Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that 

is required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act. 1 The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

I 52 U.S.C. §3011 l(b). 

Final Audit Report of the 

Commission on the Kansas 

Democratic Party 

(January 1, 2011 - December 31, 2 0 12) 

About the Campaign (p. 3) 

The Kansas Democratic Party is a state party committee 

headquartered in Topeka, Kansas. For more information, see the 

chart on committee organization, p. 2. 

Financial Activity (p. 4) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Transfers from Other Political 

Committees 

o Transfers from Non-Federal Accounts 

o Transfer of Levin Funds 

o Other Receipts 

Total Receipts 

• Disbursements 

o Allocable Federal/Non Federal 

Expenditures 

o Federal Operating Expenditures 

o Federal Election Activity 

o Transfers to Non-Federal Accounts 

o Allocated Federal/Levin Activity 

Total Disbursements 

Commission Findings (p. 5) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Reporting of Debts and Obligations (Finding 3) 

• Levin Funds Activity (Finding 4) 

$475,045 

94,475 

258,668 

356,727 

14,400 

43,164 

$1,242,479 

$ 865,494 

257,869 

97,884 

37,706 

25,575 

$1,284,528 
Final Audit Report of the 

Commission 

on the Kansas Democratic Party 

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

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Audit Hearing 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Commission Findings 

Part IV. Commission Findings 

Finding 1. Misstatement of Financial Activity 

Finding 2. Recordkeeping for Employees 

Finding 3. Reporting of Debts and Obligations 

Finding 4. Levin Funds Activity 

Page 

1 

1 

1 

2 

3 

4 

5 

7 

10 

12 

13 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Kansas Democratic Party (KDP), undertaken by 

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

with the Federal Election Campaign Act of 1971 , as amended (the Act). The Audit 

Division conducted the audit pursuant to 52 U.S.C. §3011 l(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 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of contributions from prohibited sources; 

2. the disclosure of individual contributors' occupation and name of employer; 

3. the disclosure of disbursements, debts and obligations; 

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

5. the consistency between reported figures and bank records; 

6. the completeness of records; 

7. the disclosure of independent expenditures; and 

8. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission's "Policy Statement Establishing a Program for Requesting 

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

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

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

monthly time logs under 11 CFR § 106. 7( d)(l) were required for employees paid with 100 

percent federal funds. 

The Commission concluded, by a vote of 5-1 , that 11 CFR § l 06. 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 KDP representatives of the payroll requirement and the 

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

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

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

l 00 percent federal funds and reported as such. 
Audit Hearing 

KDP declined the opportunity for a hearing before the Commission on the matters 

presented in this report. 

2 
3 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration December 31 , 1976 

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

Headquarters Topeka, Kansas 

Bank Information 

• Bank Depositories One 

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

Levin 

Treasurer 

• Treasurer When Audit Was Conducted Mathew Watkins ( June 30, 2011 - June 

17, 2015) 

Tobias Schlingensiepen (June 18, 2015 

- October 25, 2016) 

Joan Wagnon (October 26, 2016 -

March 19, 2017) 

Bill Hutton (March 20, 2017 to Present) 

• Treasurer During Period Covered by Audit Dan Lykins (January 1, 2011 - June 29, 

2011) 

Mathew Watkins (June 30, 2011 -

December 31 , 2012) 

Management Information 

• Attended Commission Campaign Finance Yes 

Seminar 

• Who Handled Accounting and Paid and Volunteer staff 

Recordkeeping Tasks 
Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand (ti), January 1, 2011 $81,067 

Receipts 

0 Contributions from Individuals 475,045 

0 Contributions from Political Committees 94,475 

0 Transfers from Other Political Committees 258,668 

0 Transfers from Non-Federal Accounts 356,727 

0 Transfer of Levin Funds 14,400 

0 Other Receipts 43,164 

Total Receipts $ 1,242,479 

Disbursements 

0 Allocable Federal/Non Federal Expenditures 865,494 

0 Federal Operating Expenditures 257,869 

0 Federal Election Activity 97,884 

0 Transfers to Non-Federal Accounts 37,706 

0 Allocated Federal/Levin Activity 25,575 

Total Disbursements $1,284,528 

Cash-on-hand @ December 31, 2012 $39,018 

4 
Part III 

Summaries 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

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

records revealed misstatements of cash-on-hand, receipts, and disbursements for 2011 

and 2012. KDP understated its reported beginning cash-on-hand, receipts, and 

disbursements in 2011 by $28,845, $27,004, and $64,670, respectively. KDP overstated 

the reported ending cash-on-hand in 2011 and beginning cash-on-hand in 2012 by 

$8,571. KDP understated its receipts and disbursements in 2012 by $122,088, and 

162,640, respectively. KDP overstated its reported ending cash-on-hand in 2012 by 

$58,065. In response to the Interim Audit Report recommendation, KDP amended its 

disclosure reports to materially correct the misstatements for calendar years 2011 and 

2012. In response to the Draft Final Audit Report, KDP had no further comments. 

5 

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

years 2011 and 2012. (For more detail, seep. 7.) 

Finding 2 . Recordkeeping for Employees 

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

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

spent in connection with a federal election. For 2011 and 2012, the Audit staff identified 

payments to KDP employees totaling $332,755, for which KDP did not maintain monthly 

payroll logs. This included $314,595 for which payroll was allocated with federal and 

non-federal funds, and $3,945 paid directly from non-federal funds. 

In response to the Interim Audit Report recommendation, KDP's counsel stated that KDP 

has created procedures to ensure that time logs are created and maintained for all 

employees paid all or in part with non-federal funds. As such, KDP has complied with 

the Interim Audit Report recommendation by implementing a plan to maintain monthly 

payroll logs. In response to the Draft Final Audit Report, KDP had no further comments. 

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

totaling $321 ,560, as required, to document the percentage of time each employee spent 

in connection with a federal election. (For more detail, seep. 10.) 

Finding 3 . Reporting of Debts & Obligations 

During audit fieldwork, the Audit staffs review of KDP' s disbursements indicated that 

debts owed to six vendors totaling $53,556 were not disclosed on Schedule D (Debts and 

Obligations) as required. In response to the Interim Audit Report recommendation, KDP 

amended its disclosure reports to materially correct the disclosure of debts and 

obligations to these vendors. In response to the Draft Final Audit Report, KDP had no 

further comments. 
The Commission approved a finding that KDP did not disclose debts and obligations to 

six vendors totaling $53,556 on Schedule D. (For more detail, seep. 12.) 

Finding 4. Levin Funds Activity 

During audit fieldwork, a review of KDP's reports revealed that KDP did not file any 

Schedules L (Aggregation Page: Levin Funds), L-A (Itemized Receipts of Levin Funds), 

or L-B (Itemized Disbursements of Levin Funds), but reported Levin funds transfers to 

KDP's federal accounts on Schedule HS (Transfers of Levin Funds Received for 

Allocated Federal Election Activity) and the Levin share of disbursements on Schedule 

H6 (Disbursements of Federal and Levin Funds for Allocated Federal Election Activity). 

The Levin funds activity did not pass through the bank account designated for Levin 

funds by KDP and no accounting records were provided for the Levin funds activity. In 

response to the Interim Audit Report recommendation, KDP filed amended reports to 

materially correct the disclosure of Levin funds activity. In response to the Draft Final 

Audit Report, KDP had no further comments. 

The Commission approved a finding that KDP did not fail to report Levin funds activity. 

(For more detail, see p. 13.) 

6 
Part IV 

Commission Findings 

( Finding 1. Misstatement of Financial Activity 

Summary 

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

records revealed misstatements of cash-on-hand, receipts, and disbursements for 2011 

and 2012. KDP understated its reported beginning cash-on-hand, receipts, and 

disbursements in 2011 by $28,845, $27,004, and $64,670, respectively. KDP overstated 

the reported ending cash-on-hand in 2011 and beginning cash-on-hand in 2012 by 

$8,571. KDP understated its receipts and disbursements in 2012 by $122,088, and 

162,640, respectively. KDP overstated its reported ending cash-on-hand in 2012 by 

$58,065. In response to the Interim Audit Report recommendation, KDP amended its 

disclosure reports to materially correct the misstatements for calendar years 2011 and 

2012. In response to the Draft Final Audit Report, KDP had no further comments. 

7 

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

years 2011 and 2012. 

Legal Standard 

Contents of Federal Reports. Each report must disclose: 

• the amount of cash-on-hand at the beginning and end of the reporting period; 

• the total amount of receipts for the reporting period and for the calendar year; 

• the total amount of disbursements for the reporting period and for the calendar year, 

and; 

• certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104 (b)(l),(2),(3),(4) and (5). 

If the committee makes allocated disbursements for federal election activities using 

Levin funds: 

• the total amount of each transfer of Levin funds from its Levin or non-federal 

account, to its federal account, and each transfer from its federal account and its 

Levin or non-federal account into an allocation account, for the purpose of making 

such disbursements, and; 

• the total amount of each disbursement allocated between Federal funds and Levin 

funds, the full name and address of each person to whom the disbursement was 

made, the date of the disbursement, amount, and purpose of the disbursement and the 

total amount for the calendar year for each category of federal activity. 11 CFR 

§300.36 (b)(2)(ii) and (iii). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled KDP' s reported financial activity with 

its bank records for the calendar years 2011 and 2012 and identified misstatements in 
cash-on-hand, receipts, and disbursements. The following charts outline the 

discrepancies and succeeding paragraphs explain, to the extent possible, the reasons for 

the misstatements. 

2011 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance $52,222 $81 ,067 

(ii) January 1, 2011 

Receipts 

$463,997 $491 ,001 

Disbursements $487,760 $552,430 

Ending Cash Balance $28,2092 $19,638 

(ii) December 31 , 2011 

In 2011 , the understatement of receipts resulted from the following: 

• In-kind contributions not reported as a receipt 

• In-kind contributions reported, but not received 

• Transfers from the non-federal accounts not reported 

• Receipts not reported 

• Reported receipts not supported by deposit documentation or credit 

• Contribution refund reported as a negative receipt 

• Unexplained differences 

Net Understatement of Receipts 

In 2011 , the understatement of disbursements resulted from the following 

• In-kind contributions not reported as a disbursement 

• In-kind contributions reported, but not received 

• Disbursements not reported 

• Disbursements reported not supported by a check or a debit 

• Unexplained differences 

Net Understatement of Disbursements 

($28,845) 

Understated 

($27,004) 

Understated 

($64,670) 

Understated 

$8,571 

Overstated 

$11 ,682 

(2,545) 

9,206 

9,037 

(9,981) 

10,000 

(395) 

$27.004 

$11 ,682 

(2,545) 

66,690 

(11 ,734) 

577 

$64.670 

2 KDP miscalculated its ending cash balance. It should be $28,459 (a difference of$250). Using the 

correct ending cash balance ($28,459), the discrepancy is $8,821. 

8 
2012 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance $28,209 $19,638 $8,571 

~ January 1, 2012 Overstated 

Receipts $629,390 $751 ,478 ($122,088) 

Understated 

Disbursements $569,458 $732,098 ($162,640) 

Understated 

Ending Cash Balance $97,0833 $39,018 $58,065 

~ December 31 , 2012 Overstated 

In 2012, the understatement of receipts resulted from the following: 

• In-kind contributions not reported as a receipt 

• Transfers from the non-federal accounts not reported 

• Receipts not reported 

• Reported receipts not supported by deposit documentation or credit 

$12,725 

66,279 

46,677 

(3,350) 

• Unexplained differences 

Net Understatement of Receipts 

In 2012, the understatement of disbursements resulted from the following 

• In-kind contributions not reported as a disbursement 

• ActBlue fees not reported 

• Disbursements not reported 

• Disbursements reported not supported by a check or a debit 

• Voided checks erroneously reported 

• Unexplained differences 

Net Understatement of Disbursements 

(243) 

$122.088 

$12,725 

1,993 

217,681 

(68,318)4 

(300) 

(1,141) 

$162.640 

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

misstatements and the misstatements described above. 

B. Interim Audit Report & Audit Division Recommendation 

9 

At the exit conference, the Audit staff presented the misstatements and provided 

schedules to KDP representatives. The representatives agreed to review the.misstatement 

amounts and amend after the issuance of the Interim Audit Report. 

The Interim Audit Report recommended that KDP correct these discrepancies on the 

public record. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, KDP amended its disclosure 

reports to materially correct the misstatements for both 201 1 and 2012 reports. 

3 KDP miscalculated its ending cash balance. It should be $88, 141 (a difference of$8,942). Using the 

correct ending cash balance ($88, 141), the discrepancy is $49,123. 4 This amount includes $14,400 over reported on Schedule H6 (see Finding 4). 
10 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that KDP amended its disclosure reports to 

materially correct the misstatements for both 2011 and 2012. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, KDP had no further comments. 

Commission Conclusion 

On February 8, 2017, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that KDP 

misstated its financial activity for calendar years 2011 and 2012. 

The Commission approved the Audit staffs recommendation. 

I Finding 2. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that KDP 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 KDP employees totaling $332,755, for which KDP did not maintain monthly 

payroll logs. This included $314,595 for which payroll was allocated with federal and 

non-federal funds, and $3,945 paid directly from non-federal funds. 

In response to the Interim Audit Report recommendation, KDP's counsel stated that KDP 

has created procedures to ensure that time logs are created and maintained for all 

employees paid all or in part with non-federal funds. As such, KDP has complied with 

the Interim Audit Report recommendation by implementing a plan to maintain monthly 

payroll logs. In response to the Draft Final Audit Report, KDP had no further comments. 

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

totaling $321 ,560, as required, to document the percentage of time each employee spent 

in connection with a federal election. 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a monthly log of the 

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows: 

• employees who spend 25 percent or less of their compensated time in a given 

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

or be allocated between federal and non-federal funds 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)(l). 
Facts and Analysis 

A. Facts 

11 

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

provide any monthly payroll logs or equivalent records to the Audit staff to document the 

percentage of time each employee spent in connection with a federal election. These logs 

are required to document the proper allocation of federal and non-federal funds used to 

pay employee salaries and wages. For 2011 and 2012, KDP did not maintain monthly 

logs for $321 ,560 in payroll. 5 This amount includes payroll paid as follows to KDP 

employees: 

i. Employees reported on Schedule H4 (Disbursements for Allocated Federal/NonFederal Activity) and paid with federal and non-federal funds during the same 

month (totaling $314,595); and 

11. Employees reported on Schedule H4 and/or Schedule B and also paid with 100 

percent non-federal funds during the same month (totaling $6,965) 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the recordkeeping requirement with KDP representatives 

during audit fieldwork and at the exit conference. Subsequently, KDP representatives 

stated that the executive director of KDP received weekly emails from staff describing in 

detail what they had worked on for that week. To date, the Audit staff has not received 

copies of those emails. 

In response to the exit conference, KDP submitted affidavits stating that none of the 

employees whose payroll was reported on Schedule H4 spent more than 25% of their 

time working on activity in connection with a federal election or on federal election 

activities. 

The Interim Audit Report recommended that KDP provide evidence that it maintained 

monthly time logs to document the percentage of time an employee spent in connection 

with a federal election; or implement 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, KDP's counsel stated that KDP 

has created procedures to ensure that time logs are created and maintained for all 

employees paid all or in part with non-federal funds. As such, KDP has complied with 

the Interim Audit Report recommendation by implementing a plan to maintain monthly 

payroll logs. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that KDP did not maintain monthly payroll 

logs during the audit cycle totaling $321,560, but has implemented a plan to maintain 

monthly payroll logs in the future . 

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

such (See Part 1, Commission Guidance, Request for Early Consideration of a Legal Question -

Recordkeeping for Employees, Page I). Payroll amounts are stated net of taxes and benefits. 
12 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, KDP had no further comments. 

Commission Conclusion 

On February 8, 2017, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that KDP 

failed to maintain monthly payroll logs totaling $321 ,560, as required, to document the 

percentage of time each employee spent in connection with a federal election. 

The Commission approved the Audit staffs recommendation. 

I Finding 3. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staffs review of KDP's disbursements indicated that 

debts owed to six vendors totaling $53,556 were not disclosed on Schedule D (Debts and 

Obligations) as required. In response to the Interim Audit Report recommendation, KDP 

amended its disclosure reports to materially correct the disclosure of debts and 

obligations to these vendors. In response to the Draft Final Audit Report, KDP had no 

further comments. 

The Commission approved a finding that KDP did not disclose debts and obligations to 

six vendors totaling $53,556 on Schedule D. 

Legal Standard 

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

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

52 U.S.C. §30104(b)(8) and 11 CFR §§104.3(d) and 104.1 l(a). 

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

owed by and to the committee with a statement explaining the circumstances and 

conditions under which each debt and obligation was incurred or extinguished. 

11 CFR §104.1 l(a). 

C. Itemizing Debts and Obligations. 

• Once it has been outstanding 60 days from the date incurred, a debt of $500 or 

less must be reported on the next regularly scheduled report. 

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

which the debt was incurred, except reoccurring administrative expenses (such as 

rent) shall not be reported as a debt before the payment due date. 

11 CFR §104.1 l(b). 
Facts and Analysis 

A. Facts 

13 

During audit fieldwork, the Audit staff used available disbursement records to reconcile 

the accounts6 of KDP's vendors. These vendors provided KDP with compliance 

software, voter ID calls, email services, focus groups, office space, and printing services. 

KDP did not report any debts on Schedule D. 

The Audit staff identified debts owed to six ofKDP's vendors totaling $53,556 that were 

not reported on Schedule D as required. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff presented this matter to KDP representatives at the exit conference and 

provided schedules detailing the unreported debts for each reporting period. In response 

to the exit conference, KDP agreed to file amendments to correct the disclosure of debts 

after the issuance of the Interim Audit Report. The Interim Audit Report recommended 

that KDP correct the public record by disclosing the debts and obligations totaling 

$53,556. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, KDP amended its disclosure 

reports to materially correct the disclosure of debts and obligations to these vendors. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that KDP filed amended reports to 

materially correct the reporting of debts and obligations. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, KDP had no further comments. 

Commission Conclusion 

On February 8, 2017, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that KDP 

did not disclose debts and obligations to six vendors totaling $53,556 on Schedule D. 

The Commission approved the Audit staffs recommendation. 

l Finding 4. Levin Funds Activity 

Summary 

During audit fieldwork, a review of KDP's reports revealed that KDP did not file any 

Schedules L (Aggregation Page: Levin Funds), L-A (Itemized Receipts of Levin Funds), 

or L-B (Itemized Disbursements of Levin Funds), but reported Levin funds transfers to 

6 The reconciliation consisted of calculating invoiced and paid amounts for individual reporting periods in 

the 2011-2012 election cycle. The Audit staff then determined whether any outstanding debts were 

correctly disclosed on Schedule D. Each debt amount was counted once, even if it required disclosure 

over multiple reporting periods. 
14 

KDP's federal accounts on Schedule H5 (Transfers of Levin Funds Received for 

Allocated Federal Election Activity) and the Levin share of disbursements on Schedule 

H6 (Disbursements of Federal and Levin Funds for Allocated Federal Election Activity). 

The Levin funds activity did not pass through the bank account designated for Levin 

funds by KDP and no accounting records were provided for the Levin funds activity. In 

response to the Interim Audit Report recommendation, KDP filed amended reports to 

materially correct the disclosure of Levin funds activity. In response to the Draft Final 

Audit Report, KDP had no further comments. 

The Commission approved a finding that KDP did not fail to report Levin funds activity. 

Legal Standard 

A. Reporting. If a state, district or local party committee's combined annual receipts 

and disbursements for federal election activity (FEA) total $5,000 or more during the 

calendar year, the committee must disclose receipts and disbursements of federal 

funds and Levin funds used for FEA. 11 CFR §300.36 (b)(2). 

B. Contents of Levin Reports. Each report must disclose: 

• The amount of cash-on-hand for Levin funds at the beginning and end of the 

reporting period; 

• The total amount of Levin fund receipts and disbursements (including allocation 

transfers) for the reporting period and for the calendar year; and 

• Certain transactions that require itemization on Schedule L-A (Itemized Receipts 

of Levin Funds) or Schedule L-B (Itemized Disbursements of Levin Funds). 

11 CFR §300.36 (b )(2). 

C. Accounts. Each State party that has receipts or makes disbursements for federal 

election activity must establish its accounts in accordance with one of the following: 

• One or more federal accounts established in accordance with 11 CFR § 103, which 

must be treated as a separate political committee and be required to comply with 

the requirements of the Act including the registration and reporting requirements 

of 11 CFR §§ 102 and 104. 

• Establish at least three separate accounts as follows: 

o One or more Federal accounts; 

o One or more Levin accounts; and 

o One or more Non-Federal accounts. 

• Establish two separate accounts in depositories as follows: 

o (i) One or more Federal accounts, and; 

o (ii) An account that must function as both a Non-Federal account and a 

Levin account. If such an account is used, the State, district, and local 

party must demonstrate through a reasonable accounting method approved 

by the Commission (including any method embedded in software provided 

or approved by the Commission) that whenever such organization makes a 

disbursement for activities undertaken pursuant to 11 CFR §300.32(b ), that 

organization had received sufficient contributions or Levin funds to make 

such disbursement. 11 CFR §300.30( c ). 
D. Recordkeeping for Accounts. All party organizations or committees must keep 

records of deposits into and disbursements from such accounts, and, upon request, 

must make such records available for examination by the Commission. 11 CFR 

§300.30(d). 

Facts and Analysis 

A. Facts 

15 

During audit fieldwork, a review of KDP's disclosure reports revealed that KDP did not 

file any Schedules L, L-A or L-8, but reported $14,400 in Levin funds transfers to KDP's 

federal accounts on Schedule H5 and $32,684 in Levin funds share of allocable activity 

on Schedule H6. The Audit staff reconciled KDP' s reported federal financial activity 

with its federal bank records for the calendar years 2011 and 2012 and determined that of 

the amount reported on Schedule H6, $14,400 was over-reported (See Finding 1 -

Misstatement of Financial Activity). 

KDP had a bank account designated for Levin funds activity, and also used a non-federal 

bank account for Levin funds activity. The Audit staff requested accounting records for 

the Levin funds activity that was conducted through the non-federal accounts, but no such 

records were provided. Since the reported Levin funds activity was not transferred 

through the designated Levin bank account, the Audit staff asked KDP for verification 

that these reported transfers were Levin funds activity. KDP stated that the activity 

reported on Schedules H5 and H6 was Levin funds activity. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff presented this matter to KDP representatives at the exit conference, 

provided schedules detailing the amounts reported on Schedules H5 and H6, and 

requested accounting records for the reported amounts. In response to the exit 

conference, a KDP representative stated that the failure to file the required schedules was 

due to a software error, and that KDP would send additional information regarding the 

Levin donors. The Audit staff did not receive any additional information about the Levin 

funds activity. 

The Interim Audit Report recommended that KDP provide the accounting for the Levin 

funds that were received in and disbursed from its non-federal bank accounts, and correct 

the discrepancy of Levin funds activity on the public record. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, KDP amended its disclosure 

reports to remove the $14,400 transfer of Levin funds on Schedule H5, and instead report 

this transfer on Schedule H4 (Disbursements for Allocated Federal/Non-Federal 

Activity). KDP also provided the Audit staff with a list of the allocable administrative 

activity for which this transfer was made. The Audit staff verified that the administrative 

activity was allocable. Furthermore, a KDP representative stated that there was no Levin 

funds activity during the audit period and that the reported Levin fund activity had been 

reported in error. As such, the discrepancy of Levin funds activity on the public record 

has been materially corrected, and no further action is necessary. 
D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that KDP filed amended reports to 

materially correct its reports and provided documentation to show that no Levin funds 

activity was conducted. 

E. Committee Response to the Draft Final Audit Report 

In response to the Draft Final Audit Report, KDP had no further comments. 

Commission Conclusion 

16 

On February 8, 2017, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that KDP 

did not fail to report Levin funds activity. 

The Commission approved the Audit staffs recommendation.