Interim Aii^it Report of the 

Audit Division on the New York 

Republican Federal Campaigii 

Committee 

(January 1, 2011 - December 31, 2012) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

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. 

About the Committee (p. 2) 

The New York Republican Federal Campaign Committee is a 

state party committee headquartered in Albany, New York. For 

more information, see the chart on the Committee Organization, 

p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Transfers from Affiliated and 

Other Political Committees 

o Transfers from Non-federal 

Accounts 

o Other Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Refunds of Contributions 

o Federal Election Activity 

o Other Disbursements 

Total Disbursements 

$ 1,606,371 

257,350 

2,522,875 

1,682,587 

177,507 

S 6,246,690 

$ 2,921,022 

20,200 

2,716,291 

350,929 

$ 6,008,442 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Disclosure of Occupation^lame of Employer (Finding 3) 

• Reporting of Apparent Independent Expenditures (Finding 4) 

• Recordkeeping for Communications (Finding 5) 

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

Audit Division on tho 

New Repuhli^n Federnl 

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

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activi^ S 

Finding 2. Recordkeeping for Employees 8 

Finding 3. Disclosure of Occupation^lame of Employer 9 

Finding 4. Reporting of Apparent Independent Expenditures 11 

Findings. Recordkeeping for Communications 16 
I 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the New York Republican Federal Campaign Committee^ 

(NYR), undertaken by the Audit Division of the Federal Election Commission (the Commission) in 

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

Division conducted the audit pursuant to 52 U.S.C. §30111(b), which permits the Commission to 

conduct audits and field investigations of any political conunittee 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 disclosure of individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; 

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

4. the consistency between reported figures and bank records; 

5. the completeness of records; 

6. the disclosure of independent expenditures; and 

7. 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 NYR requested early consideration of a legal question raised during audits covering the 2010 

election cycle. Specifically, the Commission addressed whether monthly time logs under 11 CFR 

§ 106.7(d)(1) were required for employees paid with 100 percent federal funds. 

The Commission concluded, by a vote of 5-1, that 11 CFR § 106.7(d)(1) does require committees to 

keep a monthly log for employees paid exclusively with federal funds. Exercising its prosecutorial 

discretion, however, the Commission decided it will not pursue recordkeeping violations for the 

failure to keep time logs or to provide affidavits to account for employee salaries paid with 100 

percent federal fimds and reported as such. The Audit staff informed NYR representatives of the 

payroll log requirement and of the Commission's decision not to pursue recordkeeping violations 

for failure to keep payroll logs for salaries paid and correctly reported as 100 percent federal. This 

audit report does not include any findings or recommendations with respect to NYR employees paid 

with 100 percent federal funds and reported as such. 

^ On December 23,2013, the Commission received a Statement of Organization from the New York Republican 

Federal Campaign Committee ofTicially changing its name to NY Republican Federal Campaign Committee. 
Part II 

Overvievr of Committee 

Committee Organization 

• Date of Registration August 2,1976 

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

Headquarters Albany, New York 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Eight Federal, Two Non-federal 

Treasurer 

• Treasurer When Audit Was Conducted John Riedman (3/18/11 - Present) 

• Treasurer During Period Covered by Audit Jane Corwin (10/5/09 - 3/17/11) 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Overview of Fix 

(Audited. 

Paid Staff 

laxicial Activity 

Amounts) 

Cash-on-hand ® January 1,2011 $ 59,732 

Receipts 

o Contributions from Individuals 1:606,371 

o Contributions from Political Committees 257,350 

o Transfers from Affiliated and Other Political 

Committees 2,522,875 

o Transfers from Non-federal Accounts 1.682.587 

o Other Receipts 177,507 

Total Receipts $ 6,246,690 

Disbursements 

o Operating Expenditures 2,921,022 

o Refunds of Contributions 20.200 

o Federal Election Activity 2.716,291 

o Other Disbursements 350,929 

Total Disbursements S 6,008,442 

Cash-on-hand @ Deeember 31,2012 $ 297,980 
Part III 

Suinxnaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

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

records revealed material misstatements in both 2011 and 2012. For 2011, NYR 

understated its receipts by $204,900 and its disbursements by $191,367. In 2012, NYR 

understated its receipts by $149,247 and its disbursements by $151,593. The Audit staff. 

recommends that NYR amend its disclosure reports to correct the misstatements. 

(For more detail, see p. 5.) 

Finding 2. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that NYR 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 NYR employees totaling $713,427^ for which NYR did not maintain 

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

non-federal funds. There was no payroll paid exclusively with non-federal funds. The 

Audit staff recommends that NYR provide monthly payroll logs that indicate the time 

spent in connection with a.federal election. Further the Audit staff recommends that 

NYR provide a copy of the policy implemented in January, 2014. 

(For more detail, see p. 8.) 

Finding 3. Disclosure of Occupation/Name of Employer 

A review of contributions from individuals requiring itemization indicated that 205 

contributions totaling $563,191 lacked or had inadequate disclosure of occupation and/or 

name of employer. In addition, "best efforts" to obtain, maintain and submit the 

information had not been sufficiently documented for these contributions. The Audit 

staff recommends that NYR establish "best efforts" by amending its reports to disclose 

the missing information relating to the contributions for which it had the required 

documentation. (For more detail, see p. 9.) 

Finding 4. Reporting of Apparent Independent Expenditures 

During audit fieldwork, the Audit staff reviewed expenditures totaling $1,352,118, that 

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

Federal Funds), that appear to be apparent independent expenditures that should have 

been disclosed on Schedule E, Line 24, (Independent Expenditures). NYR maintains that 

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

such. (See Part I, Background, Commission Guidance, Request for Early Commission Consideration of 

a legal Question, Page 1.} Payroll amount does not include taxes and fringe beneflts. 
these expenditures are part of its non-allocable mail program. NYR provided 

documentation supporting the use of volunteers, totaling $209,615. 

Additionally, NYR did not provide sufficient documentation pertaining to dissemination 

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

independent expenditures totaling $1,142,503. 

If NYR believes that these apparent independent expenditures, totaling $1,142,503, did 

not require reporting as independent expenditures, the Audit staff recommends that NYR 

provide evidence to support its conclusion. Absent such evidence, the Audit staff 

recommends that NYR amend its reports to disclose these disbursements as independent 

expenditures on Schedule £ and submit revised procedures for reporting independent 

expenditures. Lastly, the Audit staff recommends that NYR provide documentation to 

support the date of public dissemination for each communication to determine whether a 

filing of a 24/48-hour report was required. (For more detail, see p. 11.) 

Finding 5. Recordkeeping for Communications 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of 

information and proper classification of transactions disclosed on reports. The Audit 

staff identified $77,354 for wh^ch sufficient records were not provided. Without a copy 

of the invoices and the associated communications, the Audit staff is unable to determine 

how NYR should have reported these disbursements. The Audit staff recommends that 

NYR provide, in sufficient detail, the necessary information ftom which the reported 

expenditures totaling $77,354 may be verified or explained. Such records should include 

copies of invoices and identification of the associated communication, and, if the 

communication has already been provided, information associating each communication 

with an invoice(s). (For more detail, see p. 16.) 
Part IV 

Pindings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

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

records revealed material misstatements in both 2011 and 2012. For 2011, NYR 

understated its receipts by $204,900 and its disbursements by $191,367. In 2012, NYR 

understated its receipts by $149,247 and its disbursements by $151,593. The Audit staff 

recommends that NYR amend its disclosure reports to correct the misstatements. 

Legal Standard 

A. 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 tor 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). 

B. Federal vs. Non-Federal Account. The federal account may not accept funds that 

are not permissible under federal election law. 11 CFR §§102.5(a)(l)(i). 

Facts and Analysis 

A. Facts 

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

its bank records for 2011 and 2012. The reconciliation identified that NYR misstated 

receipts and disbursements for 2011 and 2012. The following charts outline the 

discrepancies between NYR's disclosure reports and its bank records, and the succeeding 

paragraphs explain why the discrepancies occurred. 

2011 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2011 

$57,528 $59,732 $2,204 

Understated 

Receipts $1,620,406 $1,825,306 $204,900 

Understated, 

Disbursements $1,562,000 $1,753,367 $191,367 

Understated 

Ending Cash Balance @ 

December 31,2011 

$115,934 $131,671 $15,737 

Understated 
The beginning cash balance was understated by $2,204 and is unexplained, but likely 

resulted from prior-period discrepancies. 

The understatement of receipts resulted from the following: 

• Transfers from non-federal accounts for allocable activity, 

not reported 

•' Uiueported deposit 

» Non-federal contributions deposited in the 

federal account, not reported 

Unexplained differences 

Net Understatement of Receipts 

The understatement of disbursements resulted from the following: 

• Transfer of non-federal contributions to the non-federal 

account, not reported 

• Net credit card charges, not reported 

• Unexplained differences 

Net Understatement of Disbursements 

+ 

+ 

+ 

+ 

$14,321 

975 

190,000 

396 

190,000 

1,563 

m. 

$191.367 

The $15,737 understatement of the ending cash balance resulted from the misstatements 

described above. 

^ 2012 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2012 

$115,934 $131,671 $15,737 

Understated 

Receipts $4,272,137 $4,421,384 $149",247 

Understated 

' Disbursements $4,103,481 $4,255,074 $151,593 

Understated 

Ending Cash "Balance @ 

December 31,2012 

$284,590 $297,981 $13,391 

Understated 

The imderstatement of receipts resulted from the following: 

• Transfers from non-federal accounts for allocable activity. 

riot reported + $11,750 

• Non-federal contributions deposited in the 

federal account, not reported + 157,447 

• Unexplained differences •TS . 19,-950. 

Net Understatement of Receipts + S149.247A 
The understatement of disbursements resulted from the following: 

• Transfer of non-federal contributions to the non-federal 

account, not reported + 157,447 

•: Unexplained differences ; 5.854. 

Net Understatement of Disbursements + S1S1.S93 

The $13,391 understatement of the ending cash balance resulted from the misstatements 

described above. 

For the $347,447 ($190,000 + $157,447) not reported above, NYR stated it used a federal 

account as its merchant account, depositing federal and non-federal contributions. 

Subsequently NYR would tr^@$fui-/''^y-cpplKlbutr^^^^^ was from federally 

impermis'sible fund's^ or that eii^ed'ed.federal cbntribulion limits" td the appropriate nonfederal account. NYR stated that some of the discrepancies were due to the manner in 

which the credit cards contributions were processed. 

The Audit staff confirmed there was one wire and three credit card deposits into the 

federal account totaling $310,000, that were identified by NYR as non-federal 

contributions. The Audit-staff was unable to identify the bank deposits for the remaining 

$37,447, however, was able to verify $347,447 was transferred to the non-federal account 

via 12 individual transactions. Finally, the Audit staff was able to verify $321,647 of 

these non-federal transfers were reported as contributions on the state reports. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatement of receipts and disbursements with NYR 

representatives at the exit conference. NYR representatives asked questions for 

clarification and said they would respond after having time to review each issue. The 

Audit staff provided schedules detailing the misstatement of receipts and disbursements.. 

In response to the exit conference, NYR stated all federal and non-federal credit card 

contributions were deposited in the federal account as a matter of administrative 

convenience. 

Furthermore, NYR representatives stated to ensure greater compliance and avoid 

accepting impermissible funds in the federal account, it has implemented a new system 

for processing credit card contributions. Through a new software vendor, NYR staff 

determines whether the contributions should be deposited in the federal or non-federal 

account based on the Commission and New York State Board of Elections regulations. 

Once identified, contributions are deposited directly into the appropriate NYR bank 

account. 

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

amend its disclosure reports to correct the misstatements noted above and reconcile the 

* In response to the exit conference, NYR representatives stated these contributions were federally 

permissible. Due to the lack of documentation, the Audit staff was unable to verify the permissibility of 

the contributions. 
8 

cash balance on its most recent report to identify any subsequent discrepancies that could 

affect the recommended adjustments. 

Finding 2. Recordkeeping for Employees . ' 

Summary 

During audit fieldwork, the Audit staff determined that NYR 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 NYR employees totaling $713,427® for which NYR did not maintain 

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

non-federal funds. There was no payroll paid exclusively with non-federal funds. The 

Audit staff recommends that NYR provide monthly payroll logs that indicate tlie time 

spent in connection with a federal election. Further, the Audit staff recommends that 

NYR provide a copy of the policy implemented in January, 2014. 

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 as administrative costs; 

• employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and, 

• employees who spend none of their compensated time in a given month on federal 

election activities may be paid entirely with funds that comply with state law. 11 

CFR§ 106.7(d)(1). 

Facts and Analysis 

A. Facts 

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

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

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

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

salaries and wages. For 2011 and 2012, NYR did not maintain monthly logs for 

$713,427 in payroll. This amount includes payroll paid as follows to NYR employees: 

Employees reported on Schedule H4 (Disbursements for Allocated Federal 

and Nonfederal Activity^ and paid with allocated federal and non-federal 

funds during the same month (totaling $713,427). 

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

such. (See Part I, Background, Commission Guidance, Request for Early Commission Consideration of 

a legal Question, Page 1.) Payroll amount does not include taxes and fringe benefits. 
NYR provided the Audit staff with affidavits from the former Executive Director 

attesting to the fact that he was able to determine those employees who spent less than 

25% of their time in federal activity. There was no payroll paid exclusively with nonfederal funds^. The affidavits provided by NYR do not resolve the recordkeeping 

finding because they do not document the time that an employee spent in connection with 

a federal election and the documents were provided after notification of the audit. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the recordkeeping requirement with NYR representatives 

during the audit fieldwork and at the exit conference. NYR representatives asked 

questions for clarification and said they would respond after reviewing each issue. 

Subsequently, NYR representatives stated that contemporaneous payroll logs were not 

kept; however, every dffort was made to ensure that employees that spent significiant time 

on federal elections were paid properly from the federal account. Further, NYR stated 

that a policy had been adopted and implemented to maintain monthly payroll logs^. 

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

provide monthly payroll logs that indicate the time spent in connection with a federal 

election. Further the Audit staff recommends that NYR provide a copy of the policy 

implemented in January, 2014. 

Finding 3. Disclosure of Occupation/Name of Employer 

Summary 

A review of contributions from individuals requiring itemization indicated that 205 

contributions totaling $563,191 lacked or had inadequate disclosure of occupation and/or 

name of employer. In addition, "best efforts" to obtain, maintain and submit the 

information had not been sufficiently documented for these contributions. The Audit 

staff recommends that NYR establish "best efforts" by amending its reports to disclose 

the missing information relating to the contributions for which it had the required 

documentation. 

Legal Standard 

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

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

exceeds $200 per calendar year, either by itself or when combined with other 

contributions from the same contributor. 52 U.S.C §30104(b)(3)(A). 

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

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

• The contributor's full name and address (including zip code); 

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

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

This is based on the Audit stafTs review of the available disbursement records and state reports. 

The Audit staff did not receive a copy of the policy nor a sample timesheet as noted in the narrative 

supplied by NYR. 
10 

The amount of the contribution; and 

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

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

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

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

the information required by the Act, the committee's reports and records will be 

considered in compliance with the Act. 52 U.S.C. §30102(i). 

D. Definition of Best Efforts. The treasurer and the committee will be considered to 

have used "best efforts" if the committee satisfied all of the following criteria; 

• All written solicitations for contributions included: 

o A clear request for the contributor's full name, mailing address, occupation, 

and name of employer; and 

o The statement that such reporting is required by Federal law. 

«! Within 30 days after the receipt of the contribution, the treasurer made at least one 

effort to obtain the missing information, in either a written request or a 

documented oral request. 

• The treasurer reported any contributor information that, although not initially 

provided by the contributor, was obtained in a follow-up communication or was 

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

during the same two-year election cycle. 11 CFR § 104.7(b). 

Facts and Analysis 

A. Facts 

A review of itemized contributions indicated that 205 contributions totaling $563,191, or 

40 percent of the dollar value of individual contributiotis required to be itemized by 

NYR, lacked or had inadequate disclosure of occupation/name of employer. 

A review of the Schedule A (Itemized Receipts) filed with the Commission determined 

the following: 120 errors totaling $334,027 did not disclose the occupation or name of 

employer, 77 errors totaling $191,764 disclosed the occupation or the name of employer 

as "Information Requested", and of the eight remaining errors totaling $37,400, seven 

inadequately disclosed the occupation or name of employer as self-employed. 

• The Committee did not provide documentation for 95 contributions showing it 

made follow-up best efforts for contributions totaling $214,944. 

• The Committee had the required documentation for 110 contributions totaling 

$348,247, however this information was not disclosed on its FEC reports. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed this matter with NYR representatives 

and they asked questions for clarification. Subsequent to the exit conference, NYR 

provided the Audit staff a list of individual contributors with occupation and name of 

employer information previously omitted. NYR representatives stated that since the 2012 

cycle it has made a point of sending and keeping records of follow-up correspondence. 
11 

NYR representatives further stated that its record of demonstrating that best efforts have 

ihade is^upport^ by the fabf that it has not received any Obm'mis^ion Requests for 

Addifiehal.Information letters on thi^ issue in the 2013-20i4 &yel.e*: Further, It-has 

implemented a policy that when additional information arrives, the public record will be 

updated to reflect that information. 

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

establish "best efforts" by amending its reports to disclose the missing information 

relating to the 110 contributions for which it had the required documentation. 

Finding 4. Reporting of Apparent Independent 

Expenditures 

Summary 

During audit fieldwork, the Audit staff reviewed expenditures totaling $ 1,352,118, that 

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

Federal Funds), that appear to be apparent independent expenditures that should have 

been disclosed on Schedule E, Line 24, (Independent Expenditures). NYR maintains that 

these expenditures are part of its non-allocable mail program. NYR provided 

documentation supporting the use of volunteers, totaling $209,61 S. 

Additionally, NYR did not provide sufficient documentation pertaining to dissemination 

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

independent expenditures totaling $1,142,503. 

If NYR believes that these apparent independent expenditures, totaling $1,142,503, did 

not require reporting as independent expenditures, the Audit staff recommends that NYR 

provide evidence to support its conclusion. Absent such evidence, the Audit staff 

recommends that NYR amend its reports to disclose these disbursements as independent 

expenditures on Schedule E and submit revised procedures for reporting independerit 

expenditures. Lastly, the Audit staff recommends that NYR provide documentation to 

support the date of public dissemination for each communication to determine whether a 

filing of a 24/48-hour report was required. 

Legal Standard 

A. Definition of Independent Expenditures. The term "independent expenditure" 

means an expenditure by a person for a communication expressly advocating the election 

or defeat of a clearly identified candidate that is not made in coordination with any 

candidate or authorized committee or agent of a candidate. No expenditure shall be 

considered independent if the person making the expenditure allows a candidate, a 

candidate's authorized committee or their agents, or a political party committee or its 

agents to become materially involved in decisions regarding the communication as 

described in 11 CFR 109.21(d)(2), or shares financial responsibility for the cost of 

production or dissemination with any such person. 11 CFR § 1 GO. 16(a) & (c). 

' The Audit staff has verified that the Commission has not sent Requests for Additional Information 

leners. 
12 

B. Expressly Advocating. Expressly advocating means any communication that - (a) 

Uses phrases such as "vote for the president," "re-elect your Congressman," "support the 

Democratic nominee," "cast your ballot for the Republican challenger for the Republican 

challenger for U.S. Senate in Georgia," accompanied by a picture of one or more 

candidate(s), or communications of campaign slogan(s) or individual word(s), which in 

context can have no other reasonable meaning than to urge the election or defeat of one or 

more clearly identified candidate(s). (b) When taken as a whole and with limited 

reference to external events, such as the proximity to the election, could only be 

interpreted by a reasonable person as containing advocacy of the election or defeat of one 

or more clearly identified candidate(s). 11 CFR §100.22. 

C. Disclosure Requirements - General Guidelines. An independent expenditure shall 

be reported on Schedule E (Itemized Independent Expenditures) if, when added to other 

independent expenditures made to the same payee during the same calendar year, it 

exceeds $200. Independent expenditures made (i.e., publicly disseminated) prior to 

payment should be disclosed as memo entries on Schedule E and as a debt on Schedule 

D. Independent expenditures of $200 or less need not be itemized, though the committee 

must report the total of those expenditures on line (b) on Schedule E. 11 CFR 

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

D. Last-Minute Independent Expenditure Reports (24-llour Reports). Any 

independent expenditures ajggregating $l,000'Qr more, with r^^tto any givehejection, 

and made after the 20''' day but.more than 24 hours, before the day of an .'electiohi>must. be 

reported and the report must be received by the Commission within 24 hours alln the 

expenditure is made. A 24-hour report is required each time additional independent 

expenditures aggregate $1,000 or more. The date that a communication is publicly 

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

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

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

E. Independent Expenditure Reports (48-Hour Reports). Any independent 

expenditures aggregating $ 10,000 or more for an election in any calendar year up to and 

including the 20th day before an election, must be disclosed within 48 hours each time 

the expenditures aggregate $10,000 or more. The reports must be filed with the 

Commission within 48 hours after the expenditure is made. 11 CFR §§ 104.4(f) and 

104.5(g)(1). 

F. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which the 

filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. CFR § 104.14^)(1). 

G. Volunteer Activity. The payment by a state committee of a political party of the 

costs of campaign materials (such as pins, bumper stickers, handbills, brochures, posters, 

party tabloids or newsletters, and yard signs) used by such committee in connection with 
13 

volunteer activities on behalf of any noniinee(s) of such party is not a contribution, 

provided that the conditions below are met. 

1. Such payment is not for costs incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any 

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists.-

2. The portion of the cost of such materials allocable to Federal candidates must be 

paid from contributions subject to the limitations and prohibitions of the Act. 

3. Such payment is not made from contributions designated by the donor to be spent 

on behalf of a particular candidate for federal office. 

4. Such materials are distributed by volunteers and not by commercial or for-profit 

operations. 

5. If made by a political committee, such payments shall be reported by the political 

committee as a disbursement in accordance with 11 CFR §104.3 but need not be 

allocated to specific candidates in committee reports. 

6. I'he exemption is not applicable to campaign materials purchased by the national 

party committees. 11 CFR §100.87 (a), (b), (c), (d), (e) and (g) and 11 CFR 

§100.147(a),(b),(c),(d),(e)and(g). 

Facts and Analysis 

A. Reporting of Independent Expenditures 

1. Facts 

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

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

expenditures on Schedule E, however, made apparent media-related expenditures 

totaling $1,142,503 and disclosed them as Federal Election Activity. NYR 

maintains that diese expenditures are part of its non-allocable mail program. The 

breakdown analysis of these expenditures is as follows; 

a. Independent Expenditures Reported as Federal Election Activity 

(Associated mailer and Invoice Provided under 11 CFR §100.22(a)) 

NYR made 88 disbursements for apparent independent expenditures for direct 

mail totaling $866,372 for which it provided a copy of the mailer with an 

associated invoice. According to the Audit staff, each of these direct mailers 

contained language expressly advocating the election or defeat of a clearly 

identified candidate as defined under 1ICFR § 100.22(a). 

b. Independent Expenditures Reported as Federal Election Activity 

(Associated mailer and Invoice Provided under 11 CFR 100.22(b)) 

NYR made 31 apparent independent expenditures for direct mail totaling 

$276,131 for which it provided a copy of the mailer with an associated invoice. 

These communications encouraged the reader to vote for Republicans noting 

various reasons why the Democrats were bad for New York. Based on the 

definition of express advocacy under 11 CFR 100.22(b), the Audit staff 
14 

believes that these communications could only be interpreted by a reasonable 

person as advocating the election or defeat of clearly identified candidate(s). 

c. Volunteer Material Exemption 

To support the volunteer material exemption, NYR representatives provided 

seven affidavits with the associated invoices and mailers from vendors and 

campaign officials, totaling $906,027. The affidavits detailed that the 

volunteers sorted, bundled, bagged and tagged the mail pieces by local zip 

code as part of the NYR "non-allocable volunteer program" during the audit 

period. NYR did not submit affidavits for the remaining $236,476 in invoices 

and mailers. Based on the limited documentation provided, the Audit staff 

determined these disbursements totaling $1,142,503 to be apparent 

independent expenditures. 

In addition to the expenditures discussed above, one invoice totaling $209,615 

included pictures of a single volunteer working on each individual mail piece. 

NYR provided signed volunteer forms for eight mail pieces which reflected the 

volunteer's name, address, the date and the title of the mail piece. The job 

performed was left blank on all of the forms. Based on the dates on the forms, 

it appeared most of this volunteer activity occurred immediately prior to the 

2012 General Election. This disbursement was not determined to be an 

independent expenditure. 

The Commission has addressed the applicability of the volunteer materials 

exemption in the Final Audit Reports of the Arizona Republican Party, the 

Democratic Executive Committee of Florida, and the Tennessee Republican 

Party. In these reports, the Conunission recognized a lack of clarity regarding 

the application of the volunteer material exemption. The Cominission had 

attenipted to formulate a consensus pdli'ey regarding what constitutes 

substantial ynlanteer involvement fpr the purpose ofrapp.lying thC; exemption', 

but this was never achieved. Since a lack of clarity exists concerning the -

application of the volunteer materials exemption, it follows that the type and 

amount of documentation needed to support volunteer involvement is also 

unclear. 

In view of the uncertainty regarding the amount of volunteer involvement 

needed to qualify for the volunteer materials exemption, as well as the amount 

of documentation required to support such an exemption, the Audit staff 

recommends NYR provide more detailed information and documentation for 

any volunteer involvement associated with each mailer. 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented a schedule detailing these 

expenditures to NYR representatives. In response to the exit conference, NYR 

representatives provided invoices, mailers, photographs, signed volunteer forms 

Proposed Interim Enforcement Policy, Agenda Document No. 10-16.. 
15 

and signed affidavits specifically addressing the volunteer component in 

processing the direct mailers. Further NYR representatives stated that as a result 

of the audit process, it is developing a policy that documents the volunteer 

component of the NYR non-allocable mail program. The Audit staff considers 

this matter unresolved. 

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

report, NYR provide documentation and evidence that apparent independent 

expenditures totaling $1,142,503 did not require reporting as independent 

expenditures. Evidence should include any documentation such as volunteer 

timesheets and photographs to support the involvement of volunteers in the 

processing or distribution of the communications noted above. Absent such 

evidence, the Audit staff recommends that NYR amend its reports to disclose 

these disbursements as independent expenditures on Schedule E and submit 

revised procedures for reporting independent expenditures. 

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

1. Facts 

In addition to not reporting any independent expenditures during the audit period, 

NYR also did not file 24 or 48-hour reports for any independent expenditures. 

I Therefore, the apparent independent expenditures identified above by the Audit 

staff may also have required such filings. 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed with the NYR representatives the 

requirements for filing 24/48-hour reports. The NYR representatives did not offer 

any comments regarding this matter. 

Absent documentation and evidence that apparent independent expenditures 

totaling $1,142,503 did not require reporting as independent expenditures (per 

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

service of this report, NYR provide documentation to support the date of public 

dissemination for each conununication to determine whether a 24/48-hour report 

was required. 
16 

Finding 5. Recordkeeping for Comnmnications 

Summary 

During audit fieldwork, the Audit staff reviewed disbursements tb verify the accuracy of 

information and proper classification of transactions disclosed on reports. The Audit 

staff identified $77,354 for which sufficient records were not provided. Without a copy 

of the invoices and the associated communications, the Audit staff is unable to determine 

how NYR should have reported these disbursements. The Audit staff recommends that 

NYR provide, in sufficient detail, the necessary information from which the reported 

expenditures totaling $77,354 may be verified or explained. Such records should include 

copies of invoices and identification of the associated communication, and, if the 

communication has already been provided, information associating each communication 

with an invoice(s). 

Legal Standard 

A. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which the 

filed reports may be verified, and checked for accuracy and completeness. 11 CFR 

§104.14(b)(l). 

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

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

U.S.C. §30102(d). 

Facts and Analysis 

A. Facts 

During the fieldwork, the Audit staff reviewed disbursements to verify the accuracy of 

the information and proper classification of transactions disclosed on reports. NYR made 

seven expenditures totaling $77,354 for which documentation was insufficient to make a 

determination pertaining to whether these disbursements were correctly reported on 

Schedule B, Line 30(b). 

The Audit staffs analysis resulted in the following: 

1. Disbursement- Invoice Provided.-No Copy of the Communication Provided 

($11,747) 

A disburserrient totaling $11,747 was paid to a vendor and was disclosed oii Schedule 

B, Line 30(b) with purpose FEA - Mail Production with a candidate identification 

number, but no mailer associated with the disbursement was provided. The Audit staff 

requested copies of the associated mailers for this disbursement. To date, the mailer or 

other documentation to associate the payment to a particular mail production has not 

been provided. 
17 

2. bisbtfrsemehts- No Cbtiicg of €:emmunicat'i6iis. or 'lriyoiccs l^rovided iSSS^iSibl^ 

Disbursements totaling $65,607 were paid to three vendors and reported oh Schedule 

B, Line 30(b) with purposes FEA - Exempt Mail Postage - candidate name, FEA -

Postage - candidate i^e/district, FEA Mail Postage - candidate identification 

number, FEA - 100% Federal; FEA Mailing and FEA - Mail Production - candidate 

name. However, documentation was not provided by NYR. Without sufficient 

details, the Audit staff is unable to verify NYR's reporting of these amounts as Federal 

Election Activity. The Audit staff requested documentation for each of these 

disbursements. To date, this documentation has not been provided. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented NYR with schedules of the invoices and 

associated mail pieces for which records were necessary to verify the accuracy of 

reporting. The Audit staff recommends that, within 30 calendar days of the service of 

this report, NYR provide the invoice and the associated mail pieces for disbursements 

totaling $77,354.