I .

9

9

•

o

7

•

{}

2

5

•

1

3

3

{3

€

REPORT OF THE AUDIT DIVISION

ON THE

MISSISSIPPI DEMOCRATIC PARTY

POLITICAL ACTION COMMITTEE

Appro\'ed Jaaua,,' 16, 1997..

FEDERAL ELECfION COMMISSION

999 ESTREET, N.W.

WASHINGTON. D.C.
TABLE OF CONTENTS

MISSISSIPPI DEMOCRATIC PARTY

POLITICAL ACTION COMMITTEE

'}

C} Pqe tle

7 Executive summar)· ..

" Final Audit Repon 3 2

5 Backaround 3 ...

1

3 Findinp S

3

1 TransminaJ to Comminee 17

.ie Chronolog~· 19

c
FEDERAL ELECTION CO~1MISSIO'"

..

o

7

..

(}

2

5

..

1

3

3

2

rC

o

nNAL AUDIT REPORT

ON THE

MISSISSIPPI DEMOCRATIC PARTY

POLITICAL ACTION COMMITTEE

EXECUTIVE SUMMARY

The Mississippi Democratic Par1)- Political Action Comminee (the Committee)

registered with the Federal Ejection on February 8. 1982. and maintains its headquaners

in Jackson. Mississippi.

The audit was conducted pursuant to Section 438(b) ofTide 2 ofthe United States

Code \\ilich states. in pan. that the Commission mI)- conduct audits ofany political

comminee whose repons fail to meet the threshold level ofcompliance set b)- the

Commission.

The findings ofthe audit \Nae presented to the Comminee at an exit conference

held at the completion offield 'work on JanWU)' 23. 1996 and later. in interim audit repone

The Comminee·s responses to those findings are included in the final audit repon.

The followinl is an overview ofthe findings contained in the final repone

R,ECORQItt£E.'SC foR RECElns AlSO D'SllIIl$EME1\TS - 2 U.S.C. §§432(c~

(d) and 431 (13). The review ofcontributions and disbursements \\~ restricted by the

lack ofdocumentation maintained b)' the Comminee. Although some records were

obtained via Commission subpoena. the missing records hampered the audit. In response

to the interim audit report. the Committee provided the Audit Staffwith a wrinen

description ofthe procedures which the)· have implemented to insure that contribution

and disbursement records are cunently maintained.

REVIEW Of A"OCAILE AalYID· - II CFR §§I06.5(g)(I). 104.IO(bX3) and

104.1O(b)(4). The Committee made 54 disbursements totaling 530..J22 which were (or

shared federal/non-fedcral expenses and were paid from the Committee·s non-federal

accounts. In addition the Committee failed to itemiu 13 reimbursements from the nonfederal account to federal accounts totaling S23.714. In response to the interim audit

report. the Committee filed amended Schedulesto conect the public record.

f ....ilt.'f.n" ,*'- (....."........", .. :'".. ""In","1...",

" 'If"I'" "tr .", ",p r. "" ~6(C 1\\

PI Un "III' 'tt....'..,c. 'tt' I' "' K .".*',ii ;

P~e 1, Approved 1/16/97
7

Q

i

2

Ib:CEIPT OF ApPARENT PROHIBITEQ COP.TBJBlmONS - 2 U.S.C. §441b(a) and

11 CFR §§103.3(b){2) and (4). The scarcity ofCommittee documentation precluded the

Audit stnfffrom completing a review for prohibited contributiorlS. However, 52,500 in

prohibited contributions fonn two different corporations was identified. in response to

the interim audit repo~ the Committee filed amended Schedules D to report the refunds

due as debts.

MISUATEMENIOfF.SANC'ALAcnym'- 2 U.S.C. §§434(bXI)(2) and (4).

The 1993 beginning cash on hand \\"85 understated b)' S3.673, receipts were understated

by 53,912. disbursements were understated by S13.057, and ending cash on hand was

overstated b)' $13.296. For 1994 •the Committee only filed a report for the rust quaner.

For that report period. beginning cash on hand was overstated by S13.296. receipts were

overstated by 513.876. disbursements were overstated by $17.939 and ending cash on

hand was overstated b)· 59.233. In response to the interim audit repo~ the Committee

filed amended disclosure repons. to correct the public record.

FAILURE TO fiLE DISCLOSURE REPORTS - 2 U.S.C. §434(a)(4). The

Comminee failed to file disclosure repons for the fonowing periods in 1994, the second

and third quaners. pre-general. post general and year end. In response to the interim audit

repon. the Comminee filed the missing disclosure repons to complete the public record.

ITEMIZATION Of RECE.n5 FRO)' INPIVlDlfA' 5 AND POUTICAL

ORGANIZAIIQ:-;S- 2 U.S.C. §§434(b)(3)(A). (8). (D) and 431(13). The Committee

failed to itemize SI0.140 in contributions from individuals. Most ofthe itemization

errors appear to result from a failure to properly aggregate multiple contributions from

the same individual. The Comminee also failed to itemize II contributions totaling

S53.978 from political comminees and miscategoriz.ed $4.200 as contributions from

individuals that were from political comminees. In response to the interim audit repo~

the Committee filed Schedules A complete the public record.

IIEMIZADOS Of DIS8l'RSEME~"'IS- 2 U.S.C. §434(b)(S)(A) and 11 CFR

§104.1 O(b). The Comminee failed to itemize 71 disbursements totaling 524.185. This

amount is in addition to items not reponed during the period for which disclosure reports

were not filed. In response to the interim audit repon. the Comminee filed amended

Schedules to correct the public record.

Pa~~ ~, ~~r~eC 1/16/97
FEDERAL ELECTION CO~"MISSION AR# 95-92

it

o

7

I.

REPORTOF THE AUDITDIVISION

ON THE

MISSISSIPPI DEMOCRATIC PARTYPOLITICAL ACTION

COMMITTEE

BACKGROUND

..

o

?

5

if

1

3

3

q

·C:

c

A. AVTHORJn'

This repon is based on an audit ofthe Mississippi Democratic p~.

Political Action Committee (the Comminee). undenaken by the Audit Division ofthe

Federal Election Commission in accordance with the provisions ofthe Federal Election

Campaign Act of 1971. as L'1\ended (the Act). The audit \\'85 conducted pursuant to

section 438(b) ofTitle 2 ofthe United States Code y;hich states. in part. that the

Commission ma~' conduct audits and field investigations ofan)' political comminee

required to file a repon under section 434 ofthis title, Prior to conducting t.ny audit

under this subsection. the Commission shall perfonn an internal review ofreports filed by

selected comminees to determine ifthe repons l1Jed by a panicuJar committee meet the

threshold requirements for substantial compliance \\ith the Act.

B. Al'DIT CO\'ERACE

The audit covered the period from JanuaJ')' 1. 1993 through December 31.

1994. During this period. the Comminee repons reneet an opening cash balance of

S2!.709~ total receipts ofSI48.986: total disbursements of$161.379; and a closing cash

balance of S9.316.'

c. COMMlnEE ORCA~IZATIO~

The Conuninee registered \\ith the Commission on February 8. 1982. and

maintains its headquarters in Jackson. Mississippi. The Treasurers ofthe Committee

These totals represent ~ed fi,urts throop March 31. 1944 The Comminee (ailed to file any

disclosure repon.s for the pmod from Apnl I. 1994 10 December 31. 1994 (see Finding II.E.).

F'IUrts In this report are rounded 10 the nearest dolill

( ....,.-.,'." •••• I ."•••• , ... ,.,•••••', ..,. ~'t"f"~'-'"

\!'" ... :'\\ 1',.,\\ "',:',••" .." .... 1\\

1)( (tit ·\11" ,. ,t..' p,." "t' .', H: If "Ie ~"fI.

Pa~~ 3, ~-proved 1/16/97
2

during the period covered by the audit were Mr. Larry Denman from January I, 1993

through July t3. 1994 and Mr. Stephen Hale from June, 19942 through the end ofthe

audit period. Ms. Peggy Peterson was elected Treasurer on September 16, 1995 and is

the current Treasurer.

To manage its federal financial &clivi!)·. the Committee maintained two

bank accounts. From these accounts. the Committee made approximately 340

disbursements. The Comminee'sreceipts were composed ofconuibutions &om

individuals (approximateI)· $49.320), conbibutions from other political comminees and

organizations (approximatel)· S58.1 00) and transfers from the Committee"s Don-federal

accounts ofapproximatel)· S23,7oo.

...

o

I

i

itt

3

3

5

D.

1.

2.

3.

AUDIT SCOPE AND PROCEDURES

The audit included testing ofthe (ollo\l,in& general categories:

The receipt ofcon1ributions or loans in excess ofthe statutory limitations;

the receipt of contributions from prohibited sources. such as those from

corporations or labor organizations(see Finding II.C,);

the receipt of excessive cash conuibutions;

4. proper disclosure ofcontributions from individuals, political committees

and other entities. to include the itemization of contributions when

required. as well as. the completeness and accuracy ofthe information

disclosed (see Finding II.F.);

S. proper disclosure of disbursements including the itemization of

disbursements when required. as well as. the completeness and accuracy of

the infonnation disclosed (see Finding II.G.);

6. proper disclosure of campaign debts and obligations;

7. the accuracy oftotal reponed receipts. disbursements and cash balances as

compared to bank records (see Finding 11.0.);

8. adequate recordkeeping ofComminee transactions (see Finding II..A•.);

The Comminee nevn- filed an ammdtd Statement ofOrcantzalion indicating that Mr. Hale was

the Committee Treasurer. However. the Commlttet's Executive DtreC10r notified the Commission (--

on June 23. 1995 thai Mr. Halt was Commlnee's Trusum and had taken office in June of

1994.

Page 4, Approved 1/16/97
9.

3

proper reporting and funding of allocable (shared) expenditures (see

Finding 11.8.);

Q

)

a

}

..

o

7

c

10. review ofexpenditures made on behalfoffederal candidates: and.

11. other audit procedures that were deemed nec~' in the situation (see

Finding II.E.),

Unless specifically discussed belo,,'. no material non-compliance was

detected. The review ofcontributions \\'8S limited. The Committee·5 receipt records

consisted ofcopies ofbank deposit slips \\ith names and amounts listed for the

contributions (see Finding IJ.A.). In addition. the Committee did DOt maintain invoices

for most ofits disbursements and did not have canceled checks for some ofthe

disbursements (see Finding II.A.). As a result.. we "'ere unable to test the reponing of

debts and obligations and disclosure ofinfonnation such as payee address and purpose of

the disbursement for all items. Some records "'ere obtained by the Commission via

subpoena. These records included copies ofselected deposits. copies ofsome canceled

checks. invoices related to one ofthe Comminee·s major vendors. and documentation

related to the mongage for the Comminee·s headquaners. FinalI)'•as noted at Finding

II.E.• the Comminee failed to file disclosure repons (or any ofthe reporting periods from

April 1. 1994 to December 31. 1994. Therefore, all disclosure problems noted in this

repon will be related to the actual repons \\ilich \\'ere filed between January 1. 1993. and

March 31. 1994. It should be noted that the Commission ma), pursue an)' oftl)e maners

discussed in this repon in an enforcement action.

II. AUDIT FINDINGS AND RECO!\I~IENDATIQNS

A. RECORDKEEPINC fOR RECEIPTS AND DISBURSEPtIENTS

Section 432(c) and (d) ofTitle 2 ofthe United States Code states. in pan,

that the treasurer of a political comminee !hall keep an account ofthe name and address

ofany person who makes an)" contribution in excess ofS50. together with the date and

amount ofsuch contribution by an)" person; the identification ofany person who makes a

contribution or contributions aggregating morc than S200 during a calendar year. together

with the date and amount of an~' such contribution~ and the name and address ofevery

person to whom any disbursement is made. the date. amount. and purpose ofthe

disbursement. including a receipt. invoice or canceled check for each disbursement in

excess of5200. The treasurer shall preserve all records required to be kept and copies of

all repons required to be filed for 3 years after the repon is filed.

Section 431(13) ofTitle 2 ofthe United States Code defines the tenn

"identification" as. in the case ofan)' individual. the name. the mailing address, and the

occupation ofsuch individual. as "'ell as the name of his or her employer: and in the case

ofany other person. the fuJI name and address ofsuch person.

Page 5, Approved 1/16"97
ito.I

.!

fin

2

5

...

1

3

3

-/

As noted previously. the only receipt record.$ available for our review were

copies ofdeposit slips to suppon the Comminee's bank deposits. These deposit slips

contained only the name ofthe contributor and an amounL Deposit slips were missing

for S deposits totaling 56.303. Therefore. the Committee did not maintain the address or

identification ofits conttibutors when required. This lack ofdocumentation precluded

the Audit stafffrom verifying infonnation such as reponed addresses. occupation. and

name ofemployer. Furthermore. we did not have the necessary documentation to test for

prohibited contributions unJess there \\'IS a name on the deposit slips which raised a

concern about the permissibility ofthe contributions. In addition the audit staffcould not

verif)· proper attribution orthe contributions. The Commission obtained copies of

selected deposits from the Committee's bank via subpoena to assist in our testing.

In addition to the Committee failing to maintaitl invoices for most ofits

disbursements. no canceled checks "·ere maintained for 31 disbursements totaling

515.332. Copies ofthe front and back ofthe negotiated cbecks were obtained as a result

ofsubpoenas issued b)' the Commission. Since only canceled checks were available to

perform our reviews. we could not revie"· the reporting ofdebts and obligations. Our

,,·ork \\'85 funher limited by our inabilit)' to verif)· the purpose ofdisbursement that was

noted on Comminee canceled checks.

In the interim audit report. the Audit naffrecommended that the

Comminee demonstrate that 1M records noted as not being available were in fact

maintained b)· the Comminee. Absent such a demonstration. it was recommended that

the Committee pro\/ide a wrinen description ofthe procedures which have been

implemented ~o insure that contribution and disbursement records are maintained.

In response to the interim audit repon. the Comminee was unable to

demonstrate tha~ the required records were in fact maintained by the Committee.

HowevCf, the Comminee has pro\'ided the Audit starT with a wrinen description ofthe

procedures which it has implemented to insure that contribution and disbursement records

are currently being maintained.

B. REVIEW OF ALLOCABLE AC1l\1n·

Section 106.S(gX1) ofTitle II ofthe Code of Federal Regulations states.

in part, that committees that have established separate federal and non-federal accounts

under II CFR I02.S(aXI)(i) shall pay the expenses ofjoint federal and non-federal

activities as follows: (i) pay the entire amount of an allocable expense from its federal

account and transfer funds from its non-federal actounllO its federal account solely to

cover the non-federal share ofthat allocable expense; or (ii) establish a separate allocation
..

o....

/

tiD

?

5

account into v.'hich funds from its federal and non-federal accounts shall be deposited

solely (or the purpose of paying aJlocable expenses. Once a Committee has established a

separate allocation account for this purpose, all aJlocable expenses shall be paid from that

account for as long as the account is maintained.

Section 104.1O(b)(4) ofTitle 11 ofthe Code ofFcderaJ Regulations states,

in pan. that a political committee that pays allocable expenses in accordance with 11 CFR

106.5(g) or l06.6(e) shall also repon each disbursement from its federal account or its

separate allocation account in payment for a joint federal and non-federal expense or

activity.

The rules regarding the percentages to be used in the allocation ofshared

expenses for administrative and generic voter drives; exempt activities; and direct

fundraising costs are described respt..~tivel)· under sections 106.S(d), (e) and (I) ofTitle

11 ofthe Code of Federal Regulations. Admjnistrative and voter drive percentages are

calculated on the ratio ofthe federal offices expected on the ballot to total federal and

non-federal offices expected on the ballot in the next general election to be held in the

committee's state. State and local pany committees in states that do not hold federal and

non-federal elections in the sarne year shall allocate the costs ofgeneric voter drives

according to the ballot composition method based on a ratio for that caJendar year.J

Exempt acti"ities are allocated according to the proportion oftime or space devoted to

federal candidates or elections as compared to the total time or space devoted to all

federal or non-federal candidates or elections. FundJaising costs shall be allocated based

on the ratio offunds received into the Committee's federal account to its total receipts

from each fundraising program or event.

Section 104.1O(b)(3) ofTitle 11 ofthe Code ofFederal Regulations states..

in pan. that a political comminee that pays allocable expenses shall report each transfer

offunds from its non-federal account to its federal account for the purpose of paying such

expenses. In the repon covering the period in which each transfer occurred, the

comminee shall explain in a memo entry the allocable expenses to which the transfer

relates and the date on which the transfer was made. Ifthe transfer includes funds for the

allocable costs ofmore than one activit),. the comminee shall itemize the transfer,

showing the amounts designated for administrative expenses and generic voter driVe5il

and for each fundraising program or exempt activit)'. Section 106.5(g)(2)(ii) in pan

provides that such funds may not be transferred more than 10 days before or more than 60

days after the payments for which the)' are designated.

The Audit staffreviewed disbursements from both the federal and nonfederal accounts during the audit period and identified 54 disbursements totaling S30,122

which were for allocable expenses and "·ere paid from the Comminee's non-federal

accounts, The disbursements were for administrative expenses and 1994 get-out-the-vote

,C J The Stale of MISSIssippi holds non·fedtral eJections an years for which no federal election is held.

Page 7, Approved 1/16/97
...

(1

7

tie

2

5

...

1

3

3

6

expenses. The correct allocation percentage for administrative expenses for the audit C-,

period was 50010 federal and SOO4. non-federal. The 1994 get-out-the-vote percentage was

66.67% federal and 33.33% non-federal. As a resuJ~ the federal share ofthe allocable

expenditures made from the non-federal accounts "''IS S15.853. Further. most ofthese

disbursements were not included on the disclosure repons that the Committee filed (see

Finding 11.0.). Ofthe above disbursemen~ $18.431 were made during the period for

which disclosure repons were filed (Ja..qWU')0 I. 1993 to March 31. 1994) and S11.691

were made during the remainder ofthe audit period.

In addition, the Committee's federal accounts made 340 disbursements

totaling $134,227 which were for allocable acti\ojt).. The non-federal share ofthese

disbursements totaled S66.S48. The non-federal account made 13 transfers totaling

523.714 to the federal account. However, the Comminee had maintained no

documentation to support the amounts transfened. Although documentation \\-as not

available to suppo~ the amounts transferred. the Audit staffconsidered them to be for

allocable activity and thus, the Committee's non-(ederaJ accounts could have reimbursed

the federal account an additional 542,134 (or allocable activity (566.548 - 523.714).

These transfers from the non-federal account shouJd have been itemized on FEe

Schedule H-3. Ten ofthese transfers totaling $17,414 were during the period for which

repons were filed; n"De were itemized on Schedule H-). Three ofthe transfers totaling

56.300 were made in the period for which no repons were filed.

The regulations require that all aJlocable activity be paid from a federal

account and reimbursements may be made from a committee's non-federal accounts. As

noted previousl)", the Comminee made S30,1:!:! in disbursements for allocable activity

from its non-federal 8CroWlt, 51 S,853 of,,'wch represented the federal share. Also, the

Comminee made allocable disbursements from its federal accounts and could have been

reimbursed an additional 542.834 b)' its non-federal accounts. Therefore. although the

Comminec·s actions did not conform to 11 CFR 1106.5(g). the Committee's federal

account paid more than its share oftht allocable aclivi!)·.

The Comminee was informed ofthis problem at the exit conference but

had no response at that time.

In the interim audit repon. the Audit staffrecommended that the

Committee demonstrate that the disbursements noted on Anachment 1do not represent

allocable activity "'"hich should have been paid from the federal account. Absent such a

demonstration. it \\"U recommended that the Committee file amended disclosure reports

which would include these disbursements as memo entries on Schedules H-4. Further. it

was recommended that the Comminee file Schedules H-) to itemize the transfers from

the non-federal accounts to the federal accounts. Finall)', it was recommended that the

Page 8, App~~ 1/16/97
7

Committee provide a written description ofthe changes which it has made to its

accounting system to insure that all allocable expenses are paid from a federal account

and that documentation is maintained to suppon the amounts transfened from its nonfederal accounts to its federal accounts.

In response to the interim audit report. the Committee filed amended

Schedules H-) and H-4 for 1993 and 1994 to correct the public record. As noted in the

previous finding the Comminee has provided the Audit staffwith a written description of

the procedures which they have implemented to insure that the required records are

maintained

Section 441b(a) ofTitle 2 ofthe United States Code states, in part, that it

is unJa\\ful for any corporation organized by authorit), ofany law ofCongress to make a

contribution in cOMection v.ith any election to an)' political office.

*

G

7

iiB

2

c-

.J

c. RECEIPT or ApPARENT PROHIBITED CONTRIBUTIONS

ili

1

z

.J

4

0

C

c

Section I03.3(b)(2) and (4) ofTitJe 11 ofthe Code of FederaJ Regulations

state, in part. that the treasurer shall refund an)' contribution determined to be illegal to

the contributor \lfithin thi~' days ofthe date on which the illegality is discovered.

Further. any contribution \~,.hich appears to be illegal and which is deposited into a

campaign depositoI')' shall not be used (or any disbursements by the political committee

until the contribution has been detennined to be legal. The political committee must

either establish a separate account in a campaign depository for such contributions or

maintain sufficient funds to make all such refunds.

During our revie\\' ofthe Comminee·s receipts. the Audit staffidentified

three contributions from two apparent prohibited sources. As noted previously, only

copies ofdeposit slips were available for review and thus the only possible prohibited

contributions we could identif)· were based on the name contained on the deposit slip

copy. These conbibutions total S~.SOO. Two ofthe contributions were from a casino

which is located in the state. The Committee did not maintain sufficient funds in its bank

accounts to refund these apparent prohibited contributions as required by 11 CFR

1103.3(b)(4).

At the exit conference. the Comminee was provided with a schedule

detailing these contributions. The Committee responded by stating that they thought

money could be accepted from casinos. The Audit swTresponded that money could not

be accepted ifthe casino was an incorporated entit)'.

In the interim audit report.. it was recommended that the Comminee

demonstrate that the above contributions are not from prohibited soW'Ccs. Absent such a

demonstration. it was recommended that the Comminee refund the contributions and

1)2"""" Q ,,---__ ,~, " t. 10"
if>

{}

7

I

..

o

2

-j

..

1-"l.

3

4

1

'"'"

I

provide evidence (i.e.• copies ofthe front and back ofthe negotiated check) ofsuch

refunds. Iffunds were not available to make the refunds, the Committee was to rcpon the

amounts as debts on Schedules D.

In response to the interim audit report. the Committee filed amended

Schedules D for 1993 and 1994 to repon the refunds due for apparent prohibited

contributions as debts.

D. MISSTATEI\IErt."f OF FINANCIAL AcrlVln·

Sections 434(b)(1)(2) and (4) ofTitle 2 ofthe United States Code state. in

pan. that a political conuninee shall disclose the amount ofcash on hand at the beginning

ofthe reponing period and the total amount of all receipts and an disbursements for the

reponing period and calendar year.

The Audit staffs reconciliation ofbank activity to repons filed by the

Comminee indicated a material misstatement for 1993 as well as a material misstatement

for the one repon filed b)' the Comminee (or J994. The Comminee maintained two

federal bank accounts during the audit period. One was the main operating account and

the second account "'as entitled Vieto')" ·91. The Victo!)' 692 account had been used

during the J992 election and had linle activit)' during the audit period. However. it

appears that the Comminee did not include at least the beginning cash on hand and

disbursements from this account in its disclosure repons. The account was closed in

earl~" 1994.

I. 1993 Actiyin"

On its 1993 disclosure repons. the Comminee understated

beginning cash on hand by 53.673. overstated receipts b)' S3.912. understated

disbursements b>' $13,057. and overstated ending cash on hand by SI3.296. The

begiMing cash understatement "'35 the result of not accounting (or 5276 in outstanding

checks as ofDecember 31. 1992 and b)' not including $3.949 in beginning cash in the

Victol}' ·92 bank account. The Comminee's disclosure repons included large amounts of

unitemized receipts. and no record was kept of ho\\' reponed amounts were derived. As

a result. the Audit staff could not detennine what was included in the Committee's

reponed receipt figures and consequently could not definitely detennine the cause ofthe

receipts misstatement.

The disbursements misstatement "'IS the result ofthe following:

Total Disbursements Reponed

Disbursements not Reponed

Payroll Taxes Reponed T"ice

Amounts Overreponed

Paae 10-, A;Jproved 1/16/97

5127.966

J5.762

(5.052)

(7.235)

(
Victory 692 Account not Reponed

Reconciling Item

Correct Reponable Disbursements

9

10.222

(641)

$141.022

The misstatement ofthe ending cash on hand was the result ofthe

adjustments noted above.

2. J994 Ac;tiyjl)'

As noted previousl)·. the only disclosure repon filed by the

Committee in 1994 was the repon covering the period from January 15t to March 31 st.

The Committee's begiMing cash on band \\"85 overstated b). 513.296: receipts \\'ere

overstated b)' $13.876; disbursements were overstated by 517.939; and ending cash on

hand was overstated b)' $9.233. The misstatement ofbeginning cash on hand \\'85 the

result ofthe 1993 miSSlatement noted above and the receipts misstatement was primaril)'

the result ofthe Comrninec reponing S14.250 in receipts which were deposited in one of

its non-federal bank accounts.

...

o

7

...

o

2

5

...

1

3

4

?

~C

The disbursements misstatement was the result of:

Total Disbursements Reponed

Disbursements not Reponed

Payroll Taxes Reponed Twice

Reconciling Item

Non-federal Disbursements Reponed

Correct ReponabJe Disbursements

533.414

3.091

(1.142)

(70)

(19.819)

S15.474

c

The misstatement ofendina cash on hand was the result ofthe adjustments

noted above.

The Audit staffdiscussed these misstatements with the Committee at the

exit conference. The Comminee expressed its willingness to file any amended disclosure

repons as required.

In the intaim audit report. the Audit staffrecommended that the

Committee file a comprehensive amended repon for calendar year 1993 to correct the

misstatements (or that year. In addition. it was recommended the Comminee file an

amended first quarter or 1994 repon to concet the miSS1atement for that reponing period.

In response to the interim audit report. the Committee filed amended

disclosure repons. Schedules A and Schedules H-4 for 1993 and 1994 to correct the

public record.

1),~I"\" • .-~ "","'-
E.

10

FAlLURE TO FILE DISCLOSURE REPORTS

..

(1

7

..

1

3

4

Section 434(a)(4) ofTitle 2 ofthe United States Code states, in relevant

that all political committees other than authoriud committees ofa candidate shall

file quarterly reports. in a caJr.:ndar year in which a regularly scheduled general election is

beld. which shall be filed no later than the 1Sth day after the last day ofeach calendar

quaner: except that the repon for the quarter ending on December 31 ofsuch calendar

year shall be filed no latt~ than JanUat)' 3, I ofthe following calendar year; a pre-election

report.. which shall be filed no later than the 12th day before any election in which the

committee makes a contribution to or ar1 expenditure on betJalfofa candidate in such

election. and which shall be complete as ofthe 20th day before the election; and. a postgeneral election report.. which sh;lll be filed no later than the 30th day after the general

election and which shall be complete as ofthe 20th day after such general election.

During the audit period. the Committee filed a mid-year and a year-end

repon for 1993 and filed a d~sclosure repon covering the fU'St quarter of 1994.4 Thus. the

Committee did not file rqy~ns covering the second and third quaners of 1994 nor did it

file a pre-general, post-general. or year-end disclosure report. The reports (or the period

from April I. 1994 to I'JeCember 31 .. 1994 should have reflected a beginning cash balance

of$84.. total receipts (If528..437. total disbursements of$24.853. and an ending cash

balance ofS3..668. In addition to the acti\ity in the federal accounts9 the Committee

impennissibly made 24 disbursements totaling SII..691 from its non-federal accounts

which were for ,Jlocable activity (sec Finding II.B.).

At the exit conference. the Comminee was informed that it would be

required to file disclosure repons covering this period. The Audit staffstated that we

\J\'ould p~ovide the Committee officials with information needed to file the repons once

we it.~ obtained the necessary records. The Audit staffsubsequently provided the

COITnnittee \\ith schedules which show the total &Clivi!}' to be reponed as well as the

trarsactioru required to be it'emiz.ed on the supponing schedules. A poniOD ofthe

inf.onnation provided to the Committee was obtained via Commission subpoena.

In the interim audit report. the Audit staffrecommended that the

Committee file a disclosUl~ repon which covers the period from April 1t 1994. to

December 31. 1994.

In response to the interinl ludit repon.. the Committee filed disclosure

repons. Schedules A and Schedules H-4 for i 994 to complete the public record.

• In settlement of Maner Under Rcvlc'" 3100. tht Commaftee paid a civil penalty in the amount of

S15.000 (or failinc 10 file disclosure repon.s dUMg the 1991·92 election cycle.
it

(}

7

it

o

~-r

t..

5

ili

.1

J

4

4

C

II

F. ITEMIZATION OF RECEIPTS FROM INDIVlDVALS AND

POUTICAL ORCANIZAnONS

Section 434(b)(3)(A). (8) and (0) ofTitle 2 ofthe United States Code

states, in relevant pan. that each repon under this section shall disclose the identification

ofeach person (other than a political committee) who makes a contribution to the

~poning comminee during the reponing period. whose contribution or contributions

have an aggregate amount or value in excess of5200 ,,;thin the calendar year, together

with the date and amount of any such contribution. Further, each repon under this

section shall disclose the identification ofeach: political committee which makes a

contribution to the reporting comminee during the reponing period. together with the date

and amount ofany such contribution; and each affiJiated comminee which makes 8

transfer to the reponing comminee during the reponing period ancl where the reponing

comminee is a political par1)' comminee. each transfer offunds to the reponing

comminee. regardless ofwhether such comminees are affiliated, together with the date

and amount ofsuch transfer.

Section 431 (13) ofTitle 2 ofthe United States Code states that the tenn

·'ideratification" means: in the case ofan)' individual. the name. the mailing address. and

the occupation ofsuch indi\'iduaJ. as well as the name ofhis or her employer; and in the

case of an)' other person. the full name and address ofsuch person.

As noted previousl)'. the Comminee failed to file disclosure reports for the

period from April I. 1994 to December 31. 1994. The itemization errors discussed below

are in addition to the items not reponed for the above period.

1. Receipts {rpm Individuals

As noted previousl)', the Committee·s receipt records consisted

only ofcopies ofdeposit slips which contained names ofcontributors. The Audit staff

based its review ofthe reporting of conaibutions on these nmnes end identified all

individuals whose contributions required itemization. The Audit Staffidentified 52

contributions totaling 510.140 ,,'hich were not itemized. Most ofthe itemization errors

occurred in the later pan of 1993 and appear to result from a failure to properly aggregate

all contributions from an individual.

At the exit conference. the Committee was provided with a

schedule detailing the items which the Comminee had failed to itemize. Committee

officials agreed to file amended disclosure repons as needed.
2.

12

Receipts &pm Political rqanizatiOD$

...

o

7

•

{}

2

5

...

1

3

~i

5

The Audit staffalso reviewed contributions received from pany

committees and other political comminees and organizations and identified 16 such

contributions which totaled S58.178. Included in this amount are 2 contributions totaling

540,000 which were received &om DNe Services Corporation and the Democratic

Congressional Campaign Comminee. Ofthese contributions. II contributions totaling

S53,978 were not itemized~ The remaining 5 conbibutions totaling 54.200 were itemized

on Line I I(a) as contributions fiom individuals.

At the exit conference. the Committee was provided a schedule

detailing these items. Comminee officials again agreed to fnc: amended disclosure

repons.

In the interim audit report. d~e Audh staffrecommended that the

Comminee file amended disclosure repons \\'hich contain Schedule!; A for Line 1J<a> to

itemize the contributions from indi\'iduals which 'were pn:viously o~mitted. In addition. it

was recommended that the Comminec file amended Scbf:duJes A fi>r Lines II(b) and

IICc) y,iUch contain all ofthe conuibutions from the polittir..a11 org81nizations noted above

which "'ere previousl)' omined or incorrectl)· reyj()ned.

In response to the intcrin. audit n:porf~ the (Committee filed

Schedules A for lines numbers I J(I). I I(b) and IJ(c) !tor JfJ9) arId 1994 to complete the

public: record.

c. ITEMIZATION OF D.SBVRSEMf;r-n

Section 434(b)(S)(A) ofTitle :! ofthe Uni1Led States Code requires the

reponing comminee to disclose the name and address ofeach person to whom an

expenditure in an aggrepte amount or value in excess of'.200 within the calendar year is

made by the reporting comminee to meet a ':ommin,ee ope:rating expense. together with

the date. amounL and purpose ofsuch openitina expendih.U't:.

Section 104.1O(b) ofTide 11 ofthe Code ofFederal Regulations states in

relevant pan that political committees that have establi.shf~ separate federal and nonfederal accounts pursuant to 11 CFR tI02.5(8)(I)(i) sh,JI state. for each disbursement

from its (edcraJ account (or a joint Cederal and n(.)ft-(eeJeraJ expense or activity. 'the full

name and address o(each person to ~'hom the disbur:iCment was made. and the date.

amount and purpose ofeach such disbursement.

The Audit staffreviewed disbursements made by the Comminee and

identified 7J disbursements totalinl S24.IIS ":hich were not itemized. These items ,ae in

addition to the ones not reponed durin, tJr.e ~od for which disclosure reports were not

filed b)' the Comminee (see FindinG II.E.). As noted previousl)'. the Committee did not

(
13

Q) maintain invoices and documentation (or the majority orits disbursements. Based on the

records available, it appears that all ofthe disbursements which were not itemized were

for allocable expenditures and thus should have been reponed on Schedule H-4.

At the exit conference. the Comminee was provided with schedules

detailing the items which were not itemized as required. Committee officials indicated

that they would file amended disclosure reports as needed.

...

o

7

...

e

2

5

..

1

3

4

b

O./

·0

In the interim audit repon. the Audit staffrecommended that the

Committee file amended Schedules H-4 (or the items noted above.

In response to the interim audit report. the Committee filed amended

Schedules H-4 for 1993 and 1994 to correct the public record.
q•

()7•o25•1347

n ....._,0 ..• '"• '4'" 'fOII-

---
FEDERAL ELECTION CC)fv1~\ISSION

W~HINCTO". 0 C. 2001& 1

it

(}

7

it

o

?

5

·c

January 17, 1997

Ms. Peggy Peterson, Treasurer

Mississippi Democratic Part}·

Political Action Comminec

426 Frida)' Harbour

Ridgeland, MS 39157

Dear Ms. Peterson:

Anached please find the Final Audit Repon on the Mississippi Democratic Part}·

Political Action Comminee. The Commission approved the repon on Janu3l)' 16, 1997.

The Commission approved final Audit Repon \\;11 be placed on the public record

on JanuaJ)· 24, 1997. Should you ha\·e an,.- questions regarding the public release ofthe

repon. please contact the Commission's Press Office at (202) 219-4155 or toll-free at (800)

424·9530. An)' questions you have related to maners co\'ered during the audit or in the

repon should be directed to Roben Morcomb ofthe Audit Division at (202) 219-3720 or at

the above toll free number.

-j@:;Yd:- R.oben J. Costa

Assistant StaffDirector

Audit Di\'ision

Attachment as stated

(,.~.,.,."••••••• & ...., ..... " ••, ... , "'"'' ",ltlt•• ,."",

,. 'Sf ~p \\ tOtl" "'0 Ie "'" .t:I;. 1\\

Ilfn,( \tI f) I. t ~fI ''''L "tf '"Ul K '" OW"U)

Page 17, Approved 1/16/97
•

{}7•e25•13

tf

Cj

p~,A a~........,.,.," to. IQ.,

(~

.J
CHRONOLOGY

MISSISSIPPI DEMOCRATIC PARTY

POLITICAL ACTION COMMITTEE

118196· 1123/96

C}

..

o

7

..

()

2

5

..

1

3

5

0)::

1

J

-c:

Audit Fieldwork

Interim Audit Repon to

the Committee

Response Received to the

Interim Audit Repon

Final Audit Repon Approved

10111196

12127/96

1/16197

...

..i. Paae 19. ADo~ l/1A/Q'7
..

.

c;•

()7•

()25•135

1r-

.-

.-

."
...

fj

"i

t:..

5

...

1

3

5

2