Final Audit Report of the 

Commission on the Oakland 

County Democratic Party 

(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 

Comniission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.^ 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) 

The Oakland County Democratic Party is a local party committee 

headquartered in Southfield, Michigan. For more information, see 

the chart on the Committee Organization, p. 3. 

Financial Activity (p. 3) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Transfers from Non-federal 

Accoimt 

o Other Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Other Disbursements 

Total Disbursements 

$ 1,933,148 

56,849 

49,859 

7,120 

S 2,046,976 

$ 2,045,934 

14,930 

$ 2,060,864 

Commission Findings (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Disclosure of Occupation and Name of Employer (Finding 3) 

• Recordkeeping for Receipts (Finding 4) 

• Use of the Campaign Depository (Finding 5) 

On September 1,2014, the Federal Election Campaign Act of 1971, as amended ("the Act"), was 

transferred from Title 2 of the United States Code to new Title S2 of the United States Code. 

52 U.S.C. §30111(b). 
Final Audit Report of the 

Commission 

on the Oakland County 

Democratic Party 

(January 1, 2011 - December 31, 2012) 
Table of Contents 

Part III. Summary 

Commission Findings 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance. 1 

Audit Hearing 2 

Part II. Overview of Committee 

Committee Organization 3 

Overview of Financial Activity 3 

Part IV. Commission Findings 

Finding 1. Misstatement of Financial Activity 6 

Finding 2. Recordkeeping for Employees 8 

Finding 3. Disclosure of Occupation and Name of Employer 9 

Finding 4. Recordkeeping for Receipts 12 

Findings. Use of the Campaign Depository 14 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Oakland County Democratic Party (CCD?), undertaken by 

the Audit Division of the Federal Election Commission (the Commission) in accordance wath 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 

particular committee meet the threshold requirements for substantial compliance with the Act. 

52 U.S.C. §30111(b). 

Scope of Audit 

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; and 

9. other committee operations necessary to the review. 

Commission Guidance 

Request for Elarly Commission Consideration of a Legal Question -

Recordkeeping for Employees 

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 OCDP requested early consideration of a legal question raised during audits 

covering the 2010 election cycle. Specifically, the Commission ^dressed 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)(l) 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 

OCDP representatives of the payroll log requirement and of the Commission's decision not to 
pursue recordkeeping violations for failure to keep payroll logs for salaries paid and coirectly 

reported as 100 percent federal. Finding 2 of this audit report (Recordkeeping for Employees) 

does not include any OCDP employees paid with 100 percent federal funds and reported as such. 

Directive 69 and Request for Elarly Commission Consideration of a Legal 

Question - Recordkeeping for Receipts 

Pursuant to Conunission Directive 69, the Commission's guidance was requested by the Office 

of Compliance and the Office pf General Counsel on an issue addressing what recordkeeping 

requirements imder 52 U.S.C. §30102(c) and 11 CFR § 102.9(a) applied to contributions received 

by OCDP during bi-weekly "bingo nights."^ A subsequent request was made to the Commission 

by OCDP on the same issue under the Commission's "Policy Statement Establishing a Program 

for Requesting Consideration of Legal Questions by the Conunission." Specifically, the 

Commission was asked whether OCDP's gaming nights consisted of three separate fundraising 

events rather than a single event for purposes of applying the recordkeeping requirements under 

11 CFR § 102.9(a). 

The Commission concluded on the Directive 69 Guidance and on the Request for Legal 

Consideration, by votes of 6-0, that OCDP's bingo nights did not constitute three separate 

fundraising events and that OCDP was required to itemize all contributions exceeding $50 

received during each bingo night. See Finding 4, Recordkeeping for Receipts. 

Audit Hearing 

OCDP declined the opportunity for a hearing before the Commission on the matters presented in 

this report. 

^ ~ I '1. A ... WSnnM ..0A.I AII ' I ...EKIME. Ek^Hnn I The term bingo is used to refer to ail OCDP gaming activity, which includes bingo, progressive bingo, and : 

charity ticket sales. ' 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration June 11,1976 

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

Headquarters Southfield, MI 

Bank Information 

• Bank Depositories Two 

e Bank Accounts Two federal and two non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Ryan Gesund: 12/29/11 - 1/28/14; 

Alexander Pike: 1/29/14 - present 

• Treasurer During Period Covered by Audit Jerry Bixby: 1/01/11 - 12/28/11; 

Ryan Gesund: 12/29/11-12/31/12 

Management Information 

• Attended Commission Campaign Finance Seminar No 

• Who Handled Accounting and Recordkeeping 

Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand January 1,2011 $ 26,378 

Receipts 

o Contributions from Individuals 1,933,148 

o Contributions from Political Committees 56,849 

o Transfers from Non-federal Account 49,859 

o Other Receipts 7,120 

Total Receipts S 2,046,976 

Disbursements 

o Operating Expenditures . 2,045,934 

o Other Disbursements 14,930 

Total Disbursements $ 2,060,864 

Cash-on-hand @ December 31,2012 S 12,490 
Part III 

Summaries 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of OCDP's reported financial activity with its bank records 

revealed that, for 2012, OCDP understated its reported receipts, disbursements and ending cash 

by $90,487, $60,715, and $33,279, respectively. Subsequent to the exit conference, OCDP 

amended its reports and materially corrected its misstatements. In response tp the Interim Audit 

Report recommendation and the Draft Final Audit Report, OCDP stated it has begun the process 

of complying with all recommendations. 

The Commission approved a finding that OCDP misstated its financial activity for calendar year 

2012. (For more detail, see p. 6.) 

Finding 2. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that OCDP 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 2011 and 2012, the Audit staff identified payments to OCDP 

employees totaling $107,555, for which monthly payroll logs were not maintained. This 

consisted entirely of payroll which was allocated between federal and non-federal funds. In 

response to the Interim Audit Report recommendation and the Draft Final Audit Report, OCDP 

stated it has begun the process of complying with all recommendations. 

The Commission approved a finding that OCDP failed to maintain monthly payroll logs to 

document the time employees spent on federal election activity totaling $107,555. (For more 

detail, see p. 8.) 

Finding 3. Disclosure of Occupation and Name of Employer 

A review of all contributions from individuals requiring itemization indicated that 35 

contributions totaling $7,389 lacked disclosure of occupation and/or name of employer. In 

addition, there was no evidence that "best efforts" to obtain, maintain and submit the information 

had been exercised. In response to the Interim Audit Report recommendation and the Draft Final 

Audit Report, OCDP stated it has begun the process of complying with all recommendations. 

The Commission approved a finding that OCDP failed to disclose occupation and/or name of 

employer information for contributions from individuals totaling $7,389 and did not demonstrate 

"best efforts" to obtain, maintain, and submit disclosure information with respect to these 

contributions. (For more detail, see p. 9.) 
Finding 4. Recordkeeping for Receipts 

During audit fieldwork, it was noted that OCDP did not maintain adequate documentation and 

did not properly report receipts from its gaming activities totaling $1,820,466 for the 2012 

election cycle. OCDP reported gaming receipts as un-itemized individual contributions in 

accordance with requirements for receipts from individuals contributing $50 or less at 

fundraising events based on its position that each gaming activity constituted a separate "event" 

under state law. However, the Commission subsequently determined that all activities on a 

single night were properly considered a single fundraising event.^ When all gaming activities 

were viewed as a single event, the average contribution from OCDP's. bi-weekly gaming events 

was approximately $88 per person, which requires more extensive recordkeeping activities. In 

response to the Interim Audit Report recommendation and the Draft Final Audit Report, OCDP 

stated it has begun the process of complying with all recommendations. However, OCDP said it 

disagreed with certain unspecified aspects of the report that concerned its gaming activities. 

The Commission approved a finding that OCDP failed to maintain adequate documentation for 

its gaming activities and did not properly report its receipts from gaming activities totaling 

$1,820,466. (For more detail, see p. 12.) 

Finding 5. Use of the Campaign Depository 

A review of OCDP's gaming operations found that OCDP did not deposit most of its gaming 

receipts into its designated campaign depository as required. During the audit period, OCDP 

collected $1,820,466 from its bi-weekly gaming activities but only deposited $450,162 into its 

campaign depository. OCDP disbursed the majority of these cash receipts ($1,370,304) directly 

to prize winners and game workers. In response to the Interim Audit Report recommendation 

and the Draft Final Audit Report, OCDP stated it has begun the process of complying with all 

recommendations. However, OCDP said it disagreed with certain unspecified aspects of the 

report that concerned its gaming activities. 

The Commission approved a finding that OCDP failed to properly utilize its designated 

campaign depository for most of its gaming receipts totaling $1,370,304. (For more detail, see p. 

14.) 

* See Part I, Background, Commission Guidance, Directive 69 and Request for Early Commission 

Consideration of a Legal Question - Recordkeeping for Receipts, Page 2. 
Part IV 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of OCDP's reported financial activity with its bank records 

revealed that, for 2012, OCDP understated its reported receipts, disbursements and ending cash 

by $90,487, $60,715 and $33,279, respectively. Subsequent to the exit conference, OCDP 

amended its reports and materially corrected its misstatements. In response to the Interim Audit 

Report recommendation and the Draft Final Audit Report, OCDP stated it has begun the process 

of complying with all recommendations. 

The Commission approved a finding that OCDP misstated its financial activity for calendar year 

2012. 

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

Facts and Analysis 

A. Facts 

During audit.fieldwork, the Audit staff reconciled OCDP's reported financial activity with its 

bank records for the calendar years 2011 and 2012 and identified misstatements for 2012 in 

receipts, disbursements and ending cash. The following chart outlines the discrepancies and 

succeeding paragraphs explain, to the extent possible, the reasons for the misstatements. 

2012 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January 1,2012 $5,356 $8,863 $3,507 

Understated 

Receipts $937,760 $1,028,247 $90,487 

Understated 

Disbursements $963,905 $1,024,620 $60,715 

Understated 

Ending Cash Balance 

@ December 31,2012 ($20,789) . $12,490 $33,279 

Understated 
The understatement of receipts resulted from the following. 

• Gaming receipts not reported^ $ 76,233 

• Transfers from non-federal account not reported 12,178 

• In-kind contributions not reported 2.076 

Understatement of Receipts $ 90.487 

The understatement of disbursements resulted from the following. 

• Gaming expenditures not reported $ 36,229 

• Operating expenditures not reported 33,899 

• Expenditures reported twice (10,056) 

• Operating expenditures incorrectly reported 167 

• Unexplained difference 476 

Net Understatement of Disbursements $ 60.715 

The understatement of the beginning and ending cash balances resulted from prior year 

misstatements and the misstatements described above. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff explained the misstatements and provided schedules to 

OCDP representatives. The representatives agreed to amend their reports. 

Subsequent to the exit conference, OCDP amended its reports and materially corrected its 

misstatements. The Interim Audit Report recommended that OCDP provide any additional 

comments it considered relevant to this matter. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, OCDP provided no additional 

information regarding this matter. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that OCDP amended its reports and materially 

corrected its misstatements. 

E. Committee Response to the Draft Final Audit Report 

OCDP responded to the Draft Final Audit Report and stated it has begim the process of 

complying with all recommendations. 

Commission Conclusion 

On May 21,2015, the Conunission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a finding that 

OCDP misstated its financial activity for calendar year 2012. 

The Commission approved the Audit staffs recommendation. 

^ See Finding 4, page 12. 
Finding 2. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that OCDP 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 2011 and 2012, the Audit staff identified payments to OCDP 

employees totaling $107,555, for which monthly payroll logs were not maintained. This 

consisted entirely of payroll which was allocated between federal and non-federal funds. In 

response to the Interim Audit Report reconunendation and the Draff Final Audit Report, OCDP 

stated it has begun the process of complying with all recommendations. 

The Commission approved a finding that OCDP failed to maintain monthly payroll logs to 

document the time employees spent on federal election activity totaling $107,555. 

Legal Standard 

Maintenance of Monthly Logs. 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 have their pay 

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). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements for payroll. OCDP did not maintain 

any monthly logs or equivalent records to document the percentage of time each employee spent 

in connection with federal election activity. These logs are required to document the proper 

allocation of federal and non-federal funds used to pay employee salaries and wages. For 2011 

and 2012, logs were not maintained for $107,555^ in payroll. The total of $107,555 consisted 

entirely of payroll which was allocated between federal and non-federal funds. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference and during audit fieldwork, the Audit staff discussed the payroll 

recordkeeping issue with OCDP representatives. The representatives indicated that they did 

maintain some records for one individual but did not keep records for all required individuals. 

No records were provided. 

' See Part I, Background, Commission Guidance, Request for Early Commission Consideration of a 

Legal Question - Recordkeeping for Employees, Page 1. Payroll is stated net of taxes and benefits. 
For OCDP employees that were paid with an allocation of federal and non-federal funds, the 

Interim Audit Report recommended that OCDP provide the following: 

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

employee spent in connection with a federal election; or 

• a plan to maintain monthly payroll logs in the future. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, OCDP agreed to comply with the 

recommendation to implement a plan to maintain monthly payroll logs in the future. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that OCDP agreed to maintain monthly payroll logs 

in the future. 

E. Committee Response to the Draft Final Audit Report 

OCDP responded to the Draft Final Audit Report and stated it has begun the process of 

complying with all recommendations. 

Commission Conclusion 

On May 21,2015, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a finding that 

OCDP failed to maintain monthly payroll logs to document the time employees spent on federal 

election activity totaling $107,555. 

I 

The Commission approved the Audit staffs recommendation. 

Finding 3. Disclosnre of Occupation and Name of Employer 

Summary 

A review of all contributions from individuals requiring itemization indicated that 35 

contributions totaling $7,389 lacked disclosure of occupation and/or name of employer. In 

addition, there was no evidence that "best efforts" to obtain, maintain and submit the information 

had been exercised. In response to the Interim Audit Report reconunendation and the Draft Final 

Audit Report, OCDP stated it has begun the process of complying with all recommendations. 

The Commission approved a finding that OCDP failed to disclose occupation and/or name of 

employer information for contributions from individuals totaling $7,389 and did not demonstrate 

"best efforts" to obtain, maintain, and submit disclosure information with respect to these 

contributions. 

Legal Standard 

A. Itemization required for Contributions from Individuals. A political committee other 

than an authorized committee must itemize any contribution from an individual if it exceeds 

$200 per calendar year, either by itself or when combined with other contributions from the same 

contributor. 52 U.S.C §30104(b)(3)(A). 
10 

B. Required Information for Contributions from Individuals. For each itemized 

contribution from an individual, the committee must provide the following information: 

• The contributor's full name and address; 

• The contributor's occupation and the name of his or her employer; 

• The date of receipt (the date the committee received the contribution); 

• The amount of the contribution; and 

• The calendar year-to-date total of all contributions from the same individual. 11 CFR 

§§100.12 and 104.3(a)(4) and 52 U.S.C §30104(b)(3)(A). 

C. Best Efforts Ensures Compliance. When the treasurer of a political committee shows that 

the committee used best efforts (see below) to obtain, maintain, and submit the information 

required by the Act, the committee's reports and records will be considered in compliance with 

the Act. 52 U.S.C. §30102(i). 

D. Definition of Best Efforts. The treasurer and the conunittee will be considered to have used 

"best efforts" if the committee satisfied all of the following criteria: 

• All written solicitations for contributions included: 

o A clear request 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. 

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

to obtain the missing information, 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 contained in the 

committee's records or in prior reports that the committee filed during the same two-year 

election cycle. 11 CFR § 104.7(b). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed all reported contributions from individuals to 

determine if the required contributor information was disclosed. The review indicated that 

OCDP did not adequately disclose both the occupation and the name of the employer for nearly 

all identified errors. There were 35 errors equaling $7,389. All of the errors disclosed a 

notation, "Information Requested" on the Schedule A, Itemized Receipts, filed with the 

Commission. 

Although requestied, OCDP did not provide any records to demonstrate evidence of any best 

efforts procedures or follow-up requests for missing contributor information. As a result, OCDP 

did not make "best efforts" to obtain, maintain and report the missing occupation and name of 

employer information. 
11 

B. Interim Audit Report & Audit Division Recommendation | 

Prior to the exit conference, OCDP was provided schedules of the contributions requiring I 

additional disclosure information. One of OCDP's representatives stated that missing j 

contributor information was partly due to problems with its database. He also stated that the j 

provided schedules would be reviewed and any comments concerning OCDP's best ! 

efforts procedures would be submitted in writing. No documents supporting OCDP's best efforts 

were submitted. ! 

The Interim Audit Report recommended that OCDP take the following action: 

• provide documentation such as phone logs, returned contributor letters, completed 

contributor contact information sheets or other materials which demonstrated that best efforts 

were made to obtain, maintain, and submit the required disclosure information; or 

• absent such documentation, make an effort to contact those individuals for whom required 

information was missing or incomplete, provide documentation of such contacts (such as 

copies of letters to the contributors and/or phone logs), and amend OCDP's reports to 

disclose any information obtained from those contacts. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, OCDP agreed to comply with the 

recommendation to either demonstrate that it had exercised best efforts or to attempt to obtain 

the missing contributor information and amend its disclosure reports in conformity with best 

efforts. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that OCDP agreed to comply with the 

recommendation to either demonstrate that it had exercised best efforts or to attempt to obtain 

the missing contributor information and amend its disclosure reports in conformity with best 

efforts. 

E. Committee Response to the Draft Final Audit Report 

OCDP responded to the Draft Filial Audit Report and stated it has begun the process of 

complying with all recommendations. 

Commission Conclusion 

On May 21,2015, the Commission considered the Audit Division Reconmiendation 

Memorandum in which the Audit staff recommended that the Commission adopt a finding that 

OCDP failed to disclose occupation and/or name of employer information for contributions from 

individuals totaling $7,389 and did not demonstrate "best efforts" to obtain, maintain, and submit 

disclosure information with respect to these contributions. 

The Commission approved the Audit staffs recommendation. 
12 

I Finding 4. Recordkeeping for Receipts 

Summary 

During audit fieldwork, it was noted that OCDP did not maintain adequate documentation and 

did not properly report receipts from its gaming activities totaling $1,820,466 for the 2012 

election cycle. OCDP reported gaming receipts as un-itemized individual contributions in 

accordance with requirements for receipts from individuals contributing $50 or less at 

fimdraising events based on its position that each gaming activity constituted a separate "event" 

under state law. However, the Commission subsequently determined that all activities on a 

single night were properly considered a.single fundraising event.^ When all gaming activities 

were viewed as a single event, the average contribution from OCDP's bi-weekly gaming events 

was approximately $88 per person, which requires more extensive recordkeeping activities. In 

response to the Interim Audit Report recommendation and the Draft Final Audit Report, OCDP 

stated it has begun the process of complying with all recommendations. However, OCDP said it 

disagreed with certain unspecified aspects of the report that concerned its gaming activities. 

The Commission approved a finding that OCDP failed to maintain adequate documentation for 

its gaming activities and did not properly report its receipts from gaming activities totaling 

$1,820,466. 

Legal Standard 

A. Recordkeeping. Political committees must keep records of: 

• All contributions received by or on behalf of the committee; 

• The name and address of any person who makes a contribution in excess of $50, together 

with the date and amount of the contribution; and 

• The occupation and name of employer of any individual whose contributions aggregate 

more than $200 during a calendar year, together with the date and amount of any such 

contributions. 52 U.S.C. §30102(c). 

B. Retention of Check Copies. For contributions in excess of $50, committees must maintain a 

photocopy or digital image of the check or written instrument. 11 CFR § 102.9(a)(4). 

C. Preserving Records and Copies of Reports. Committees must preserve these records for 3 

years after a report is filed. 52 U.S.C. §30102(d). 

Facts and Analysis 

A. Facts 

OCDP did not maintain adequate documentation and did not properly report receipts for its biweekly gaming activities totaling $1,820,466* for the 2012 election cycle.' Michigan state law 

governs Michigan gaming activities and recordkeeping requirements. Accordingly, records were 

See Part I, Background, Commission Guidance, Directive 69 and Request for Early Commission 

Consideration of a Legal Question - Recordkeeping for Receipts, Page 2. 

This amount does not include errors in recordkeeping for checks deposited into OCDP's accounts that 

were not associated with gaming activities projected to total $1,970. 

In addition to the improper reporting of gaming receipts, OCDP did not report S76,233 mentioned 

in Finding 1, Misstatement of Financial Activity. 
13 

kept of the number of attendees and the quantity and price of gaming cards, books and tickets 

sold (all gaming sales transactions are for cash). 

However, federal election laws and regulations apply to the activities of federal political 

committees and those rules require a different set of recordkeeping and reporting requirements 

for contributions. The level of detail required in the records and reports of committees is a 

function of the contribution limits for individual contributors. 

During the audit period, OCDP maintained records and filed reports as if contributions did not 

exceed the $50 threshold.'" This approach was based in part on OCDP's position that each 

gaming activity constituted a separate fiindraising "event" under state law. The $50 threshold 

only requires records to identify the name of the event and the total amount received for the 

event. OCDP reported gaming receipts from events as un-itemized individual contributions in 

accordance with requirements for receipts from individuals contributing $50 or less. 

The Commission considered OCDP's position that each gaming activity held during a night was 

a separate event for aggregation purposes and that their records and reporting were adequate. As 

part of its consideration, the Commission sought information about separation of gaming 

activities and their administrative functions. In anticipation of these questions, the Audit staff 

held a teleconference with Committee personnel and were told that they had only one hall for all 

gaming activities; separate personnel were not used for the different gaming activities; and all 

gaming activity tickets could be purchased at any of the ticket purchase locations. No additional 

information was provided that would indicate separation of gaming activities. When viewed as a 

single fiindraising event, the Audit staff calculated that the average gaming night contribution 

was approximately $88 per person. As such, OCDP could not reasonably assure that 

contributions received aggregated to amounts of $50 or less a night. Accordingly, to comply 

with the recordkeeping requirements for contributions over $50, OCDP needs to collect more 

contributor information for its gaming events. Based on the above information, the Commission 

concluded" that OCDP's bingo nights were not separate fiindraising events, but were one event, 

and that OCDP was required to obtain the name and address of any person who made 

contributions in excess of $50 during a gaming night, and then identify and report those 

contributors whose aggregate contributions exceeded $200 during a calendar year. As a result, 

the Audit staff calculated that OCDP did not properly record and account for contributions 

totaling $1,820,466, or 89% of OCDP's total contributions. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented this recordkeeping matter to OCDP 

representatives as an open issue for which additional Commission guidance would be sought. It 

was subsequently presented to OCDP representatives as a finding. 

This recordkeeping threshold is discussed in the Federal Election Commission Campaign Guide for 

Political Party Committees and in Advisory Opinions 1981-48 and 1980-99. 

" See Part 1, Background, Commission Guidance, Directive 69 and Request for Early Commission 

Consideration of a Legal Question - Recordkeeping for Receipts, Page 2. OCDP maintains that its recordkeeping 

procedures for the bingo events were in compliance with recordkeeping requirements prior to the further guidance 

issued by the Commission in response to OCDP's request. 
14 

The Interim Audit Report recommended that OCDP provide records demonstrating that its 

gaming night contributions did not exceed $50 per contributor. Absent such records, OCDP 

should have developed and implemented a plan to obtain and maintain a record of: 

• the name, address, date and amount of any person contributing more than $50; and 

• the occupation and name of employer of any individual whose contributions aggregate 

more than $200 during a calendar year, together with the date and amount of any such 

contributions. 

C. Committee Response to. Interim Audit Report 

In response to the Interim Audit Report recommendation, OCDP stated it has begun the process 

of complying with all recommendations. However, OCDP said it disagreed with certain 

unspecified aspects of the report that concerned its gaming activities. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that OCDP agreed to comply with the 

recommendation, although disagreeing with certain unspecified aspects of the report that 

concerned its gaming activities. 

E. Committee Response to the Draft Final Audit Report 

OCDP responded to the Draft Final Audit Report and stated it has begun the process of 

complying with all recommendations. However, OCDP said it disagreed with certain 

unspecified aspects of the report that concemed its gaming activities. 

After submitting its Draft Final Audit Report response, OCDP indicated that it had identified a 

point of sale system that will electronically track the receipt and disbursement of funds for each 

game participant through the use of a gaming card. The new system and procedures will 

facilitate OCDP's compliance with the Audit Division recommendation. 

Commission Conclusion 

On May 21,2015, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a finding that 

OCDP failed to maintain adequate documentation for its gaming activities and did not properly 

report its receipts from gaming activities totaling $1,820,466. 

The Commission approved the Audit staffs recommendation. 

Finding 5. Use of the Campaign Depository 

Summary 

A review of OCDP's gaming operations found that OCDP did not deposit most of its gaming 

receipts into its designated campaign depository as required. During the audit period, OCDP 

collected $1,820,466 from its bi-weekly gaming activities but only deposited $450,162 into its 

campaign depository. OCDP disbursed the majority of these cash receipts ($1,370,304) directly 

to prize winners and game workers. In response to the Interim Audit Report recommendation 

and the Draft Final Audit Report, OCDP stated it has begun the process of complying with all 
15 

recommendations. However, OCDP said it disagreed with certain unspecified aspects of the 

report that concerned its gaming activities. 

The Commission approved a finding that OCDP failed to properly utilize its designated 

campaign depository for most of its gaming receipts totaling $1,370,304. 

Legal Standard 

A. Depositories. Each political committee shall designate one or more state banks, federally 

chartered depository institutions (including a national bank), or depository institutions, the 

deposits or accounts of which are insured by the Federal Deposit Insurance Corporation, Federal 

Savings and Loan Insurance Corporation, or the National Credit Union Administration, as its 

campaign depository or depositories. Each political committee shall maintain at least one 

checking account or transaction account at one of its depositories. All receipts received by such 

committee shall be deposited in such accounts. No disbursements may be made (other than petty 

cash disbursements) by such committee except by check drawn on such accounts in accordance 

with this section. 52 U.S.C. §30102(h)(l) and 11 CFR §103.2. 

B. Deposit of Receipts and Disbursements. All receipts by a political committee shall be 

deposited in account(s) established pursuant to 11 CFR §103.2, except that any contribution may 

be, within 10 days of the treasurer's receipt, retumed to the contributor without being deposited. 

The treasurer of the committee shall be responsible for making 

such deposits. All deposits shall be made within 10 days of the treasurer's receipt. A committee 

shall make all disbursements by check or similar drafts drawn on an account at 

its designated campaign depository, except for expenditures of $100 or less made from a petty 

cash fund maintained pursuant to 11 CFR §102.11. Funds may be transferred from 

the depository for investment purposes, but shall be retumed to the depository before such funds 

are used to make expenditures. 11 CFR § 103.3(a). 

C. Petty Cash Fund. A political committee may maintain a petty cash fund out of which it may 

make expenditures not in excess of $100 to any person per purchase or transaction. 

It is the duty of the treasurer to keep and maintain a written journal of all petty cash 

disbursements. The written joumal shall include: 

• Name and address of every person, to whom any disbursement is made, 

• Date, 

• Amount, 

• Purpose, and 

• If disbursement is made for a candidate, the joumal shall include the name of that 

candidate and the office (including State and Congressional district) sought by such 

candidate. 11 CFR §102.11. 

Facts and Analysis 

A. Facts 

The Audit staff reviewed OCDP's records of its bi-weekly gaming events and found that OCDP 

did not deposit most of its gaming receipts into its designated campaign depository as required 
16 

by 11 CFR §103.3(a).During the audit period, OCDP collected funds from 204 gaming events 

totaling $1,820,466. However, OCDP only deposited funds totaling $450,162 to its campaign 

depository, after having disbursed the majority of funds collected ($1,370,304) to prize winners 

and to game workers. These cash payments did not utilize a petty cash fund for cash payments 

of $ 100 or less and checks (or similar drafts) for amounts disbursed over $ 100. 

For the audit period, OCDP made total expenditures of $2,060,864 with gaming expenditures 

comprising $ 1,711,394 of this amount (83% of total expenditures). As discussed above, cash 

payments comprised the majority of gaming expenditures. However, for most recurring 

expenses, checks were used. Disbursements by check were made for hall rentals, gaming 

supplies, advertising and other items totaling $341,090. 

The table below summarizes cash payment activity for gaming. 

Payment Type Total 

Amount 

Paid 

Description 

Cash Prize 

Payouts 

Exceeding 

$50.00 

$827,861 

Records were maintained for each payment. Disbursements 

were itemized on reports as payments to individuals and 

contained the name, address, date, amount and purpose for 

each payment. 

Cash Prize 

Payouts $50.00 

or Less 

$511,914 

Records were not maintained of individual payments. 

Disbursements were reported as lump sum payments to "Non 

Voucher Bingo Prizes $50 or Less" (no individual payee 

information was provided). 

Other Cash 

Gaming 

Expenses 

$30,529 

Records of miscellaneous gaming expenses paid to gaming 

workers in 2011 were not maintained. These disbursements 

were included as un-itemized expenditures in reported totals. 

Total gaming 

Cash payments 1370,304 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff initially presented an open issue for recordkeeping for 

amounts of $50 or less to OCDP representatives. This issue was later expanded to include all 

cash disbursements and subsequently presented to OCDP representatives as a finding for failure 

to utilize a campaign depository for all cash transactions. 

The Commission noted in a prior audit of OCDP, approved on March 28,2001, that OCDP paid prizes 

using cash received from the sale of bingo cards. As a result of the prior audit, matters were referred to 

the Office of General Counsel for further enforcement (See MUR 5236). In that matter, the 

Commission found that OCDP had violated the requirement to deposit all its receipts and that it failed 

to properly itemize gaming disbursements. In the conciliation agreement with the Commission, OCDP 

agreed to correctly disclose all financial activity related to its bingo account, deposit all receipts from its 

bingo games into its designated depository and properly itemize disbursements that aggregate in excess 

of S200 from its bingo account. 
17 

In subsequent discussions about cash disbursements, OCDP responded that it complied with the 

Act's required use of a check or "similar draft" by using a "voucher system." Under the voucher 

system, prize winners fill out and redeem vouchers for cash. OCDP stated that it has used this 

system for years and the Michigan State Lottery Bureau was aware of it and permifted its use. 

In addition, OCDP cited two Advisory Opinions, 1982-25 and 1993-04, where the Commission 

allowed wire transfers and computerized bill paying, respectively, to satisfy the requirement of a 

similar draft. OCDP stated that, as in those opinions, the vouchers are not "operative 

commercial instruments" like checks, but they are documentation of the prize payment 

transaction, which is the goal of the regulations. OCDP indicated that the vouchers satisfy the 

requirements of a "similar draft" while avoiding the practical problems of writing and processing 

thousands of checks. 

Although OCDP cited wire transfers and computerized billing as exceptions to the similar draft 

requirement, the Audit staff noted the regulations go beyond simple documentation requirements 

and that they specifically required the use of a campaign depository as cited above. Using a 

campaign depository ensures a clear paper trail linking disbursements to a 3"* party payor/record 

keeper and provides for a complete disclosure history for audit purposes.*^ 

The Interim Audit Report recommended that OCDP develop and implement procedures to ensure 

that a campaign depository is used for all receipts and disbursements, including gaming 

transactions made with cash. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, OCDP stated it has begun the process 

of complying with all recommendations. However, OCDP said it disagreed with certain 

unspecified aspects of the report that concerned its gaming activities. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that OCDP agreed to comply with the 

recommendation, although disagreeing with certain imspecified aspects of the report that 

concemed its gaming activities. 

E. Comniittee Response to the Draft Final Audit Report 

OCDP responded to the Draft Final Audit Report and stated it has begun the process of 

complying with all recommendations. However, OCDP said it disagreed with certain 

unspecified aspects of the report that concemed its gaming activities. 

After submitting its Draft Final Audit Report response, OCDP indicated that it had identified a 

point of sale system that will electronically track the receipt and disbursement of funds for each 

game participant through the use of a gaming card. In addition, OCDP stated that it plans to 

change its current procedures and maintain an appropriate petty cash fund, sufficient to pay all 

game prize winners and game workers. The new system and procedures will facilitate OCDP's 

compliance with the Audit Division recommendation. 

See Advisory Opinions 1993-04 and 1986-18. 
18 

Commission Conclusion 

On May 21,2015, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a finding that 

OCDP failed to properly utilize its designated campaign depository for most of its gaming 

receipts totaling $1,370,304. 

The Commission approved the Audit staffs recommendation.