FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

October 19,2010 

MEMORANDUM 

To: The Commission 

Through: 

From: 

By: 

Alec Palmer 

Acting Staff Director 

Patricia Carmona 

Chief Compliance Officer 

Joseph F. Stoltz 

Assistant Staff 

Audit Division 

Alex Boniewicz 

Audit Manager 

Jim Miller 

Lead Auditor 

Subject: Audit Division Recommendation Memorandum on Kansas Republican Party 

(A08-02) 

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

Reports), the Audit Division recommends the Commission approve the findings as presented 

in the Draft Final Audit Report (DEAR). The Kansas Republican Party declined the 

opportunity to have a hearing. The Office of General Counsel has reviewed this 

memorandum and concurs with the recommendation. 

Finding 3.,"Payment of Federal Activity Out of Non-federal Accounts" has been 

modified. No sample was provided for a mailer to allow a determination if it promoted, 

supported, opposed or attacked a clearly identified candidate. As such, that expenditure has 

been has been removed from the category "Payment and Disclosure of Non-Allocable Federal 

Election Activity" and placed in the category "Payment and Disclosure of Printed Materials." 

The Kansas Republican Party is aware of this modification and has been given an opportunity 

to respond in writing and/or request an audit hearing, which it declined and stated it agreed 

with die proposed modification. 

The Kansas Republican Party was audited once before for the period January 1,1976, 

through March 31,1978. A summary of the report is at Attachment 1. 
Attachment 1 

If this report is approved, the DFAR will be revised accordingly and circulated on a 72 

hour no objection basis as a "Proposed Final Audit Report" within 30 days ofthe 

Commission's vote. 

Should an objection be received, Directive No. 70 states that the report be placed on 

the next regularly scheduled open session agenda. 

Documents related to this audit report can also be viewed on Voting Ballot Matters. 

Should you have any questions, please contact Jim Miller or Alex Boniewicz at 694-1200. 

Attachments: 

Attachment 1- Previous audit 

Draft Final Audit Report on the Kansas Republican Party 

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

Audit Division on the 

Kansas 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). TheCommission 

generally conducts such 

audits when a 

committee appears not 

to have met the 

threshold requiremeni 

for substantial 

compliance with the 

Act. The ai ^ 

determ ine^^etherll 

commjl^complied 

with 'fh^nitations, 

prohibition 

disclosure reqlij^ments 

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. 

The Kansas Republican Party is a J^^^^^y committee 

headquartered in Topeka, Kansa^por^^gjnformation, see the 

chart on the Committee OrgamzmQn, p. 2' 

Financial Acti 

• Receipts 

o Contributions from I: 

o Coti^jbudons from Oth 

Politf 

Transfi 

Party C 

Transfers 

Account 

11 Other R^ 

1 Receipts 

$ 645,470 

50,877 

mittees 

iliated/Othl 

mittfTM 

ortK^onjOperafirif^isbursements 

fell Other Disbursements 

To^mi^ursements 

14,774 

$ 778,835 

$781,933 

6,485 

S 788,418 

indings and Recommendations (p. 3) 

f Misstatement of Financial Activity (Finding 1) 

Receipt of Apparent Prohibited Contributions (Finding 2) 

Payment of Federal Activity Out of Non-federal Accounts 

(Finding 3) 

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

Audit Division on the 

Kansas Republican Party 

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

Part I. Background 

Authority for Audit 

Scope of Audit 

Limitations 

Part IL Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recommenda 

Finding 1. Misstatement of Financial Activity 

Finding 2. Receipt of Apparent Prolftj^d Contributions 

Finding 3. Payment of Federal Activil^^^|@^CNon-federa1 

Page 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Kansas Republican Party (KRP), 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 th^^mmission to 

conduct audits and field investigations of any political comm itt^natirt-equi red to file a 

report under 2 U.S.C. §434. Prior to conducting any audit u^J^is subsection, the 

Commission must perform an intemal review of reports f^^by^^ted committees to 

determine if the reports filed by a particular committeg|mi^the thi^^l^ requirements 

for substantial compliance with the Act. 2 U.S.C. §4 

Scope of Audit 

Following Commission approved procedures, the''' 

factors and, as a result, this audit examined: 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

lit stajP^luated variou^isk 

The disclosure of disbursements,M|tejTid obligations? 

The disclosure of expenses allocat^^^^eji federal an 

The disclosure of individual contrib 

The receipt of contributions from pro 

The consistency be^^j^eported figu 

The completenM^Wre 

Other commi^^^eration^ecessary to thji review. 

federal accounts, 

ion and n^me of employer. 

ds. 

In m^i 

reg^^ments 

liifm^bv thi 

record 

obligatid 

and purpos 

£cords, K ^ satisfied the minimum recordkeeping 

102.^5^^e\!er, the Audit staffs testing of disbursements was 

al do^pentation, such as invoices. This lack of third party 

r reci^keeping and the proper reporting of debts and 

lequacy of disclosure of information, such as payee, address 

ints. 
Part II 

Overview of Committee 

Important Dates 

Date of Registration 

Committee Organization 

Kansas Republican Party 

March 15,1979 

Audit Coverage January 1,2007 - December 31,2008 

Headquarters Topeka, Kansas 

Bank Information 

Bank Depositories One 

Bank Accounts Six gj^eaial and FourT^^igfederar 

Treasurer 

• Treasurer When Audit Was Conducted JFitzgplij 

Treasurer During Period Covered by Audit ;hel?(thru 2m/0f) 

le (2/05/07 thru 12/17/07) 

(12/18/07 thru 2/17/09) 

Management Information 

Attended Commission Campaign Finance 

Seminar 

Used Commonly Aspiial 

Management Sofi^Re Packa 

Who Handled Acco 

Recordkeeping Tasks 

fvi^^f Financial Activity 

(^^ited Amounts) 

Cash on hanlS^January 11^07 $ 14,426 

Receipts "^^feh Jf^ 

o Contributions fi^^nj#^iduals $ 645,470 

o Contributions frori^lher Political Committees 50,877 

o Transfers from Affiliated/Other Party Committees 45,475 

o Transfers from Non-federal Account 22.239 

o All Other Receipts 14.774 

Total Receipts $ 778,835 

Disbursements 

o Operating Disbursements $781,933 

o All Other Disbursements 6,485 

Total Disbursements $ 788,418 

Cash on hand @ December 31,2008 $ 4,843 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

A comparison of KRP's reported figures to bank records revealed a rn^tetement of receipts, 

disbursements and cash-on-hand in both 2007 and 2008. For 2007j^^^erstated beginning 

cash on hand by $4,628, overstated receipts by $11,885, understa^^sbursements by $11,370 

and overstated ending cash-on-hand by $27,883. In 2008, re^ps^^|MJinderstated by 

$111,149, disbursements understated by $176,956 and the en^g cas^^^iand was overstated 

by $93,690. In response to the interim audit report recojp^^odation, Kl^^yended its reports to 

materially correct the misstatements noted above. (F( lore detail, see p. 4) 

Finding 2. Receipt of Apparent Pf^^itej^gpntributij 

Based on a review of contributions received by KRP, t^^^d^^tailTHdentified foQr contributions 

totaling $52,498 which appear to be from prohibited source^^response to the interim audit 

report, KRP indicated it had transferred %^^00 from its fedewtoits non-federal account. 

Citing insufficient funds, KRP amended 1^^^^^'^"^ report t^^^Ipe a debt to its nonfederal account for the remaining prohibite^oml^^^^f $37,^^'(For more detail, see p. 6) 

Finding 3. Payme^ygif Federsi^Ae'liv^^^Sft of Non-federal 

Acc 

de paymentsaotaling $104,859 from its non-federal 

ponse to the ii^pilh audit report, KRP amended its reports 

'Inderal account for federal/shared expenses. 

KRP appeared to ha^^ 

accounts for federal ex 

to disclose these disburse 

(For more 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity J 

Summary 

A comparison of KRP's reported figures to bank records revealed a mi^tatement of receipts, 

disbursements and cash-on-hand in both 2007 and 2008. For 2007, ^^^^rstated beginning 

cash on hand by $4,628, overstated receipts by $11,885, understa^^sbursements by $11,370 

and overstated ending cash-on-hand by $27,883. In 2008, rec^l^^^Ainderstated by 

$111,149, disbursements understated by $176,956 and the en#ig caslr^^and was overstated 

by $93,690. In response to the interim audit report recon;}]^!|nda.tion, K^^Egended its reports to 

materially correct the misstatements noted above. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• The amount of cash on hand at the beginning and end^i^^ reporting period; 

• The total amount of receipts for the ^gorting period and^^be calendar year; 

• The total amount of disbursements ^oi^^^^^^i^'ng P^^^^^^^Ej!?^ caiendar year; and 

• Certain transactions that require itemiz^o^^^^ul e A (It^^^d Receipts) or Schedule 

B (Itemized Disbursements). 2 U.S.C. §%4(b)^^^Q), (4)(^d(5). 

Facts and Analysis 

The Audit staff recon 

The following chart^o 

disbursements, and the e 

reasons for thejaajsjlatemen 

records for calendar years 2007 and 2008. 

;eginning cash balances, receipts, 

ear. Succeeding paragraphs address the 

m ^ Reported Bank Records Discrepancy 

Beginhl^^ash Balan ^ 

@,January%|007 # 

$19,054 $14,426 $4,628 

Overstated 

Receipts ''^^ ^ $184,566 $172,681 $11,885 

Overstated 

Disbursements $172,457 $183,827 $11,370 

Understated 

Ending Cash Balance 

(^December 31,2007 

$31,163 $3,280 $27,883 

Overstated 

Thc beginning cash on hand was overstated by $4,628 and is unexplained, but likely resulted 

from prior period discrepancies. 
The overstatement of receipts was the result ofthe following: 

• Contribution amount incorrectly reported (see details below) 

• Reported non-federal caucus receipts in error 

• Transfer of funds from non-federal not reported 

• Unexplained difference 

Net Overstatement of receipts 

The understatement of disbursements was the result ofthe following: 

• Transfer to non-federal account not reported (see details below) 

• Disbursements not reported 

Understatement of disbursements 

$ 8,220 

(25,000) 

2,599 

2.296 

$ r 11.885^ 

8,220 

3.150 

KRP received a $15,000 contribution from an individual and o^ositedT^i^^nds to its federal 

account on October 24,2007. KRP reported the amou^^hi§ i^ontributiTO||6,780, which 

represented the $10,000 contribution limit for individil^ less $3,220, the an^m^of 

contributions already received from the individuaU^^to Octdber 24,2007, tm 

understating receipts by $8,220 ($15,000-$6,780)r^^teion,^totransferred $P20, the 

excess portion of the contribution, from its federal acco^^y^noit^federal account on 

October 25,2007, but did not include the disbursement on^^fl07 November monthly report. 

The $27,883 overstatement of the closing 

described above. 

In 2008, one of five accou 

significant number of tn 

and expenditures rel^^go atten ~ 

has included all activR^^jpn this 

activity. 

t KRP consid 

the misstatements 

ieral bank accounts had a 

(hxch appean^ to be fede^l in nature. Nearly all receipts 

iQ at the Rep^lican National Convention. The Audit staff 

;ount (the Natll^l Convention account) in reportable 

Committee/I^Jty ^^^g ^ 

^^eported Bank Records Discrepancy 

BegiTI^^Cash Balan^ 

Janu1^^2008 W 

$31,163 $3,280 $27,883 

Overstated 

Receipts '''^ ^ $495,005 $606,154 $111,149 

Understated 

Disbursements $427,635 $604,591 $176,956 

Understated 

Ending Cash Balance 

® December 31,2008 

$98,533 $4,843 $93,690 

Overstated 

The understatement of receipts resulted from the following: 

• Receipts deposited into the National Convention account not reported 

• Refund received from Paychex not reported 

74,320 

2,846 
Receipts deposited into various federal accounts not reported 

Permissible cash deposit for sale of yard signs not reported 

Reported non-federal caucus receipts in error 

Transfers from the non-federal account not reported 

Unexplained difference 

Net Understatement of receipts 

25,822 

13,236 

(10,000) 

13,737 

(8,812) 

$111-149 

The $74,320 in receipts deposited into the National Convention account included $42,498 that 

represents three possible prohibited contributions which were used to the cost of hotel 

rooms, breakfasts for the delegates, and entertainment as discussedJ^mSmg 2 below. 

The understatement of disbursements resulted from the folio 

• Transfers to the non-federal account not reported 

• Disbursements from the National Convention acco 

not reported 

• Other disbursements not reported 

Understatement of disbursements 

The majority ofthe $105,243 disbursements from the 

for convention lodging expenses and pay^^^sts. 

The $93,690 overstatement of the closing ca^ o 

described above. 

105,243 

^66.213 

onvention account were used 

of the misstatements 

The Audit staff discuss^^£l!f1f§^^ements for^07 and 200^ with a KRP representative during 

the exit conference a^^rpvided c^ies of releva^workpapers detailing the misstatements. The 

KRP representative^i^^lbat cor^tive amendml||ss!^ould be filed. 

Interim A: 

The Aud 

and 20 

repoix^^^ect the cash 

prior periol^dit adjustment 

identify anyH^^uent disc 

the Audit staffT^l^^sponse 

reports to material 

mmenKOi^^ii and Committee Response 

ed tF^^^P amend its reports to correct the misstatements for 2007 

as at^p^mmended that KRP amend its most recently filed 

nd bal^^with an explanation that the change resulted from a 

d that^RP reconcile the cash balance of its most recent report to 

ncies that may impact the $93,690 adjustment recommended by 

he interim audit report recommendation, KRP amended its 

file misstatements noted above. 

I Finding 2. Re^pt of Apparent Prohibited Contributions J 

Summary 

Based on a review of contributions received by KRP, the Audit staff identified four contributions 

totaling $52,498 which appear to be from prohibited sources. In response to the interim audit 

report, KRP indicated it had transferred $15,000 from its federal to its non-federal account. 

Citing insufficient funds, KRP amended its most recent report to disclose a debt to its nonfederal account for the remaining prohibited contributions of $37,498. 
Legal Standard 

A. Receipt of Prohibited Corporate Contributions. Political committees may not accept 

contributions made from the general treasury funds of corporations. This prohibition applies to 

any type of corporation including a non-stock corporafion, an incorporated membership 

organization, and an incorporated cooperative. 2 U.S.C. §441 b. 

B. Definition of Limited Liability Company. A limited liability company (LLC) is a business 

entity that is recognized as an LLC under the laws of the state in which it was established. 11 

CFR §110.1(g)(1). 

C. Application of Limits and Prohibitions to LLC Contribu^ 

LLC is subject to contribution limits and prohibitions, depend^Ei]^ 

below: 

A contribution from an 

ral factors, as explained 

1. LLC as Partnership. The contribution is considere^^^tributioi^fibm a partnership if 

the LLC chooses to be treated as a partnershi^^ier Internal Reven^^gryice (IRS) tax 

rules, or if it makes no choice at all about status.^ contributionl^^a^ership is 

attributed to each partner by his or her sh£^^^^ partr^^ip profits. I r^pr§ 110.1 

(e)(1) and (g)(2). 

2. LLC as Corporation. The contribution is conside?i!S|^^rporate contribution—and is 

barred under the Act—if the LL^hooses to be trea^^^ corporation under IRS rules, 

or if its shares are traded PubUcly^^^^^R §110.1(g)(3y 

3. LLC with Single Member. The co^H^^^xonsideredl^^flribution from a single 

individual if the LLC is a single-mei%er LC^^^i^fs not pnosen to be treated as a 

corporation under IRSjrules. 11 CFR%15^)( 

D. Limited Liability^mpany^i^esponsibili^to Notify Recipient Committee. At the time 

it makes a contribuU^^mJLLC rrmt notify the re%pjept committee: 

• That it is eligible to ^^^^^^^^^^^J^"' ^^^W^ 

• In the case^mLLC tfi^^^^^^^^^amiership (for tax purposes), how the 

contribirfSHWilfeg attrl^fed among t^^LC's members. 11 CFR § 110.1 (g)(5). 

ms. IP^^fnmittee receives a contribution that appears to be 

ributio^it must follow the procedures below: 

Itreasurer receives the questionable contribution, the committee 

E. Qd^Opnable Contril 

prohibiteM^uestionable cl 

I. Witn^^^days after tl 

must eW ^ 

• Returi^^npntrMtion to the contributor without depositing it; or 

• Deposit^^y^bution (and follow the steps below). 11 CFR §103.3(b)(l). 

If the comm itt^^eposits the questionable contribution, it may not spend the funds and 

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

refunds or establish a separate account in a campaign depository for possibly illegal 

contributions. 11 CFR §103.3(b)(4). 

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

prohibited and must include this information when reporting the receipt ofthe 

contribution. 11 CFR § 103.3(b)(5). 

Wiihin 30 days ofthe treasurer's receipt ofthe questionable contribution, the committee 

must make at least one written or oral request for evidence that the contribution is legal. 

2. 

3. 

4. 
8 

Evidence of legality includes, for example, a written statement from the contributor 

explaining why the contribution is legal or an oral explanation that is recorded by the 

committee in a memorandum. 11 CFR § 103.3(b)(1). 

5. Within these 30 days, the committee must either: 

• Confirm the legality of the contribution; or 

• Refund the contribution to the contributor and note the refund on the report covering 

the period in which the refund was made. 11 CFR § 103.3(b)(1). 

Facts and Analysis ~. 

The Audit staff reviewed contributions received by KRP and identifiepirobi^^contributions 

totaling $52,498 from apparent corporate entities. The Audit staf^^fied with the Secretary of 

s ($42,498) were made, 

dingl^^^e used for national 

;COunt. r^^contributions were 

d entertainm^kat the 

a limited liaJsnity 

e limited liaoility company 

ntribution based on its tax filing 

£t contain any such 

State that three of these entities were incorporated when the cq| 

These amounts were deposited into the account discussed in 

convention expenses that KRP did not consider to be a fp^^ l 

to defray the cost of hotel rooms, breakfasts for the dejg^e? 

convention. 

The one remaining contribution ($10,000) was deteri 

company, which may choose a corporate tax filing 

was required to affirm to KRP that it w^eligible to make I 

status being other than corporate. Recorl^mvided by KRP 

affirmations or any follow-up by KRP to ^^^Wi|gihility. 

The Audit statT presented this matter to a KKBkrepr^l^^^^^u|irfg the exit conference along 

with a schedule of the appa^^grohibited conlrab^Kns. fl^^^ P representative stated they 

would send a letter requg^!^^^^ filing stat^for the limited liability company and would 

refund any remainino^^hibited^S^ributions. 

Interim Audit Repo 

The Audit sta^y^^mmen 

the contribuj^^n^^^^limitl 

contrib^^ns were mai^^h pe 

^ndationMnd Committee Response 

^umentation detailing the tax filing status for 

>ility compiny and demonstrate that the remaining three 

^ible funds. Absent such evidence, it was recommended 

that jfund the $52, 

and provi^^gcumentation 

and back) o^^sfer. If fun 

disclosed on S^^ule D (De 

refunds or transfe 

contributions were rl 

into its Federal accoun 

j-espi 

the cli^fmjtors or transfer the funds to a non-federal account 

^uch r^mnds (i.e., copies of each negotiated refund check, front 

ere not available, then the refunds or transfer due were to be 

and Obligations) until funds became available to make the 

fe to the interim audit report, KRP acknowledges that these 

"Trom corporations or companies taxed as a corporation and deposited 

ther than its non-federal account. KRP transferred $15,000 on January 

25,2010, from its federal account to its non-federal in partial payment of prohibited 

contributions and also amended its most recent report to disclose the remaining obligation of 

$37,498^ on Schedule D as owed by KRP to its non-federal account. 

' In its response, KRP noted a portion ofa prohibited contribution had been refunded; however, the refiind was 

made from its non-federal account. In amendments filed, KRP included this in the amount owed to its non-federal 

on Schedule D. 
Finding 3. Payment of Federal Activity Out of Non-federal 

Accounts 

Summary 

KRP appeared to have improperly made payments totaling $104,859 from its non-federal 

accounts for federal expenses. In response to the interim audit report, KRP amended its reports 

to disclose these disbursements paid from its non-federal account for federal/shared expenses. 

Legal standard 

A. Accounts for Federal and Non-federal Activity. A part>^gp¥?ffSiSttpe that finances political 

activity in connection with both federal and non-federal ^^ions l^^^stablish two accounts 

(federal and non-federal) and allocate shared expens^^thSi^e that sf^hfeaneously support 

federal and non-federal election activity—between^^t^fi^accounts. ^^aatively, the 

committee may conduct both federal and non-f|^al activijty from one b£^^^ount, 

considered a federal account. 11 CFR §l02.5,:(^ray). 

B. Paying for Allocable Expenses. Commission regul 

to pay for allocable, shared federal/npn-federal expens^ 

• They may pay the entire amount^to^hared expense 

transfer funds from the non-federaH^^M-io the federaf 

federal share of that expense; or 

• They may establish a separate, federal 

deposits funds fro 

paying the allo^ 

§l06.7(f)(l) 

ti 

C. Reporting Allocable^ 

federal/nond^^ral expef 

(or sepl^^^l^^^accot 

repG^hese kindsl^^^urser 

S^^^^onFederal ^^[ty). 

federal an( 

for shared^ 

-federal 

;deral/nonfer party committees two ways 

the federal account and 

^rft to cover the non-

^ifFo which the committee 

Tunts solely for the purpose of 

lederal activities. 11 CFR 

|ate, distri^j^r local committee that allocates 

isbursement it makes from its federal account 

pay foilf^hared federal/non-federal expense. Committees 

chedule H4 (Disbursements for Allocated 

§104.17(b) (3). 

D. Allocafi^^atio for Ad^iistrative & Non-Candidate Specific Voter Drive Costs. State 

and local^^mpommitte^nust allocate their administrative expenses and non-candidate 

specific vote^mye costs^cording to the fixed percentage ratio. Under this method, ifa 

Presidential can^^jteg^lra Senate candidate appear on the ballot, the committees must 

allocate at least 3^^ ^ expenses to their Federal funds. 11 CFR §l06.7(d)(2)(ii) and (3)(ii). 

Facts and Analysis 

Distinct from the National Convention account addressed previously in Finding 1. Misstatement 

of Financial Activity, the Audit staff determined that KRP maintained four non-federal bank 

accounts. KRP made payments from two of its non-federal account totaling $104,859 that 

should have been paid from a federal account. Most of these payments were for allocable 

administrative and non candidate specific voter drive expenses, which KRP should have paid 

from a federal account and reported on Schedule H-4 using the fixed percentage ratio of 36% 
10 

federal and 64% non-federal in accordance with 11 CFR §106.7(d)(2)(ii) and (3)(ii). Below is a 

breakdown ofthe $104,859 in federal activity paid from the non-federal account: 

Pavment and Disclosure of Non Allocable Federal Election Activitv (FEA^ 

A payment of $1,639 was disbursed from one ofthe non-federal accounts for the purchase of 

convention pins^. It appeared KRP should have paid this expense from a federal account. 

Pavment and Disclosure of Lodging Expense 

KRP paid $5,000 from one of their non-federal accounts for lodging pertaining to the national 

party convention. This expense should have been paid from a federaJ^f^Sbtynt. 

Pavment and Disclosure of Allocable Administrative Costs 

Apparent allocable administrative expenses totaling $83,861 ^^e diSB^ ^ from two nonfederal accounts for postage, rent, consulting, travel reimfa^sements, pr^^^phone service and 

office supplies. Available documentation does not indk^mat any of the^^^ments were for 

solely non-federal activities; therefore, they are treat^ras allocable administra^^igxpenses. The 

federal share for these expenses is $30,190 ($83,81^^^^% Fed^l share). 

Pavment and Disclosure of Printed Materials 

KRP disbursed $14,359 from a non-federal account for prinl^^nateriais for which copies were 

not available to assess the nature of thes^^^^itures. As sul^^e Audit staff could not verify 

that these expenditures were properly ma^^^^^ejion-federaP^miiift and were not required 

to be reported to the Commission. Should ^ui^^^^^b e provi^PTto indicate these 

expenditures are other than solely non-federal%i n^t^^^^^^^l d properly disclose these 

transactions. 

The Audit staff compj^Mreimbui 

allocable activity, this^^vsis ii 

additional amount that is in^eej 

adjustment^gl^^^iyjded 9 

committji^the e^^Sbig. two 

addressM by KRP. 

lents receivd^from the non-federal account for its share of 

fcated the non-^i^al account could have reimbursed an 

)^t^jSissue. Therefore, after considering all 

lere was*fi^@!Tunding of federal activity by the non-federal 

ludit period and only the disclosure issues need to be 

At the exi^^^rence, the /i^ t staffaddressed these matters and provided schedules 

identifying tiransactions nMd above to a KRP representative. The KRP representative stated 

that they wouldn^^ymendedKports to include these as memo entries. 

Interim Audit Re^ ^ Recommendation and Committee Response 

The Audit staff recommended KRP demonstrate that the identified disbursements paid from the 

non-federal account are solely non-federal expenses. As part of that demonstration KRP was 

requested to obtain and provide samples of the printed materials and a sample or description of 

the pin to demonstrate the nature of these expenditures. Absent such a demonstration, it was 

recommended that KRP amend its reports to disclose, as memo entries, the above noted 

^ The Audit staff is unable to verify that this disbursement was properly made from a non-federal account. The 

purchase ofthe pins was in close proximity to the convention and other payments made to that vendor were for 

convention gifts. However, should a copy ofthe pin or a description of its content be provided indicating the nature 

ofthis expense to be allocable or solely non-federal, the Audit staff will revise its conclusion. 
11 

disbursements on Schedules B (Itemized Disbursements) or H-4 (Disbursements for Allocated 

Federal/Nonfederal Activity), as appropriate. In response to the interim audit report, KRP noted 

that due to scant records it is unable to demonstrate that these disbursements are for non-federal 

purposes. In light ofthe lack of records and that no non-federal overfunding occurred, KRP 

amended its reports to correctly disclose these disbursements.