committee subrili"tted a proposed

memorandum to its International Executive Board advising regions

and locals to include the required notices on all of their

solicitation materials.

Recommendation

Provided that a copy of the proposed memorandum is distributed

to all regions arid locals, the Audit staff recommends no further

action on this matter.

2. Late Reporting of Transfers

During the period of the audit, Section 434(b) (4)

of Title 2, United States Code required that the committee

disclose the name of each political committee to which the

committee made transfers during the reporting period: together

with the amount and date of each transfer.

In addition to the bank accounts maintained at

the national office in Detroit, the Committee maintains an

account at the Washington, D.C. office from which contributions

to candidates are made. The Washington, D.C. office then ~~riodi~a1ly notifl~s th~ nati6nal office of the coritrib~tions

and seeks a reimbursenent in the amount of the contributions.

The na~ional office does not report the contributions until the

period of notification, which is generally one or two mon~hs

after the contributions are made.

The Audit staff recommended that the Committee

issue written instructions requiring the \'1ashington office to

inform the national o=fice of transfers to candidates as soon as

,they are made so they can be reported on a timely and ,current basis.,

The Audit staff further recommended that a copy of the written

procedures be submitted to the Audit staff for review.

On April 15, 1981, the Committee submitted a proposed

memorandum to its Was~ington office requiring a prompt reporting of

all transfers made from the Washington account.

Recommendation

Provided the proposed memorandum is sent to the Washington

office, the Audit staff recom.'T'.ends no further action on this matter.
III. ::rocedural Recon~'11endations

Certain matters noted during the audit were

referred ~o the Co~~ission's O==ice of General Counsel on ~larch· 4, 1981.

In general, it was the opinion of the Audit staff that many

of the problems encountered by the Committee could be avoided in

the future through the development of specific written guidelines

to be forwarded to all collection agents and Co~mittee officials

responsible for UAW-V-CAP ac~ivit~' at the local and reqional

levels.

1. Matters Referred to the Office of General Counsel

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Regional and Local Union Activity

Overview

Loc.J.l 167 \·iYOl:1i.ng, :·11

Loc31 1231 GranJ R~9ids, ~I (Grand Rapids-R0gion ID)

Local 239 in Baltimore, Md.

Local 786 in Yor}~, PA - (Baltimorc-n.egion 8)

Balti~ore Area - Region 8 Gra~d Rapids Area - Region 1D

B.

~/

UAW-V~CAP uses a three (3) tiered decentralized

collection system with both local offices' and regional" offices

soliciting contributions. These funds ·are combined at the

regional offices which in turn transfer the contributions to

the national office in Detroit. The contributions are raised

by direct solicitation, raffles, sales, and mailings conducted

by ~egional and local offices during their annual "Dollar Drives".

Although national officials. provide brochures on fundraising

to the local and 'regional representatives, they do not monitor

the fundraising activities~ and since records for the fundraising

activities are maintained only at the local and regional offices,

officials at the national office could not provide the Audit staff

with information on how the funds,were collected. '

In order to evaluate the Committee's fundraising

techniques, two (2) regional offices 2/ and two (2) locals 3/

within each region were chosen for review. The _two~ (2) regIons

account for 19.55% of the total contributions received bv the

Committee during the audit period and the locals reviewed account

for 14.47% and 6.0% of the ~wo (2) regions, respectively •

......"
Specifically, it was the opinion of the Audit 'staff that these

guidelines should ad?=~s~_th~following: .

3. be used to purchase a cashier's check, money order,

or similar instrument to forward the contributions without

depositing the contributions _.. intoanv account prior to transfer. . .,

Option 3 above is intended to allow for the periodic tran~rer of contributions to the COLmittee without having to

open and/or maintain a bank account for each event, i.e. for

the smaller less frequent events.

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p.)

Under each method, contributions (and expenditures and

cash on hand in the case of a designated depository) must be

disclosed on reports filed by the COw~ittee for the period in

which the transactions occur. Speci=ic information; such ,as the

identification of the contributor, the date, and amo~~t of the

contribution: or payee, date, amo".1l1t, und purpose of expenditure:

shall also be disclosed if the contribution or expenditure is in

excesiof, .or aggregutes in excess 0= $200 during the calendar

year. (2 U.S.C. 432(b), (c) and (11), 2 U.S.C. 434 (b), and 11

C.P.R. 102.6, 103.3(a), and 104.3).

Deposit, Transmittal and Disclosure

of Contributions and Cash on Hand

All contributions shall either:

1. be -deposited into a designated campaign 'depository, or'

2. be deposited into a "transmittal" account to be

forwarded to the Committee treasurer, or

If Committee depositories are.established (1 above),

contributions may be deposited' into and expenditures made from , ' the accounts. Each depository must be disclosed on the Committee's",:

,statement of Organization •.

Alternatively, transmittal accounts· (2 above) mav be used.

solely for the deposit and transrnitt~1.,9~ contributioni-to·the

Committee. -All" funds deposited are SUbject. to the prohibitions' .. and limitations of the·Act. Contributions deposited into transmittal

accounts must be ,for\'larded to the CO!!'.!':'!i ttee treasurer 'wi thin "30 days

of the original.,collection,or, if in excessof'$50'~e~_individuali:

within·IO: days '.of receipt together\-;ith the contributor's.:. name "and"

address and the 'date of the contribu£ion. '

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b)

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Accounting for and Disclosure of _ Fundraising Receipts and Expenditures

The Committee treasurer is required to maintain an

'accounting of as well as report all contributions made (gross

proceeds) to the Committee. All fun~raising expenditures

made from Committee funds, including the cost of raffle prizes

and other items sold, must be made from designated Committee

depositories and disclosed on Committee reports. (2 U.S.C.

432 (c) and (h) (1) and 434 (b» •

. The Audit staff recommended that the Committee prepare

and submit to the Audit staff detailed guidelines with emphasis

in the above areas for the purpose of informing local and regional

UAW-V-CAP officials of these requirements of the Act.

On April 15, 1981, the Committee submitted a copy of

the proposed memorandum to its International Executive Board

outlining procedures for transmitting contributions from local

and regional offices to the national headquarters. In addition,

the proposed memo outlines procedures for accounting and disclosure

of fundraising receipts and expenditures by locals, regions, and

the national office. The Audit staff has reviewed those sections

of the Committee memorandum which address the specific reco~mendations contained in the interim audit report. 4/ The Audit

staff recommends that in the paragraph dealing with segregation

of Union Treasury and Committee monies, the committee may wish

to substitute the term "bank account" for the phrase "designated

fund,." This would provide clear guida~ce that such moni~s may not

be kept in the same account.

, Recommendation

Except as noted above, the Audit sta::f is of the opinion

that these procedures will provide the necessary guidance to

national, regional, and local officials.

The Committee memorandu~ addresses a number of issues

in addition to those contained in the recommendations of

the interim report. ~ot h~ving been addressed in the

interim report, these matters are beyond the scope of the

final audit reoort. It should be noted, however, that

neither the Co~mission nor the ~udit st~ff approves or

endorses the statement in the draft memorandum that the

"audit report disclosed th~t the UAW waR generally in

co:;,pli<lnce \d th the FrO\"i sion~, 0: the Federal Election C~im!).:liCJn .:\ct ... " Reg::.rding tli.:it section of the mcmora.nd'-l::l

i:-1\'ol':in<} discl~dmcrs, t;l'~ CO::lini ttec is l"l:minc1cd that

certain costs dircctl~ attributable to any communication c:,press]~" ~d'."oc.:ltin(:t t:K' (.~lection 01- defc:tt: of: u c]oarly

idcntifi0d cnndi~nte must be rep0rted pursuant to 11 C.F.R.

Sec ti 0 ns 10·1. (), 10 () • 8 (]:I) (4), .:md 11·;' 3 (b) .
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FEDERAL ELECTION COMMISSION

1325 KSIREET N.W

WASH\II;CTON.D.C If.....J

At01.TIrNL BEGAlDIR; 'IBIS OIGARIZATIOI

!flY BE JOCATED IN A CDI'U.'1ED CDI'LIMIZ AC'mII

FlU: RP'lUSED BY 'DE a:HaSSIIIf Ill) MAtE PUBLIC IN

"DE PI&.IC BEaRS OFFICZ. lOR 1BIS PAKrIQUR

~'S CXH'LE1ID aJIILIMa AC'mII FILE

SDB.Y NJK !Ol 'DE PlESS stHUY fR !lit I /375.

"DE PlESS stHUY WILL PlIJVDE A 8IEF HIS1\itY (W

'1BE CASE _ A stHUY ar 'DE ACmIII TAlCEH, IF 1Bf.

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