Interim Audit Report of the 

Audit Division on the 

Maine Republican Party 

January 1, 2007 - December 31, 2008 

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 met 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 Maine Republican Party is a state party committee 

headquartered in Augusta, Maine. For more information, see the 

chart on the Conmiittee Organization, p. 2. 

Financial Activity (p. 2) 

Receipts 

o Contributions from Individuals $ 422,772 

o Contributions from Political Party 

Committees 778,500 

o Contributions from Other 

Political Committees 172,044 

o Transfers from Non-federal 

Account 48,381 

o All Other Receipts 887 

Total Receipts $ 1,422,584 

Disbursements 

o Operating Disbursements $ 806,455 

o Coordinated Party Expenditures 12,500 

o Federal Election Activity 519,305 

o Independent Expenditures 56,601 

Total Disbursements $ 1,394,861 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Reporting of Debts and Obligations (Finding 2) 

• Disclosure of Disbursements (Finding 3) 

• Failure to File Notices and Properly Disclose Independent 

Expenditures (Finding 4) 

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

Audit Division on the 

Maine Republican Party 

January 1, 2007 - December 31, 2008 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatementof Financial Activity 4 

Finding 2. Reporting of Debts and Obligations 6 

Finding 3. Disclosure of Disbursements 7 

Finding 4. Failure to File Notices and Properly Disclose Independent 

Expenditures 12 
Part I 

Background 

Authority for Audit 

This report is based on an audit ofthe Maine Republican Party (MRP), undertaken by the 

Audit Division ofthe Federal Election Commission (the Commission) in accordance with 

the Federal Election Campaign Act of 1971, as amended (the Act). The Audit Division 

conducted the audit pursuant to 2 U.S.C. §438(b), which permits the Commission to 

conduct audits and field investigations of any political committee that is required to file a 

report under 2 U.S.C. §434. 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. 2 U.S.C. §438(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and, as a result, this audit examined: 

1. the disclosure of disbursements, debts and obligations; 

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

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

4. the consistency between reported figures and bank records; 

5. the completeness of records; and 

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

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration April 19,1976 

• Audit Coverage Januaiy 1,2007 - December 31,2008 

Headquarters Augusta, Maine 

Bank Information 

• Bank Depositories One 

• Bank Accounts Two Federal and Four Non-federal 

Treasurer 

• Treasurer When Audit Was Conducted William Logan 

• Treasurer During Period Covered by Audit Phillip Roy 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid/volunteer staff and accounting firm 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ^ January 1,2007 $ 1,888 

Receipts 

o Contributions from Individuals 422,772 

o Contributions from Political Party Committees 778,500 

o Contributions from Other Political Committees 172,044 

o Transfers from Non-federal Account 48,381 

o All Other Receipts 887 

Total Receipts $ 1,422,584 

Disbursements 

o Operating Disbursements 806,455 

o Coordinated Party Expenditures 12.500 

o Independent Expenditures 56,601 

o Federal Election Activity 519,305 

Total Disbursements $ 1,394,861 

Cash-on-hand @ December 31,2008 $ 29,611 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of MRP*s reported figures with bank records revealed a 

misstatement of receipts, disbursements and cash-on-hand in both 2007 and 2008. For 2007, 

MRP overstated beginning cash-on-hand by $5,636, understated receipts by $22,461, understated 

disbursements by $29,346 and overstated ending cash-on-hand by $12,521. For 2008, MRP 

overstated receipts, disbursements and ending cash-on-hand by $53,727, $46,985 and $19,263, 

respectively. The Audit staff recommends that MRP amend its disclosure reports to correct the 

misstatements for both 2007 and 2008. (For more detail, see p. 4) 

Finding 2. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff noted that MRP failed to report debts and obligations 

totaling $103,721. The Audit staff recommends MRP amend its reports to disclose these debts 

and obligations. (For more detail, see p. 6) 

Finding 3. Disclosure of Disbursements 

During audit fieldwork, the Audit staff identified disbursements, totaling $625,824, which 

appeared to be improperly disclosed. MRP made disbursements from a non-federal account 

($94,019), which may be federal in nature. In addition, MRP did not properly disclose 

coordinated expenditures on behalf of a federal candidate ($12,500) and payments for federal 

election activity ($519,305). The Audit staff recommends that MRP provide further 

documentation to clarify the nature of these disbursements and amend its reports as necessary. 

(For more detail, see p. 7) 

Finding 4. Failure to File Notices and Properly Disclose 

Independent Expenditures 

During audit fieldwork, the Audit staff reviewed disbursements and noted expenditures for 

printed materials totaling $56,601, which appeared to be independent expenditures that MRP 

disclosed as operating expenditures. The Audit staff recommends that MRP provide further 

documentation to clarify the nature of these disbursements and amend its reports as necessary. 

(For more detail, see p. 12) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of MRP*s reported figures with bank records revealed a 

misstatement of receipts, disbursements and cash-on-hand in both 2007 and 2008. For 2007, 

MRP overstated beginning cash-on-hand by $5,636, understated receipts by $22,461, understated 

disbursements by $29,346 and overstated ending cash-on-hand by $ 12,521. For 2008, MRP 

overstated receipts, disbursements and ending cash-on-hand by $53,727, $46,985 and $19,263, 

respectively. The Audit staff recommends that MRP amend its disclosure reports to correct the 

misstatements for botii 2007 and 2008. 

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 (Itemized Disbursements). 2 U.S.C. §434(b)(l), (2), (3), (4) and (5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled MRP's reported activity with bank records for 

calendar years 2007 and 2008. The following charts outiine the discrepancies for the beginning 

cash balances, receipts, disbursements and the ending cash balances for each year. Succeeding 

paragraphs address the reasons for the misstatements, if known. 

2007 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2007 

$7,524 $1,888 $5,636 

Overstated 

Receipts $223,515 $245,976 $22,461 

Understated 

Disbursements $209,782 $239,128 $29,346 

Understated 

Ending Cash Balance @ 

December 31,2007 

$21,257 $8,736 $12,521 

Overstated 

The beginning cash-on-hand was overstated by $5,636, and is unexplained, but is likely the 

result of prior period discrepancies. 
The understatement of receipts was the result of the following: 

• Receipts reported, not supported by a credit or deposit 

• Deposited receipts, not reported 

• Interest from non-federal account reported 

• Unexplained difference 

Net Understatement of Receipts 

The understatement of disbursements was the result ofthe following: 

• Disbursements not reported 

• Disbursements reported, not supported by check or debit 

• Disbursement from non-federal account reported in error 

• Disbursement amounts incorrectly reported 

• Unexplained difference 

Net Understatement of Disbursements 1 

(186) 

22,533 

(28) 

142 

22.461 

36,506 

(4,006) 

(3,165) 

227 

£216} 

29.346 

The $12,521 overstatement of the ending cash-on-hand was the result ofthe misstatements 

described above. 

2008 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1,2008 

$21,257 $8,736 $12,521 

Overstated 

Receipts $1,230,335 $1,176,608 $53,727 

Overstated 

Disbursements $1,202,718 $1,155,732 $46,985 

Overstated 

Ending Cash Balance @ 

December 31,2008 

$48,874 $29,611 $19,263 

Overstated 

MRP overstated beginning cash-on-hand by $12,521, a carryover ofthe misstatement of 

ending cash-on-hand for 2007. 

The overstatement of receipts resulted from the following: 

• Receipts reported but deposited in non-federal account 

• Unexplained difference 

• Overstatement of Receipts 

The overstatement of disbursements resulted from the following: 

• Disbursements reported, not supported by check or debit 

• Disbursements not reported 

• Disbursement from non-federal account reported in error 

• Debit to reverse deposited contribution reported 

• Disbursement reported twice 

• Disbursement amount incorrectly reported 

• Unexplained difference 

Net Overstatement of Disbursements 

$ 52,353 

1.374 

$ 53.727 

$ (32,736) 

26,881 

(42,916) 

(5,000) 

(56) 

(1,200) 

8.042 

S 46.985 
The $19,263 overstatement of the ending cash-on-hand resulted from the misstatements 

described above. 

Prior to the audit, MRP made the Conmiission aware that an employee of the outside accounting 

firm used by the committee had embezzled $48,000. The individual, who had kept MRP's books 

for both its federal and non-federal accounts, and prepared the reports to the Commission, 

pleaded guilty to the embezzlement. As of the time of the audit, the individual had paid 

restitution of $39,531 and MRP had filed reports disclosing the embezzlement. MRjP conducted 

a full audit of its books and intemal controls and, as recommended by its auditor, has instituted 

better intemal controls. In addition, MRP has hired a different accounting firm. 

The Audit staffs reconciliation includes adjustments related to the embezzlement. Specifically, 

the adjustment for unreported disbursements of $26,881 includes $5,997 in disbursements that 

were associated with the embezzlement and not reported by MRP. In addition, the adjustment 

for disbursements reported that were not supported by a check or debit of ($32,736), includes 

disbursements of $14,316 that were associated with the embezzlement. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatements for 2007 and 2008 with MRP representatives during 

the exit conference and provided copies of relevant workpapers detailing the misstatements. The 

MRP representatives stated that necessary amended reports would be filed. 

The Audit staff recommends that, within 30 calendar days of receipt of this report, MRP: 

• Amend its reports to correct the misstatements for 2007 and 2008 as noted above; and, 

• Amend its most recently filed report to correct the cash-on-hand balance with an 

explanation that the change resulted from a prior period audit adjustment. Further, MRP 

should reconcile the cash balance of its most recent report to identify any subsequent 

discrepancies that may affect the adjustment recommended by the Audit staff. 

Finding 2. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff noted that MRP failed to report debts and obligations 

totaling $103,721. The Audit staff recommends MRP amend its reports to disclose these debts 

and obligations. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount and 

nature of outstanding debts and obligations until those debts are extinguished. 2 U.S.C 

§4340))(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Itemizing Debts and Obligations. 

• A debt of $500 or less must be reported once it has been outstanding 60 days from the 

date incurred (the date of the transaction); the committee reports it on the next regularly 

scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on which the 

debt was incurred. 11 CFR §104.11(b). 
Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff identified debts owed to four vendors totaling $103,721 

that MRP did not report on Schedule D (Debts & Obligations). 

Although MRP did report debt totaling $45,669 relative to three ofthe four vendors during the 

audit period, the reported amounts did not accurately reflect the outstanding debt. Beginning 

with die 2008 July Quarterly Report, the debt reporting for these three vendors continued to be 

inaccurate for the remainder of2008. MRP did not report debt with respect to the fourth vendor. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff presented this matter during the exit conference to MRP's representatives and 

provided them with workpapers detailing the debts. MRP representatives indicated that 

necessary amended reports would be filed. 

The Audit staff recommends that, within 30 calendar days of service of this report, MRP file 

amended reports to disclose these debts and obligations on Schedule D. 

Finding 3. Disclosure of Disbursements 

Summary 

During audit fieldwork, the Audit staff identified disbursements, totaling $625,824, which 

appeared not to be properly disclosed. MRP made disbursements from a non-federal account 

($94,019), which may be federal in nature. In addition, MRP did not properly disclose 

coordinated expenditures on behalf of a federal candidate ($12,500) and payments for federal 

election activity ($519,305). The Audit staff recommends that MRP provide further 

documentation to clarify the nature of these disbursements and amend its reports as necessary. 

Legal Standard 

A. Reporting Allocable Expenses. A political committee that allocates federal/non-federal 

expenses must report each disbursement it makes from its federal account (or separate 

allocation account) to pay for a shared federal/non-federal expense. Committees report these 

kinds of disbursements on Schedule H-4 (Jomt Federal/Non-federal Activity Schedule). 

11 CFR§104.17(b)(3). 

B. Allocation Ratio for Administrative & Non-Candidate Specific Voter Drive Costs. State 

and local party committees must allocate their administrative expenses and non-candidate 

specific voter drive costs according to the fixed percentage ratio. Under this method, if a 

Presidential candidate and Senate candidate appear on the ballot, the committees must 

allocate at least 36% of expenses to their Federal funds. 11 CFR §106.7(d)(2)(ii) and (3)(ii). 

C. Coordinated Party Expenditures. A political committee that coordinates expenditures on 

behalf of a federal candidate must report the name, address, date, amount and purpose, as 

well as the name of the candidate for which the expenditure is made. 

2 U.S.C. §434(b)(6)(B)(iv). 
D. Federal Election Activity Expenditures. For each such disbursement, the committee must 

report the full name and address, date, amount and purpose of the disbursement. Committees 

report these kinds of disbursements on Schedule B (Itemized Disbursements), which provides 

space for the disclosure of the Candidate's name to which the activity relates, if applicable. 

11 CFR §300.36(b)(2). 

E. Salaries and Wages. Committees must keep a monthly log ofthe percentage of time each 

employee spends in connection with a Federal election. Employees who spend 25 percent or 

less of their compensated time in a given month on Federal election activity or on activities 

in connection with a Federal election must either be paid only from the Federal account or 

have their salaries allocated as an administrative cost. 11 CFR §lQ6.7(d)(l). 

Facts and Analysis 

A. Payments from Non-federal Accounts 

1. Facts 

MRP made payments, totaling $94,019 (See Chart A), from its non-federal accounts for 

activity that may be federal in nature. Payments totaling $48,520 from MRP's nonfederal accounts appear to be for allocable administrative expenses that should have been 

paid from a federal account. Also, payments totaling $45,499 were made from the nonfederal account and sufficient records were not available to clarify the nature of the 

. expense or to demonstrate that the expense was solely non-federal. Below is a discussion 

of these expenses. As calculated at the end ofthe two year audit period, MRP did not 

fund federal activity with non-federal funds. 

• Administrative Costs: MRP paid expenses totaling $48,520 from a non-federal 

account for postage, consulting, travel reimbursements, printing, and accounting 

fees that appear to be allocable administrative costs. Available documentation 

does not indicate that any of these payments were solely for non-federal activities. 

As allocable administrative expenses, MRP should have paid these from a federal 

account and reported on Schedule H-4 using an allocation ratio of at least 36 

percent federal and 64 percent non-federal in accordance with 11 CFR 

§106.7(d)(2)(ii) and (3)(ii). MRP should provide documentation to demonstrate 

that these were solely non-federal expenses. 

• Payroll and Associated Costs: MRP paid expenses totaling $14,999 from a nonfederal account for payroll and associated costs. MRP has not provided monthly 

logs, timesheets or affidavits demonstrating that costs were solely non-federal in 

nature. It is noted that MRP did provide affidavits for some employees indicating 

no time was spent relative to federal activity. Payroll and related costs associated 

with those employees were excluded from payroll costs in the amounts presented 

above. MRP should provide documentation to demonstrate the payroll and 

associated expenses of $14,999 were solely non-federal. 

Voter Identification: MRP's database described a $19,000 payment to "National 

Republican" on April 25,2008, as made for Voter ID; and, the available invoice 

noted "volunteer connect." Unless documentation is provided to indicate that 
these expenditures are solely non-federal in nature, MRP should disclose these 

transactions on its federal disclosure reports. 

• Printed Materials: MRP disbursed $11,500 from a non-federal account for printed 

materials for which copies were not available to assess the nature of these 

expenditures or to demonstrate that these payments were solely for non-federal 

activities. MRP should provide sufficient documentation to clarify the nature of 

these expenses. 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff addressed this matter and provided a schedule 

identifying the transactions in question to MRP representatives. MRP representatives 

stated that they would look into these items and send documentation to try to resolve the 

proper classification ofthe transactions. MRP representatives subsequently provided 

materials, to include affidavits addressing time spent by employees on non-federal 

election activity that resolved some of the items that the Audit staff considered in its 

above analysis. 

The Audit staff recommends that, within 30 calendar days of service of this report, MRP 

demonstrate that the identified disbursements paid from the non-federal accoimt are 

solely non-federal expenses. MRP should provide monthly logs, timesheets or affidavits 

demonstrating that payroll costs were solely non-federal in nature. In addition, MRP 

should obtain and provide samples of printed materials ($11,500). As necessary, MRP 

should amend its reports to disclose, as memo entries, the above disbursements on 

Schedules B or H-4. 

B. Payments from the Federal Account 

1. Facts 

MRP incorrectly disclosed payments, totaling $531,805 (See Chart B, Page 1), made 

from its federal account. These payments were disclosed on FEC reports but appear to 

be reported on the incorrect line number and itemized on the wrong schedule. These 

payments were for apparent non-allocable FEA ($519,305) or apparent coordinated 

party expenditures ($12,500). As indicated below, in some cases, the Audit staff did not 

have sufficient records to determine the proper classification. It is also noted that for 

approximately $330,000 of these disbursements MRP coded the disbursements on its 

database as FEA. 

Possible Federal Election Activity: Payments totaling $326,688 were reported 

by MRP as federal operating expenditures, but appear to have been made for nonallocable FEA, which should have been reported on Schedule B for Line 30(b). A 

discussion of these expenditures by category follows: 

GOTV/Public Communications: Payments totaling $183,747 were made for 

printed materials, of which MRP coded $88,241 on its database as FEA. The 

remaining $95,506 was not coded on MRP's database as FEA. However, an MRP 

representative stated during fieldwork that all activity with this vendor was FEA 

on behalf ofthe Republican presidential candidate. In addition, copies of the 

printed materials support that they were for get-out-the-vote (GOTV) activity or 
10 

were public communications in support of a clearly identified federal candidate. 

As such, the Audit staff considered all these payments FEA. (See Chart B, Page 

1,A.) 

Payroll Expenses: MRP made expenditures for payroll expenses totaling 

$142,941 from its federal account. Documentation was not available detailing the 

percentage ofthe individual's times that related to federal activity; however 

affidavits were submitted indicating the individuals worked solely in connection 

with federal elections during 2008. In addition, these individuals received at least 

one payment that MRP coded on its database as FEA. As such, the Audit staff 

classified these expenditures as FEA. MRP should explain the discrepancy 

between its reports and its intemal records. (See Chart B, Page 1, B.) 

Documentation Insufficient to Determine Nature of Expense: Payments 

totaling $192,617 were reported by MRP as federal operating expenditures, but 

documentation was insufficient to detennine the nature of these expenses. Most 

of these expenditures were coded on MRP's database as FEA. 

Consulting Expenses: Although coded FEA on its database, no affidavit or other 

documentation has been provided relative to the consulting expenses ($20,000), 

The Audit staff classified these expenditures as potential FEA since MRP coded 

these expenditures on its database as FEA. MRP should explain the discrepancy 

between its reports and its intemal records. (See Chart B, Page 1, B.) 

Travel and Per Diem Expenses: MRP made expenditures for travel ($38,192) and 

per diem ($3,050). Documentation was not available detailing what activities the 

individuals were involved with and whether these activities were related to a 

clearly identified federal candidate. The Audit staff classified these expenditures 

as potential FEA since MRP coded these expenditures on its database as FEA. 

MRP should clarify the discrepancy between its reports and its intemal records. 

(See Chart B, Page 2, A. & B.) 

Equipment and Miscellaneous Costs: MRP made expenditures for equipment 

($36,933) and miscellaneous costs ($3,7Q2). MRP's records detailed that, for die 

most part, the equipment consisted of computers and phone equipment, as well as 

copier rental. Documentation was not available detailing how the equipment was 

used. Most of the miscellaneous costs were for shipping, with no indication of 

what was shipped. However, these expenditures were coded as FEA in MRP's 

database. The Audit staff considered tiiese potential FEA expenses and 

recommends that MRP clarify the discrepancy between its reports and its intemal 

records. (See Chart B, Page 2, C. & D.) 

Printed Materials. Copies Not Available: MRP made payments totaling $67,711 

for printed materials, copies of which were not available for review by the Audit 

staff. Of these payments, MRP coded $24,417 as FEA, and these payments were 

for such puiposes as Voter ID ($11,228) and GOTV ($13,189). The remaining 

$43,294, although none were coded FEA, were for apparent GOTV-related 

activities. (See Chart B, Page 2, E.) 
11 

Telemarketing Expenses: MRP made expenditures to FLS Connect for 

telemarketing totaling $23,029, none of which were coded on MRP's database as 

FEA. MRP disclosed die puipose for tiiese expenditures as: GOTV ($6,097), 

Voter ID. ($3,117), state campaign activity ($4,460), and telemarketing ($9,355). 

Although invoices were available to the Audit staff, copies of scripts/printed 

materials were not available to determine the nature of these expenditures. (See 

Chart B, Page 2, F.) 

Payment of Apparent Coordinated Party Expenditures: MRP made payments 

during the period October 30-31,2008, totaling $12,500, for a television 

advertisement for Charlie Summers for Congress. The advertisement appears to 

be a public communication that refers to a clearly identified House candidate and 

was pubhciy disseminated in the candidate's jurisdiction within 90 days of the 

election. The candidate appears in the advertisement and the advertisement states 

that it was approved by the candidate. MRP reported these payments on Schedule 

B (Itemized Disbursements) as other federal operating expenditures rather than on 

Schedule F (Itemized Coordinated Party Expenditures) as coordinated party 

expenditures. (See Chart B, Page 3.) 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff addressed this matter and provided a schedule 

identifying the transactions in question to MRP representatives. MRP representatives stated 

that they would look into these items and send documentation to try to resolve the proper 

classification of the transactions. MRP representatives subsequently provided materids, to 

include affidavits addressing time spent by employees on federal election activity that 

resolved some of the items that the Audit staff considered in its above analysis. 

The Audit staff recommends that, within 30 calendar days of service of this report, MRP 

demonstrate that the payments from the federal account were correctly reported as federal 

operating expenditures. Further information is needed for the Audit staff to verify the 

classification of disbursements totaling $192,617. MRP should explain the discrepancies 

between expenditures coded on its database as FEA and its reporting of those expenditures as 

operating expenditures. In addition, MRP should obtain and provide monthly logs, timesheets 

or affidavits ($20,000), samples of printed materials ($67,711) and telemarketing scripts 

($23,029). As necessary, MRP should amend its reports to disclose the noted disbursements 

on Schedule B or Schedule F. 
12 

Finding 4. Failure to File Notices and Properly Disclose 

Independent Expenditures 

Summary 

During audit fieldwork, the Audit staff reviewed disbursements and noted expenditures for 

printed materials totaling $56,601, which appeared to be independent expenditures that MRP 

disclosed as operating expenditures. The Audit staff recommends that MRP provide furtiier 

documentation to clarify the nature of these disbursements and amend its reports as necessary. 

Legal Standard 

A. Definition of Independent Expenditures. The term "independent expenditure" means an 

expenditure by a person for a communication expressly advocating the election or defeat of a 

clearly identified candidate that is not made in coordination with any candidate or authorized 

committee or agent of a candidate. 11 CFR §100.16. 

B. Disclosure Requirements - General Guidelines. An independent expenditure shall be 

reported on Schedule E if, when added to other independent expenditures made to the same 

payee during the same calendar year, it exceeds $200. Independent expenditures made (i.e., 

publicly disseminated) prior to payment should be disclosed as "memo" entries on Schedule 

E and as a reportable debt on Schedule D. Independent expenditures of $200 or less do not 

need to be itemized, though the conunittee must report the total of those expenditures on line 

OJ)on ScheduleE. 11 CFR §§104.3(b)(3)(vii), 104.4(a)and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour Notices). Any independent 

expenditures aggregating $1,000 or more, with respect to any given election, and made after 

the 20* day but more than 24 hours before the day of an election must be reported and the 

report must be received by the Commission within 24 hours after the expenditure is made. A 

24-hour notice is required each time additional independent expenditures aggregate $1,000 or 

more. The date that a communication is publicly disseminated serves as the date that the 

committee must use to determine whether the total amount of independent expenditures has, 

in the aggregate, reached or exceeded the threshold reporting amount of $ 1,000. 11 CFR 

§§104.4(f) and 104.5(g)(2). 

D. Last-Minute Independent Expenditure Reports (48-Hour Notices). Any independent 

expenditure aggregating $10,000 or more with respect to any given election, at any time 

during a calendar year, up to and including the 20tii day before an election, must be disclosed 

within 48 hours each time the expenditures aggregate $10,000 or more. The notices must be 

filed with the Commission within 48 hours after the expenditure is made. 11 CFR §§ 104.4(f) 

and 104.5(g)(1). 

E. Allocation of Expenses between Candidates. Expenditures made on behalf of more than 

one clearly identified federal candidate shall be attributed to each such candidate according 

to the benefit expected to be derived. In the case of a publication or broadcast 

communication, the attribution shall be determined by the proportion of space or time 

devoted to all candidates. This method shall be used to allocate payments involving both 

clearly identified federal candidates and one or more clearly identified non-federal 

candidates. 11 CFR § 106.1 (a). 
13 

Facts and Analsrsis 

A. Facts 

During audit fieldwork, the Audit staff reviewed MRP's disbursements and identified a payment 

for $84,902 for printed materials reported as an operating expenditure. Of this amount, it was 

calculated that $56,601 appeared to be apparent independent expenditures. A review of the 

printed materials revealed the following: 

• The "Absentee Ballot Application Self Mailer" invoice billed MRP for two mailers. Both 

mailers pictured Presidential candidate Senator John McCain and Vice-Presidential 

candidate Govemor Sarah Palin on a sample absentee ballot with checked boxes below 

their pictures, advocating their election. 

• In addition, one sample mailer also pictured Susan Collins, candidate for the U. S. Senate 

and Charlie Summers, candidate for the U. S. Congress. The other sample provided a 

picture only of Susan Collins, but provided space for a congressional candidate. 

• Both mailers had space provided for a state senate candidate and a state house candidate. 

• Above the pictures ofthe candidates, both samples state "Good Jobs. A Strong Economy. 

Independence from Foreign Oil." In addition, the mailers state "Help Team Maine Today 

by Signing Up to.. .Canvass a local precinct door to door." 

Since the documents contain a statement of the candidates' positions on several issues and 

include the solicitation of volunteer canvassing, they go beyond the limitations of the slate card 

exemption^. As a result, the Audit staff concluded that a portion of each mailer was an 

independent expenditure that should have been reported as such and that appropriate 24/48-hour 

notices should have been filed. The amount of independent expenditures ($56,601) was 

determined by the space allotted to federal candidates versus non-federal candidates on the 

mailers. The remaining $28,301 ($84,902 - $56,601) should have been reported as FEA. 

B. Interim Audit Report & Audit Division Recommendation 

At an exit conference, the Audit staff addressed this matter, having previously provided MRP 

with the materials for discussion. MRP representatives stated that they would look into this 

matter, examine the materials, and address the "slate card" exemption. In response to the exit 

conference, MRP's Treasurer stated that the materials in question were slate cards and, as such, 

were exempt from independent expenditure rules. 

The Audit staff recommends that, within 30 calendar days of service of this report, MRP take the 

following action: 

• Provide evidence that would demonstrate that these disbursements were not independent 

. expenditures and therefore did not require disclosure as such. 

• Absent such a demonstration, MRP should amend its reports to disclose disbursements of 

$56,601 as independent expenditures on Schedule E; and, disclose the remaining $28,301 

on Schedule B as FEA. 

• Submit and implement revised procedures for recognizing and reporting independent 

expenditures, to allow for timely filing of24/48-hour reporting notices, as required. 

^ Seell CF.R. §§ 100.80,100.140, Advisory Opinions 2008-06 (Democratic Party of Virginia), 1978-89 (Withers 

for Congress), 1978-9 (Republican State Central Committee of Iowa). 
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