FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 May 16,2012 

MEMORANDUM 

To: The Commission 

Through: Alec Palmer 

Staff Director 

From: Patricia Carmona 

Chief Compliance Officer 

Tom Hintermlster -^V^ 

Assistant Staff Director 

Audit Division 

Marty Kuest fH ^ 

Audit Manager 

By: Christopher Carrell / ^ 

Lead Auditor 

Subject: Audit Division Recommendation Memorandum on the National Council of 

Fanner Cooperative Co-op/PAC (NCFC) (All-26) 

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

the Audit staffs recommendations are presented below and the findings are discussed in 

the attached Draft Final Audit Report. The Office of General Counsel has reviewed this 

memorandum, and concurs with the recommendations. 

Finding 1. Misstatement of Financial Activity 

NCFC had no additional conunents on this finding in response to the DFAR. The 

Audit staff recommends that the Commission find that NCFC misstated its 

financial activity for receipts, disbursements, and ending cash-on-hand for 

calendar year 2009 and beginning cash-on-hand for 2010. 

Finding 2. Disclosure of Occupation/Name of Employer 

NCFC had no additional comments on this finding in response to the DFAR. The 

Audit staff recommends that the Commission find that NCFC failed to properly 

disclose occupation/name of employer for contributions from individuals. 
Finding 3. Disclosure of Contributions to Candidate Committees 

NCFC had no additional comments on this finding in response to the DFAR. The 

Audit staff recommends that the Commission find that NCFC failed to properly 

disclose candidate information for its contributions to federal candidates. 

The Conimittee did not request an audit hearing. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 

30 days of the Commission's vote. 

Should an objection be received, Directive No. 70 states that the Audit Division 

Recommendation Memorandum will be placed on the next regularly scheduled open 

session agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Christopher Canell or Marty Kuest at 694-

1200. 

Attachments: 

- Draft Final Audit Report of the Audit Division on the National Council of Farmer 

Cooperative Co-op/PAC 

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

Audit Division on the National 

Council of Farmer Cooperatives 

Co-op/PAC 

(January 1, 2009 - December 31, 2010) 

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 complis 

with the Act' Ths 

determines whether the^ 

committee 

with the. 

prohiUBns and 

disoro^^Dsguirements' 

of the Ac! 

Future Acl 

The Commission 

initiate an enforceme 

action, at a later time, 

with respect to any of 

the matters discussed in 

this report. 

About the Committee (p. 2) 

The National Council of Farmer Cooperatives Co-op/PAC is a nonconnected, qualified, multi-candi^^Hlolitical Action Committee and 

is headquartered in Washingtop^^C. For more information, see chart 

on Committee Organization. 

Financial Ac 

• Receipts 

o Contributid; 

o Contributions 

^litical Commii 

o oB^j^eceipts 

Total 

Disbur 

o Conti%i3j[ghs to 

CommKes 

Other Dlbuisements 

'otal Disbuwifbnts 

$ 64,195 

46,000 

6,352 

$ 116,547 

$ 128,500 

421 

$ 128,921 

Ings and Recommendations (p. 3) 

Stement of Financial Activity (Finding 1) 

Tclosure of Occupation/Name of Employer (Finding 2) 

i« Disclosure of Contributions to Candidate Committees (Finding 3) 

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

Audit Division on the 

National Council of Farmer 

Cooperatives Co-op/PAC 

(Januaiy 1, 2009 - Dece 2010) 
Table of Contents 

Page 

Parti. 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 Recom 

Finding 1. Misstatement of Financial Ac 

Finding 2. Disclosure of Occupation/Name of 

Finding 3. Disclosure of Contributions to Candida! 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the National Council of Farmer Cooperatives Coop/PAC (NCFC), undertaken by the Audit Division of the Federal Election Commission 

(tiie 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. 

§43 8(b), which permits the Commission to conduct audits and fiQ||ynvestigations of any 

political committee that is required to file a report under 2 U.j^§43H. Prior to 

conducting any audit under this subsection, the Commissi^j^^^perform an internal 

review of reports filed by selected committees to detem^vwhSKLtiie reports filed by a 

particular committee meet the threshold requiremen^^^^Kibstantnl^ipipliance with the 

Act. 2 U.S.C. §438(b). 

lus risk 

e of employer; 

Scope of Audit 

Following Commission-approved procedures, the 

factors and as a result, this audit examined: 

1. the disclosure of individual con 

2. the disclosure of disbursements; 

3. the consistency between reported fi 

4. the completeness of records; and 

5. other comniittee opejg/g/^ccQSSdry t< 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration September 24, l^li^^ 

• Audit Coverage January 1,20^rDec^ber 31,2010 

Headquarters Washingtq|tfD^^^ 

Bank Information 

• Bank Depositories One^ll^V 

• Bank Accounts Qs^hec^ng 

Treasurer \ . ^^^ ^ 

• Treasurer When Audit Was Conducted K^^SwJ|<^ 

• Treasurer During Period Covered by Audit RandhCes 9/20/06-3/25/09 

Jill Th^[^L3/26/09-8/23/l I 

Management Information Yfe ^ 

• Attended FEC Campaign Finance Semiqi^^ 

Who Handled Accounting and 

Recordkeeping Tasks 

lewof Finj dal Activity 

LOunts) 

$ 44,630 

Receipts ^ 

o ContributidlMum IndividHls 64,195 

o ContributionsHBLOther witical 

Committees ^^^^ ^ 46,000 

o Other Receipts 6.352 

Total Receipts ^ $ 116,547 

Disbursements 

o Contributions to Political Committees 128.500 

o Other Disbursements 421 

Total Disbursements $ 128,921 

Cash-on-hand @ December 31,2010 $ 32,256 
Part III 

Summaries 

Findings and Recommendations 

Finding 1, Misstatement of Financial Activity 

During audit fieldwork, a comparison of NCFC's reported figures with its bank records 

indicated that in 2009, NCFC understated receipts and disbursemALby $10,770 and 

$806, respectively, and overstated ending cash by $5,133. 

beginning cash by $13,000 and disbursements by $6,500. 

Audit Report, NCFC filed amended disclosure reports 

(For more detail, see p. 4) 

Finding 2. Disclosure of Occujjjftion/ 

During audit fieldwork, a review of itemizedx^l^utioni 

57 percent of the contributions failed to include adi 

name of employer. The Audit staff &mid that the 

89 percent of the itemized contributi^BiikNCFC*s recoil 

10, NCFC overstated 

2nse to the Interim 

lisstatements. 

lude the ml 

ame of Eii^uoyer 

individual^lSicated that 

seizure for occupation and 

information was available for 

response to the Interim 

Audit Report, NCFC filed amended n 

(For more detail, see p. 6) 

Finding 3. Dis 

Committees 

During audit field^o: 

to federal candidates thi? 

sought, st^ 

Interim 

info: 

(Fo; 

iformation. 

to Candidate 

dentified 80 percent of contributions 

d disclosure information, such as office 

candidate mformation. In response to the 

ended reports to include the missing or conected 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of NCFC's reported figures with its bank records 

indicated that in 2009, NCFC understated receipts and disbursemente by $10,770 and 

$806, respectively, and overstated ending cash by $5,133. In 2()ml^iPPC overstated 

beginning cash by $13,000 and disbursemente by $6,500. 

Audit Report, NCFC filed amended disclosure reports to 

onse to the Interim 

G misstatements. 

Legal Standard 

Contents of Reports. Each report must disclose 

• the amount of cash-on-hand at the begi 

• the total amount of receipte for the re] 

• the total amount of disbursemente for the 

year; and 

• certain transactions that requiiWunization on 

Schedule B (Itemized DisburseVBll^U.S.C. 

Facts and Analysis 

A. Facts 

During audit field^|^Lthe Ai 

with ite bank recofusl^idlenc 

discrepancies forthe reel 

2010. Sucst^E^msigrai 

calendar 

A (Itemized Receipts) or 

,(2), (3), (4) and (5). 

istaff recondlbd NCFC*s reported financial activity 

^ears 2009 asUfOlO. The following charts outline the 

ite^^Sending cash balances for 2009 and 

idresSmVsons for the misstatemente. 

^Bk. ^ft R&orted Bank Records Discrepancy 

BeginningC^^^alance 1 

@ Januarv 1. zl^^ M 

1 $44,630 $44,630 $0 

Receipte ^^^^^ $43,485 $54,255 $10,770 

Understated 

Disbursemente ^ $60,887 $61,693 $806 

Understated 

Ending Cash Balance 

@ December 31.2009 

$42,326^ $37,193 $5,133 

Overstated 

' The amount in this column cannot be calculated accurately due to numerous discrq>ancie8 throughout 

2009 between amounts reported fbr ending cash and the beginning cash in the subsequent period. 
In 2009, NCFC understated receipte by $10,770 as a result of failing to report any of ite 

July receipte. 

The understatement of disbursemente was due to the following: 

• Disbursements supported by check/debit, not reported 

• December 2009 disbursement, reported June 2010 

• Disbursemente reported, not supported by check/debit 

• Disbursement inconectly reported 

Net Understatement of Disbursements 

$ 5,601 

1,500 

(3,500) 

r2.795^ 

S 806 

NCFC overstated the beginning cash balance for 2010 by $UH|0 for the above reasons 

and because NCFC reported an increase in the beginninMBh^M|ce of $7,877 

($50,193 - $42,326) as of Januaiy 1,2010. The diffajmS^m the^M^nding cash and 

the 2010 beginning cash illustrates NCFC's failureJ^Mifiiistently r^^y^eginning cash 

balances that equaled ending cash balances fioq«e previous period.^ 

2010 Activity ^^^ ^ ^ 

Reported Banmicords Discrepancy 

Beginning Cash Balance 

®. January 1.2010 ^^^ ^ 

$13,000 

Overstated 

Receipte $6i,3te i^^^62,:j| r $1,000 

Understated 

Disbursements 1^ $73,72Wr JB7,228 $6,500 

Overstated 

Ending Cash Balaiffil^^ 

®, December 31.2010^^ 

W $32,257* ' ^ 32,256 $1 

Overstated 

The ov© 

sursemente si 

DSflW^er 2009 di^ 

Disbu!a|ente 

Net OvS^temei 

was due to the following: 

rted byBBeck/debit, not reported 

ement, reported June 2010 

not supported by check/debit 

bf Disbursements 

$ 3,000 

(1,500) 

(8,000) 

^ ^6.500^ 

B. Interim Audit fflibrt & Audit Division Recommendation 

At the end of audit fieldwork. Audit staff discussed this matter with NCFC 

representatives at the exit conference. NCFC representatives acknowledged the 

discrepancies in the reporte and indicated that NCFC would file corrective amendments. 

^ NCFC failed to cany over the correct ending cash balance to die subsequent report for all but one of its 

reports filed between May 2009 and Year-End 2010. The Reports Analysis Division sent 19 Requests for 

Additional Infomiation concerning this issue to NCFC during flie period covered by die audit. 

*" This column does not total due to numerous discrepancies throughout 2010 between amounts reported for 

ending cash and the subsequent period's beginning cash, these numbers do not foot 
The Interim Audit Report recommended that NCFC amend ite reporte to coirect the 

misstatemente noted above. 

C. Committee's Response to Interim Audit Report 

NCFC filed amended reporte to materially correct the misstatement of receipte, 

disbursemente and ending cash-on-hand for 2009 and beginning cash-on-hand and 

disbursemente for 2010. 

I Finding 2. Disclosure of Occupation/Name of Employer 

Summary 

During audit fieldwork, a review of itemized contributions^ 

57 percent of the contributions failed to include adequat 

name of employer. The Audit staff found that the rec 

89 percent of the itemized contributions in NCFCJi 

Audit Report, NCFC filed amended reporte to ipAde the. 

Legal standard 

A. Required Information for Contributions from 

contribution fh)m an individual, tl^^pmmittee musf 

information 

• the contributor's full name an 

• the contributor's occupation and^e n 

• the date of receijjM^date the coi 

• the amountoraecflBbution; and 

the calen^M^^-to-dHtotal of all 

2 U.S.C. § 43l%G)(And 11 CFR 

Col 

idividuals indicated that 

for occupation and 

[nformlBrwas available for 

In resp^^tp the Interim 

lissing infoi 

dduals. For each itemized 

dde the following 

Riding zi|KSde); 

ir employer; 

receSRl the contribution); 

utions &om the same individual. 

00.12 and 104.3(a)(4)(i). 

consu 

mce. WBSn the treasurer of a political conimittee 

'that the collBjtee uSH^stefforts (see below) to obtain, maintain, and submit 

lation reqiHkby th^M; the committee's reporte and records will be 

in complia^with^Ee Act. 2 U.S.C. § 432(i) and 11 CFR §104.7(a). 

C. Definition^^Kest EflfolEs. The treasurer and the committee will be considered to 

have used **bem|fog^if the committee satisfied all of the following criteria. 

All written^^itations for contributions included: 

o a clesffrequest for the contributor's full name, mailing address, occupation, 

and name of employer; and 

o the statement that such reporting is required by Federal law. (Note that the 

request and statement must appear in a clear and conspicuous manner on 

any response material included in a solicitation.) 

Within 30 days of receipt of the contribution, the treasurer made at least one 

effort to obtain the missmg mformation, in either a written request or a 

documented oral request. 

The treasurer reported any contributor information that, although not initially 

provided by the contributor, was obtained in a follow-up communication or was 
contamed in the committee's records or in prior reporte that the committee filed 

during the same two-year election cycle. 11 CFR § 104.7(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, a review of NCFC's itemized contributions from individuals for 

disclosure of occupation and name of employer indicated that NCFC &iled to disclose 

the required information for 57 percent of contributions itemized. In a review of NCFC's 

records, the Audit staff noted that NCFC had the required informaltpn for 89 percent of 

the itemized contributions reviewed. NCFC failed to include iutf^Rprte the 

information it had in ite possession. 

B. Interim Audit Report & Audit Division RecommelBation^ 

The Audit staff presented this matter to NCFC repropil^^^es at the^ 

treasurer stated that NCFC would, using the contrfutor information 

amend the reporte to disclose occupation and. 

The Interim Audit Report recommended that NCF 

occupation and name of employer foihcontributions 

reporte to disclose the 

iividuals. 

C. Committee's Response to Interim 

NCFC filed amended reporte to materiali%ca 

disclosure information for occupation and 

from individuals. 

Finding 3. 

Sumi 

Diuifl^^dit fieldwork,^ 

to federa^^^dates that 

sought, sta^^Ldistrict, o| 

Interim Audit R^tft, NC] 

infonnation. 

conference. The 

obtained, 

^adeqijlre and/or missing 

rf e!intollf for itemized contributions 

tions to Candidate 

aew OKsbursemente identified 80 percent of contributions 

;d tom;lude required disclosure mformation, such as office 

[isclosed inconrect candidate information. In response to the 

filed amended reporte to include the missing or corrected 

Legal Standard 

Reporting Contributions to Candidate Committees. When operating expenditures to 

the same person exceed $200 in a calendar year, the committee must report: 

• die amount of the expenditures; 

• the date when the expenditures were made; 

• the name and address of the payee; 

• the purpose of the expenditures (2 U.S.C. § 434(b)(5)(A) and 11 CFR §§ 

104.3(b)(3)(i)); and 
• the candidate's name and office sought (including the state and, if applicable. 

Congressional district) (11 CFR §104.3(b)(3)(v)). 

Faets and Analjrsis 

A. Facts 

During audit fieldwork, the Audit staff reviewed the committee's contributions to 

candidate conimittees. The review indicated that NCFC failed to correctly disclose 

candidate information such as state, office sought and, if applicable, congressional district 

for 80 percent of the contributions. 

B. Interim Audit Report & Audit Division Recommend 

The Audit staff presented this matter to NCFC represeni 

treasurer stated that NCFC would amend ite reports tq 

information for each contribution. 

exit conference. The 

candidate 

The Interim Audit Report recommended that MMC file ai 

disclose the candidate infonnation, such as omce^^^t, 

applicable, congressional district for ite contribution 

C. Committee's Response to Interii 

NCFC filed amended reporte to materie 

disclosure information for contributions 

t Report 

^e inadec} 

fed^^kididates 

d/or incorrect 
FEDERAL ELECTION COMMISSION 

WASHINGTON. D.C. 20463 

MEMORANDUM 

TO: OFFICE OF THE COMMISSION SECRETARY 

FROM: STAFF DIRECTOR 

DATE: 05/16/12 

SUBJECT: Audit Division Recommendation Memorandum 

National Council of Farmer Cooperative Co-op/PAC (NCFC) 

(A11-26) 

AGENDA 

The attached document is submitted as AGENDA BACKUP PAPER for the 

Commission Meeting of . 

OPEN SESSION • CLOSED SESSION • 

24-Hour Tally Vote 

Sensitive • 

NOTE: This document has been cleared by the Office of the Staff Director for the above named 

Commission Meeting. 

••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• • 

CIRCULATIONS DISTRIBUTION 

Commissioners, OGC (3), Staff Director, 

Public Disclosure & Press • 

Compliance • 

Audit Matters IE! 

Non^Fiiers • 

No-Obiection Personnei • 

Commissioners Only • 

Miscellaneous • 

other (see distribution beiow) • 

Non-Sensitive • 

Weekly Tally Vote 

Sensitive • 

Non-Sensitive IEI 

24-Hour No Objection 

• 

ISI 

• 

Sensitive • 

Non-Sensitive • 

Information • 

Sensithfe • 

Non-Sensitive • 

24-Hour No Ob|eetion 

Personnei • 
Date & Time Transmitted: 05-16-12 

TO: THE COMMISSIONERS 

FROM: OFFICE OF THE STAFF DIRECTOR 

SUBJECT: AUDIT DIVISION RECOMMENDATION MEMORANDUM ON 

NATIONAL COUNCIL OF FARMER COOPERATIVE COOP/PAC 

(NCFC) (All-26) 

DEADLINE: 

Sunshine Recommendation 

A. X Open Session B. Closed Session 

Discussion would involve compliance matters which would be confidential 

" under 2 U.S.C. §437g. (11 CFR §2.4(a)(l) and (2)) 

. Matter relates solely to the Commission's internal personnel decisions, or 

intemal mles and practices.(l 1 CFR §2.4(b)(l)) 

Report contains privileged or confidential financial or commercial 

infonnation. (11 CFR §2.4(b)(2)) 

. Discussion would involve the consideration of a proceeding of a formal 

nature by the Commission to a specific person or the formal censure of a 

person. (11 CFR §2.4(b)(3)) 

Disclosure would constitute a clearly unwarranted invasion of privacy. 

(llCFR§2.4(b)(4)) 

Discussion involves mvestigatory records complied for law enforcement 

purposes, and production would disclosure investigative techniques. 

(llCER§2.4(b)(5)) 

Premature disclosure would be likely to have considerable adverse effect on 

the implementation of a proposed Commission action. (11 CFR §2.4(b)(6)) 

Matter specifically concerns the Commission's participation in a civil action 

or proceeding, or an arbitration. (11 CFR §2.4(b)(7)) 

for die Staff Director