Draft Final Audit Report of the 

Audit Division on the Majority 

Committee PAG 

(January 1, 2011 - December 31, 2012) 

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. !.Thq audit 

determines wh^her the. 

commirtOe complied with, 

the limitations, 

prohibition^and ^ 

disclosure requirements 

of the Act. I -S 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any 

matter discussed .in this 

report. 

About the Committee (p. 2) 

The Majority Committee PAC. is a nonconnected, multi-candidate. 

House leadership, political action committee, headquartered in 

Bakersfield, California. The Leadership PAC Sponsor is 

Congressman Kevin McCarthy. Foir more information, see the 

Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contribution from individuals 

o Contributions froih Political 

Committees 

o Transfers from Affiliated 

Committees 

o Offsets tp Operating. 

Expenditures 

Total Receipts 

Disbursements 

o Operating Expenditures 

o Contributions to Federal 

. Candidates 

o. Other Disbursements 

Total Disbursements 

$304,150 

1,412,986 

220,572 

9,850 

S 1,947,558 

$ 792,934 

1,291,922 

10,833 

$2,095,689 

Finding and Recommendation (p. 3) 

Excessive Contributions to Candidates 

S2 U.S.C. §30111(b). 
Final Au^it Repoift of the 

Audit RiDiaida @n tftfa 

Ms^ofity Committ^ PAC 

(January 1, 2011 - December 31, 2012) 

A. V 
Table of Contents 

i-. 

/' 

Page 

Part 1. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summary 

Finding and Recommendation 3 

• IS 

Part IV. Finding and Recommendation 

Excessive Contributions to Candidates 4 
Paii; I 

Backgr0;und 

Authority for Audit 

This report Is based on an audit of the Majority Committee PAC (MCP), 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. §30111(b), which permits the 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report under 52 U.S.C. §30104. Prior to conducting any audit under this 

subsection, the Commission must perform an internal review of reports filed by selected 

committees to determine if the reports filed by a particulu committee meet the threshold 

requirements for substantial compliance with the Act,. 52 U.S.C. §30111(b). • " .» • 

Scope of Audit 

Following Commission-approved procedures; .the%^.dif.atlft¥iev{Cldate VaribUi^Ffsik 

factors and as a result, this audit examined: 

1. the consistency between reported figures and bank records; 

2. the disclosures of individual contributor's occupation and name of employer; 

3. the disclosure of contributions to other political committees; 

4. travel related expenses; and 

5. other committee operations necessary to the .review.. . 

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= V 
Part n 

Overview of Oommittee 

Committee Organization 

Important Dates .. 

• Date of Registration August 24,2006 

• Audit Coversge January 1,2011 - December 31,2012 

Hckj£t(iiuarters . . Bakersfield;CA ... 

Bank Information 

• Bank 'Dfipositaries Two 

• Bank Accounts Two Federal 

Treasurer 

• Treasurer When Audit Was Conducted Jill Thomson 

• Treasurer During Period Covered by Audit Conni Brunni: 8/24/06 - 10/18/12 

Jill Thomson; 10/19/12-Present 

Manai^lthent Information . 

• Attended Commission Campaign Finance 

Seminar 

yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Qvenriew of Financial Activity 

(Audited Amounts) 

Cash-nn.-hand.^ January 1i 2011 $205,040 

Receipts 

o Contributions from Individuals 304,150 

6 Contributions from PiPlttid^ Committees .. . 1,412,986. . . : 

o Transfers from Affiliated Committees 220,572 

. o Offsets to. Qpe^tingfExpfindituif$.s . . 9,850 

Total Receipts $ U947,558 

Disbursements 

o Operatihg'iExp''eri'ditures 792,934 

o Contributions to Federal Candidates 1,291,922 

o Other Disbiirsemrats . 1.0.833 

Total Disbursements $2,095,689 

Cash-on-hand @ December 31,2012 $ 56,909 
iNrtm 

Finding and Recommendation 

Excessive Contributions to Candidates 

MCP made direct money contributions to nine federal candidate committees that, when 

aggregated with in-kind contributions, appeared to exceed the multicandidate 

contribution limit by S20,l 10. The in-kind contributions consisted of airfare paid by 

MCP for the leadership PAC's Sponsor to speak or make appearances at fundraising 

events that directly benefitted these committees. The excessive contributions are not 

eligible for redesignation. In response to the Interim Audit Report recommendation, 

MCP stated that it had contacted the nine federal candidate committees that received 

excessive contributions to request refunds. Subsequently, MCP provid^ copies of 

refund request letters sent to the nine candidate committees and provided copies of refund 

checks and supporting bank documentation for refunds totaling $13,276. The Audit staff 

considers the $13,276 to be untimely resolved arid recommends that MCP provide copies 

of the additional refund checks and outstanding bank documentation to support when 

refunds for the remaining $6,834 are deposited. (For more detail, see p. 4.) 

v .. 
Part^ 

Fi)^#ng and Recommendation 

I Finding 1. EKcessive Contributions to Candidates J 

Summary 

MCP made direct money contributions to nine federal candidate committees that, when 

aggregated with in-kind contributions, appeared to exceed the multicandidate 

contribution limit by $20,110. The in-kind contributions consisted of airfare paid by 

MCP for the leadership PAC's Sponsor to speak or make appearances at fiindraising 

events that directly benefitted these committees. The excessive contributions are not 

eligible for redesignation. In response to the Interim Audit Report recpmmendation, 

MCP stated that it had contacted the nine federal candidate committees that received 

excessive contributions to request refunds. Subsequently,.MCP provided copies, of 

refund request letters sent to the nine candidate committees and provided copies of refund 

checks and supporting bank documentation for refunds totaling $ 13,276. The Audit staff 

considers the $13,276 to be untimely resolved and recommends that MCP provide copies 

of the additional refund checks and outstanding bank documentation to support when 

refunds for the remaining $6,834 are deposited. 

Legal Standard 

A. Contribution Defined. A gift, subscription, loan (except when made in accordance 

with 11 CFR §§i 00.82 and 100.83), advance, or deposit of money or anything of value 

made by any person for the pur^se of influencing any election for Federal office is a 

contribution. 11 CFR §l()0.S2(a).' " 

B. In-Kind Contribution. The term, anything of value, includes in-kind contributions. 

The^.provjsion of servi^'s at a charge less than the usual and normal charge results in an 

in-kind contribution. The usual and normal charge for a service is the commercially 

reasonable rate that one would expect to pay at the time the services were rendered. The 

value of such a!contribution'wouId be the difference between the usual and normal charge 

for the services and the amount the political committee was billed and paid. 11 CFR 

§100.52(d). 

C. Contribution Limits. No multicandidate political comminee shall make contributions 

to any candidate and his authorized political committees with respect to any election for 

Federal office which, in the aggregate, exceed $S,000. 52 U.S.C. §30116 (a)(2)(A). 

D. Definition of Multicandidate Committee. 

A multicandidate committee is a political committee (other than an authorized 

candidate committee) that has satisfied the following 3 requirements: 

It has been registered under the federal election campaign law for at least 6 

months. 

It has received contributions from more than SO contributors. 
5 

" It has made contributions to at least S federal candidates. (This last 

requirement does not apply to state party committees.) 52 U.S.C. 

§30116(a)(4). 

•. A political committee affiliated with another political committee that has already 

qualified as a multicandidate committee automatically becomes a multicandidate 

committee by virtue of that affiliation. But it shares the contributions limits with its 

affiliated committee. 52 U.S.C. §30116(a)(S). 

E. Allocation of Expenses Between Candidates. Expenditures made on behalf of more 

than one clearly identified federal candidate shall be attributed to each such candidate 

according to the benefit expected to be derived. In the case of a publication or broadcast 

communication, the attribution shall be determined by the proportion of space or time 

devoted to all candidates. This method shall be used to allocate payments involving both 

clearly identified federal candidates and one or more clearly identified non-federal 

candidates. 11 CFR §106.1(a). 

Facts and Analysis 

A. Facts • • • • ^ 

The Audit staff reviewed MCP's reported contributions to political committees, totaling 

$1,292,000, and airfare, totaling $178,000. From the ieview of airfare, the Audit staff 

found in-kind contributions to political committees totaled $94,000. Of this amount, 

contributions to -liihe: federal candidate dbmmittees, totaling $20,110^ appear to be 

exGifesslye contributions, when combined: with;direct money cbntributions.' The in-kind 

contributions consisted of airfare paid by MCP for the leadership PAC's Sponsor to 

speak or make appearances., at fundraising events that directly benefitted these federal 

candidate committees... llie excessive contributions are not eligible for redesignation. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented a finding for the potentially excessive 

contributions and explained that they resulted from the aggregation of direct money 

contributions and ih-kind contributions related to airfare. A schedule of the potentially 

excessive contributions was provided. The Audit staff asked Counsel to provide an 

explanation .and documentation for any item on the schedule for which they believed was 

incorrect. Counsel agreed iand slatisd that they may need additional clarification for some 

of the items on the schedule^* 

In response to the exit, conference. Counsel provided a narrative and documentation for 

three contributions that did not result in excessive contributions. The Audit staff 

removed these items from the schedule and they were not presented as part of the finding 

amount. 

The Interim Audit Report recommended that MCP provide evidence showing that the 

contributions were not excessive or seek a refund of the excessive contributions and 

provide copies of the refund checks and the related depositoiy bank statements. 

' The amount of airfare/in-kind contributions was allocated equally among different committees based 

upon the number of events attended by the Sponsor. 

' The amount of direct money contributions was $65,000. 
6 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, MCP stated that it had 

contacted the nine federal candidate committees that received excessive contributions to 

request refunds. Subsequently, MCP provided copies of refund request letters sent to the 

nine candidate committees and provided copies of refund checks and supporting bank 

documentation for refunds totaling $13,276. The Audit staff considers the $13,276 to be 

untimely resolved and recommends that MCP provide copies of the additional refund 

checks and outstanding bank documentation to support when refunds for the remaining 

$6,834 are deposited. 

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