Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Changes to the Law

Part II. Overview of Committee
Committee Organization
Overview of Financial Activity

Part III. Summaries

Findings and Recommendations

Part IV. Findings and Recommendations
Finding 1. Receipt of Prohibited Contributions
Finding 2. Receipt of Contributions that Exceed Limits
Finding 3. Misstatement of Financial Activity
Finding 4. Allocable Expenses Paid from Non-federal Accounts
Finding 5. Proceeds from Joint Fundraising Activity
Finding 6. Reporting of Debts and Obligations

Page

Ne COaAUN

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¢ Refund the remaining $31,000 and provide evidence of such refunds (copies of the
front and back of each negotiated refund check).

¢ If funds were not available to make the necessary refunds, amended reports were to
be filed to reflect the amounts to be refunded as debts on Schedule D (Debts and
Obligations Excluding Loans) until funds became available to make the refunds.

In response to the interim audit report, DPH did not dispute the majority of the excessive
contributions nor the fact that the four refunds previously made were untimely. DPH did
provide information which proved that one contribution from a political action committee
in the amount of $5,000 was not excessive. DPH also filed amended disclosure reports

that included Schedules D which listed the remaining $26,000 as debt.

| Finding 3. Misstatement of Financial Activity

Summary

DPH misstated its beginning cash balance, receipts, disbursements, and ending cash
balance during 2002. The Audit staff recommended that DPH amend its disclosure
reports to correct the misstatements. In response to the interim audit report, DPH filed
amended disclosure reports that corrected these misstatements.

Legal Standard

Contents of Reports. Each report must disclose:
¢ The amount of cash on hand at the beginning and end of the reporting period;
The total amount of receipts for the reporting period and for the calendar year;

e
¢ 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). 2 U.S.C. §§434(b)(1), (2), (3), (4) and(5).

Facts and Analysis

The Audit staff reconciled reported activity to bank records for 2002. The following
chart outlines the discrepancies for the beginning cash balance, receipts, disbursements
and the ending cash balance on December 31, 2002. Succeeding paragraphs address the

reasons for the misstatements.

2002 Committee Activity

Reported Bank Records _| Discrepancy

Beginning Cash Balance @ January 1, 2002 $41,939 $20,154 $21,785
Overstated

Receipts $628,082 $649,307 $21,225
Understated

Disbursements $636,602 $655,954 $19,352
Understated

Ending Cash Balance @ December 31, 2002 $33,419 $13,507 $19,912

Overstated



11

stated that these were not for shared expenses. She stated that for the 2002 election cycle,
most of the party activity had been directed at state and local races, specifically the race
for the governor’s seat. She stated that she would provide the requested documentation.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that DPH provide documentation supporting the solely
non-federal nature of the above noted expenditures. Absent such a demonstration, the
Audit staff recommended that DPH amend its reports to disclose these expenditures as
memo entries on Schedules H-4. In response, DPH filed amended its disclosure
reports as recommended.

| Finding 5. Proceeds from Joint Fundraising Activity

Summary

DPH failed to properly disclose the proceeds ($19,128) from joint fundraising activity
with the Democratic National Committee. The Audit staff recommended that DPH
amend its disclosure reports to correctly disclose these receipts. In response to the
interim audit report, DPH provided documentation that allowed the Audit staff to
associate reported memo entries with joint fundraising transfers. In addition, DPH filed
amended reports that correctly disclosed all amounts as memo entries.

Legal Standard

Itemization of Contributions From Joint Fundraising Efforts. Participating political
committees must report joint fundraising proceeds in accordance with 11 CFR
102.17(c)(8) when such funds are received from the fundraising representative. 11 CFR
§102.17(c)(3)(iii).

Each participating political committee reports its share of the net proceeds as a transfer-in
from the fundraising representative and must also file a memo Schedule A itemizing its
share of gross receipts as contributions from the original contributors to the extent
required under 11 CFR 104.3(a). 11 CFR §102.17(c)(8)(i)(B).

Facts and Analysis

The Audit staff determined that DPH received a total of $19,128 in joint fundraising
proceeds from the Democratic National Committee (DNC). Although it disclosed the
transfers from DNC, DPH did not itemize its share of the gross receipts as contributions
from the original contributors as required on memo Schedules A for those contributors
who contributed in excess of $200. The treasurer stated that although she had received
information on filing memo schedules, she had difficulty disclosing this information on
DPH’s disclosure reports.

The treasurer was provided a schedule of joint fundraising transfers and agreed to file
memo Schedules A.


The $21,785 overstatement of the beginning cash balance on January 1, 2002, could not
be explained. It likely results from errors which occurred prior to the beginning of the
audit period.

The understatement of receipts was the net result of the following:

e Transfers of funds from non-federal accounts not reported + $19,994

© Contribution from a party committee not reported + 5,000

e Disbursement reported as a receipt - 960

e@ Reimbursement reported that had been deposited into a non- - 3,000
federal account

© Unexplained differences + 191

Net Understatement of Receipts $21,225

The understatement of disbursements was the net result of the following:

Operating expenses not reported + 10,987

@ Interest income reported as a disbursement - 5

e Disbursement reported as a receipt + 960

e Transfer to non-federal account not reported + 8,490

e@ Unexplained differences - 1,080

Net Understatement of Disbursements $ 19,352

The $19,912 overstatement of the ending cash balance on December 31, 2002, was the
net result of the misstatements detailed above.

At the exit conference, the Audit staff explained the misstatements and provided DPH’s
treasurer with schedules detailing these discrepancies. The treasurer stated that she was
unaware of the misstatements but agreed to review the spreadsheets provided and to file
amended disclosure reports.

Interim Audit Report Recommendation and Committee Response

The Audit staff recommended that DPH amend its reports to correct the misstatements
noted above, to include amended Schedules A and B as appropriate, and to amend its
latest report filed to correct the cash misstatement. In response to the interim audit
report, DPH filed amended reports that corrected the misstatement of reported activity
and corrected the cash misstatement on the latest report it had filed.

Finding 4. Allocable Expenses Paid from Non-federal
Accounts

Summary

DPH made 54 disbursements ($164,640) from its two non-federal accounts that appear to
be for allocable expenses. The Audit staff recommended that DPH demonstrate that
these disbursements were not allocable expenditures or amend its disclosure reports to








Part I
Background

Authority for Audit

This report is based on an audit of the Democratic Party of Hawaii (DPH), 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 2 U.S.C. §438(b), which permits the
Commission to conduct audits and field investigations of any political committee that is
required to file a report under 2 U.S.C. §434. 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. 2 U.S.C. §438(b)

Scope of Audit

This audit examined:

. The receipt of excessive contributions and loans.

. The receipt of contributions from prohibited sources.

. Disclosure of contributions and other receipts.

. Disclosure of disbursements, debts, and obligations.

. Disclosure of expenses allocated between federal and non-federal accounts.
. Consistency between reported figures and bank records.

. The completeness of records.

. Other committee operations necessary to the review.

ONIDAWAWNe

Changes to the Law

On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act
of 2002 (BCRA). The BCRA contains many substantial and technical changes to the
federal campaign finance law. Most of the changes became effective November 6, 2002.
Except for the period November 7, 2002, through December 31, 2002, the period covered
by this audit pre-dates these changes. Therefore, the statutory and regulatory
requirements cited in this report are primarily those that were in effect prior to November
7, 2002.




Legal Standard

A. Party Committee Limits. A party committee may not receive more than a total of
$5,000 per year from any one contributor. 2 U.S.C. §§441a(a)(1)(C), (2)(C) and (f); 11
CFR §§110.1(a) and (d) and 110.9(a).

B. Handling Contributions That Appear Excessive. If a committee receives a
contribution that appears to be excessive, the committee must either:
e Return the questionable check to the donor; or
¢ Deposit the check into its federal account and:
o Keep enough money in the account to cover all potential refunds;
o Keep a written record explaining why the contribution may be illegal;
0 Include this explanation on Schedule A if the contribution has to be itemized
before its legality is established;
o Seek a reattribution or a redesignation of the excessive portion, following the
instructions provided in Commission regulations; and
o If the committee does not receive a proper reattribution or redesignation
within 60 days after receiving the excessive contribution, refund the excessive
portion to the donor. 11 CFR §§103.3(b)(3), (4) and (5) and
110.1(k)(3)(ii)(B).

C. Revised Regulations Applied. The Commission recently adopted new regulations
that allow committees greater latitude to reattribute contributions to joint account holders
and has decided to apply these regulations to current matters. The Audit staff has
evaluated the excessive contributions discussed below using the new regulations.

Facts and Analysis

The Audit staff’s review of contributions identified $51,000 of contributions in excess of
allowable limits had been accepted; five from individuals ($31,000) and four from
political committees ($20,000). DPH has refunded $20,000 to four contributors;
however, these refunds were untimely, with one of the refunds being made 16 months
after the contribution was deposited.

As noted in Finding 1 above, beginning in December 2002, DPH did not maintain
sufficient funds to make all refunds. The balance in DPH’s bank accounts on December
31, 2002 was $13,507.°

The Audit staff provided DPH’s treasurer with a schedule of the excessive contributions
noted above. A discussion ensued about refunding the remaining excessive contributions
and how to disclose them as a debt until sufficient funds were available to make the
refunds.

Interim Audit Report Recommendation and Committee Response

The Audit staff recommended that, DPH:
e Provide evidence that the identified contributions were not excessive; or

> See Footnote 2.


Part II
Overview of Committee
Committee Organization

Important Dates

Democratic Party of Hawaii

e __Date of Registration

December 17, 1986

e Audit Coverage

January 1, 2001 - December 31, 2002

Headquarters

Honolulu, Hawaii

Bank Information

e __ Bank Depositories

1

e — Bank Accounts

2 Federal and 2 Non-federal Checking
Accounts

Treasurers

e Treasurer When Audit Was Conducted

Yuriko Sugimura

e Treasurer During Period Covered by Audit

Yuriko Sugimura

Management Information

e Attended FEC Campaign Finance Seminar | Yes

° Used Commonly Available Campaign No
Management Software Package

e¢ Who Handled Accounting and Volunteers

Recordkeeping Tasks

Overview of Financial Activity

(Audited Amounts)

Cash on Hand @ January 1, 2001 $ 25,529
Receipts

e Contributions from Individuals 305,719

¢ Transfers from Non-federal Accounts for Joint Activity 275,651

© Contributions from Political Committees 122,288

e Transfers from Other Party Committees 41,697

e All Other Receipts 85,530
Total Receipts $ 830,885
Disbursements

e Operating Expenditures 764,648

e All Other Disbursements 78,259
Total Disbursements $ 842,907
Cash on Hand @ December 31, 2002 $ 13,507



10

include these disbursements. In response to the interim audit report, DPH filed amended
reports disclosing these items.

Legal Standard
A. Paying for Allocable Expenses. Commission regulations offer party committees
two ways to pay for allocable, shared federal/non-federal expenses.

¢ They may pay the entire amount of the shared expense from the federal account
and transfer funds from the non-federal account to the federal account to cover the
non-federal share of that expense; or

e They may establish a separate, federal allocation account into which the committee
deposits funds from both its federal and non-federal accounts solely for the
purpose of paying the allocable expenses of shared federal/non-federal activities.
11 CFR §106.5(g)(1)(i) and (ii)(A).

B. Reporting Allocable Expenses. A political committee that allocates federal/non-
federal expenses must report each disbursement it makes from its federal account (or
separate allocation account) to pay for a shared federal/non-federal expense. Committees
report these kinds of disbursements on Schedule H-4 (Shared federal/Non-federal
Activities). 11 CFR §104.10(b)(4).

C. Allocation Ratio for Administrative & Generic Voter Drive Costs. State and
local party committees must allocate their administrative expenses and generic voter
drive costs according to the ballot composition method. Under this method, a
committee determines the ratio of federal offices to the total number of federal and
non-federal offices expected on the ballot in the next general election in the state or
geographic area. 11 CFR §106.5(d)(1) and (2).

Facts and Analysis

The Audit staff identified 54 payments ($164,640) made from DPH’s two non-federal
accounts, for such purposes as television and radio production, television advertising,
research, postage and consulting. Documentation, such as invoices, bills and receipts,
was either not available or did not demonstrate that these expenditures were for solely
non-federal activities

The Audit staff’s analysis indicated that during the audit period the non-federal account
transferred significantly less than it could have to the federal account for its share of
allocable expenses. A total of $275,636 was transferred; however, the non-federal share
of allocated costs was $603,431, leaving an additional $327,795 which could have been
transferred. Therefore, no transfer of funds by DPH to its non-federal account is required
for $164,640 in allocable expenses paid for by the non-federal account.

At the exit conference, DPH’s treasurer was provided a schedule of these disbursements
and advised that absent documentation to demonstrate that they are not allocable
expenses, the disbursements would need to be disclosed on Schedules H-4. The treasurer


FEDERAL ELECTION COMMISSION
Washington, DC 20463

September 22, 2004

MEMORANDUM

TO: ROBERT W. BIERSACK
PRESS OFFICER
PRESS OFFICE

FROM: JOSEPH F. STOLTZ (i
ASSISTANT STAFF CTOR
AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE AUDIT REPORT ON THE DEMOCRATIC
PARTY OF HAWAIL

Attached please find a copy of the audit report on the Democratic Party of Hawaii,
which was approved by the Commission on September 14, 2004.

The report may be released to the public on September 22, 2004.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library
Web Manager




Part III
Summaries

Findings and Recommendations

Finding 1. Receipt of Prohibited Contributions

DPH received two contributions totaling $30,000 from the non-federal accounts of two
political action committees. The Audit staff recommended that DPH provide evidence
that these contributions were not from prohibited sources or transfer the funds from the
federal account to the non-federal account. In response to the interim audit report, DPH
did not dispute that the two contributions were impermissible and had been inadvertently
deposited into the federal account. In addition, DPH filed amended disclosure reports
which included Schedules D that list these items as debt payable to the non-federal
account. (For more detail, see p. 5)

Finding 2. Receipt of Contributions that Exceed Limits
DPH received nine contributions that exceeded limitations by $51,000. Four refunds
($20,000) were made, but not timely. The Audit staff recommended that DPH provide
evidence that the remaining contributions were not in excess of the limitations or refund
the remaining $31,000. In response to the interim audit report, DPH did not dispute the
majority of the contributions were excessive nor that the four refunds were made
untimely. DPH did provide information which proved that one contribution from a
political action committee in the amount of $5,000 was not excessive. DPH also filed
amended disclosure reports that included Schedules D which listed the remaining
excessive contributions ($26,000) as debt. (For more detail, see p. 6)

Finding 3. Misstatement of Financial Activity

DPH misstated its beginning cash balance, receipts, disbursements, and ending cash
balance during 2002. The Audit staff recommended that DPH amend its disclosure
reports to correct the misstatements. In response to the interim audit report, DPH filed
amended disclosure reports that corrected these misstatements. (For more detail, see p. 8)

Finding 4. Allocable Expenses Paid from Non-federal

Accounts

DPH made 54 disbursements ($164,640) from its two non-federal accounts that appear
to be for allocable expenses. The Audit staff recommended that DPH demonstrate that
these disbursements were not allocable expenditures or amend its disclosure reports to
include these disbursements. In response to the interim audit report, DPH filed
amended reports disclosing these items. (For more detail, see p. 9)

Finding 5. Proceeds from Joint Fundraising Activity
DPH failed to properly disclose the proceeds ($19,128) from joint fundraising activity
with the Democratic National Committee. The Audit staff recommended that DPH
amend its disclosure reports to correctly disclose these receipts. In response to the
interim audit report, DPH provided documentation that allowed the Audit staff to




13

Interim Audit Report Recommendations and Committee Response
The Audit staff recommended that DPH amend its reports to disclose the debts and
obligations addressed above on Schedules D. In response to the interim audit report,
DPH provided evidence that $22,635 of the items were not required to be disclosed as
debt and filed amended reports disclosing the remaining $33,705 as debts and obligations
on Schedules D.










Part IV
Findings and Recommendations

|Finding 1. Receipt of Prohibited Contributions

Summary

DPH received two contributions totaling $30,000 from the non-federal accounts of two
political action committees. The Audit staff recommended DPH provide evidence that
these contributions are not from prohibited sources or transfer the funds from the federal
account to the non-federal account. In response to the interim audit report, DPH did not
dispute that the two contributions were impermissible and had been inadvertently
deposited into the federal account. In addition, DPH filed amended disclosure reports
which included Schedules D that list these items as debt payable to the non-federal
account.

Legal Standard

A. Federal v. Non-Federal Account. The federal account may contain only those funds
that are permissible under the federal election law; the non-federal account may contain
funds that are not permitted under the federal law (but are legal under state law), such as.
contributions that exceed the limits of the federal law and contributions from prohibited
sources, such as corporations and labor organizations. 11 CFR §102.5(a)(1)(i) and (a)(3).

B. Questionable Contributions. If a committee receives a contribution that appears to
be prohibited (a questionable contribution), it must follow the procedures below:

1. Within 10 days after the treasurer receives the questionable contribution, the
committee must either:

e Return the contribution to the contributor without depositing it; or
¢ Deposit the contribution (and follow the steps below). 11 CFR §103.3(b)(1).

2. If the committee deposits the questionable contribution, it may not spend the
funds and must be prepared to refund them. It must therefore maintain sufficient
funds to make the refunds or establish a separate account in a campaign
depository for possibly illegal contributions. 11 CFR §103.3(b)(4).

3. The committee must keep a written record explaining why the contribution may
be prohibited and must include this information when reporting the receipt of the
contribution. 11 CFR §103.3(b)(5).

4. Within 30 days of the treasurer’s receipt of the questionable contribution, the
committee must make at least one written or oral request for evidence that the
contribution is legal. Evidence of legality includes, for example, a written
statement from the contributor explaining why the contribution is legal or an oral
explanation that is recorded by the committee in a memorandum. 11 CFR
§103.3(b)(1).

5. Within these 30 days, the committee must either:
¢ Confirm the legality of the contribution; or
¢ Refund the contribution to the contributor and note the refund on the report

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


Facts and Analysis

A review of all contributions from party and other political committees resulted in the
identification of two impermissible contributions totaling $30,000. DPH received
$25,000 from a non-federal account of a union political committee on October 28, 2002,
designated for its non-federal account, and, $5,000 from a non-federal account of a
political action committee on November 19, 2002. It is the opinion of the Audit staff that
the contributions were deposited into the federal account in error.

Based on the Audit staff’s analysis of DPH bank account balances, those balances were
insufficient to refund the prohibited contributions between December 2, 2002, and the
end of the audit period. The balance in DPH’s bank accounts on December 31, 2002,
was $13,507,” insufficient to refund both of the prohibited contributions and the
excessive contributions addressed at Finding 2 below.

The Audit staff advised DPH’s treasurer of the prohibited contributions. The treasurer
was unaware of the impermissible nature of the contributions, but indicated a willingness
to make the necessary refunds.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that DPH provide evidence that the two contributions
($30,000) are not prohibited. Absent such evidence, DPH should have transferred
$30,000 from the federal account to the non-federal account, as it was intended, and
provided evidence of the transfer (photocopies of the front and back of the negotiated
instrument). If funds were not available to make the necessary refunds, the amounts due
should have been disclosed on Schedule D (Debts and Obligations Excluding Loans)
until funds became available to make the refunds. In response to the interim audit report,
DPH did not dispute that these contributions were impermissible and acknowledged that
they were inadvertently deposited into the federal account. DPH also filed amended
disclosure reports which included Schedules D, listing these items as debts owed to the
non-federal account.

Finding 2. Receipt of Contributions that Exceed Limits

Summary

DPH received nine contributions that exceeded limitations by $51,000. Four refunds
($20,000) were made, but not timely. The Audit staff recommended that DPH provide
evidence that the remaining contributions were not in excess of the limitations or refund
the remaining $31,000. In response to the interim audit report, DPH did not dispute the
majority of the contributions were excessive nor that the four refunds were made
untimely. DPH did provide information which proved that one contribution from a
political action committee in the amount of $5,000 was not excessive. DPH also filed
amended disclosure reports that included Schedules D which listed the remaining
excessive contributions ($26,000) as debt.

2 DPH reported its ending cash on hand on August 29, 2004, to be $69,639.


Report of the Audit Division
on the Democratic Party of
Hawaii

January 1, 2001 - December 31, 2002

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.' 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.

' 2 U.S.C. §438(b).

About the Committee (p. 2)

The Democratic Party of Hawaii (DPH) is a state party committee
headquartered in Honolulu, HI. For more information, see the
chart on the Committee Organization, p. 2.

Financial Activity (p. 2)
¢ Receipts

o Contributions from Individuals $ 305,719
Transfers from Non-federal Accounts for 275,651
Joint Activity

© Contributions from Political Committees 122,288

o Transfers from Other Party Committees 41,697

o All Other Receipts 85,530

o Total Receipts $ 830,885

e Disbursements

o Operating Expenditures $ 764,648

o All Other Disbursements 78,259

o Total Disbursements $ 842,907

Findings and Recommendations (p. 3)
Receipt of Prohibited Contributions (Finding 1)

Receipt of Contributions that Exceed Limits (Finding 2)
Misstatement of Financial Activity (Finding 3)
Allocable Expenses Paid from Non-federal Accounts
(Finding 4)

Proceeds from Joint Fundraising Activity (Finding 5)

¢ Reporting of Debts and Obligations (Finding 6)






12

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that DPH file amended disclosure reports that include
memo Schedules A (for those contributors who contributed in excess of $200) for its
share of the gross joint fundraiser contributions. In response to the interim audit report,
DPH provided documentation that allowed the Audit staff to associate previously
reported memo entries with joint fundraising transfers. In addition, DPH filed amended
reports that correctly disclosed all amounts as memo entries.

Finding 6. Reporting of Debts and Obligations

Summary

DPH failed to report debts owed to six vendors which totaled $56,340. The Audit staff
recommended that DPH amend its disclosure reports to include these debts. In response
to the interim audit report, DPH provided evidence which showed that three of the items
($22,635) did not require reporting as debt. DPH also filed amended disclosure reports
which included the remaining items ($33,705) on Schedules 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. 2
U.S.C §434(b)(8) and 11 CFR §§104.3(d) and 104.11(a).

B. Separate Schedules. A political committee must file separate schedules for debts
owed by the committee and debts owed to the committee, together with a statement
explaining the circumstances and conditions under which each debt and obligation was
incurred or extinguished. 11 CFR §104.11(a).

C. Itemizing Debts and Obligations

e A debt of $500 or less must be reported once it has been outstanding 60 days from the
date incurred (the date of the transaction); the committee reports it on the next
regularly scheduled report.

« A debt exceeding $500 must be disclosed in the report that covers the date on which
the debt was incurred. 11 CFR §104.11(b).

Facts and Analysis

Disclosure reports filed by DPH during the audit period did not disclose any debts owed
by DPH. Based on available records and computer files, the Audit staff determined that
debts of $56,340 should have been disclosed on Schedules D (Debts Owed by the
Committee).

DPH’s treasurer was informed of this matter at the exit conference and later provided
schedules, via email, detailing the debts requiring disclosure. She indicated that the
appropriate amended disclosure reports would be filed.


associate reported memo entries with joint fundraising transfers. In addition, DPH filed
amended reports that correctly disclosed all amounts as memo entries. (For more detail,
see p. 11)

Finding 6. Reporting of Debts and Obligations

DPH failed to report debts owed to six vendors which totaled $56,340. The Audit staff
recommended that DPH amend its disclosure reports to include these debts. In response
to the interim audit report, DPH provided evidence which showed that three of the items
($22,635) did not require reporting as debt. DPH also filed amended disclosure reports
which included the remaining items ($33,705) on Schedules D. (For more detail, see p.
12)