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. 1 The audit 

determi~s whether the 

commi~e complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Actio~ l 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any 

matters discussed in this 

report. 

1 52 u.s.c. §3011 ](b). 

Draft Final Audit Report of the 

Audit Division on the 

Conservative Campaign 

Committee 

(April 5, 2011 - December 31, 2012) 

About the Committee (P. 2) 

The Conservative Campaign C~irunittee is a non-connected 

committee headquartered in Willows, California. For more 

information, see the chart on Committee Organization, p. 2. 

Financial Activity<q:i, 2) 

• Receipts ·:i:::; .-if:· ·. 

o Contributions ~.Individuals 

o : O.t4er Receipts 

Total Receipts ,'',,,',' 

• Disburs~ments 

o Operating Expenditures 

o Independent Expenditures 

o Refund of Contributions 

o Other Disbursements 

Total Disbursements 

$3,871,317 

28,994 

$3,900,311 

$2,519,567 

1,339,170 

20,110 

6,512 

$3,885,359 

Findings and Recommendations (p. 3) 

• Reporting of Apparent Independent Expenditures (Finding 1) 

• Recordkeeping for Communications (Finding 2) 
Draft Final Audit Report of the 

Audit Division on the 

Conservative Campaign 

Committee 

(April 5, 2011 - Dece)]J'Ber 31, 2012) '\' 
Table of Contents 

Part I. Background 

Authority for Audit 

Scope of Audit 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recommendations 

Finding I. Reporting of Apparent Independent Expenditirn:s 

Finding 2. Recordkeeping for Communications · · · · 

Page 

I 

I 

2 

2 

3 

4 

8 
Part I 

Background 

1 

Authority for Audit 

This report is based on an audit of the Conservative Campaign Committee2 (CCC), 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 52 U.S.C. §3011 l(b), which permits the Commission to conduct 

audits and field investigations of any political committee that is requ\J"~ to file a report under 52 

U.S.C. §30104. Prior to conducting any audit under this subsectio11,;the Commission must 

perform an internal review ofreports filed by selected committeesJ> .determine if the reports 

filed by a particular committee meet the threshold requirements for'substantial compliance with 

the Act. 52 U.S.C. §3011 l(b). 

Scope of Audit ... Following Commission-approved procedures, the Audit staff eyaluated variouirisk factors and 

as a result, this audit examined: :/: · 

1. the consistency between reported figures and bank recotds; 

2. the disclosure of individual contributors' occupation and name of employer; 

3. the disclosure of independent expenditures; 

4. the disclosure of debts and obligations pertaining to independent expenditures; 

5. the completeness of disbursement records; and 

6. other committee operations necessary to the review. 

2 On December 18, 2012, the Commission received a Statement of Organization from the Campaign to Defeat 

Barack Obama officially changing its name to the Conservative Campaign Committee. 
Part II 

Overview of Committee 

Committee Organization 

Imuortant Dates 

• Date of Registration April 11, 2011 

• Audit Coverage April 5, 2011 J _ December 31, 2012 

Headouarters Willows, California · 

Bank Information 

• Bank Deuositories One 

·········· • Bank Accounts One Checking and One Savings 

Treasurer . .... . 

• Treasurer When Audit Was Conducted ~~lly Lawler 

• Treasurer During Period Covered by Audit ·K~lly Lawler 

Mana11:ement Information 

• Attended Commission Campaign Finance No 

Seminar ·. . 

• Who Handled Accounting and .. Paid Staff 

Recordkeeping Tasks 

Overview of Financial Activity 

fiμdited Aspounts4

) 

··. \ \· 

Cash-on-hand (ii)_ Auril 5, 2011 '. $0 

Receiuts 

o Contributions from Individuals 3,871,317 

o Other R<1ceipts ·. 28,994 

Total Receiuts $3,900,311 

Disbursements ·•• 

o Operating Expenditures 2,519,567 

o Independent Expenditures 1,339,170' 

o Refund of Contributions 20,110 

o Other Disbursements 6,512 

Total Disbursements $3,885,359 

Cash-on-hand (ii) December 31, 2012 $14,952 

3 CCC opened its first bank account April 5, 2011. 

2 

4 Audited amounts may differ from reported amounts; however, the differences were not material enough to result 

in a misstatement of financial activity finding. 

' This amount, as well as the amount for operating expenditures, may change as a result of the Commission's final 

consideration of Finding I. 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Reporting of Apparent Independent 

Expenditures 

3 

During audit fieldwork, the Audit staff ascertained that CCC disclosed independent 

expenditures, totaling $1,339,170, on Schedule E (Itemized Independent Expenditures). 

Of these expenditures, CCC did not properly disclose independent expenditures totaling 

$12,168 that were publicly disseminated prior to payment and therefore required 

reporting as memo entries on Schedule E and reporting as debt on Schedule D (Debts and 

Obligations). Additionally, the Audit staff identified disbursements disclosed as 

operating expenditures on Schedule B, Line 21b (Operating Expendit:ures), totaling 

$294,036, which appear to be independent expenditures. 

Of the $1,339,170 independent expenditures reported on S~~dule E, CCC lc1 not file 

24-hour reports for $12,302 of them in a timely m~~;)jiddid not file any 24-hour 

reports for $3,774 of them. Additionally, for the $294;Q'~(j disclosed as operating 

expenditures which appeared to be in~~ndent expenditttres, CCC did not file 24/48-

hour reports totaling $270,210. · · 

CCC did not submit a response to the Interim AudffR.e;:port. Absent evidence that the 

expenditures in question did not require reporting as independent expenditures and did 

not require 24/48-hour reports, the Audit staff considers these expenditures to be 

independent expenditures. 

(For more detail, seep. 4.) 

Finding 2. Recordkeeping for Communications 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of 

the information reported on the disclosure reports. CCC reported 134 expenditures 

totaling $3.57,998 on Schedule B, Line 21 (Operating Expenditures) with purposes such 

as "fundraising blast emails", "media consulting and commissions" and "online 

advertising". Documentation that was provided by CCC was insufficient to make a 

determination pertaining to the purpose for these disbursements and verification as an 

operating expense. 

CCC did not submit a response to the Interim Audit Report. Absent the further 

documentation as recommended, the Audit staff considers the documentation provided to 

be insufficient. 

(For more detail, seep. 8.) 
Part IV 

Findings and Recommendations 

Finding 1. Reporting of Apparent Independent 

Expenditures 

Summary 

4 

During audit fieldwork, the Audit staff ascertained that CCC disclosed independent 

expenditures, totaling $1,339,170, on Schedule E (Itemized Independent Expenditures). 

Of these expenditures, CCC did not properly disclose independertt~1-penditures totaling 

$12,168 that were publicly disseminated prior to payment andJhereJote required 

reporting as memo entries on Schedule E and reporting as ~htpn Schedule D (Debts and 

Obligations). Additionally, the Audit staff identified disbtitsements disclosed as 

operating expenditures on Schedule B, Line 21b (Operatitig Expenditllres), totaling 

$294,036, which appear to be independent expenditures. · · · 

Of the $1,339,170 independent expenditures repo{!ed on Schedule E, CCC ~cl not file 

24-hour reports for $12,302 of them in a timely mtrtmer and did not file any 24-hour 

reports for $3,774 of them. Additionally, for the $294,036 disclosed as operating 

expenditures which appeared to be independent expenditures, CCC did not file 24/48-

hour reports totaling $270,210. 

CCC did not submit a response to the Interim Audit Report. Absent evidence that the 

expenditures in question did not require reporting as ind~jlendent expenditures and did 

not require 24/48-hour reports, the Audit staff considers these expenditures to be 

independent expenditures. 

Legal Standard <. / · \ ·> .•. . •••... · 

A. Definit~n:ofJndependent Expeii'ditures. An independent expenditure is an 

expenditure made for a communication expressly advocating the election or defeat of a 

clearly identified candidate that is not made in cooperation, consultation, or concert with, 

or at the request or suggestion of, acandidate, a candidate's authorized committee, or 

their agents, or a political party or its agents. 

A clearly identified candidate is one whose name, nickname, photograph or drawing 

appears, or whose identity is apparent through unambiguous reference, such as "your 

Congressman," or through an unambiguous reference to his or her status as a candidate, 

such as "the Democratic Presidential nominee" or "Republican candidate for Senate in 

this state." 

Expressly advocating means any communication that: 

• Uses phrases such as "vote for the President" or "re-elect your Congressman" or 

communications of campaign slogan(s) or individual word(s), which in context 

can have no other reasonable meaning than to urge election or defeat of one or 

more clearly identified candidates; or 

• When taken as a whole and with limited references to external events, such as 

proximity to the election, could be interpreted by a reasonable person only as 
advocating the election or defeat of one or more clearly identified candidates. 11 

CFR §§100.16(a), 100.17 and 100.22. 

5 

B. Disclosure Requirements - General Guidelines. An independent expenditure shall 

be reported on Schedule E if, when added to other independent expenditures made to the 

same payee during the same calendar year, it exceeds $200. Independent expenditures 

made (i.e., publicly disseminated) prior to payment should be disclosed as memo entries 

on Schedule E and as a debt on Schedule D. Independent expenditures of $200 or less 

need not be itemized, though the committee must report the total of those expenditures on 

line (b) on Schedule E. 11 CFR §§ 104.3(b)(3)(vii), 104.4(a) and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hom;Reports). Any 

independent expenditures aggregating $1,000 or more, with respect to any given election, 

and made after the 20th day but more than 24 hours before the clay of an election, must be 

reported and the report must be received by the Commission within,J4 hours after the 

expenditure is made. A 24-hour report is required ea\;h time additi&n~l independent 

expenditures aggregate $1,000 or more. The date .that a communicatic:m is publicly 

disseminated serves as the date that the committee must use to determine w4ether the 

total amount of independent expenditures has, in the aggregate, reached or e\cceeded the 

threshold reporting amount of $1,000. 11 CFR §§ 104:4(t) and 104.5(g)(2). 

D. Independent Expenditure Reports (48-Hour Repo~)·> Any independent 

expenditures aggregating $10,000 or more.with respect to an~,given election, at any time 

during a calendar year, up to and includin,g the20tQ~ay befor{an election, must be 

disclosed within 48 hours each time the expenditure~ijggregate $10,000 or more. The 

reports must be filed with the Commission within 48 hours after the expenditure is made. 

11 CFR §§104.4(t) and 104.S(g)(l). 

E. Formal Requirements Reg~tiJi11g Reports and Statements. Each political 

committee sha,11 maintain te\ll)f(i~ With respect tb the matters required to be reported 

which shalfptovide iJ:l .sufficient detail the tiecessary information and data from which the . ' . . . . . . . 

filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. 11 CFR §104.14(b)(l). 

Facts and Analysis 

A. Reporting of Apparent Independent Expenditures 

1. Facts 

During audit fieldwork, the Audit staff reviewed disbursements to ensure that 

independent expenditures were disclosed correctly on Schedule E, including 

disclosing the correct memo and debt entry, ifrequired. The Audit staff noted that 

CCC disclosed independent expenditures totaling $1,339,170 on Schedule E; 

however, CCC made additional apparent media-related expenditures totaling 

$294,036 and disclosed them as operating expenditures. A review and analysis of 

these expenditures revealed the following: 
a) Apparent Independent Expenditures Reported as Operating 

Expenditures (Copy of Communication Made Available) 

6 

CCC made 39 apparent independent expenditures totaling $294,036 for 

which it provided invoices, television and radio advertisements, 

fundraising blast emails, and additional supporting documents to the Audit 

staff. All of these communications totaling $294,036 contained language 

expressly advocating the election or defeat of a clearly identified 

candidate, as defined under 11 CFR §100.22(a). The television and radio 

advertisements included statements such as: "Defeat Obama Tele-thon", 

"Defeat Obama Radio-thon" and "Rebuild America, Defeat Obama Tour". 

The fundraising blast emails included links to televlmon and radio 

advertisements, as well as express advocacy llll;ljli:1g~ within the body of 

the email. The emails included express advg~~~:phrases such as: 

"Defeat Barack Obama" and "We're going"° stop B,irack Obama from 

getting Wisconsin's 10 Electoral Votes'', · · · · · · 

b) Independent Expenditures Re~ti;~:n Schedule E 

(Independent Expenditure Schedule)- Disclosure Errors.· 

CCC made 240 independent expenditμres totaling $1,339,170 which were 

reported on Schedule E. CCC did not Properly disclose seven independent 

expenditures totaling $12,168 that were pttl)l:\cly disseminated prior to 

payment and therefore required reporting aS''~e1no entries on Schedule E. 

CCC should have disclosed memo:entries on Schedule E when the 

communications were disseminati~ffiaddition to the reporting at the time 

of payment. This amount sl10uld also be reported as a corresponding debt 

on Schedule D (Debts and Obligations). 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented the schedule of apparent disclosure 

errors for independent expenditures. In response to the exit conference, CCC 

provided additional documeμt,ition including copies of seven major fundraising blast 

emails totaling $100,374. Upon.review, the Audit staff determined these email 

communications included express advocacy, but were not properly reported as 

independent expenditurtls. The cost of these fundraising emails is part of the 

$294,036 in section A.l(a) above. ',',' 

The Interim A:Q4lt R:eport recommended that CCC provide documentation and 

evidence that apparent independent expenditures totaling $294,036 did not require 

reporting as independent expenditures. Evidence should have included invoices with 

the corresponding communications and, where applicable, CCC's payment 

information. Absent such evidence, CCC should have amended its reports to 

disclose these disbursements as independent expenditures on Schedule E and 

submitted revised procedures for reporting independent expenditures. The Interim 

Audit Report further recommended that CCC amend its reports to include the 

reporting of $12,168 in independent expenditures as memo entries based on the date 

in which the materials were disseminated and report this amount as a corresponding 

debt on Schedule D. 
3. Committee Response to Interim Audit Report 

CCC did not submit a response to the Interim Audit Report, nor were amended 

disclosure reports filed. Absent evidence that the expenditures in question did not 

require reporting as independent expenditures, the Audit staff considers these 

expenditures to be independent expenditures. 

B. Failure to File 24/48-Hour Reports for Independent Expenditures 

1. Facts 

The Audit staff reviewed independent expenditures reported by CCC, as well as the 

apparent independent expenditures noted above, to determine whether additional 

reporting of a 24/48-hour report was required.6 The following was noted: 

a) Independent Expenditures Reported on Schedule E (Independent 

Expenditure Schedule) 

Of the $1,339,170 reported on Schedule E: 

7 

i) CCC failed to file 24-hour reports for three disbursements totaling 

$3,774. . + 

ii) CCC untimely filed 24-hom-Jeports for ten disbursements totaling 

$12,302, which were generi:t11;ytwo to three days late and were 

prior to the general election. 

b) Apparent Independent Expenditures Reportt:d as Operating 

Expenditures · 

Of the $294,036 in apparem independel:lt expenditures reported on . .. . • . 7 

Schedule B, CCC did not filli.24/48-hourreports totaling $270,210 . 

2. Interim Aq~itlleport &Audit Division Recommendation 

At the exit coii.fer~lj,~~I the f.udit staff provj.ded the CCC representative with a 

schedule of undiscld~~ or Iate1'i:~~.J4{4~0 hour reports. The CCC representative did 

not provide any comments. . ........... . 

Absent documentation and evidence that apparent independent expenditures noted 

above in section A. I (a) did not require reporting as independent expenditures, the 

Interim Aqdit Report recommended that CCC provide documentation to support that 

the 24/48-hour reports, totaling $286,286 ($3,774+ $12,302 + $270,210) were timely 

filed or that thereports were not required. Such documentation should have 

included support for the date of public dissemination to determine whether or not a 

24/48-hour report was required. 

6 The date the expenditure is publicly distributed serves as the date that the independent expenditure is 

made for purposes of the additional 24/48-hour report filing requirement. In the absence of a known date 

for public dissemination, the Audit staff used the invoice date or date of incurrence to determine if a 

24/48-hour report was required. The Audit staff used the invoice date for 15 of the payments, totaling 

$125,582, to determine ifa 24/48-hour report was required. 7 There was $23,826 ($294,036 - $270,210) in apparent independent expenditures reported as operating 

expenditures that did not require 24/48-hour reports. Based on the available documentation, these 

expenses were publicly disseminated outside of the 24/48-hour report requirement periods for 

California's Primary Election (1/1/12 - 6/3/12) and General Election (1/1/12 - 11/4/12). 
3. Committee Response to Interim Audit Report 

CCC did not submit a response to the Interim Audit Report. Absent evidence that 

the expenditures in question did not require reporting as independent expenditures 

and did not require 24/48-hour reports, the Audit staff considers these expenditures 

above as requiring 24/48-hour reports. 

I Finding 2. Recordkeeping for Communications 

Summary 

8 

During audit fieldwork, the Audit staff reviewed disbursements to yerify the accuracy of 

the information reported on the disclosure reports. CCC reporte4'.J~4 expenditures 

totaling $357,998 on Schedule B, Line 21 (Operating Expendi,fes) with purposes such 

as "fundraising blast emails", "media consulting and commissf~ns" and "online 

advertising". Documentation that was provided by CCC was insufficient to make a 

determination pertaining to the purpose for these disbursements and vedfication as an 

operating expense. 

CCC did not submit a response to the Interirn A.Jd)l Report. Absent the further 

documentation as recommended, the Audit staff considers the documentation provided to 

be insufficient. 

Legal Standard < : ·. 

A. Formal Requirements Regarding ~poris~~:Statements. Each political 

committee shall maintain records with respect tothematters required to be reported 

which shall provide in sufficient detail the necessary information and data from which the 

filed reports may be verified, explained, clarified, and check for accuracy and 

completeness. II CFR §104.14(b)(l). 

B. Preserving Records ancl(:;opies of Reports. The treasurer of a political committee 

must preserve all rec!'.>r/,ls and copies of reports for 3 years after the report is filed. 52 

u.s.c. §30102(d). . .. 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of 

the information reported on the disclosure reports. CCC made 134 expenditures totaling 

$357,998 for which documentation was insufficient to make a determination pertaining to 

whether these disbursements were correctly reported on Schedule B, Line 21 b (Operating 

Expenditures). 

The Audit staff's analysis of the documentation that was provided, including CCC's 

disbursement database, invoices and bank statements, determined the following: 

1. Disbursements Invoices Provided No Copies of Communication Provided 

($353,323) 

Disbursements totaling $353,323 were paid to vendors for services such as 

fundraising communications and disclosed on Schedule B with purposes of 
9 

"fundraising blast emails", "media consulting and commissions" and "online 

advertising". For these 133 disbursements, CCC provided payment 

documentation and invoices, some invoices contained titles of candidates or 

issues including one titled "paulryan" and another titled "waronwomen". 

However, CCC did not provide the associated communication. Without a copy of 

the communications, the Audit staff is unable to verify CCC's reporting of these 

amounts as operating expenditures. The Audit staff requested copies of the 

associated communication. To date, this information has not been provided. 

11. Disbursements - No Invoices or Copies of Communication Provided 

($4,675) 

There was one disbursement for newsletters with missing invoices and missing 

communications totaling $4,675. The disbursement was reflected on CCC's 

database as a payment to one vendor and disclosed on Schedule B with the 

purpose of"email list and newsletter". Without a copy ofthi:: invoices and 

communications, the Audit staff is unable to verify CCC's ilporting of this 

amount as operating expenditures. The Audit staff requested the invoices, 

payment documentation, and copies of the communications. To date, this 

information has not been provided. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented a schediJ:J:~ofthe disbursements for 

which further records were necessary to '1ei:ify the accuracy of CCC' s reporting ( with the 

discussion of independent expenditures at Finding 1 above). Tjl.e CCC representative did 

not provide any comments. , 

The Interim Audit Report recommended that¢CC provide the necessary information 

from which the reported operating expenditures totaling $357,998 may be verified or 

explained. Such records should have included copies of communications, invoices with 

the corresponding communications and, where applicable, CCC' s payment information. 

C. Com~ittee R~;~llnse to Interim Audit Report 

CCC did not submit a response to the Interim Audit Report. Absent the further 

documentation as recommeμded, the Audit staff considers the documentation provided to 

be insufficient,.