ARISTOTL E 

Now You KNOWTM 

205 Pennsylvania Avenue, S.E. 

Washington, D.C. 20003 

April 27,2012 

Thomas Hintermister 

Assistant Staff Director 

Audit Division 

Federal Election Commission 

999 E Street, NW 

Washington, DC 20463 

Cc: Commission Secretary 

Re: Washington State Republican Committee Response to Draft Final Audit Report 

Request for Hearing 

Dear Mr. Hintermister: 

The Washington State Republican Committee (WSRP) offers this response to the Draft 

Final Audit Report provided to the Committee and requests a hearing before the Commission to 

present legal arguments conceming the proposed finding regarding misstatement of financial 

activity. 

Background 

The proposed finding on Financial Activity includes a $43,920.85 disbursement from 

WSRP's Federal account on August 5,2010 and a transfer of an identical amount from its nonFederal to its Federal accoimt on August 12,2010 that were not initially reported. This payment 

was for state legislative campaign activity (100% non-Federal). The payment was mistakenly 

made from the Federal account and the error was discovered and rectified in one week. While 

WSRP amended its reports to disclose these transactions, WSRP does not believe these 

transactions should be included in the finding regarding misstatement of financial activity. 
A combination of Federal and Washington law effectively require WSRP to maintain 

four separate accounts (Federal, Levin, State Exempt, and State Non-Exempt). Occasionally, 

especially in the midst of a busy election season, a payment is made or a receipt deposited into 

an incorrect account. On the receipt side, WSRP performs a daily reconciliation that normally 

resolves receipt characterizations at the end of each business day. Disbursements are reviewed 

weekly at a minimum. 

In light of this regulatory complexity, WSRP believes there should be room to correct 

clerical errors in deposit or payment processing. The Audit Division's finding currently counts 

this error against WSRP twice: first as an unreported disbursement, and second as an unreported 

receipt (transfer) from the state account. While this accounting presents a technically correct 

picture of WSRP's bank account activity, it presents a substantively misleading picture of 

WSRP's Federal and non-Federal activity. WSRP believes these transactions should be 

excluded from the finding regarding misstatement of financial activity. 

Issue Presented 

The audit division's position appears to be that every transaction in a political 

committee's (Federal) bank account must appear on the committee's FEC report, even if the 

transactions were obvious and quickly rectified errors. WSRP believes that simple payment 

errors corrected within a reporting period should not be required to be reported. 

Analysis 

In the analogous context of correcting mistaken deposits the audit division itself appears 

to have acknowledged that a reasonable cure period for simple banking errors is appropriate. 

The Final Audit Report for the Democratic Party of Orange County FED PAC (September 29, 

2011) notes: 

During audit fieldwork, DPOC representatives inquired as to whether they were 

required to report deposit errors made and corrected within a reporting period. The 

Audit staff noted that DPOC did not correct all of the errors within a reporting period. 

This statement implies that errors corrected within the reporting period might not require 

reporting.' That is precisely the situation of this transaction by WSRP. 

^ The DPOC report goes on to note that not all errors by that committee were corrected within the same reporting 

period and the number of occurrences indicated a systemic problem. In WSRP's case the error was corrected in 

the same reporting period and this type of error occurred one time only. 
In the Final Audit Report on the Georgia Federal Elections Committee (August 15,2011) 

the Commission failed to adopt a recommended finding that the Georgia Committee should have 

reported non-Federal disbursements from a payroll account. This is another instance where the 

Commission refused to apply an "every account entry" reporting requirement. Commissioners 

who supported the proposed finding in the Georgia audit need not concede that ongoing activity 

from a shared account is exempt from reporting to conclude in this case that a one-time error 

should be exempt. 

In at least one circumstance, the Commission explicitly approves excluding offsetting 

transactions within a single reporting period from FEC reports. In discussing reporting 

requirements for bounced checks, the Commission's Campaign Guide for Party Committees 

(page 77,2009) states: "Checks received and retumed by the bank in the same reporting period 

do not need to be reported." WSRP believes that a similar offsetting transaction mie should 

apply to disbursement errors where an offsetting transaction corrects the error within the same 

reporting period. 

Conclusion 

WSRP believes that political committees maintaining Federal and non-Federal accounts 

should be permitted to correct deposit or payment errors between the accounts within a reporting 

period without a requirement to report the offsetting account transactions. Requiring reporting of 

simple and rapidly corrected banking errors serves no public purpose, and, indeed, would present 

a misleading picture of a committee's poUtical activity. WSRP asks that the proposed findings 

regardmg understatements of receipts and disbursements each be reduced by $43,921 to exclude 

these offsetting transactions. 

Sincerely, 

David M. Mason 

Senior Vice President, Compliance Services 

Aristotle Intemational 

for Washington State Republican Committee