Interim Audit Report of the 

Audit Division on the Oklahoma 

Leadership Council 

(January 1, 2019 - December 31, 2020) 

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 

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. 

About the Committee (p. 3) 

Oklahoma Leadership Council is a state party committee 

headquartered in Oklahoma City, Oklahoma. For more 

information, see the Committee Organization chart, p. 3. 

Financial Activity (p. 4) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Transfers from Affiliates 

o Other Federal Receipts 

o Transfers from Levin/NonFederal Account 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Transfers to Affiliates 

o Independent Expenditures 

o Other Federal Disbursements 

o Federal Election Activity 

Total Disbursements 

• Levin Receipts 

• Levin Disbursements 

$ 333,978 

680,872 

990,361 

3,724 

185,222 

$ 2,194,157 

$ 516,964 

585,813 

397,335 

202,892 

413,748 

$ 2,116,752 

$ 0 

$394 

Findings and Recommendations (p. 5) 

• Misstatement of Financial Activity (Finding 1) 

• Increased Activity (Finding 2) 

• Contributions from Unregistered Political Organizations 

(Finding 3) 

• Reporting of Debts and Obligations (Finding 4) 

• Recordkeeping for Communications (Finding 5) 

• Recordkeeping for Employees (Finding 6) 

• Reporting of Apparent Independent Expenditures (Finding 7) 

1 52 U.S.C. §30111(b). 
 

 

Interim Audit Report of the Audit 

Division on the 

Oklahoma Leadership Council 

(January 1, 2019 - December 31, 2020) 
 

Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 3 

Overview of Financial Activity 4 

Part III. Summaries 

Findings and Recommendations 5 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 8 

Finding 2. Increased Activity 9 

Finding 3. Contributions from Unregistered Political Organizations 11 

Finding 4. Reporting of Debts and Obligations 13 

Finding 5. Recordkeeping for Communications 14 

Finding 6. Recordkeeping for Employees 16 

Finding 7. Reporting of Apparent Independent Expenditures 18 
1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the Oklahoma Leadership Council (OLC), 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 shall perform an internal review of reports filed by selected 

committees to determine if the reports filed by a particular 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 Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

4. the disclosure of individual contributors’ occupation and name of employer; 

5. the disclosure of disbursements, debts and obligations; 

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

7. the consistency between reported figures and bank records; 

8. the completeness of records; 

9. the disclosure of independent expenditures; and 

10. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission’s “Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission,” several state party committees 

unaffiliated with OLC requested early consideration of a legal question raised during 

audits covering the 2010 election cycle. Specifically, the Commission addressed whether 

monthly time logs under 11 CFR §106.7(d)(1) were required for employees paid with 100 

percent federal funds. 

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, however, the Commission decided it will not 

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 OLC representatives of the payroll requirement and the 

Commission’s decision not to pursue recordkeeping violations for failure to keep payroll 

logs for salaries paid and correctly reported as 100 percent federal. This audit report does 
 

2 

not include any findings or recommendations with respect to OLC employees paid with 

100 percent federal funds and reported as such. 
 

 

 

3 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration May 13, 1983 

• Audit Coverage January 1, 2019 - December 31, 2020 

Headquarters Oklahoma City, Oklahoma 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Five Federal, Two Non-Federal, One 

Levin 

Treasurer 

• Treasurer When Audit Was Conducted John Elliott (8/30/2022 – Present) 

AJ Ferate (6/16/2022 – 8/29/2022) 

Dwaine Shroyer (11/10/2021 – 

6/15/2022) 

Joe Hart (6/3/2021 – 11/9/2021) 

• Treasurer During Period Covered by Audit Rodd Moesel (9/27/2017 – 5/19/2019 

Michael McCutchin (5/20/2019 – 

5/12/2021) 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Who Handled Accounting and 

Recordkeeping Tasks 

Treasurer 
4 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1, 2019 $ 5,390 

Receipts 

o Contributions from Individuals 333,978 

o Contributions from Political Committees 680,872 

o Transfers from Affiliates 990,361 

o Other Federal Receipts 3,724 

o Transfers from Levin/Non-Federal Account 185,222 

Total Receipts $ 2,194,157 

Disbursements 

o Operating Expenditures 516,964 

o Transfers to Affiliates 585,813 

o Independent Expenditures 397,335 

o Other Federal Disbursements 202,892 

o Federal Election Activity 413,748 

Total Disbursements $ 2,116,752 

Cash on hand @ December 31, 2020 $ 82,795 

Levin Cash on hand @ January 1, 2019 $ 394 

Total Levin Receipts 0 

Total Levin Disbursements 394 

Levin Cash on hand @ March 31, 2019 $ 0 
 

 

 

 

 

 

 

 

5 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of OLC’s most recent reported financial activity 

with its bank records revealed a misstatement of receipts and disbursements for calendar 

year 2020. Specifically, OLC understated receipts by $216,154 and disbursements by 

$226,564. The Audit staff recommends that OLC amend its disclosure reports or file a 

Form 99 (Miscellaneous Electronic Submission) to correct the misstatements. 

(For more detail, see p. 8.) 

Finding 2. Increased Activity 

A comparison of OLC’s bank activity with its original reports filed with the Commission 

revealed that receipts were understated by $829,858 and disbursements were understated 

by $1,077,630 for calendar years 2019 and 2020. The Audit staff recommends that OLC 

provide any comments it deems relevant to this matter. 

(For more detail, see p. 9.) 

Finding 3. Contributions from Unregistered Political 

Organizations 

During audit fieldwork, the Audit staff identified 15 contributions from unregistered 

political organizations, totaling $16,981, that may have been made with impermissible 

funds. The Audit staff recommends that OLC demonstrate that the contributions were 

made with permissible funds or issue refunds. 

(For more detail, see p. 11.) 

Finding 4. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff noted that OLC failed to disclose debts and 

obligations to eight vendors totaling $230,595. The Audit staff recommends that, absent 

documentation demonstrating that these expenditures did not require reporting on 

Schedule D (Debts and Obligations), OLC amend its reports or file a Form 99 

(Miscellaneous Electronic Submission) to disclose these debts. 

(For more detail, see p. 13.) 

Finding 5. Recordkeeping for Communications 

During audit fieldwork, the Audit staff reviewed disbursements for communications to 

verify the accuracy of the information and proper classification of transactions disclosed 

on OLC’s disclosure reports. Of these disbursements, OLC reported 35 disbursements 

totaling $378,222 on Schedules B (Itemized Disbursements), Line 21(b) (Other Federal 

Operating Expenditures) and Line 30(b) (Federal Election Activity Paid Entirely With 

Federal Funds) with purposes including, “Materials/Mail/Design-Non Candidate,” 
 

 

 

 

 

 

 

 

6 

“Printing & Design Services: Banner,” “Voter Data Consulting,” “Trump signs/signs,” 

“GOTV Postcards,” “Online Advertising,” “Trump Products,” “Billboard,” “Pins for 

convention,” “GOTV Text Messages” and “Direct Mail Printing & Postage.” The Audit 

staff recommends that OLC provide the necessary information from which 35 

disbursements totaling $378,222 may be verified or explained. Such records should 

include copies of invoices and identification of the associated communications, and, if the 

communication has already been provided, information associating each communication 

with an invoice(s). 

(For more detail, see p. 14.) 

Finding 6. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that OLC did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2019 and 2020, the Audit staff identified 

10 payments to OLC employees, totaling $25,031, for which OLC did not maintain 

monthly payroll logs. This consisted of payroll which was allocated with federal and 

non-federal funds and payroll paid exclusively with non-federal funds. The Audit staff 

recommends that OLC provide evidence that monthly logs were maintained to document 

the percentage of time employees spent in connection with a federal election. Absent the 

provision of monthly logs specific to employees paid with 100% non-federal funds, OLC 

may provide records sufficient to verify that certain employees were involved in 

exclusively non-federal activities. If such monthly logs and/or records were not 

maintained by OLC, the Audit staff recommends that OLC implement a plan to maintain 

such monthly logs and records in the future. 

(For more detail, see p. 16.) 

Finding 7. Reporting of Apparent Independent 

Expenditures 

During audit fieldwork, the Audit staff reviewed expenditures, totaling $345,389, that 

OLC disclosed on Schedule B, Line 30(b) (Federal Election Activity Paid Entirely with 

Federal Funds). These expenditures appear to be independent expenditures containing 

express advocacy and should have been disclosed on Schedule E, Line 24 (Itemized 

Independent Expenditures). Of these expenditures, OLC did not properly disclose 

independent expenditures, totaling $62,915, 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, OLC did not provide documentation to support the dissemination dates, in 

order to verify whether 24/48-hour reports were required to be filed for the apparent 

independent expenditures totaling $326,460. 

If OLC believes that the apparent independent expenditures, totaling $345,389, did not 

require reporting as independent expenditures, the Audit staff recommends that OLC 

provide documentation to support its conclusion. Absent such documentation, the Audit 

staff recommends that OLC amend its reports to disclose these disbursements as 

independent expenditures on Schedule E and submit revised procedures for reporting 
 

7 

independent expenditures in the future. Lastly, the Audit staff recommends that OLC 

provide documentation to support the date of public dissemination for each 

communication to determine whether a 24/48-hour report was required to be filed. 

(For more detail, see p. 18.) 
 

8 

Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of OLC’s most recent reported financial activity 

with its bank records revealed a misstatement of receipts and disbursements for calendar 

year 2020. Specifically, OLC understated receipts by $216,154 and disbursements by 

$226,564. The Audit staff recommends that OLC amend its disclosure reports or file a 

Form 99 (Miscellaneous Electronic Submission) to correct the 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). 52 U.S.C. §30104(b)(1), (2), (3), (4), and (5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled OLC’s most recent reported financial 

activity, filed prior to audit notification, with its bank records for calendar years 2019 and 

2020. The reconciliation determined that OLC misstated receipts and disbursements for 

2020. The following chart details the discrepancies between OLC’s disclosure reports 

and its bank activity. The succeeding paragraphs explain why the discrepancies occurred. 

2020 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash on hand @ 

January 1, 2020 

$15,546 $15,098 ($448) 

Overstated 

Receipts $1,816,120 $2,032,274 ($216,154) 

Understated 

Disbursements $1,738,013 $1,964,577 ($226,564) 

Understated 

Ending Cash on hand @ 

December 31, 2020 

$93,653 $82,795 ($10,858) 

Overstated 

The beginning cash on hand was overstated by $448 and the discrepancy resulted from 

prior period discrepancies. 
 

The understatement of receipts resulted from the following: 

• Contributions from individuals not reported $22,383 

• Transfers from Non-federal account not reported 161,081 

• Contributions from Political Committees not reported 28,344 

• Other Receipts not reported 120 

• Net Unitemized Contributions under reported 1,985 

• Contribution under reported 10,000 

• Contribution reported but did not clear bank (750) 

• Duplicate Contributions reported (6,850) 

• Unexplained differences (159) 

Net Understatement of Receipts $216,154 

 

9 

The understatement of disbursements resulted from the following: 

• Disbursements not reported or reported incorrectly $225,008 

• Disbursements reported, but did not clear bank (2,151) 

• Interaccount Transfer reported as disbursement (100) 

• Net Merchant Vendor Fees not reported correctly 3,776 

• Disbursements reported with incorrect amounts 31 

Net Understatement of Disbursements $226,564 

The $10,858 overstatement of the ending cash on hand was a result of the reporting 

discrepancies described above. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC representatives during the exit conference 

and provided schedules detailing the misstatements of financial activity. The Audit staff 

explained each reporting error to the OLC representatives and answered a question 

regarding the dates of the reporting errors. In its response to the exit conference, OLC 

did not provide any comments on this finding, but generally stated that it would be filing 

amended reports in response to the audit. 

The Audit staff recommends that, within 30 calendar days of service of this report, OLC 

amend its disclosure reports or file a Form 99 (Miscellaneous Electronic Submission)2

 to 

correct the misstatements noted above. In addition, the Audit staff recommends that 

OLC reconcile the cash on hand balance on its most recently filed report and correct any 

subsequent discrepancies. 

Finding 2. Increased Activity 

Summary 

A comparison of OLC’s bank activity with its original reports filed with the Commission 

revealed that receipts were understated by $829,858 and disbursements were understated 

2 If OLC chooses to file a Form 99 instead of amending its disclosure reports, the form must contain all 

pertinent information that is required on each schedule. 
 

 

 

 

10 

by $1,077,630 for calendar years 2019 and 2020. The Audit staff recommends that OLC 

provide any comments it deems relevant to this matter. 

Legal Standard 

A. Reporting Requirements. All political committees other than authorized 

committees of a candidate shall file either: 

• Quarterly reports. 52 U.S.C. § 30104(a)(4)(A); or 

• Monthly reports in all calendar years shall be filed no later than the 20th day after 

the last day of the month and shall be complete as of the last day of the month, 

except that, in lieu of filing the reports otherwise due in November and December 

of any year in which a regularly scheduled general election is held, a pre-general 

election report shall be filed in accordance with 52 U.S.C. § 30104(2)(A)(i), a 

post-general election report shall be filed in accordance with 52 U.S.C. § 

30104(2)(A)(ii), and a year-end report shall be filed no later than January 31 of 

the following calendar year. 52 U.S.C. § 30104(a)(4)(B) 

B. 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 f or 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). 52 U.S.C. § 30104 (b)(1),(2),(3),(4) and 

(5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, in addition to examining OLC’s most recent disclosure reports 

filed prior to audit notification, the Audit staff compared OLC’s originally filed 

disclosure reports with its bank records. The purpose of this additional reconciliation was 

to identify the degree to which OLC misstated its original filings. 

The Audit staff calculated that OLC understated its receipts by $829,858 and 

disbursements by $1,077,630 on the original reports filed over the two-year period ending 

December 31, 2020. Part of the understatements were due to OLC not reporting funds 

received from a joint fundraising committee totaling $473,569 and the subsequent 

transfers of these funds ($473,569) to the national party. In addition, these figures 

include the understatement of receipts $216,154 and the understatement of disbursements 

$226,564 discussed in Finding 1 (Misstatement of Financial Activity). 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC representatives during the exit conference 

and provided the relevant schedule. In its response to the exit conference, OLC did not 

provide any comments on this finding, but generally stated that it would be filing 

amended reports in response to the audit. 
 

 

 

11 

The Audit staff recommends that, within 30 calendar days of service of this report, OLC 

provide any comments it deems relevant with respect to this matter. 

Finding 3. Contributions from Unregistered Political 

Organizations 

Summary 

During audit fieldwork, the Audit staff identified 15 contributions from unregistered 

political organizations, totaling $16,981, that may have been made with impermissible 

funds. The Audit staff recommends that OLC demonstrate that the contributions were 

made with permissible funds or issue refunds. 

Legal Standard 

A. Party Committee Limits. A party committee may not receive more than a total of 

$10,000 per year from any one individual. 52 U.S.C §30116(a)(1)(D), 11 CFR 

§110.1(c)(5), and 11 CFR §110.9. 

B. Organizations Not Registered With the Commission. Any organization that makes 

contributions and expenditures, but that does not qualify as a political committee 

under 11 CFR §100.5, must keep records of receipts and disbursements and, upon 

request, must make such records available for examination by the Commission. The 

organization must demonstrate through a reasonable accounting method that, 

whenever such an organization makes a contribution or expenditure, the organization 

has received sufficient funds subject to the limitations and prohibitions of the Act to 

make such contribution or expenditure. 11 CFR §102.5(b). 

C. Questionable Contributions. It is the Treasurer’s responsibility to ensure that all 

contributions are lawful. 11 CFR §103.3(b). If a committee receives a contribution 

that appears to be prohibited (a questionable contribution), it must follow the 

procedures below: 

1. Within 10 days after the treasurer receives the questionable contribution, the 

committee must either: 

• Return the contribution to the contributor without depositing it; or 

• Deposit the contribution (and follow steps below). 11 CFR §103.3(b)(1). 

2. If the committee deposits the questionable contribution, it may not spend the 

funds and must be prepared to refund them. It must therefore maintain 

sufficient funds to make the refunds or establish a separate account in a 

campaign depository for possibly illegal contributions. 11 CFR §103.3 (b)(4). 

3. The committee must keep a written record explaining why the contribution 

may be prohibited and must include this information when reporting the 

receipt of the contribution. 11 CFR §103.3(b)(5). 

4. Within 30 days of the treasurer’s receipt of the questionable contribution, the 

committee must make at least one written or oral request for evidence that the 

contribution is legal. Evidence of legality includes, for example, a written 

statement from the contributor explaining why the contribution is legal or 
 

 

 

 

12 

an oral explanation that is recorded by the committee in a memorandum. 

11 CFR §103.3(b)(1). 

5. Within these 30 days, the committee must either: 

• Confirm the legality of the contribution; or 

• Refund the contribution to the contributor and note the refund on the report 

covering the period in which the refund was made. 11 CFR §103.3(b)(1). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff identified 15 contributions, totaling $16,981, from 

unregistered political organizations, which OLC reported as follows: 

• Two contributions, totaling $1,310 on Schedule A, Line 11(a)(i) (Contributions 

from Individuals Itemized); 

• Four contributions, totaling $230, on Schedule A, Line 11(a)(ii) (Contributions 

from Individuals Unitemized); 

• Four contributions, totaling $2,292, on Schedule A, Line 11(c) (Contributions 

from Other Political Committees; 

• One contribution, totaling $1,306, on Schedule A, Line 17 (Other Receipts); and 

• Four contributions, totaling $11,843, that were not reported. 

The Audit staff considers the receipts noted above to be contributions. OLC did not 

provide any documentation to demonstrate that these contributions, from unregistered 

political organizations, were made with permissible funds. Similarly, OLC did not 

submit any evidence to show that these receipts were not contributions. To date, none of 

these contributions have been refunded to the contributors. 

The contributions from unregistered political organizations were made either from 

Oklahoma local party committees or from Oklahoma local candidate committees, and 

does not appear to be from state political action committees (state PACs). Under 

Oklahoma state law, political party committees are prohibited from accepting 

contributions from corporations, labor unions and foreign nationals. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC representatives during the exit conference 

and provided a schedule of the receipts. The OLC representatives stated that ten days 

would not be enough time to respond to this finding. The Audit staff advised OLC of 

each additional opportunity OLC will have in the audit process to respond to the finding. 

In its response to the exit conference, OLC did not provide any comments on this finding, 

but generally stated that it would be filing amended reports in response to the audit. 

The Audit staff recommends that, within 30 calendar days of service of this report, OLC: 

• Provide evidence that the 15 contributions in question totaling $16,981 were made 

from permissible funds; or 

• Provide evidence to show these items were not contributions; or 
 

13 

• Refund the impermissible funds and provide evidence of such refunds (e.g., 

copies of front and back of the negotiated refund checks); or 

• Transfer the impermissible funds to the non-federal account; or 

• If funds are not available to make the necessary refunds or donations, disclose the 

contributions requiring refunds on Schedule D (Debts and Obligations) until funds 

become available to make such refunds. 

Finding 4. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff noted that OLC failed to disclose debts and 

obligations to eight vendors totaling $230,595. The Audit staff recommends that, absent 

documentation demonstrating that these expenditures did not require reporting on 

Schedule D (Debts and Obligations), OLC amend its reports or file a Form 99 

(Miscellaneous Electronic Submission) to disclose these debts. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

52 U.S.C. §30104(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts 

owed by the committee and debts owed to the committee, together with a statement 

explaining the circumstances and conditions under which each debt and obligation 

was incurred or extinguished. 11 CFR §104.11(a). 

C. Itemizing Debts and Obligations. 

• A debt of $500 or less must be reported once it has been outstanding 60 days from 

the date incurred (the date of the transaction); the committee reports it on the next 

regularly scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on 

which the debt was incurred. 11 CFR §104.11(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed OLC’s disbursement records and 

disclosure reports for proper reporting of debts and obligations. This review identified 

debts owed to eight vendors totaling $230,5953

 that OLC failed to report on Schedule D 

during the audit period. Based on a review of the records, these vendors provided media 

services, database services and cable and internet services. OLC reported debt totaling 

$26,052 on Schedule D during the audit period. 

3 

 Each debt in this amount was counted only once, even if it was required to be disclosed over multiple 

periods. 
 

14 

The Audit staff calculated the debts owed to the vendors based on the invoice date and 

the subsequent payment date. Debts were outstanding for periods ranging from four days 

to 149 days. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC representatives at the exit conference and 

provided a schedule detailing transactions requiring disclosure on Schedule D. The OLC 

representatives questioned why there were media expenditures on the schedule, stating 

that these expenditures are normally paid immediately. The Audit staff explained that the 

media expenditures were considered debts if the amounts exceeded $500 and were not 

paid by the end of the report period in which they were incurred. In its response to the 

exit conference, OLC did not provide any comments on this finding, but generally stated 

that it would be filing amended reports in response to the audit. 

The Audit staff recommends that, within 30 calendar days of service of this report, OLC 

provide additional documentation demonstrating that the transactions totaling $230,595 

were not obligations which required reporting on Schedule D. Absent such 

documentation, the Audit staff recommends that OLC amend its reports or file a Form 99 

(Miscellaneous Electronic Submission)4

 to correctly disclose these debts and obligations. 

Finding 5. Recordkeeping for Communications 

During audit fieldwork, the Audit staff reviewed disbursements for communications to 

verify the accuracy of the information and proper classification of transactions disclosed 

on OLC’s disclosure reports. Of these disbursements, OLC reported 35 disbursements 

totaling $378,222 on Schedules B (Itemized Disbursements), Line 21(b) (Other Federal 

Operating Expenditures) and Line 30(b) (Federal Election Activity Paid Entirely With 

Federal Funds) with purposes including, “Materials/Mail/Design-Non Candidate,” 

“Printing & Design Services: Banner,” “Voter Data Consulting,” “Trump signs/signs,” 

“GOTV Postcards,” “Online Advertising,” “Trump Products,” “Billboard,” “Pins for 

convention,” “GOTV Text Messages” and “Direct Mail Printing & Postage.” The Audit 

staff recommends that OLC provide the necessary information from which 35 

disbursements totaling $378,222 may be verified or explained. Such records should 

include copies of invoices and identification of the associated communications, and, if the 

communication has already been provided, information associating each communication 

with an invoice(s). 

Legal Standard 

A. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters 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 checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

4 

 See supra footnote 2. 

 
15 

B. Preserving Records and Copies of Reports. The treasurer of a political committee 

must preserve all records 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 for communications to 

verify the accuracy of the information and proper classification of transactions disclosed 

on the reports. Of these disbursements, OLC made 35 disbursements, totaling $378,222, 

for which documentation was insufficient to make a determination pertaining to whether 

these disbursements were correctly reported on Schedule B, Line 21(b) and Schedule B, 

Line 30(b). 

The Audit staff’s analysis resulted in the following: 

i. Disbursements – No Invoices or Copies of Communications Provided 

($13,602) 

Seventeen disbursements totaling $13,602 were paid to nine vendors. Sixteen of 

these disbursements, totaling $13,471, were disclosed on Schedule B, Line 21(b) 

with purposes of “Printing & Design Services: Banner,” “Trump Signs,” “Online 

Advertising,” “Trump Products,” “Billboard,” “Trump Signs,” and “Pins for 

Convention.” One disbursement in the amount of $131 was disclosed on 

Schedule B, Line 30(b) with the purpose of “Signs.” No invoices or associated 

communications were provided for these disbursements. Without sufficient 

detail, the Audit staff is unable to verify OLC’s reporting of these amounts as 

other operating expenditures or federal election activity. The Audit staff 

requested copies of the invoices and the associated communications for each of 

the disbursements. To date, these invoices and communications have not been 

provided. 

ii. Disbursements – Invoices Provided – No Copies of Communications 

Provided ($364,620) 

Eighteen disbursements totaling $364,620 were paid to seven vendors. Ten of 

these disbursements totaling $43,376 were disclosed on Schedule B, Line 21(b) 

with purposes of “Materials/Mail/Design-Non Candidate” and “Signs.” Eight 

disbursements totaling $321,244 were disclosed on Schedule B, Line 30(b) with 

purposes of “Voter Data Consulting,” “GOTV Postcards,” “Campaign Mailers,” 

“GOTV Text Messages” and “Direct Mail Printing & Postage.” For these 

disbursements, OLC provided invoices but did not provide information about the 

related communications. Without sufficient detail, the Audit staff is unable to 

verify OLC’s reporting of these amounts as other operating expenditures or 

federal election activity. The Audit staff requested copies of the associated 

communications. To date, these communications have not been provided. 
 

16 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC representative during the exit conference 

and provided a schedule of the disbursements for which further records were necessary to 

verify the accuracy of OLC’s reporting. The OLC representatives stated the previous 

chairman did not keep the documentation; therefore, OLC will not be able to provide the 

documentation. In its response to the exit conference, OLC did not provide any 

comments on this finding, but generally stated that it would be filing amended reports in 

response to the audit. 

The Audit staff recommends that, within 30 calendar days of service of this report, OLC 

provide, in sufficient detail, documentation that allows for verification of proper 

reporting for the communication disbursements totaling $378,222. The documentation 

should include copies of invoices, along with identification of the associated 

communication, and if the communication was previously provided, information 

associating each communication with an invoice(s). 

Finding 6. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that OLC did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2019 and 2020, the Audit staff identified 

10 payments to OLC employees totaling, $25,031, for which OLC did not maintain 

monthly payroll logs. This consisted of payroll which was allocated with federal and 

non-federal funds and payroll paid exclusively with non-federal funds. The Audit staff 

recommends that OLC provide evidence that monthly logs were maintained to document 

the percentage of time employees spent in connection with a federal election. Absent the 

provision of monthly logs specific to employees paid with 100% non-federal funds, OLC 

may provide records sufficient to verify that certain employees were involved in 

exclusively non-federal activities. If such monthly logs and/or records were not 

maintained by OLC, the Audit staff recommends that OLC implement a plan to maintain 

such monthly logs and records in the future. 

Legal Standard 

A. 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 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or be allocated as administrative costs; 

• Employees who spend more than 25 percent 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)(1). 
 

 

 

17 

B. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters 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 checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed disbursements for payroll. OLC did not 

maintain any monthly payroll logs or equivalent records to document the percentage of 

time each employee spent in connection with a federal election. These logs are required 

to document the proper allocation of federal and non-federal funds used to pay employee 

salaries and wages. For 2019 and 2020, OLC did not maintain monthly logs for $25,031 

in payroll.5  This amount consisted of: 

• Payroll totaling $22,676 for employees reported on Schedule H4 (Disbursements 

for Allocated Federal and Non-Federal Activity) and paid with an allocation of 

federal and non-federal funds during the same month; and 

• Payroll totaling $2,355 for employees reported on Schedule B, Line 30(b) 

(Federal Election Activity Paid Entirely With Federal Funds) and also paid with 

100 percent non-federal funds during the same month.6 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC representatives during the exit conference 

and provided a schedule of the payroll transactions. In its response to the exit 

conference, OLC did not provide any comments on this finding, but generally stated that 

it would be filing amended reports in response to the audit. 

The Audit staff recommends that, within 30 calendar days of service of this report, OLC 

provide evidence that monthly logs were maintained to document the percentage of time 

employees spent in connection with a federal election. Absent the provision of monthly 

logs specific to employees paid with 100% non-federal funds, OLC may provide 

evidence that records consistent with 11 CFR §104.14(b)(1) were maintained to 

document that certain employees were involved in exclusively non-federal activities. 

Additionally, OLC should provide and implement a plan to maintain monthly logs and 

other records consistent with 11 CFR §104.14(b)(1) in the future. 

5 This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such (see Part I, Background, Commission Guidance, and Request for Early Commission Consideration 

of a Legal Question, Page 1). Payroll amounts are stated net of taxes and fringe benefits. 6 Employees who were paid with federal funds and non-federal funds in the same month. 
 

 

 

18 

Finding 7. Reporting of Apparent Independent 

Expenditures 

Summary 

During audit fieldwork, the Audit staff reviewed expenditures, totaling $345,389, that 

OLC disclosed on Schedule B, Line 30(b) (Federal Election Activity Paid Entirely with 

Federal Funds). These expenditures appear to be independent expenditures containing 

express advocacy and should have been disclosed on Schedule E, Line 24 (Itemized 

Independent Expenditures). Of these expenditures, OLC did not properly disclose 

independent expenditures. totaling $62,915, 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, OLC did not provide documentation to support the dissemination dates, in 

order to verify whether 24/48-hour reports were required to be filed for the apparent 

independent expenditures totaling $326,460. 

If OLC believes that the apparent independent expenditures, totaling $345,389, did not 

require reporting as independent expenditures, the Audit staff recommends that OLC 

provide documentation to support its conclusion. Absent such documentation, the Audit 

staff recommends that OLC amend its reports to disclose these disbursements as 

independent expenditures on Schedule E and submit revised procedures for reporting 

independent expenditures in the future. Lastly, the Audit staff recommends that OLC 

provide documentation to support the date of public dissemination for each 

communication to determine whether a 24/48-hour report was required to be filed. 

Legal Standard 

A. Definition of Independent Expenditures. 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, a candidate, 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 
 

 

19 

advocating the election or defeat of one or more clearly identified candidates. 

11 CFR §§100.16(a), 100.17 and 100.22. 

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 30(b) on Schedule E. 11 CFR 

§§104.3(b)(3)(vii), 104.4(a) and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour 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 day of an 

election must be reported and the report must be received by the Commission within 

24 hours after the expenditure is made. A 24-hour report is required each time 

additional independent expenditures aggregate $1,000 or more. The 24-hour report 

must be filed on a Schedule E. The date that a communication is publicly 

disseminated serves as the date that the Committee must use to determine whether the 

total amount of independent expenditures has, in the aggregate, reached or exceeded 

the threshold reporting amount of $1,000. 11 CFR §§104.4(f) and 104.5(g)(2). 

D. Last-Minute Independent Expenditure Reports (48-Hour Reports). Any 

independent expenditure aggregating $10,000 or more for an election in any calendar 

year, up to and including the 20th day before an election, must disclose this activity 

within 48 hours each time that the expenditures aggregate $10,000 or more. The 

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

made. The 48-hour report must be filed on a Schedule E. The date that a 

communication is publicly disseminated serves as the date that the Committee must 

use to determine whether the total amount of independent expenditures has, in the 

aggregate, reached or exceeded the threshold reporting amount of $10,000. 11 CFR 

§§104.4(f) and 104.5(g)(1). 

E. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters 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 checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

F. 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 
20 

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. Reporting of Apparent Independent Expenditures 

1. Facts 

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

reporting. The Audit staff noted that OLC did not disclose any independent 

expenditures on Schedule E, however, it made apparent independent expenditures 

totaling $345,389, and disclosed them on Schedule B, Line 30(b) (Federal 

Election Activity Paid Entirely with Federal Funds). These expenditures were for 

20 direct mail pieces that contained express advocacy. A breakdown analysis for 

these expenditures is as follows: 

a. Apparent Independent Expenditures Reported as Federal Election 

Activity (FEA) Paid Entirely with Federal Funds (Associated Mailer and 

Invoice Provided under 11 CFR §100.22(a)) 

OLC made disbursements for eighteen mail pieces totaling $314,380 for 

which it provided copies of the mail pieces with associated invoices, and wire 

transfer documentation. The mail pieces were disclosed as “Campaign 

Mailers” on OLC’s disclosure reports and contained the phrases such as: 

“Vote Stephanie Bice for Congress November 3rd,” “Vote Bice for Congress 

on Nov 3rd,

” “Vote Early for Republican Stephanie Bice,” “Vote No on 

Kendra Horn Nov 3rd”, and “Oppose Kendra Horn November 3rd.” These 

communications contained language expressly advocating the election or 

defeat of a clearly identified candidate, as defined under 11 CFR §100.22(a). 

Further, two of these communications totaling $47,455 were publicly 

disseminated prior to payment and therefore required reporting as memo 

entries on Schedule E when the communications were disseminated in 

addition to the reporting at the time of payment. This amount should also be 

reported as a corresponding debt on Schedule D (Debts and Obligations). 

b. Apparent Independent Expenditures Reported as Federal Election 

Activity (FEA) Paid Entirely with Federal Funds (Associated Mailer and 

Invoice Provided under 11 CFR §100.22(b)) 

OLC made disbursements for two mail pieces totaling $31,009 for which it 

provided copies of the mail pieces with associated invoices and wire transfer 

documentation. The mail pieces were disclosed as “Campaign Mailers” on 

OLC’s disclosure reports and contained the phrases such as: “We Can’t Have 

Kendra Horn in Congress,” and “Kendra Horn Puts Party Over People.” 

Based on the definition of express advocacy under 11 CFR §100.22(b), the 

Audit staff believes that these mailers could only be interpreted by a 
 

 

 

21 

reasonable person as advocating the election or defeat of a clearly identified 

candidate. 

Further, one of these communications totaling $15,460 was publicly 

disseminated prior to payment and therefore required reporting as memo 

entries on Schedule E when the communication was disseminated in addition 

to the reporting at the time of payment. This amount should also be reported 

as a corresponding debt on Schedule D (Debts and Obligations). 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC representatives during the exit 

conference and provided a schedule detailing these expenditures. In its response 

to the exit conference, OLC did not provide any comments on this finding, but 

generally stated that it would be filing amended reports in response to the audit. 

The Audit staff recommends that, within 30 calendar days of service of this 

report, OLC provide documentation that apparent independent expenditures, 

totaling $345,389, did not require reporting as independent expenditures. Absent 

such documentation or evidence, the Audit staff recommends OLC amend its 

reports to disclose these disbursements as independent expenditures on Schedule 

E (Itemized Independent Expenditures) and provide documentation to support the 

date of public dissemination for each communication to determine whether a 

24/48-hour report was required to be filed. The Audit staff also recommends that 

OLC amend its reports to include the reporting of independent expenditures, 

totaling $62,915 ($47,455 + $15,460), as memo entries based on the date in which 

the mail pieces were disseminated. This amount should also be reported as 

corresponding debt on Schedule D.7 

 

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

1. Facts 

In addition to not reporting the apparent independent expenditures during the 

audit period, OLC did not file any 24 or 48-hour reports.8  Of the $345,389 in 

apparent independent expenditures reported as federal election activity, 

• OLC failed to file 48-hour reports totaling $182,168; and, 

• OLC failed to file 24-hour reports totaling $144,292. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with OLC representatives during the exit 

conference and presented a schedule detailing these expenditures. In its response 

7 This amount is not included in Finding 4 (Reporting of Debts and Obligations). 8 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 requirements. In the absence of a known 

date for public dissemination, the Audit staff used the invoice date of incurrence to determine if a 24/48-

hour report was required. 
 

 

22 

to the exit conference, OLC did not provide any comments on this finding, but 

generally stated that it would be filing amended reports in response to the audit. 

Absent documentation that the apparent independent expenditures, totaling 

$345,389, did not require reporting as independent expenditures (per Part A 

above), the Audit staff recommends that, within 30 calendar days of service of 

this report, OLC provide documentation to support the date of public 

dissemination for each identified expenditure to determine whether 24/48-hour 

reports were required to be filed.