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December 23, 1980

PUBLIC ISSUANCE OF FINAL AUDIT REPORT -

COMMUNICATION WORKERS OF AMERICA - C.O.P.E.

POLITICAL CONTRIBUTIONS COMMITTEE

FRED EILAND

PRESS OFFICE

BOB COSTA

JUDY HAWKINS

FEDERAL ELECTION COMMISSION

Attached as stated

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cc: FEe Library

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/,Pub1ic Record ...-

Informational copies of this report have been received

by all parties involved and this report may be released to

the public as of today, December 23, 1980 •

Attached please find a copy of the final audit report of

the Conununicatioll Workers of America - C.O.P.E. Political

Contributions Committee which was approved by the Commission on

December 8, 1980.

SU BJEC'l' :

FROM:

THROUGH:

MEMORANDUM

TO:

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-- FEDERAL ELECTION COMMISSION

WASHI:-;<;lO:-;. DC Z04bl

REPORT OF THE AUDIT DIVISION

ON THE

COMMUNICATION WORKERS OF AMERICA - C.O.P.E.

POLITICAL CONTRIBUTIONS CO~MITTEE

I. Background

A. Overview

This report is based on an audit of the communication

Workers of Arnerica-C.O.P.E.-Political Contributions Committee

(lithe Committee"), undertaken bv the Audit Division of

the Federal Election Commission~in accordance with the Commission I::

audi t policy to determine \.;hcther there has been compliance wi t:'

the provisions of the Federlll Election Campaign Act of 1971, as

amended (lithe Act"). The iludit was conducted pursuant to Section

438(a) (8) of Title 2 of the United States Code which at the time

of the audit, directed the Commission to make from time to time

audits and field investigations with respect to reports and statements filed under the provisions of the Act.

The Committee req.i stered \.;i th the Office of the Clerk

of the Cnited States House of Representatives on April 17, 1972,

and maintains its headquarters in Washington, D.C.

The audit covered the period from January 1, 1977

through January 31, 1979, the final coverage date of the most

recent report filed by the Committee at the time of the audit.

The Committee reported a beginning cash balance on January 1,

1977 of $117,096.22, total receipts for the period of

$569,578.95, total expenditures for the period of $659,665.04

and a closing cash balance on January 31, 1979 of $27,010.13.

The Union is composed of b,7elve District offices und

876 LOCAL Unions. Contributions are solicited by the Committee

at the LOCAL level, for~arded to the appropriate District office

am: then transmitted to the committee for distribution to selected

candidates and committees.

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The principal officers of the Committee during the

perio~ of the audit were Mr~ Glenn E. Watts, Chairman and

Mr. Louis B. Knecht, Treasurer.

B. Key Personnel

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The findings obtained during the audit of the above

LOCALS will be prcsented individually following the CWA-COPEPCC (Headquarters) section of this interim report.

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The audit report is based on documents and working

papers which support each of its factual statements. They form

part of the record upon which the Commission based its decisions

on the matters in the report and were available to Commissioners

. and appropriate staff for review.

Due to the Committee's structure, ~ll contributor

reconb are maintained at the LOCAL level. Therefore, to test

disc1mmr.e and compliance provisions relating to solicitation

and recordkecping for contributions, thc Audit staff selected for

audit, the records maintained by five (5) Union locals based on

dollar vu1ue of contributions transferred during the period of

the audit. The selected LOCALS transferred a total of $120,697.18

thereby enabling the Audit staff to test 21% of the totnl contributions transferred to the Committee. The five (5) LOCALS audited

were:

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(1) CWA LOCAL Union No. 1101

New York, NY

.... (2 ) C\'lA LOCAL Union No. 12143

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San Antonio, TX

C (3 ) C\'lA LOCAL Union No. 12222

Houston, TX

. (4) C\'lA LOCAL Union No. 12215

Dallas, TX

(5) CWA LOCAL Union No. 2336

Washington, D.C.
During the period of audit, Section 434(b) (8) of Title

2 of the United States Code stated, in part, that each report

under this section shall disclose the total sum of all receipts

by or for such committee during the reporting period.

Section 434(b) (9) of Title 2 of the United States Code

stated, in part, that each report under this section shall

disclose the identification of each person to whom expenditures

have been mucie by such committee or on behalf of such committee

within the calendar year in an aggregate amount or value in

excess of S100, the amount, date, and purpose of each such

expenditure and the nLl~e and address of, and office sought by

each candidate on whose behalf such expenditures were made.

During the Audit staff's reconciliation of the bank

activity to the disclosure reports, the following disclosure

errors were revealed:

1979

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1978

$3,881.29 - 0 -

- 0 - - 0 -

5,673.81 - 0 -

(137.31) (102.00)

948.00 - 0 -

- 0 - - 0 -

- 0 - - 0 -

(6,054.00) - 0 -

(713.42)

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6,082.07

2,555.44

1,937.38

(1,500.00)

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C. Scope

1977

(a) Certificates 0: Deposit $2,812.03

(b) Savings account

(7) Reported Void Expenditures (4,350.00)

(6) Unre~or.ted Expenditures

(5) Returned Committee Check

(4) Comrnittce addition err.ors

(3) Reported ~SF Contributor

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(2) Unreported Deposits

(1) Unreported Interest

A. Disclosure of Total R~ceipts and Expenditures

II. Findinqs and RecommendLltions

The audit included such fests as verification of

total reported receipts and expenditures ana individual

transactionn: review of required supporting documentation

ilnd anali':·;i:; of Committee debts and obligations: and such

other audit procedures as deemed necessary under the

circumstflncl's.

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Recommml'lll1" tion

A. Overview

l,' lInl.ess specified otherwise, the use of LOCAL refers to

C\-;r;\-COPE pec (lithe Committel~") field operations, and

clOl~S not refer to th0 Union org;:mization or its operations.

TI1l' I\udi.t staff recommends no further action on this matter.

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Cuidelincs pre;)arcd bv tlw Committee concerning

CWA-COPE-PCC operations do not inform LOCAL officials of

the recordkeeping or disclosure requirements relating to

Federal election activity. Therefore, due to the lack of

records m3.intained at C\1A-COPE-PCC (lithe Committee"), the

decision was made to exp.:.nd audit fieldwork to include five

(5) LOC,\LS.

Contributions are mainly solicited at the Union

LOCAL level. To encourage LOCAlS to actively solicit members

for contributions to the Committ0c, a quot.:. system was

established whereby LOCALS are .:.ssigned a t.:.rget amount,

equivalent to $2.00 per member, with a system of recog~ition

for those LOCALS who meet their a~signed quotas. written

procedures suggC'st that e3.ch LOCi\l. fonvard contributio::s

collected on a weekly basis, m3.int~in the necessary records,

and emphasize the need to transmit contributions prior to

the annu3.l convention. Each M.:.y or June, during the annual

convention, awards arc give~ to lhose LOCALS who have

successfully met their quota.

B. Certain other matters noted durirnl the audit were

referred to the Commission I s Of r i Cl~ of GSnei.-.:.l Counsel for consideration on February 26, 1980 .

The Committee filed comprehensive amendments for 1977

and 197" and an amended report for January, 1979 to correct the

~11C1·,..,rc i t l 't~ln •

In general, the above errors resurted from_inadequate

reporti 1\C1 and recordkeeping practices.

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IV. Findings and Recommendations Concerning Audited - Union LOCALS - ..

A. Certain matters noted during the audit were referred

to the Commission's Office of General Counsel for consideration

on ~cbruary 26, 1980.

V. Procedural Recommendations

]n general, it is the opinion of the Audit staff that many

of the problems encountered by the Committee can be corrected

through development of specific guidelines to be given to LOCAL

treasurers responsible for C\~A-COPE-PCC activity.

Guidelines prepared should include the following:

a) Deposit and Transmittal of Contributions - All contributions shall either be deposited into a committee designated

depository, or deposited into a transmittal account to be

forwarded to the treasurer, or used to purchase a cashier's check

or similar instrument to forward the contributions without

depositing the contributions into any account. Contributions

shall be forwarded within 10 days of receipt if in excess of $50,

or within 30 days if the contribution is $50 or less. No disbursements may be made prior to deposit into a designated cacpaign

depository. (2 U.S.C. 432(b), (h) and 11 C.F.R. 103.3(a) and

10~~.6).

b) Recordkeeping for Contributions - The Committee treasurer

is required to maintain an account of all contributions made to

th0 Committee. Stewards collecting contributions, must forward

the contributions to the treasurer, within the time limits

specified in (a) above and if in excess of $50, forward the name

and address of the person making the contribution along with the

date of receipt. (2 U.S.C. Section 432(b) (2)).

c) Current Reportinq - All contributions received, and

expenditures made at the LOCAL level, must be disclosed on

reports filed by the Committee covering that period. Specific

information: such as the name, date, and amount of the contribution: or payee, date, and purpose of expenditure; shall also

be disclosed if the contribution or expenditure is in excess of,

or angregates in excess of $200 during the reporting period.

(2 u.s.c. Section 434 (b) (3) ,(5») .
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- d) Solicitation - Union political action committees may

flllt solicit contributions from indivi.duals other than member.s

ancl their families. Any person soliciting contributions for the

fund must inform the person being solicited of the political

purpose of the fund at the time of the solicitation and that the

solicitee has the right to refuse to so contribute without any

repr.isal. A guideline for contributions may be suggested

provided that the person soliciting or the solicitation informs

the person being solicited that the guidelines are merely

suggestions anll that the individual is free to contribute more

or less than the guidelines suggest. (2 U.S.C. Section 44lb(b)

(4) (1\) (ii), 441b(b) (3}(B) and (C», and 11 C.F.R. 114.5(a)(2).

e) Separa ti.on of Funds - Contributions to the Commi "I.ee

may not bec·onlni'lngled--\vi th personal funds of officers, members,

associates or any other individuals. (2 U.S.C. Section 432(b) (3)

11 C.F.R. 102.15).

f) Prohibited Funds - Contributions may not be accepted

fro~ nationaY-ban~~corporations,nor labor organizations.

(2 U.S.C. 44Ib).

Reconunendation

Based on the Audit staff's recommendation, on October 1, 1980,

the Committee fon.'ar::c,1 copies of two (2) prelininary guidelines

which had been prera~-~"d and sent to Locals. In addi tion, Conuni ttee

officials have arransod to meet with Commission staff to prepare

more detailed guides to be sent to Locals.

'I'he Audit st.af: recommends no further aci ton on this matter.