Attachment as stated

PUBLIC ISSUANCE OF AUDIT REPORT -

MISSOURI REPUBLICAN STATE COMMITTEEFEDERAL CO:~ITTEE

FRED EILAND

PRESS OFFICE 0 fV9 ./

BOB COSTA f--F-··...... JUDY HAWKINS ::-

HDtRAL ELECTION COMMISSI()~

. March 3, 1980

Informational copies of. the report have been received

by all parties involved and ~his report may be released to

the public as of today, March 3, 1980.

cc: FEC Library

RAD

Public Record

Attached please find a copy of the final audit report

of the Missouri Republican State Committee-Federal Committee

which was approved by the Commi~sion on February 12, 1980 •

SUBJECT:

I;'ROM:

THROUGH:

MEMORANDUM

TO:

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A. Overview

I. Background

FEDERAL ELECTION COMMISSION"

W"... IIINt:;YON, () C 2114hl

The discrepancy in closing cash is due to the separation

of accounts for reporting purposes. See Footnote 1. ~/

The audit covered the period January 1, 1976 through

June 30, 1978, the final coverage date of the latest report

filed by the Committee at the time of the audit. During that

period, the Committee reported a beginning cash balance of

$11,906.48, total receipts ..of $319,437.45, total expenditures

of $325,296.54, and a closing cash balance on June 30, 1978

of $328.08. ?:,./

1 ' The Committee originally registered as the Missouri

Re~ublican State Committee and filed reports disclosing

both its Federal and non-Federal activity through

December 31, 1977. On January 1, 1978, the Committee

began reporting its Federal activity only and subsequently

changed its name to the Missouri Republican State CommitteeFederal Committee •

The Committee registered with the Comptroller General

of the United States on June 19, 1972, as the State committee

representing the Republican Party in Missouri. The Committee

.maintains its headquarters in Jefferson City, Missouri.

REPORT OF 'THE AUDIT DIVISION

ON THE

MISSQURI REPUBLICAN'STATE COMMITTEE

FEDERAL COMMITTEE !/

This report is based on an audit of the Missouri

Republican State Committee-Federal Committee (lithe Committee") ,

undertaken by the Audit Division of the Federal Election

Commission in accordance with the Commission's audit policy,

.to determine whether there has been compliance with the

provisions of the Federal Election Campaign Act of 1971, as

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

Section 438(a) (8) of Title 2 of the United States Code, which

directs the Commission to make from time to time audits and

field investigations with respect to reports and statements

filed under "the provisions of tl:e l~ct. ..

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Irllis audit report is bas~d "'::r~ ,:i()Ct.;::lcnts and working

papers whi.ch support each of its fact:.:.~~~ ,,;t..:ltements. They

form pdrl. of the record upon which the -':ommission based its

decision:-; on the matters in this report and were available

Lo Conuni:;:-;ioners and appropriate sta f f members for review.

B. Key Personnel

The principal officers Ilf the Committee during the

period covered by the audit were I.owell McCuskey, Chairman

for the period 1/1/76 throuyh 8/12/77, Stan10y Dale, Chairman

for the period 8/13/77 through 6/.10/78, Joe Swarts, Treasurer

for the period 1/1/76 through 9/13/76, and Harvey Tett1ebaum,

'l'reasurer for the period 9/14/76 through 6/30/78 •

C. Scope

The audit included such tests as verification of

total reported receipts and expenditures and individual

transactions; review of required supporting documentation;

analysis of Committee debts and obligations; and, such other

audit procedures as deemed necessary under the circumstances.

1I. Findings and Recommendation~_

A. Acceptance of rrohib.i.le~l Funds

Section 44Ib(a) of Title 2 of the united States

Code states, in part, that it is unlawful for any corporation

or labor organization to make a contribution in connection with

':IIlY election to any Federal officl~.

Our review of the Committee's contribution records

disclosed that $962.50 was accepted from three (3) incorporated

entities [or tickets to fundraisilhl concerts held in February

of 1976.

Pursuant to a recommend.:-ttion by the Audit staff, the

Committee refunded the contributions and provided the Audit

staff wi th copies of the cancelled re fund checb-j (front and

back) .

This matter was referred to the Commission's Office

of Genel'al Counsel by the Audit staff on l'-1.:-trc!1 8, 1979 where

H~ltter Under Revie,v 948 ,-;as initl.:-tted. On J\ugust 29, 1979, the

Commission voted to close the file on this matter with no

further action •
Pursuant to a recolllrr.'.~nd;1tion uy the Audit staff, the

Committee filed amendments to its reports on July 24, 1979

iLumizing the transfers-in.

During the course of tho audit it was determined

that th0 Committee did not report fundr.-dsinq expenditures

totaling $11,589.57. These unrepot-led u;-:pundiLures represent

3.29':' of the total dollar value of Conm:itLc:e L';..:penditures

for the period covered by the audile

Section 434 (b) (11) 0:- 'l'i tle 2 of the United States

Code states, in part, that each rl:!po.-t sha 11 disclose the

total sum of expenditures made: by such committee during the

calendar year.

Secti.'n 434(b) (9) of 'ritle 2 of the united Str.ltes

Code states, in part, that each report shall disclose 1:he

identification of each person to whom expenditures ha'/e

uC'en made by such conuuittee within the calendar year in an

':!IYJr.egate amount or value in excess of $100, together with

Lhe amount, date and purpose of each such e:-:pendiLure.

C. Disclosur~~f Expenditures

Since the Committee has filed amendments to its reports

itemizing the transfers-in, it is the recommendation of the

Audit staff that no further action be taken on this matter.

B. Transfers-in Not Itemized

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Recommendation

DurinlJ t.he course of the audit it was determined

that the Committee received 48 transfers-in, totaling

$2,836.56, which were not itemized in its disclosure reports.

These figures represent 48.0C)'L of the total number and 10.32%

of the total dollar value of all transfers-in required to be

itemized.

section 434(0)(4) of 'ritle 2" the ljaited states

Code, in relevanL part, states that each report shall disclose

the name and addn'ns of each political conunittee or candidate

from ".,,-hich the .l'por.ting committeu received any transfer of

funds, togethcr with the amount and date of all transfers.

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In add"ition, it was de·termir.:.::.; :'hat the Committee

did not itemize 105 expenditures, totali~g $16,031.55, which

were in excess of or aggregated in excess of $100 in amount.

,'1'otal expenditun~s not. itemized represent 5.46% of the total

dollal value and 15.63'1, c·f .the total number of expenditures

J'equiring itemization.

Pursuant to a recommendation by the Audit staff,

the Committee filed amenJments to its reports on July 24,

1979, disclosing the previously unreported expenditures and

itemiz~ng those expenditures requiring itemization.

Recommendation

Since the Committee has filed amendments to its reports

correctly disclosing the expenditures, it is the recommendation

of the Audit staff that no further action be taken on this . matter.

D. Expenditures Lacking Supporting Documentation

Section 432(d) of Title 2 of the United States

Code states, in relevant part, that it shall be the duty

o( the treasurer to obtain and keep a receipted bil]~ stating

t1w. particu lars, for e'lery eXEJendi t111"'=.. made by or o. ".:>ehalf·

of a politic'll committee in excess of $100 in amount, and

for any such :xpcnditure in a lesser amount, if the a.gg::-egate

amount of such expenditures to the same person during a

calendar year exceeds $100.

Section 102.9 (c) (4) of Titlc 11 of the Code of

!-,pderal Regulations states that when a receipted bill is not

.lvailable, the treasurer may keep the cancelled check(s)

showirig payment(s) of the bill; and the bill, invoice or

other contemporallcous memorandum of the transaction supplied

by the p~yee containing the partiCUlars of the expenditure.

During the course of the audit it was determined

that the Con~ittce failed to maintain a receipted bill, bill,

invoice or othel' contemporaneous memorandum for 63 expenditures,

totalinq $29,537.88, requiring supporting documentation.

'l'hese fiqures represent 10.06';; of the total number and 9.38%

of the t~tal dollar value of all expenditures requiring

such documentation.
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E. Disclosure of Contributions

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, Hecommenda tion

A comparison of the Committee's records with its

reports indicated f~ndi~ising activity i~ i97~ .of $27,372.23

in total receipts, $11,747.73 of which was not reported. The

L()Lal proceeds from these fundraisers were not disclosed on

FI':C Schedule D's. These unreported receipts represent 3.55%

of the total dollar value of Committee receipts for the period

covered by the audit •

Section 434{b) (8) of Title 2, united States Code

~;t ,ites, in part, that a I,:0litical committee shall report the

LeiLal sum of all receipts for the committee during the calendar

veal". In addition, Section 434 (b) (6) of Tit1e.,2 of the United

States Code states, in part, that each report shall disclose

the total amount bf proceeds from the sale of tickets to each

dinner, luncheon, rally, and other fundraising event: and mass

collections made at such events.

Pursuant to' a re'commendation ~"~he Atldit staff, ,the

,Commi.ttee submitted supporting documen~,1~.lon for' 20 of the

previously unsupported expenditures totaling $25,480.68. The

Committee also submitted copies of letters demonstrating their

effol"ts to obtain documentation for 23 expenditures totaling

~1,282.50. sixteen of the remainin~ ~o expenditures lacking

, '. ::iupporting documentation, tota1il)g $1 , :325.00, were rent . payments. The Conlmittee was unable t'u provide document~tion

'for these payments (lease agreement, receipted bills, etc.),

other than the cancelled checks, for the reason' that the

'lease agreement'wa~ an oral one and the lessor is now deceased.

Since the Committee has provided documentation or has

, , d(,·inonstrated its efforts to obtain documentation for $26,763.18"

", or' 90.61%, of the previously unsupported expel)ditures, it is,

. tlJ,~ recommendation, of the Audit staff ,.thatno further action be

tilklm on this matter.' "

'. .' _. ' Section, 434 (b) (2) of 'ritle 2 of the united States , .''' Code. s'tates, in relevant part, '0 that each report shall disclose

':he full riame a:1d mai1in~add:' e 3S (oc ~upation and' principal.

place of busines3, if any) of ~~ch persoQwhohas made one.or

more contributions to or for s~1Ch committee withir. the calendar

year in an aggregate ainount or vahle in excess of $100.00, -

tosether with the amount and ~ate of such contributions.

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Furthe'r, it: was determined t!~:l:: the 'Committee failed

to itemize 31 c6ntributions totaling $5~325.9~, which represented

5.89% of the total number and 9.82% of the total dollar value

. of contriuutions requiring itemization.

Pursuant to ,-ecommendation by' the Audit staff, the

Committee filed amendmt.:nt.:, to its reports on July 24, 1979'

disclosing the.previouE'J unreported receipts and itemizing

those contributions requiring itemization. In addition, the;

Committee filed an FEC Schedule D disclosing the total proceeds

raised through the fundraising events.

R.ecommendation

. Since the Committee has' filed amendments to its reports ....

correctly disclosing the contributions, it is the recommendation . ~)( the Audit staff that no further action be ~akenon this ..

matter:'

F. Administrative Expenses

Section 106.l(e) of Title 11 of the Code of Federal

. Regulations states, ~n relevant part, that party committees

'. which have estabJ..i.shec1 Federal campaign committees pursuant

to Section 102'.6 s.:la.Ll a llocate administrative ~xpenses between

c.heir Federal' and non-Federal accounts on some reasonable basis.

During the course of the audit it was determined that

since the separation of the Committee into Federal and nonFederal account3 on January 1, 1978, the non-Federal state

level organi~ation has paid all administrative expenses on

behalf of th~ two (2) accounts and has not been reimbursed by

the Federal account for the Federal account's share. The

. Committee's Executive Director informed us that they were

aware that administrative expenses had to be allocated between

the Federal and non-Federal accounts, but that the Federal

account had no money with which to reimburse the non-Federal

organization.

Pursuant to a ~ecommendation by the Audit staff, the

Con~ittee developed a basis for the allocation of administrative

expenses between the Federal and non~Federal accounts and

tiubmitted such basis, along with supporting documentation, on

July 24, 1979. In addition, the Committee filed an amendment

to its 1978 reports disclosing an in-kind contribution in the

amount of $871.44 from the non-Federal account for the Committee's

share of 1978 ~drninistr~tive expenses. .
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Rec< " ". "lnda tion " ,

he Audit staff has received written confirmation that

no prohibited funu', were deposited into the non-Federal

account during the period covered by the audit, therefore,

it is the recommendation of the Audit staff that a one time

in-kind contribution from the non-Federal account be allowed

and. that no further action be taken on this matter.

It is further recommended that administrative expenses

continue to be allocated between the Federal and non-Federal

accounts. In the future, however, the Federal account must

reimburse the non"';l~ederal account for its share of the

administrative expenses on a timely basis.

G.· '. Improper Repayment und Disclosure of Loan

Section 437b(a) (2) of Title 2 of the United State~

. Cede states, in part. that no political committee may make an

e:-.penL iture except by check druwn '.m a committee depositm'y'

other tha~ petty cash expenditures.'

:, In addition, Section 4340:» (9) states, in part, that·

\';'.ch report shall disclose the identification of each person

Ll.l whom expenditures have been made by such committee within

· Llw calendar year in an aggregate amount or value .in excess of .'

~~lOO" together with the amount, dat::e, arld purpose of each"such

expenditure., '

, ' During the course of the audit it ':;asci~termined that,

on June 15, 1976, the Committee obtained a $30,000.00 bank'loan,'

· $15,000~00 of which was to be used to retire a previous loan

......• from the same bank. 'I'his loan repayment was' not made by a check

drawn on one of the.Conuuittee's depositories, but was repaid, · in cash. . .

In i tsc.:iiscl05ure' repo~-t,. the Cor.u:li ttee ,reported

: the $ 30 ;'000.00 on the schedule of proceetls.· from ·loans, and

reflected the ne~ loan and the~eti~emcnt bf.the previous

10un on theschetlule of debts and obligutions,but failed to'

... disclose the $15,000.00 10un repuyment, on the schedule of loan

-., n)pu~'ments as an e:':.~JC:nditure.
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Pursuant to a recoMt:lendati'.';·. ::y th(! ,\udit sta-t:f,

t llf' Commi t tee filed an amendment to its 1 7fl renorts' on ;lulv 2t1. ,

1'nil, disclosinq the reoavment of the loan.

HecoITlmendation

since the C~Mmittee has flied an amendment to its lq7~

reports disclosing the. re~aymcnt of the loan, it is the

recommendation of the ~udi~ staff that no further action be

taken on this matter.