Dnft Final Audit Report of the 

Audit Divieion on the 

Conaervative Majority Flind 

{Juiy 9. 2012 - December 31. 2012) 

Why the Andlt 

Wee Done 

Federal law permits the 

CommisBion to conduct 

audits and field 

investigBtlons of ai^ 

politkal commttteethat is 

required to filcicpoits 

unto the Fcdeial 

Election Campaign Act 

(the Act). HM 

Commission generally 

conducts such audits 

when a committee 

appears not to have 

the threshold 

requirements ibr 

substantial compUance 

whhtfae 

the 

prohi 

disclosuR 

of the Act 

Fatun 

The Commission 

initiate an enfincement 

action, at a later time, 

with respect to any of the 

matten discussed in this 

report. 

Ahont tho Commlttoe 

The Consenrative Mqiority 

headquartered in Arili 

the chart on Committee 

committee. 

For more Infonnatkm, see 

p. 2. 

Flfwnda 

• Recel|ils 

o Contril 

TatalRecdpti 

$2,814,766 

$2314,766 

itures 

Expenditures 

$ 1398317 

1347333 

$2,745350 

and HimtrmmimiliiHiHit (p. 3) 

: of Financial Activity (Finding 1) 

Disclosure of Occupation and Name of Empk^ (Finding 2) 

Reporting of Apparent Independent Expenditures (Finding 3) 

Reporting ofDebts and Obligations (FMing4) 

Recordkeeping for Communications (Finding 5) 

S2U.SX:. §30111(b). 
Draft Final Audit Report of the 

Audit Division on the 

Conservative Minority Fund 

(July 9, 2012 - December 31, 2012) 
Table of Contents 

Pice 

Put I. Baekgrannd 

Authority fiiT Audit 

Scope of Audit 

FsrtlL Overvlmr of Committee 

Committee Qrgeiizilion 

Overview of FinanciBi Activity 

Putm. Snrnmerlee 

Findings and Recommendations 

Put IV. Finding* uid Recom 

Finding 1. Misstatement of Financial 

Finding2. Disclosure of Occupatkm and N 

Findings. Repoitingof 

Findingd. Reporting of Debts 

Findings. Recordkeepingfbr 
Parti 

Background 

Anthorltj fiir Andit 

This report is baaed on an audit of the Consenrative 14a|ority Fund (CMFX undertaken by 

the Audit Dtviaion of the Fedeial Electian Commission (the Commisskm) in aooocdanoe 

witfi the Federal Election Campaign Act of 1971, as amended (the Act). IheAudh 

Division conducted the audit pursuant to 52 U.SJC. $3011 l(bX which pennhs the 

Commission to conduct audits and field investigations of any poJUkal commhlee that is 

required to file a report under 52 U.SX?. §30104. Priorto 

subsection, the Commission must perfimn an faitemal 

committees to detennine if the reports filed by a 

requirements tor substantial compliance witti the 

Seope of Audit 

Following Commission-appfoved procedureSk 

fhcton and as a result, this audit examined; 

1. the disclosure of contributions received; 

audit under this 

filed by selected 

meet the threshold 

2. the disclosure of individual 

3. the discloBure of debts and obliL 

4. the consistency between reported fi| 

5. the completeness of disburaement 

6. the disclosure of i 

7. other committee 

1* occupation 
Fftrtn 

Overview of Committee 

Committee Organization 

ImportMtDatei 

MinttfBwt lafannrtloB 

Attended Commission Cimpaign 

Seminar 

Who Handled 

RecoidkeepingTi 

Caah-on-1 mgJnlv 9L 20m T $0 

Rseeliils • 

o ContributkMBi^mbidiviAls 2.814w766 

TolalReeelDla SU14^766 i 1 < 

o Operating Expenditures 1398^17 

Q TfwlMlplwlMtt PY'WMUi'Wa 

Toinl DmbansBcnia 

1347333 

S2.745JS8 

Cash-on-hand dh Deeerabar 31.20U $68316 
Part m 

Summaries 

Findings and Recommendations 

Finding 1. HlsstntoMnt of Financial Activity 

HW Audit sbdrsoomparison of CMF's financial activity wWi its bank icconbicvcalcd a 

material misslalcuaiLofdisbunenicnts in calendar year 2012. G^gmiastated its 

disbuiscnicnts by $2,163,830. in response to the Interim 

the CMF Treasurer stated that CMF did not agree diat it 

by S2.163.83(^ and it had amended its 2012 disclosure 

errors for inconect dates and names. Hbwever.as 

reports have been filed by CMF to conect the pul 

amended reports, CMF dlsbuiscments remain 

(For more detail, see p. S.) 

Findings. Dtwloonre 

Employor 

During audit fieldwofk, a review of all 

itemization indicated that 527 

of the contributor's occupation and 

efforts" to obtain. 

Report 

reports to conea 

disclosure reports have 

of 

Oeenpn 

! recommendation, 

its disbursements 

some of the 

noamended 

Absent fl^ging of 

^$2,163,830. 

requirbig 

adequate disclosure 

name Sg^foydnM^ did iK)t demonstrate "best 

ibmit this VonnatlonXi response to the Interim Audit 

Treasurer nmed that CMF had amended its disclosure 

as of timdale of this report, no amended 

the public record. Absent the filing 

lacking adequate disclosure of 

Findln] 

l^endil 

During audit 

expenditures that I 

were accurately and 

jemahis as $86,745. 

Appuat IndependMit 

Audit staff reviewed disbursements to verii^ the independent 

on Schedule B (Itemized Independent Expenditures) 

ipletoly disclosed. 

The Audit staff identified disbursements totaling $469,136 which were not reported as 

apparent independent expenditures. Also independent expenditures totaling $185,663 

were disclosed with an incorrect vendorname. 

With respect to the filing of24/48-hour reports required for certain independent 

expenditures, CMF did not file 24-hour reports toeing $90L260 in a tbiiely nunmer and 

did not file 24/4S-liour reports for apparent IndependeDt expenditures totaling $469,136 

noted above. 
In lespoMC to the Interim Audit Report recommendation, the CMF TYeasiner staled that 

the actual amount of independent expenditures was $914,836 and CMF has filed new and 

amended 24/48-hour reports fiv independent expenditures totaling $764^082. After 

reviewing additional voidor invoices that were provided, the Audit staff has accepted that 

expenditures totaling SI95,839 were not indepemient expenditures, and reduced 

apparent independent expeiiditures not lepmled to $273,297 (S469,136 - $193,839). 

A^ CMF's response mentioned fliat it had filed amended reports to ooirect the 

reporting ofthe 31 independent expenditures totaling $183,6<B discloaed with the 

incoirectvendorname. However, even though the CMF Treasurer said that amended 

reports were filed, as ofthe dale of this repoi^ CMF has not filed any amended disclosure 

reixntsooooemlng the independent expeiiditures. Absent evidepKgt the expenditures 

in question did not require reporting as independent expendi|H^and did not require 

24/48-hour reports, the Audit staff considers the expendireniftyra $273,297 to he 

independent expenditures^ and CMF has not complied snK the imKinendation to 

correct die disclosure for 31 independereexpendituiivWuhigSl] 

(For more detail, see p. 9.) 

Finding 4. Repoitlngof Mbta 

During audit fieldwoifc, the Audit staff identified 

disclosed on Sdiedule D (Drirts and Qbliptians) as 

not liable fix-a portion ofthe expensm^Rcy were 

response to the Interim Audit Report 

ch^ copy (fiont only) written a 327 

ten invoices billed to the^gprganizstioiC 

owed have been prDpGd|^|A|d. TheAuVstaff 

documentation to djj^mlnlieVt the debts 

by CMF. Absent fu^MlocuiAtation. the 

Schedule D remains as 

(For more drtg^MU). 13.^ 

$67,800 that were not 

CMF contended that it was 

committee, in 

. the ClHIneasurer movided a 

of $93,990 along whh 

all debts and obligations 

consider diis adequate 

ling $67,800 did not require diadosure 

of debts required to be disclosed on 

5. 

^fieldwoifc, 

the infixml^^and 

staff identifiaBD4J99 

ofthe invoices I 

determine how 

interim Audit 

fof ConmiuiloRtloiis 

Ludit reviewed disbuisements to verify the accuracy of 

riflcation of transactions disclosed on reports. IheAiidit 

sufficient records were not provided. Whhoutacqpy 

communications, the Audit staff was unable to 

lid have reported these disbursements. In response to the 

lendatkxi, the CMF IVeasurer provided two media vendor 

invoices, four television advertisements; and staled that CMF believed that all 

documentation needed by the Audit staffhas been provided. The Audit staff concludes 

that the records provided hy CMF demonstrated thtt disbursements totaling $224^768 

were operating expenditures and disbursements totaling $79,631 were insufficiently 

documented. In addition, disbmsements totaling $38^302, which were originally included 

in the apparent independent expenditure finding are not sufficiently documented. Absent 

further documentation, the Au^ staff oonsiderB the reniainmg disbursements totaling 

$117,933 ($79,631 + &8302) to be insufficiently documented. 

(For more detail, see p. 18.) 
Part IV 

Findings and Recommendations 

Finding 1, lUartatemmt ef Activity 

The Audit stufTs oompnison of CMF*s financial activity with ha bank leooids revealed a 

material misslaiement of diabunements in calmdar year 2012. 

diabuiaements by $2,163,830. In response to the fadeiim Audit 

the CMFlVcasurer stated that CMF dU not agree that it had 

by $2,163,830^ and it had amended ha 2012 disclosure 

errors fix* incorrect dates and names. However,aaof 

reports have been filed by CMF to correct the public AoA A1 

amended reports, CMF disbuisements remain mi 

F misstated ha 

recommendatioii, 

ha disbursements 

some of the 

no amended 

Lngal Standud 

Contents of Reporta. Each report nuist disclose: 

• the amount ofcaah-on-handa^te beginning 

• the total amount of receipts 

• the total amount of d! 

year; and 

• certain transactiomjBttrequue 

Schedule B (ttaMWebunemendV 32 U.S.< 

(5). 

of the reporting period; 

fix-the calendar year; 

idnd fin the calendar 

le A (Itemized Receipts) or 

30104(bXlXCX(3X(4X«nd 

lied CMPs reported financial activity with 

The reconciliation determined that CMF 

12. The fbllowing chart outlines the discrepancies 

and ha bank records. The succeeding paragraphs 

occurred. 

2012 CoBuiittBe AlBvity 

Renorted BankRceorda DisereiMMar 

Begjiming Cadi Balance 

July 9,2012 

SO $0 $0 

Receipts $2,814,767 $2,816,233 ($1^ 

Understated 

Diabunements $2,743,851 $2,747,337 ($1^ 

Understated 

Ending Cash Balance 

® December 31,2012 

$68,916 $68,916 $0 
CMFundenlatDdh8disbiifwnwiitshy$M86in2012. However, when evaluating the 

identified enon, legaidless of whether the eirors were positive or negative (absolute 

valueX fhe Audit staff discovered that CMF misstated its disbursements by S2,163,830 as 

follows: 

The misstatement of disbursements resulted fiom the following difforences: 

• Expenditures underrepoited or not reported^ 

• Expendhures overrepoiledornot supported by bank payments 

• Bank charges not reported 

Snm of Hsportlng Adiinstmcals 

$1,081,176 

1,081,172 

Ld82 

S2,163|i30 

Although die chart demonstrated that overall CMF had 

disbursements by $1,486 in 2012, the Audh staff 

tiienuyoriQf of its disbursements. Thedii 

that, during the period from CMF's inception 

was unable to match vendor payments to any 

over-reporting and under^reporting on hs disci 

reporting expenditnrea of $1,081,172 and 

of$l,082,6S8. 

B. Interlai AmUtRspoit AAndIt 

At tlie exit conference, the Audit staff | 

discussed the reporting enooatfaat cau^ 

additional comments. 

its 

properly report 

a manner 

October 23,20l2!%gAudh staff 

lued 

ilted in CI 

bxpenditures and bank charges 

lofthb misstated activity and 

L^he CMF Treasurer had no 

The hiterim Ai 

misstatements for 2012' 

that' lend Its reports to correct the 

I tol^rim Audit Report 

I to the Int^Bkudit^B|rimoommendation, the CMF Treasurer stated that 

disagreed^^fthaMMated its disbursements by $2,163^130. Also^tlie 

! staled thatW|he djscreponcy of $1^486 was a simple case of bank 

' being rKrted as contmeceipts (not-sufBcient-fbnds checks or 

credit card Ghar]^^4prreduce receipts) histeadofas bank sereke charges." CMF 

did agree that sorn^kaleiiames and some dates were reported incorrectly; therefore^ the 

CMF Treasurer said^mended 2012 disclosure reports were filed to correct the payee 

names, mconect dates, and the reporting of the bimk service charges only (see Finding 3 

- Reporting of Apparent Independent Bxpendituies). However, as ofthe date of tMs 

report, the Audit staff determined tliat no amended reports have been filed by CMF to 

correct the public record. Absent tlie filing ofamended reports, CMF disbursements 

remain misstated by $2,163,830. 

' ThiiUiioiintIiichideitwo<nrpciiK!itirwtohliiigS79.63l fcr wfakfa duwiiiwiSUhsi vui InaifHctert to 

mdwadetuinliMtionpertsiiUiigtohewthiiiiidiibonaiieBliiheiiidbewpotted. SeeReBonllmpiegfer 

nHiiii'Tnkstlim Findiii^ p.18. 
Finding 2. DtaclomnofOeeapntlonandNuneof 

Bm^toyer 

During audit fieldworic, a review of all contributions fiom Individuals requiring 

Itemization indkaled that 327 contributions totaling $86^745 lacked adequate disclosure 

ofthc contributor's occupation and name of employer. CMF did not demonstrate'tat 

efibits" to obtain, maintain and submit this mfimnation. In response to the Interim Audit 

Report lecommeiHlation, the CMF Treasurer slated that CMF liisUiBiiiiili d Hs disclosure 

reports to cociect the eiiors. However, as ofthe date of this 

dtelosure reports have been filed i^ CMF to correct the pul loid. Absent the filing 

ofamended reports, the amount of contributions lacking w gaclosureof 

occupation and name of employer remains as $86,741 

A. Required Inftmallon Ibr Coutribnt 

oontributloa fiom an Indmduai, the committe? 

Infimation: 

m the contribulor's full name 

• the contributor's occupation 

• the date ofreceipt (the date the^ 

• the amount of the contribution; 

• the calendar total of] 

U.S.C. i301MbXjlBjiid 11 

code); 

iployer, 

trlbutkm); 

the same Individual. 52 

and 104.3(aX4Xi). 

' of a political commhlee 

below) to obtair^ maintain, and submit 

Act, tfiTCbmrnittee's reports and records will be 

52U.SX:.§30l02(i)andllCFRS]04.7(a). 

ofBeatEfMai Theheasurer and the committee will be considered to 

: efforts'V the committee satisfied all of the fi)llowing criteria, 

^licltwms ibr contributions included; 

a cidtagb ibr the contributor^ fidl name, mailing address, occupation, 

and rSHeof em|doyer; and 

o the st&ment that such reporting Is required by Federal law. 

o Note: The request and statement rruist appear in a clear and conspicuous 

manner on ariy response material included in a solicitation. 

Within 30 dqysofreceiptofthe contribution, the treasurer made at least one 

eflbrt to obtain the missing infiamation. In either a written request or a 

documented oral request 

The treasurer reported any contributor infixmation that, although not initially 

provided by the corrtributor, was obtained in a firllowup communication or was 

contained in the committee's records or in prior reports that the committee filed 

durmg the same two-year election cycle. 11 CFRfi 104.7(b). 
A. Full 

A review of all contributioiu fiom Individuals requiring hanization 'M'catgd that 527 

oontributlons tolalnig $86^745, or 3096 of total oontributlGns fiom Individuals required to 

be itemized by CMF, lacked disclosure of the contributor's occupation and name of 

employer. For most of these entries, the contributor's occupation and name of employer 

intbrniation (455 of527) were blank on the Schedule A (Itemized Receipts) filed with the 

Commission. 

Ihe Audit staff reviewed the receipt records provided by 

utilized "beA eflforts" to obtain, maintain aiul submh the 

CMF did not provide documentation 

requests for 48 contributions totaling $9, 

CMF had the required Information fbr4 

however, this information wu not disclosed 

detennme If It had 

fol 

r($86,745-$77, 

In response to the audit; CMF submit 

requirenients; (Owhhin thirty days of 1 

seii^ clearly asldng for the mlssitig 

contributors would be Informed of the reqi 

such Information; 

efforts 

totaling S' 

Slscloaure reports. 

address would be 

the mfbrrrution, 

occupation and runne ol 

contril 

contril 

B. 

Attheex! 

thecontxf 

he had 

response to the 

occupation and 

amended disclosure 

above. 

itributor? 

ha 

l"best efforts" 

a letter would be 

; a contribution; (11) 

law for the reporting ^ 

a fox number and an email 

le lYeasurer stated that upon receipt of 

ride the new Infbrmation. AMwugh 

obtained for the mqjority of Its 

that these follow up letters were sent to 

lit sthS' provided schedules and discussed tfie omission of 

name of employer. The CMF Treasurer oormnented that 

Isslng occupation arul name of employer hiformation. In 

CMF provided documentation detailing the contributor's 

employer infbrmation for $45,369 of the errors, however 

were not filed.^ This amount is Included hi the $77^5 noted 

The Interim Audit Report recommended that CMF establish "best efforts" by amending 

its reports to disclose the missing Information relatlrtg to the 479 oontributions totaling 

$77,405. 

oontilbutloailolitleg 832,036. 
C. CoamttlM Rnpomc to latorin Aidit Report 

In fcqwnse to the Interim Audit Report leGommendatioii, the CMF lYeasuicr stated that 

CMF had oblanied oocupation and name of employer infixmation for ail but 30 of Ha 

Gontributon and lesiatod Its "tat efiforts" procures. The fesponse also hicluded a 

listing ofthe 30 contributors for whom CMF was unable to obtain the missing occupation 

and name of employer infonnation. In addition. 478 "foest effort^ letters wen provided. 

Further, the response mentioned that CMF had amended its disclosure reports to conect 

the nu||ority ofthe enors. However, as ofthe date ofthis report, the Audit staff 

determined that no amended reports have been filed by CMF to conect the public record. 

AhMiit the filing nTmrnfrndnA repwfg, the mmmt nf cnnfrniMrifiMjgelrlfig 

disclosure of occupation and name of employer remains as; 

Findings. Reporting of Appunnt 

WHh respect to thp 

expenditures, CMF 

did not file 

noted 

inroip||mtotheli 

theactu3l%|puntofi 

amended 

reviewing 

expenditures tota^foSl 

appuent t 

During audit fieidwoik, the Audh staff reviewed di 

expenditures that CMF reported on Schedule E (Itemi 

were accurately and complelely disci 

HW Audit staff identified disbursement^ 

appaiaitfaidependent expenditures. Also 

were disclosed with an inflnKt vendor 

to verify thMndependent 

Expenditures) 

1,136 win were not reported as 

itures totaling $185,663 

lired for certain Independent 

ing $90^260 in a tmiiely nianner and 

bit expenditures totaling $469,136 

recommendation, die CMF Treasurer stated that 

itures was $914,856 and CMF has filed new and 

independent expendhures totaling $764^082. After 

[voices that were provided, the Audit staff has accepted that 

9 were not independent expenditures, and reduced the 

itures not reported to $273^97 ($469,136 - $195^139). 

Also^ CMF's response mentioned that it had filed amended reports to conect the 

reporting of the 51 independent expenditures totaling $185,663 disclosed with the 

faioonect vendor name. However, even though the CMF Ttoasurer said that amended 

reports were filed, as of the date ofthis report, CMF has not filed any amended disclosure 

reixnts concerning the independent eqienditures. Absent evidence that the expenditures 

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

24/48-hour reports, the Audit staff considen the expenditures totaling $273,297 to be 

independent expenditures, and CMF has not complied with the recommeiidation to 

correct the disclosure ftir 51 independent expenditures totaling $185,663. 
10 

A. Pnfliltlwi off ladipwdwrt Eiptadftam, Thetenn'iiidqpendentcgqxnAtui^ 

means an expenditure by a person fbr a communication expressly advocating the 

election or defeat ofackai^ identified candidate that is not made in cooidination 

witfaaqy candidate or authorreedoommitlee or agent of a candidale. 11 CFR 

Sioai6. 

B. Msdoaue Requirements-GcnendGuidellnca. An independent expenditure shall 

be reported on Sdiedule E iC when added to other independent expenditures made to 

the same payee during the same calendar year, it exceeds $20^1iidependent 

expenditures made (ix^ publicly disseminated) prior to piwpdk^iould be disclosed 

as memo entries on Scheie E and as a debt on Schedulu^ Independent 

expenditines of $200 or less need not be itemized, thoun^mopmmhtee must report 

the total ofthose expenditures on line (b) of ScheduMf. IIQ|^§1043(bX3Xvii)b 

104^a) and 104.11. 

C I ast MlnnSr Inrtfpfmlfnt ffipwdifIT 

independent expenditures aggregBting $1 

election, and made after the 20^ day but more 

election, must be reported and thq report must be 

24 houn after the expenditure is 24-hour: 

additional independent expenditur^HMHlP SI lOOO 

communication is publicly dissemn 

use to determine whether the total 

aggregate, reached the Itare^^ lepoiUj 

§{104A(i)and 11 

ir. 

respect to avgivcn 

before the of an 

by the Commimion within 

required each time 

The date that a 

the committee must 

expenditures has, in the 

amount of $1,000. i 1 CFR 

D. Independents 

ex| 

tbnei 

bc.j^iosed with! 

mustbe! 

is nude, 

as the diMhat the 

if 

reporting { 

(48-H^r Reports). Any mdependent 

respect to any given election, at any 

to and nichiding the 20th day befixe an electfen, must 

I the expendhuies aggregate $10,000 or more, 

dved bl|R& Commission within 48 houn after the 

I dateSat a communication is pubiiciy disseminated acnes 

must use to determine whether the total amount of 

has, in the aggregate, reached or exceeded the threshold 

;000. 11 CFR §S104A(f) and 104.5(^1). 

E. Definition of] Advocating. The term "^expressly advocatrng" means any 

communication that; 

• Uses phrases such as **vote for the Pircsideiit,"*iB-elecl your Congressman," 

'Mefesf accompanied by a picture of one or more candidate(s), "Yqject the 

incumbent," or conununications of campaign slogBn(s) or individual woid(sX 

which in context can have no other reasonable meaning than to urge the elei^on 

or defeat of one or more cleariy identified candidate(sX such as posters, bumper 

stickers, advertisenients; or 
11 

When taken as a whole and with limited leftrence to octenml eventa; sudi as the 

proximity to the election, could only be inteipwted by a leasonable person as 

containing advocacy of the election or defeat of one or more cleariy identified 

candidate(s) because: 

o the dectoialpoitianoftlie communication is unmistakable^ unambiguous, 

and suggestive of only one meaning; and 

o reasonable minds could not difler as to whether it encourages actions to 

elect or defeat one ormore clcaiiy identified candidate(s) or encouiages 

some other kind of reaction. 11 CFR J100.22(a) and (b). 

F, FDmmlReqniieinenlBRegnnling Reports and 

committee shall maintain recofdswilh respect to the 

which shaii provide hi sufficient detail the necessaiy t 

filed reports may be verified, explained, clarified, and 

completeness. 11CFR §104.14^X1)* 

political 

to be reported 

data fiam which the 

and 

Fteotn and Analpnin 

A. Reporting of Apparent Independent Fipf ndi 

1. Facts 

During audit fieldworic, the Audit 

reporting of independent expendh 

to ensure the proper 

fled the foliowing: 

Apparent ij 

Vendor] 

: expendhiiVnot leputKl totaling $469,136. 

reported\i Scheie E totaling $185,663. 

invoices or payments to any 

Schedule B (Itemized Disbursements) or Schedule 

I Audit staff^M CMI^Mrtplain how it classified communications and how 

the assocuA disbiuEnents, as well as, if any documentation was 

avaiiaOHB verity the Mortecuimounts. CMF staled that portions of some 

didnireCT^swere revted as independent expenditures and the remaining portions 

as operBtinglBtfiditun However, CMF did not explain its methodology fer 

delnmining hOTBdwdmnements were disclosed. 

Absent documentation of how disbursements were disclosed, the Audit staff used the 

following approach to deteimine the amount^ that should have been reported as 

apparent independent expenditures: 

* TheAnditnlforiglBsliy iieliidedlnitsalGataliooofliiotolricortiitlribiitadtoinile|Nndaa 

expendlluiei a wrkty of odnr types of curt dsKribed on the iiivolGeik Mich H, portsgB offtiMUmmt 

iettenr*; com MKNirtsd wilta ontt end praoeMlng Gonaecled wirii "AiUUlment ien^ end wife 

'hsquUdoo ad pfoeateiiiF^ check dsH^ Sir "^mpiUdoo red proceMiiisr^'Vnud 

'^wpeuUnaTS lockbox id cons MinriilBil withcwAgid undhg'WIunrf'wdi MS 

fire^bnnpernlGker. There cons ilrm'hfirligiBhwolcoiWB not degnod hum ofhowtlwy we 

ratalsd to the consmlBnioni, Isa the dereffpUom nilgfat nire qocniom whnherioaie oftheai ehould 
12 

Communicitions such as the telephone calls^ followHip lettcfs, and televisian 

advertisements oontaining express advocacy of a clearly identified candidate 

were considered to have moat likely disseminated befbre the date of the 

general election. 11 CFR§10022(a) 

Based on Gommunlcatioru that the Audit staffdetermined were disseminated 

befixe the November 6,2012 general etoction, any associated costs were 

considered independent expenditures. 

Based on communications that the Audit staff 

after the general electiain, any associated costs 

experulitures.^ 

disseminated 

lidered operating 

Appaient Independent Eapcnditares i 

Made Available) 

Hie Audit staff determined that CMF^ 

totaling $1^16309. However, CMF onl 

totaling $1347,233. Thereftire^ the Audit stdlBKulated an under-reported 

amount of apparent indepeadirt expenditures $469,136, fig which CMF 

provided the associated corrunflHtiMis which iiicBidphone scripts and call 

dates, advertisenients, and solicNlM||||n. This amHtiiiciuded $328330 

thatCMF had not paid and fivwvh CraHUld hauedisclosed memo entries 

on Schedule E 

debtowed^ 

Obligstions] 

expressly! 

ddined under 1! 

adi 

•"ll 

communicyygi imiiit ^Miiiiiisinl Ihe corresponding 

ive been diMosed on wnedule D (Debts and 

lis and teunsion advertisements conftained language 

or deltyif a clearly identifled candidate, as 

whiMie ftillow up letters contained iMgiwgn 

slearly identifU wmdidaln, as defined 

itbrdiei 

lAudk 

IwHh 

tincethHsaei 

* HKAudhMlfi 

vendor eonplelod tie I 

See 11 CJJL§ 100.16. UponfinllMrraviewaflerCMP*s 

the Audit naff deducted eorti Mwelaled wHh credll cad 

buew and acquitition/lpmrfingiockbaaiefvicB^ end liege 

with producing end diifrihurifig the ooumunhurinni 

of diiee itated ou each hivoioe to enhnae the dsle ooivhiGh CMF'f 

The Audit mdr treated the iart dqr of the dale luge as the dan of 

eoBBpletion fbr ail invdlcef, enepc ftr those invoieea in uddch the dale migB oecined partly beSuB and 

partiy after the geneMl election drte. In that oaaa^ the Audhatafrehoee to prome the cort of the sendee 

aneoidhig to the proportion ofthedrteiingeuouuii lug beftxe and after the general election. 

* Only S67300oftheS3283S0 would be lequfaed to be diseioaed as deb^sfaiee CMP dfacloaed debt owed 

totlilsvendortotellng$26(M50cnlli2012year-endicpotL SeeFindhigd-RBpoithigofDebliand 

OblliBliooii p.15. 

CMF has indifeifid that the two teiephouBecrlpti, two ibllowHaiietteii, and three televiiion 

• ^ f w II —— Htm mmrtmm nwmtum^ ^ 

Bade during the audit period. However, iuvoleeefaidleale there wee an addfthuul 2 television 

ailw nisi IIS lie, wr Fintlint 1 iTfirr'*''nr^ ** p r* Basedontheoonlentofliie 

ooBUHuilcalions, one telephone script one fbUouHgi letter, and two television advertbcBCBB eomainad 

eipi ess advocacy. 
13 

Indepeedert Eipendltarei Reported OB Sehedile K (ledepcDdeet 

EipeBdhflfo Schedile) - PiedoeMt Emn 

CMF disclosed SI independent expenditures totaling $183,663 with en inconect 

vendorname. These expenditures were disclosed as paid to the media vendor. 

However, CMF did not make direct payments to this vendor. The media vendor's 

services were billed to CMF through invoices fiom another vendor, and CMF 

made direct payments to that vendor instead of the media vendor. 

2. Interini Audit Report A Audit DhrisiOB 

At the exit Gonftrenoe^ the Audit staff presented schedules 

expenditure reporting errors. In response to tfieexh 

provided an email addressing $301,972 of the 

A. i(a)above. The email showed that June 2012 

billed to CMF were actually incuirad by 

paid by that committee.' Other tium the em^fPfovided by CMF, 

did not provide any other documentation tBHipoft thatthe other 

for $92^11. 

independent 

the CMF Treasurer 

not paid in section 

$92^11 that were 

have been 

FlYeasurer 

liable 

Hie interim Audit Report 1 

• Provide docnmenlBtion 

totaling $469,136 did not i 

Absent such evidence, CMF 

ditiwirsements as independent I 

proceduresfi^^^ljng 

Amend ilBPortsl^Birect the 

1183,663. 

thatCM^ 

! tiiat app^^yndnendent expenditures 

; as inflktieni expenditures. 

reports to disclose these 

ule E and submit revised 

name for the 31 independent 

Iff 

MF belli 

fois amount' 

an attfliHtont that expl 

iture 

invoices. 

lit Report 

: Report recommendation, the CMF Treasurer staled 

of independent expenditures was $914^36 

on the amended disclosure reports. CMF provided 

it determined whether an expenditure was an 

independent expenditure^ along with 20 additional vendor 

CMF consideredjib following costs as independent expenditures; allcosts 

associated with me media vendor ($629,730), 20% of all outbound phone calls 

($133,236) since approximately one minute of an avenge five minute call contained a 

taped anti-Obama message^ 30% ofall rental list costs ($30,223) since the lists were 

u^ for outbound calls which had a dual purpose ofdelivering a political message 

and soliciting a contribution, and all bumper slickBr costs incurred before the general 

election ($2,087), since the costs contained a political message. Costs totaling 

The other coaaaluee tint CMF eonmdililhbleiir the S92A11 ddxleiiotieahtsndwldithe 

ComslHioo. 
14 

SS^411 were considered to be costs asaociatod whh a 527 oiBmization'(see Fiiidnig 

4 - Reporting of Debts and ObligationsX and all other costswere considered to be 

either fiffldndsing or adniiniatfative in nature. CMF did not provide any new phone 

scripts." 

The Audit staff maintains the script used fbr the telephone calls, the fbilow-up letters 

sent, and the inedia television advertisements provided by CMF and made before the 

gen^ election contained express advocacy, making the costs fbr these and aii olher 

relaled costs independent expenditures. CMF's statement that some ofthe costs were 

iundnising only does not take into account that fundiaising ld|m with express 

advocacy language are not excluded fiom the regulation (UdHb^at 11 CFR 

SI00.16.'^ AisOk CMF's reqxmse mentioned thai it hadJB amended reports to 

correct the reporting ofthe 51 independent expenditiqnaiH|u $185,663 disclosed 

with the incorrect vendor name. However, as ofthe Jlbof^Bport, CMF has not 

filed any amended disclosure reports i tnu t \n lak nl^ii iiililiiiin 

After reviewing additkmai vendor in were: 

staff reduced the apparent independent 

staff accepted that legal and accounting expendi 

independent expenditures. Also^te Audit staff 

purchase and nuuiing of Americad^|g£l13,122X 

(H650X and credit card 

apparent independent expenditures. 

of$157,537fiomits 

these to be 

removed from 

byCMM^ndit 

$195,839. ^Audit 

$64^160 were not 

that costs relating to the 

latii^ to lock box services 

5/105) were not 

disbursements 

Coats and now consideia 

$38,302 have been 

iture total and moved to the 

provided fbr these expenditures is 

should have been reported (See 

81,347,233 

thtf the 

expenditures, th^ 

expecxlitures. 

lunt of apparent independent expenditures to 

As previously stated, CMF reported 

in ttie amount (^$1347,233. Therefbre^ CMF has not 

independent expenditures totaling $273,297 ($1,620;530 -

rept^ngasmdependentexpenditures. Absemevidence 

question did not require reporting as independent 

lit staff considers these expeiiditures to be independent 

* See ftoiDOlB 15. 

'^SeetbotnolDd. 

"CMF provided one more leievblonidvBrtlieDeB^briagiiig die total provided by CMF to to. The 

CMFTYeBnacrXrtaddiiiielcviiionadvwtieBioentiienindfipnidiideqwnditiao. However the Audit 

Mffdoei not eoBilderiliii perticiihr teievtalon advertlieaieBt to be en tadependeal expeadiliR beewae 

ft doemotcontthexptOM advocacy. AadtheocMthBOtapaitofthiifiadiiig. 

" See the Final Audit Report ofthe rrwnmlMbii on the I esaryOuiiaumBePDllliBBl Action CoBBBiaBe^ 

Fbdlng 2 (2008 decdoo cycle). 
IS 

B. Flitaire to File 24/48-HiMr Reporti for lAdcpendeat ExpeMlitnrei 

1. FagU 

During audit fiddwoik, the Audit staff levlewed disbunements to determiiie whether 

24/48-hourfeports were property filed." The Audit staffdetennined that CMF filed 

untimeiy24-houriepoits for 13 independent expenditures totBlmg $90,260. Forthese 

expenditures, 24-liour reports were filed 13to27dQysafierthedisaenihiatiandate. 

As noted above, the Audit staff also identified apparent independent expenditures 

totaling $469,136 vdilch may also require filing of24/48-hour reports. 

2. Interim Andit Report JfcAndltDtvialon 

At the cxh oonftrenoe, the Audit staff presented schedi 

24/48-hour reports that were not filed. The CMF 

comments. 

:untunely and possible 

noadditionBl 

Absent documentation and evidence that 

$469,136 did not require reporting as i 

aboveX the Interim Audit Report 

support the date of public diueminationfiirthe 

whether a filing ofa24/48-houriqgort was requii 

recommended that CMF provide okmcntatlon to 

reports totaling $90,260 were filed 

independent 

expinditures (per 

3. CommitlBeReBponaetDthelnt 

In response to the l||$iiKy{dit Reporti 

that tte actual amnt of 1 

new and aniendHBI/48-hoMeixnts for h 

totaling 

A.l.(a) 

to 

licatkms to detcimuie 

Interim Audit Report also 

tfiat the 24-hour 

the CMF Treasurer staled 

litures was $914,856 and CMF has filed 

4nt expenditures totaling $764,082. 

required filing 

1 the 24-hour reports totaling $90^260 

'restates that CMF under-reported the 

1 totaling $273,297. The Audit staff was 

' reports filings CMF made addressed these 

Absent evidence that the expenditures totaling 

section A3, above) did not require reporting as 

the Audit staff conrtders these expenditures mqy have 

reports. 

I Finding 4. ltopor*^«gof Debta nd 

During audit fieldworic, tlie Audit staff identified debts totaling $67,800 that were not 

disclosed on Schedule D (Debts and Obligations) as required. CMF contended that it was 

not liable fbr a portion ofthe expenses, as they were incurred by aiKilher committee. In 

IS SMfiMinotoS. 
16 

response to the Interim Audit Report recommendation, the CMF Treasuicr provided a 

check copy (finont only) written l^a 527 organization for payment of $93,990 along whh 

ten invoices billed to the 527 organizatum, and concluded that all debts and obligatioiis 

owed have been properly reported. The Audit staff does not considerlfais adequate 

documentation to demonsiiatB that the debts totaling $67,800 did not require disclosure 

byCMF. Absent further documentatioii, the amount ofdebtsrequhed to be discloaed on 

Schedule D lemains as $67,800. 

disclose the amount 

extinguished. 

A. CoBttuuoaa Reporting Required. A political committee 

and nature of oulatandiiig ddits and obligations until those 

52 U.S.C. S30104(bX8)aiid 11 CFR ||104J(d)and104 

B. Itemizing DeUa and ObHgatlona. 

• A debt of$500 or less must be reported 

the date incurred (the date of the 

regularly scheduM report. 

• A debt exceeding $500 must be disclosed^ 

which the debt was incurred. 11CPR§104.1 

}\ieea 

theoommitlee 

dOdaysfiom 

on the next 

rdiat covers 

C. Reporting DIapnted Debts. A 

accordance with 11 CFR 104 J(d) 

ofvalue to the political oormnitlBe. Qbtll 

commhtee shall disci 

any amount the poyi 

Isowed. The 

disclosure of the^ 

waiver of any clan 

8116.1( 

the; 

ihteeadmi 

may 

doesnoti 

; a disputed debt in 

pro^dded something 

Ived, the political 

paid to the creditor, 

'it owes adB the amoum the creditor claims 

on the appropriate reports that die 

an admission of liability or a 

hzve against the creditor. 11 CFR 

A. Raets 

Hie Audit 

obligations, 

except ibr the 201! 

vendiar. This vendor] 

B. Interim Audit Report A Audit Division Reeommcndation 

At the exit ooiifeience, the Audit staff provided a schedule and discussed the debt 

reporting matter whh the CMF Heasurer. Ihieaponse to the exit conference^ the CMF 

ices and disclosure reports fin proper reporting of debts and 

cycles CMF ovcfwspoiled debt owed to one vendor 

Report, which did not include $67,800*^ owed to the 

m^ia services for CMF. 

^ The Audh nsffideatilied fMysBmis owed to Sib vendor lotilliig $328,230. See Fladlag 3 - Rflportfaig of 

Appwea ludepeiiJeiil Espendhuw^ p, 9, Only 567,800 oflbo $328,230 would be leqiiiied to be 

diicloeed es debt ihioe CMF dbdoeed debt owed to lids vendorlolding $260^450 on hi 2012 yesMnd 

repcft CMF GOiiiendelhellii¥oloeetoliUBg$92Allofliie $328,230 UUed were incnned by Bioliier 
17 

lYeasincr provided an email ahowing that June 2012 expenses totaling $92,411 that were 

billed to CMF were actually incuired by another Gommhlee and shouid have been paid by 

that committee. However, no further documentation or explanation was provided to 

associate these expenses with another conrniittee. The Audit stalfwas not able to verify 

that the other committee is actually liable for the debt As a result the debt foat CMF did 

not report on its Schedule D remained as $67,800. 

The Interim Audit Report recommended that CMF provide documentation demonstrating 

that these expenditures did not require reporting on Schedule D and documentation to 

support that the expenses totaling $92^11 were billed enoneousfyjp CMF. Absentsuch 

documentation, it was forther recommended that CMF amend i|0Mls to disclose the 

unreported debts totaling $67,800. 

C. Commttlee Rssponae to Interlai Audit Report 

in response to the Interim Audit Report recomi 

CMF's executive director was also the lYeasurer^a 527 ofganization 

invoices should have been billed to the 527 

organization was terminating'' and CMF wasji 

maintained the vendor mistakenly bDledthe ten fan 

oiganizatioiL A check copy (fiont oi^ written by thd* 

the ten Invoices totaling 1^,990" waBrndded, and 

obligations owed to the vendor were 

[Illy 2012 

CMF 

instead of the 527 

ipiganization for payment of 

ioded that ail debts and 

In a conference held after the Interim Ai C the CMF TVeasuier stated 

that he had requested 

organization and wmAreqi 

demonstiale that thH^^rgani 

ten invoices. Subseqi 

invoices wQuddBtical to' 

the new fa 

CMFMineand 

The AudifMff mahitains i 

contained th^kre descrii 

service fiir bill 

billed to the 527 

back of Afcfaeck co-written by the 527 

527 urgsnuUcn's bimk slalauents in an attempt to 

leceiveAhftibeneflt of the services provided on the 

provided ten more invoices. The 

provided totaling $93,990, except that 

527 or^nizaticn^s name and address instead of 

I invoi^ provided by CMF and correctly hilled to CMF 

the same costs, and used the same calendar dates of 

services on the invoices CMF claimed should have been 

I. IfCMFcontiiiues to contend it did not receive the service 

" EiSilNi wpmad indw leGlion 527 of fee tax code •« ooHkhrad "polMcd orgnaadoiii,* defined 

genewHyainproy.miieiilUeeoriMorieriontiietleoiasntaedeadop—tM prhMriiyautliepnnxieBof 

influencing the lehctioB, nomlnefinn ornnmiulmertofeay indivldwl to say federal, Ufee or locri 

pifeHcofllcekorolllcelnepollllceloiieiiliallon. AH poUdcri i leiniillS m 111 wgliirrred file repoiti 

wife fee PEG ve 527 orgiiriBlionik kut not iD 527 (ngeniBClooi eraiequfaed to file vrlfetlie FEC 

SoDe (lie repofti wife the Intemei Revenue Sendee (IRS). 

^ IRS ineoidB indiceie that the 527 oigBniaiion dieeoived on August 29,2012. 

''TheCMFTteaBurerelrtedtlutonbr$92Allofthe $93,990 billed wmineuiTed by Hie 527 oqeniacion. 

AndllreihedMbaieeofS1,579($93,990-S92A11)wwnCMFinedheipenetimwooldbe 

coneldend to be Ml in4ind GOBiribniion fiom the 527 orgenialioi^ wife the exeeeeive portian of $579 

($1,579 - SlJlOO) peyible M aielbnd. 
18 

on the invDloes in question and that the $S^11 is the debt ofthe 527 ofganizatioi^ then 

CMF could icpoit it as diqndabie debt per 11 CFR S116.IO(a). 

The Audit staff concludes that altiKMigh the amount of the check copy provided agreed 

whfa the total of the 10 invoioes in question, CMF has not demonstiated that this chedc 

was succcsstiiiiy negotiated and that the 89^11 bilied to CMF was not incurred by 

CMF. Absent fintfaer documentation, such as a bank slalemeiit supporting the check in 

question was negotialed or a statement fiom the vendorthat the iO invoices in question 

should have been billed to the 527 orgsniaation or documentation that CMF did not 

receive the services noted on the hivoioes, the debt CMF has not iCDOited on Schedule D 

remains as 887,800. 

I Finding 5. Recotdfceeping HMT Com 

During audit fieldwofk, the Audit staff revi 

the information and proper classification of 

staff identified 8304^99 fia-which sufficient reooids 

of the invoices and the associated 

determine how CMF should have 

Interim Audit Report recommendation, 

invokes, four television advertisements, 

documentation needed 

that the records pr 

were operating 

documented. In 

in the appareny 

further 

8117,933^,83 

to verify tfl^Knacy of 

on reportsTThe Audit 

notprovided. Wilhoutacopy 

stsffwas unable to 

response to the 

two media vendor 

ieved that all 

The Audit staff concludes 

jfseineuta totaling 8224^788 

totaling 879,831 were insufficiently 

8,302, which were originaliy included 

not suSkkntly documented. Absent 

the remaining dishursements totaling 

iiisufficiendy documented. 

staff! 

which shall 

the filed reports 

oompktenM 1 

Reports and Statearenlai Each political 

records with respect to tiw matters required to be reported 

fficknt detail the necessary information and data fiom which 

verified, explained, clarified, and check fbr accuracy and 

FR8104.14(bXl). 

B. PreaeningReeonls and Copies of Reporls. The treasurer ofapolhkal committee 

must preserve all records and copies of reports far 3 years after the report is filed. 52 

U.S.C. S30ia2(d). 
19 

I. 

Vaets and AnalyviB 

A. Vuli 

l>iriiigai]dttfieldwoifc. the Audit staff reviewed disbunements to verify the accuracy of 

the infiwmaiinn reported OH the disclosure reports. 

The Audit staff's analysis resulted in the following; 

CMF made two disbursements to a media vendor totaling £79,631" for which 

documendation was insufifoieM to make a delerminationdinhw these 

disbunements should he reported. AvaihfofodocuingaUon included the 

ml rtntwhniir rnnrrlrdrhfflrmpiri, HnA^nlMriiiriilii Whhouta 

copy of the invoices and the associated communMBonsi^B||iidit staff was 

unable to detennlne how CMF should havejs|fe^^ there dHHMnents. TIK 

Audit stiff requested the invoices, paymenocumenlBtion. anKbies of the 

communications. 

Disbursements totaling $224, 

mediavendor. Theinvoices 

television advertisement not 

communication, theAudh staff 

costs. The 

B, Interim A 

At the exit conference, 

which 

comm^p;-

ThetM^ Audit 

Audit sta^huld detennt 

($79,631 

included 

and ifthe Gommi 

communication with' l'invoice(s). 

were paid to one 

was an addhkMud 

Without a copy of the 

MP's reporting of these 

communication. 

schedule of the disbunements for 

Treasurer did not provide any 

that CMP provide the necessary records so the 

prdper reporting for the disbunements totaiing $304399 

amendments. Such records should have 

; wife identification of the associated oomnumication, 

already been provided, infetmation associating each 

C. Comndttee Rcaponre to interim Andit Report 

In response to the Interim Audit Report recommendation, the CMP Treasurer provided 

the two miming invoices for the dlshursements for vriiich i» invoices or copies of 

communications were provided (179331). Although the two invoices were provided, the 

invoices do not indkate what advertisements were run and CMP did not provide a copy 

of the relative communications. Therefore^ the Audit staff still considers the 

» TUi mouia Is • pwt oTdie caprediliiM aotnpoilBd wMch h addrHMd tai Findiag 1 - Mi 

Plmiielii Aciivfy, p. S. 

of 
20 

diaburaeinciits far which originally no invoices or copies of communicatioiis were 

provided ($79,631) ID be insufiicieDtly doGuniented. 

Also, the CMF lYeuuier provided four televisiop advertiscinenls forthe disbunemenls 

for which invoices vm provided but the Audit staff questioned whether there was an 

additional television advertisenMiit ($224,768). Qftfae four television advcftisements 

provided, three advcftisements had already bera provided to the Audit staff during audit 

fieMwoifc. CMF did not provide the fifth adveitisement implied in an invoice.'' The 

CMF lYeasuicr stated that the media vendor had confiimed thst there was only one 

Obama-care teievision advertisement even though the uivoioes thai there was 

an Obanuhcare advertisement and a Repeal OI)aniacareadverti|^Mht Therefore^ 

aoooiding to the CMF Tkeasurer, there were only fimr televiri^Mvertisements, ^ 

CMF had provided all four of the advertisements. Aflerj^nm^pfac television 

advertisements provided, the Audit staffdeemedexpendAesto^kg $224,768 as 

operating expenditures, and that the costs for all of jWhmsion amWiements have 

bm sufficiatly documented. 

In addition, the Audit staff has moved to this' 

had previously considered to be apparent ii 

Reporting of Apparent Independent ^gpenditures). 

related expenses totaling $2^901, 

$9,276, a sample premium charge of 3 

Although invoices had been provided 

sufficient to detennine how these 

Hie Audit staff 

totaiing $224,768 

and should be reported 

totaling 98,302 that it 

(Sre Finding 3 -

included web 

call costs of 

ofSlOO. 

documentation was not 

reported. 

documentation fbr disbursements 

were operatmg expenditures 

The Audit staff considers 

+ $38302) to be insufficiently 

19 See Foolnoto 7.