Interim Audit Report of the 

Audit Division on the 

Democratic Party of Illinois 

(January 1, 2009 - December 31, 2010) 

About the Committee (p. 2) 

The Democratic Party of Illinois is a state party committee with 

headquarters in Springfield, Illinois. For more information, see the 

chart on the Committee Organization, p. 2. 

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. 

' 2 U.S.C. §438(b). 

' DPIL did not maintain a Levin bank account, but during the period covered by the audit DPIL raised S2S4,774 of 

Levin receipts that it deposited into its non-federal bank account. DPIL transferred SIOO.OOO of Levin funds to its 

federal account for federal election activity during this same period. See Finding 4 for Levin reporting issues. 

Financial Activity (p. if 

• Receipts 

o Individual Contributions 

o Political Committee Contributions 

o Transfers from Affiliates 

o Transfers from Non-federal 

Account 

Total Receipts 

• Disbursements 

o Operating Expenditures 

Federal Election Activity 

Coordinated Expenditures 

Transfers to Affiliated Committees 

Other Disbursements 

Total Disbursements 

$ 597,542 

1,337,075 

844,950 

1,504,443 

$4,284,010 

$ 1,922,328 

705,871 

1,257,848 

292,178 

62,545 

$4,240,770 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Fundraising Receipts (Finding 3) 

• Unreported Levin Fund Activity (Finding 4) 
Interim Audit Report of the Audit 

Division on the 

Democratic Party of Illinois 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Request for Early Commission Consideration of a Legal Question 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!. Misstatement of Financial Activity S 

Finding 2. Recordkeeping for Employees 6 

Finding 3. Fundraising Receipts 8 

Finding 4. Unreported Levin Fund Activity 12 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Democratic Party of Illinois (DPIL), undertaken by 

the Audit Division of the 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 whether 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 individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; 

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

4. the consistency between reported figures and bank records; 

5. the completeness of records; 

6. other committee operations necessary to the review. 

Request for Early Commission Consideration of a Legal 

Question 

Pursuant to the "Policy Statement Establishing a Program for Requesting Consideration 

of Legal Questions by the Commission," DPIL requested early consideration of a legal 

question raised during the audit. DPIL questioned whether the monthly time logs 

required under 11 CFR § 106.7(d)(1) applied to employees paid with 100 percent federal 

funds. (See Finding 2.) 

The Commission concluded, by a vote of 5-1, that 11 CFR § 106.7(d)(1) does require 

committees to keep a monthly log for employees paid exclusively with federal funds. 

Exercising its prosecutorial discretion, the Commission will not, however, pursue 

recordkeeping violations for the failure to keep time logs or to provide affidavits to 

account for employee salaries paid with 100 percent federal funds and reported as such. 

The Audit staff informed DPIL counsel of the Commission's decision on DPlL's request. 

This audit report does not include any finding or recommendation with respect to DPlL's 

employees paid with 100 percent federal funds and reported as such. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration May 4,1983 

• Audit Coverage January 1,2009 - December 31,2010 

Headquarters Springfield, Illinois 

Bank Information 

• Bank Depositories Two 

• Bank Accounts 3 Federal, 4 Non-federal Accounts 

Treasurer 

• Treasurer When Audit Was Conducted Michael Kasper 

• Treasurer During Period Covered by Audit Michael Kasper, January 1,2009 -

December 31,2010 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ® January 1,2009 $ 298,984 

Receipts 

o Individual Contributions 597,542 

o Political Committee Contributions 1,337,075 

o Transfers from Affi 1 iates 844,950 

o Transfers from Non-federal Accounts 1,504,443 

Total Receipts $4,284,010 

Disbursements 

o Operating Expenditures 1,922,328 

o Federal Election Activity 705,871 

o Coordinated Expenditures 1,257,848 

o Transfers to Affiliated Committees 292,178 

o Other Disbursements 62,545 

Total Disbursements $ 4,240,770 

Cash-on-hand @ December 31,2010 $342,224 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of DPIL's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements in calendar year 2010. 

DPFL understated receipts by $203,666 and understated disbursements by $215,677. 

The misstatements were mainly the result of unreported transfers from the non-federal 

accounts and affiliated committees, as well as unreported operating expenditures and 

transfers to affiliated committees. The Audit staff recommends that DPIL amend its 

disclosure reports to correct these misstatements. (For more detail, see p. 5.) 

Finding 2. Recordkeeping for Employees 

During audit fieldwork, the Audit staff found that DPIL did not maintain monthly logs, as 

required, to document the percentage of time each employee spent on federal election 

activity. Payroll logs were maintained for the month of September 2010; however, the 

information contained in these logs did not include the percentage of time each employee 

spent on federal election activity. For 2009 and 2010, logs were required for DPIL 

payroll totaling $729,125. For DPIL employees paid with an allocation of federal and 

non-federal funds, and for those employees paid entirely with non-federal funds, the 

Audit staff recommends that DPIL provide and implement a plan to maintain such 

monthly payroll logs to track the percentage of time each employee spends on federal 

election activity. (For more detail, see p. 6.) 

Finding 3. Fundraising Receipts 

During audit fieldwork, the Audit staff identified 10 fundraising events that raised funds 

for DPIL's federal and non-federal accounts. The federal account received $75,800 from 

these events. Although the federal account was the recipient of these funds, DPIL did not 

share in any of the costs incurred in raising these funds. Four of the events were held to 

benefit a non-federal campaign and therefore appear to be prohibited contributions. For 

the remaining six events, the Audit staff lacks sufficient information to conclude whether 

the events were joint fundraising events with other political committees or DPIL 

fundraising events solely benefiting DPIL's federal and non-federal accounts. 

The Audit staff recommends that DPIL demonstrate that it is permitted to deposit the 

$75,800 in its federal account. In addition, for the remaining six events, the Audit staff 

recommends that DPIL identify which events, if any, were joint fundraising events with 

other political committees, or which, if any, were DPIL events benefiting only its federal 

and non-federal accounts. Further, for those events that benefited only its federal and 

non-federal accounts, the Audit staff recommends that DPIL demonstrate that it has 

properly allocated costs between its federal and non-federal accounts. 
Absent such a demonstration, the $75,800 deposited in its federal account will be 

considered impermissible and the Audit staff would recommend that DPIL transfer these 

funds to its non-federal account. (For more detail, see p. 8.) 

Finding 4. Unreported Levin Fund Activity 

During audit fieldwork, an analysis of DPIL's Levin fund activity indicated that DPIL 

raised Levin funds during the period covered by the audit that totaled $254,774. Of this 

amount, DPIL did not report Levin funds totaling $115,274 on its Levin Schedules L 

(Aggregation Page: Levin Funds) or on its Schedules L-A (Itemized Receipts of Levin 

Funds). In addition, DPIL incorrectly disclosed a shared federal election activity 

expenditure in the amount of $144,375 as a shared operating expenditure. The Audit 

staff recommends that DPIL amend its reports to disclose all Levin fund activity during 

the period covered by the audit. (For more detail, see p. 12.) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieidwork, a comparison of DPIL's reported financial activity with its bank 

records revealed a misstatement of receipts and disbursements in calendar year 2010. 

DPIL understated receipts by $203,666 and understated disbursements by $215,677. 

The misstatements were mainly the result of unreported transfers from the non-federal 

accounts and affiliated committees; as well as unreported operating expenditures and 

transfers to affiliated committees. The Audit staff recommends that DPIL amend its 

disclosure reports to correct these misstatements. 

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 

As part of audit fieidwork, the Audit staff reconciled DPIL's reported activity with its 

bank records and identified misstatements of receipts and disbursements for calendar year 

2010. The chart below details the discrepancies and succeeding paragraphs explain the 

reasons for the misstatements. 

2010 Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1,2010 

$324,676 $324,676 $0 

Receipts $3,727,446 $3,931,112 $203,666 

Understated 

Disbursements $3,697,887 $3,913,564 $215,677 

Understated 

Ending Cash Balance 

@ December 31,2010 

$354,235 $342,224 $12,011 

Overstated 
The understatement of receipts was the result of the following: 

• Unreported contributions from individuals $1,S2S 

• Unreported transfers from non-federal accounts 79,316 

• Unreported transfers from affiliated committee ' 38,089 

• Contributions received via ACTBLUE reported net of 296 

processing fees 

• Reported receipts that did not clear the federal accounts (15.5601 

Net Understatement of Receipts $ 203.666 

The understatement of disbursements was the result of the following: 

• Unreported operating expenditures $155,347 

• Unreported transfer to affiliated committee 137,089 

• Reported disbursements that did not clear the federal accounts (77,607) 

• Unreported in-kind contributions 150 

• Disbursements incorrectly reported 7 

• Unreported ACTBLUE processing fees 691 

Net Understatement of Disbursements $215.677 

The $12,011 overstatement of the ending cash balance resulted from the reporting 

. discrepancies noted above. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference. Audit staff provided the DPIL representatives with work papers 

detailing the misstatements of financial activity and discussed the reporting errors that 

caused the misstatement. A DPIL representative stated that DPIL made the unreported 

transfer to the affiliated committee in error, and made the unreported transfers received 

from the same affiliated committee in order to correct the original transfer. DPIL is 

prepared to amend its reports to correct the misstatement. 

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

• amend its reports to correct the misstatements for 2010 as noted above; 

• amend its most recent report to correct the cash-on-hand balance with an 

explanation that the change resulted from a prior period audit adjustment; and 

• 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. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff found that DPIL did not maintain monthly logs, as 

required, to document the percentage of time each employee spent on federal election 

activity. Payroll logs were maintained for the month of September 2010; however, the 

information contained in these logs did not include the percentage of time each employee 
spent on federal election activity. For 2009 and 2010, logs were required for DPIL 

payroll totaling $729,125. For DPIL employees paid with an allocation of federal and 

non-federal funds, and for those employees paid entirely with non-federal funds, the 

Audit staff recommends that DPIL provide and implement a plan to maintain such 

monthly payroll logs to track the percentage of time each employee spends on federal 

election activity. 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a monthly log of the 

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows: 

• employees who spend 25% or less of their compensated time in a given month on 

federal election activities must be paid either from the federal account or have 

their pay allocated as administrative costs; 

• employees who spend more than 25% of their compensated time in a given month 

on federal election activities must be paid only from a federal account; and 

• employees who spend none of their compensated time in a given month on federal 

election activities may be paid entirely with funds that comply with state law. 11 

CFR§106.7(d)(l). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed all payroll disbursements made from 

DPlL's federal, non-federal and coordinated campaign accounts. The only payroll log 

DPIL maintained was for the month of September 2010. This log listed the number of 

hours worked by each employee and the activities performed each day. The information 

provided did not, however, include the percentage of time that the employees spent in 

connection with federal election activity. During audit fieldwork, DPIL representatives 

explained that the committee did not realize that logs were required until September 1, 

2010, and that some staff left before the end of September without turning in their logs. 

Such logs were required to document the proper allocation of federal and non-federal 

funds used to pay employee salaries and wages. 

In addition to the aforementioned logs for the month of September 2010, DPIL provided 

agreement-for-services contracts, campaign employment applications, and IRS W-4 

forms (Employee's Withholding Allowance Certificate) for most of its employees. For 

employees paid from the non-federal account, the campaign employment applications 

noted the non-federal candidates to which the employees were assigned, and for 

employees paid from the federal account, the applications noted that the employee was 

assigned to DPIL's headquarters. Further, DPIL provided copies of in-kind letters that 

were addressed to non-federal candidates. These letters listed salaries and expenses paid 

to employees from its non-federal accounts as in-kind contributions made on behalf of 

non-federal candidates. The documentation provided by DPIL supports its position that 

the employees it considered non-federal could be paid from its non-federal accounts. 
DPIL did not, however, maintain sufficient payroll logs to document the percentage of 

time each employee spent in connection with federal election activity. 

For 2009 and 2010, logs were required for $729,125 in rayroll ($412,809 in shared 

federal/non-federal and $316,316 in non-federal funds). 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference and during audit fieldwork, the Audit staff discussed the 

recordkeeping issue with DPIL representatives. The representatives provided affidavits 

by DPIL's executive director and coordinated campaign director that identified DPIL's 

employees and discussed the amount of compensated time spent by each employee on 

activities in connection with federal elections. DPIL did not provide documentation of 

the actual percentage of time spent on federal activities. 

For DPIL employees paid with an allocation of federal and non-federal funds, and for 

those employees paid entirely with non-federal funds, the Audit staff recommends that, 

within 30 calendar days of service of this report, DPIL provide and implement a plan to 

maintain such monthly payroll logs to track the percentage of time each employee spends 

on federal election activity. 

Finding 3. Fundraising Receipts 

Summary 

During audit fieldwork, the Audit staff identified 10 fundraising events that raised funds 

for DPIL's federal and non-federal accounts. The federal account received $75,800 from 

these events. Although the federal account was the recipient of these funds, DPIL did not 

share in any of the costs incurred in raising these funds. Four of the events were held to 

benefit a non-federal campaign and therefore appear to be prohibited contributions. For 

the remaining six events, the Audit staff lacks sufficient information to conclude whether 

the events were joint fundraising events with other political committees or DPIL 

fundraising events solely benefiting DPIL's federal and non-federal accounts. 

The Audit staff recommends that DPIL demonstrate that it is permitted to deposit the 

$75,800 in its federal account. In addition, for the remaining six events, the Audit staff 

recommends that DPIL identify which events, if any, were joint fundraising events with 

other political committees, or which, if any, were DPIL events benefiting only its federal 

and non-federal accounts. Further, for those events that benefited only its federal and 

non-federal accounts, the Audit staff recommends that DPIL demonstrate that it has 

properly allocated costs between its federal and non-federal accounts. 

Absent such a demonstration, the $75,800 deposited in its federal account will be 

considered impermissible and the Audit staff would recommend that DPIL transfer these 

funds to its non-federal account. 

^ Payroll is stated net of taxes and benefits. 
Legal Standard 

A. Written Agreement. Participants in joint fundraising activities must enter into a 

written agreement. The written agreement shall identify the fundraising representative 

and state a formula for the allocation of the fundraiser proceeds. 11 CFR .§ 102.17(c)(1). 

B. Fundraising Notice. A joint fundraising notice shall be included with every 

solicitation for contributions. This notice shall include the following: 

• the names of all committees participating in the joint fundraising activity; 

• the allocation formula to be used for distributing joint fundraising proceeds; 

• a statement informing contributors that they may designate their contributions for 

a particular participant or participants; and 

• if one or more participants can lawfully accept contributions that are prohibited 

under the Act, a statement informing contributors that contributions from 

prohibited sources will be distributed only to those participants that can accept 

them. II CFR §102.17(c)(2). 

C. Required Information on Solicitations. All written solicitations for contributions 

will include a clear request for the contributor's full name, mailing address, occupation 

and name of employer, and must include an accurate statement of federal law regarding 

the collection and reporting of individual contributor identifications. 11 CFR 

§ 104.7(b)(1). 

D. Fundraising for Federal and Non-Federal Accounts. If federal and non-federal 

funds are collected by a state party committee through a joint fundraising activity, that 

committee must allocate its direct fundraising costs using the funds received method. If 

the non-federal account has paid more than its allocable share, the committee shall 

transfer funds from its federal to its non-federal Account. The committee shall make note 

of any such adjustments and transfers in its report for any period in which a transfer was 

made, and shall also report the date of the fundraising program or event that serves as the 

basis for the transfer. 11 CFR § 106.7(d)(4). 

E. Depositing Contributions into Federal Accounts: Only contributions meeting any 

of the following conditions may be deposited in a federal account: 

• contributions designated for the federal account; 

• contributions that result from a solicitation that expressly states that the 

contributions will be used in connection with a federal election; or 

• contributions from contributors who are informed that all contributions are subject 

to the prohibitions and limitations of the Act. 11 CFR §102.S(a)(2)(i)-(iii). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff identified 10 fundraising events that raised funds 

for DPIL's federal and non-federal accounts. DPIL did not disclose the events on 

Schedules H-2 (Allocation Ratios). In addition, DPIL did not pay any expenses related to 

these fundraising events from its federal or non-federal accounts. From the available 
10 

documentation, the Audit staff determined that (1) solicitations for some of the events 

requested that checks be made out to the Friends of Michael J. Madigan committee,^ (2) 

organizations other than DPIL paid the costs for some of the events, and (3) most of the 

disclaimers on the event solicitations did not include an accurate statement of federal law 

regarding the collection and reporting of individual contributor information. DPIL 

provided in-kind Contribution Notification forms to document some of the costs of three 

of the fuhdraising events. These forms noted that the in-kind contributions for the costs 

were made on behalf of Friends of Michael J. Madigan, not DPIL. From the 

documentation that was made available, it appears that the solicitations for these 

fundraising events were not intended to raise money for the federal account. 

The federal account received $75,800 and the non-federal account received $1,103,925 

from these events. It is not clear whether any other committees received funds from these 

events. Although the federal account was the recipient of funds, it did not appear to have 

shared in any of the costs incurred in raising these funds. Documentation for three of the 

10 events showed that in-kind contributions were made to Friends of Michael J. Madigan 

in the amount of $5,077 for some of the costs of these events. There were no written 

agreements available that identified the fundraising representatives and stated the 

allocation formulas, the allocation percentages for distribution of joint fundraising 

proceeds and expenses among the participants. The Audit staff has grouped the 10 

fundraising events into two categories. 

1. Fundraising Events Held to Benefit the Non-federal Campaign Committee of 

DPlL's Chairman. Michael J. Madigan 

DPIL received and deposited into its federal account contributions totaling $5,650 

from four of the 10 events. DPIL contends that the events were not DPIL events 

and that it did not solicit the contributions. The four fundraisers were: 

• 2009 Lake Event held in April, 2009; 

• 2010 Lake Event held on April 26,2010; 

• Luciana Event held on September 21,2010; and 

• Union League Event held on September 23,2010. 

Based on the content of the solicitations for these four events, it appears that these 

events may have been solely for the benefit of the non-federal campaign account 

of Michael J. Madigan. All solicitations from these events asked that 

contributor's checks be made payable to "Friends of Michael J. Madigan." No 

documentation was available to demonstrate that DPIL solicited funds from or 

participated in these events. 

As cited above, 11 CFR §I02.5(a)(2)(i)-(iii) provides guidance on when funds 

may be deposited into a committee's federal account. Based on the 

documentation provided, the Audit staff concluded that none of the funds that 

* Friends of Michael J. Madigan is a non-iederal committee. Michael J. Madigan is the Speaker of the 

Illinois House of Representatives and Chairman of DPIL. 
11 

DPIL received as a result of these four events was permitted to be deposited into 

DPIL's federal account. Therefore, the funds totaling $S,6S0 were impermissible 

and should be transferred to DPIL's non-federal account. 

2. The Six Remaining Fundraisine Events 

DPIL received and deposited into its federal account contributions totaling 

$70,150 from the six remaining fundraising events. These events may be either 

joint fundraising events with other political committees or fundraising events that 

solely benefited DPIL's federal and non-federal accounts. The six events are as 

follows: 

• DC 2009 Event, held on November 4,2009; 

• WesPAC/IBEW Event held on February 24,2010; 

• Reza's Dinner held on August 12,2010; 

• Janssen Event held on September 28,2010; 

• Hospitality Event held on October 6,2010; and 

• 2010 DC Event held on October 14,2010. 

The Audit staff lacks sufficient information to be able to determine into which 

category these events fall. Despite event solicitations directing contributors to 

make their checks payable to the "Democratic Party of Illinois," the Audit staff 

does not have information suggesting that DPIL participated with any other 

committees, shared any of the costs, or received any of the shared proceeds for 

these events. Although some of the solicitations requested contributors to mail 

their checks to the event sponsor and/or include "paid for by" language to identify 

the political committee that paid for the solicitation, this alone does not establish 

that the events were Joint fundraisers with other political committees in 

connection with a federal election. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented this issue to the DPIL representatives 

and requested that they document the costs associated with these events, as well as who 

paid for such expenses. DPIL representatives acknowledged that four of the events in 

which DPIL received federal funds were not committee events, but argued that the 

amount of federal funds received from the events was de minimis. 

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

• demonstrate that it can permissibly deposit funds totaling $5,650 from the four 

fundraising events identified above; and 

• demonstrate that it can permissibly deposit funds totaling $70,150 from the 

remaining six events. Further, for these events, the Audit staff recommends that 

DPIL identify which, if any, were Joint fundraising events with other political 

committees, or which, if any, were DPIL events benefiting solely its federal and 

non-federal accounts. In connection with those events that benefited solely 
12 

DPlL's federal and non-federal accounts, the Audit staff recommends that DPTL 

demonstrate that it has properly allocated costs between its federal and nonfederal accounts. 

Absent such demonstration, the $75,800 deposited in its federal account will be 

considered impermissible and the Audit staff would recommend that DPIL transfer these 

funds to its non-federal account. 

I Finding 4, Unreported Levin Fund Activity 

Summary 

During audit fieldwork, an analysis of DPlL's Levin fund activity indicated that DPIL 

raised Levin funds during the period covered by the audit that totaled $254,774. Of this 

amount, DPIL did not report Levin funds totaling $115,274 on its Levin Schedules L 

(Aggregation Page: Levin Funds) or on its Schedules L-A (Itemized Receipts of Levin 

Funds). In addition, DPIL incorrectly disclosed a shared federal election activity 

expenditure in the amount of $144,375 as a shared operating expenditure. The Audit 

staff recommends that DPIL amend its reports to disclose all Levin fund activity during 

the period covered by the audit. 

Legal Standard 

A. Reporting. If a state, district or local party committee's combined annual receipts 

and disbursements for federal election activity (FEA) total $5,000 or more during the 

calendar year, the committee must disclose receipts and disbursements of federal funds 

and Levin funds used for FEA. 11 CFR §300.36 (b)(2). 

B. Receipt of Levin Funds. Levin funds expended or disbursed by any state committee 

must be raised solely by the committee that expends or disburses them. Each donation 

must be lawful under the laws of the state in which the committee is organized and the 

funds solicited must not aggregate more than $10,000 in a calendar year. Consequently, 

funds from national party committees, other state, district and local committees, and from 

federal candidates or officeholders, may not be accepted as Levin funds. 11 CFR 

§300.31. 

C. Contents of Levin Reports. Each report must disclose: 

• the amount of cash-on-hand for Levin funds at the beginning and end of the reporting 

period; 

• the total amount of Levin fiind receipts for the reporting period and the calendar year; 

• the total amount of Levin fund disbursements for the reporting period and the 

calendar year; and 

• certain trarisactions that require itemization on Schedule L-A (Itemized Receipts of 

Levin Funds) or Schedule L-B (Itemized Disbursements of Levin Funds). 11 CFR 

§300.36 (b)(2). 
13 

Facts and Analysis 

A. Facts 

As part of audit fieldwork, the Audit staff found that DPIL raised Levin funds totaling 

$254,774 that it deposited into its non-federal account. It reported Levin funds totaling 

$139,500 on its Schedules L-A. DPIL did not report Levin funds totaling $115,274. In 

addition, DPIL incorrectly disclosed a shared federal election activity expenditure of 

$144,375, of which the Levin share was $114,056, as a shared operating expenditure. 

DPIL did not have a Levin fund bank account for its Levin fund receipts. DPIL 

representatives explained that it kept all Levin funds raised in its non-federal account in 

accordance with 11 CFR §300.30(C)(2) and (3). DPIL provided the Audit staff with a 

reasonable accounting of its Levin fund receipts. A daily cash analysis of DPIL's nonfederal accounts demonstrated that DPIL had sufficient Levin funds at the time DPIL 

transferred the funds to the federal account. 

During the period covered by the audit, DPIL reported shared federal election activity 

expenditures totaling $180,000. The Levin share of these expenditures was $139,500. 

DPIL transferred only $100,000 to its federal account for the Levin share of the allocable 

expenditures. Levin funds totaling $154,774 remain in DPIL's non-federal account. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff provided DPIL representatives with workpapers 

that detailed a possible overfunding by its non-federal account. DPIL representatives 

responded that DPIL had incorrectly reported a disbursement in the amount of $144,375 

on Schedule H-4 (Shared Federal/Non-Federal Activity) instead of Schedule H-6 (Shared 

Federal Election Activity), and that it could have used Levin funds to pay the $114,056 

share of the direct mail expenditure. They argued that DPIL had sufficient Levin funds 

on hand to pay for the non-federal share, and stated that the reports would be amended to 

correct this matter. The Audit staff concurs that Levin funds could have been transferred 

to the federal account in regard to this expenditure, and that DPIL did have sufficient 

Levin funds available to be transferred. Further, by classifying this transaction as such, 

there no longer would be an overfunding by the non-federal account. 

the Audit staff recommends that, within 30 calendar days of receipt of this report, DPIL 

amend its reports to disclose the additional Levin receipts in the amount of $115,274 on 

Schedules L-A and disclose the expenditure in the amount of $144,375 as a shared 

federal election activity expenditure on Schedule H-6.