Final Audit Report of the 

Commission on Friends of 

Sharron Angle 

(February 17, 2009 - December 31, 2010) 

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 

(tiie 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 Campaign (p. 2) 

Friends of Sharron Angle is the principal campaign committee for 

Sharron Angle, Republican candidate for the United States Senate 

from Nevada, and is headquartered in Reno, Nevada. For more 

infonnation, see the chart on the Campaign Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o Contributions from Other 

Political Conimittees 

o Contributions from Other 

Authorized Committees 

o Refunds and Other Receipts 

Total Receipts 

• Disbursements 

o Operating Disbursements 

o Contribution Refunds 

o Other Disbursements 

Total Disbursements 

$ 27,790,037 

399,037 

56,544 

23,531 

$ 28,269,149 

$ 27,948,259 

206,202 

22,675 

$ 28,177,136 

Commission Findings (p. 3) 

• Filing of 48-Hour Notices (Finding 1) 

• Reportingof Debts and Obligations (Finding 2) 

2 U.S.C. §438(b). 
Audit Report of the 

Commission on Friends of 

Sharron Angle 

(February 17, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit I 

Scope of Audit I 

Audit Hearing 1 

Part n. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 2 

Part HI. Summaries 

Commission Findings 3 

Part IV. Commission Findings 

Finding 1. Filing of 48-Hour Notices 4 

Finding 2. Reportingof Debts and Obligations 6 
Part I 

Background 

Authority for Audit 

This report is based on an audit of Friends of Sharron Angle (FOSA), 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 intemal review of reports filed by selected committees to 

determine whether 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 

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

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

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

5. the disclosure of disbursements, debts and obligations; 

6. the consistency between reported figures and bank records; 

7. the completeness of records; and 

8. other committee operations necessary to the review. 

Audit Hearing 

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

presented in this report. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration April 9,2009 

• Audit Coverage February 17,2009 - December 31,2010 

Headquarters Reno, Nevada 

Bank Information 

• Bank Depositories Three 

• Bank Accounts Five 

Treasurer 

• Treasurer When Audit Was Conducted William E. Rasavage (March 7, 2011 -

October 24,2011) 

Robert Fee (October 25, 2011 - Present) 

• Treasurer During Period Covered by Audit Alan Mills 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand February 17,2009 $ 0 

Receipts 

o Contributions from Individuals 27,790,037 

o Contributions from Other Political 399,037 

Committees 

o Contributions from Other Authorized 56,544 

Committees 

o Refunds and Other Receipts 23,531 

Total Receipts $ 28,269,149 

Disbursements 

o Operating Disbursements 27,948,259 

o Contribution Refunds 206,202 

o Other Disbursements 22,675 

Total Disbursements $ 28,177,136 

Cash-on-hand @ December 31,2010 $ 92,013 
Part III 

Summaries 

Commission Findings 

Finding 1. Filing of 48-Hour Notices 

FOSA filed in an untimely manner or failed to file 48-hour notices for 169 contributions 

totaling $243,750, that were made prior to the primary and general elections. These 

included 65 earmarked contributions totaling $107,200. In response to the Interim Audit 

Report recommendation, FOSA submitted written comments stating that it made a goodfaith effort to file all notices, but that the contribution processing system in place could 

not handle the large number of donations received. 

The Commission approved a finding that FOSA filed in an untimely manner or failed to 

file 48-hour notices for 169 contributions, totaling $243,750, that were made prior to the 

primary and general elections. (For more detail, see p. 4.) 

Finding 2. Reporting of Debts and Obligations 

The Audit staff identified debts, totaling $2,287,080, that FOSA did not itemize on 

Schedule D (Debts and Obligations). In response to the Interim Audit Report 

recommendation, FOSA amended its reports to materially correct the reporting of debts 

and obligations. FOSA also stated that the debt reporting problems were due to a 

breakdown in communications between vendors and committee staff. 

The Coinmission approved a finding that FOSA failed to itemize debts totaling 

$2,287,080 on Schedule D. (For more detail, see p. 6.) 
Part IV 

Commission Findings 

Finding 1. Filing of 48-Hour Notices 

Summary 

FOSA filed in an untimely manner or failed to file 48-hour notices for 169 contributions 

totaling $243,750, that were made prior to the primary and general elections. These 

included 65 earmarked contributions totaling $107,200. In response to the Interim Audit 

Report recommendation, FOSA submitted written comments stating that it made a goodfaith effort to file all notices, but that the contribution processing system in place could 

not handle the large number of donations received. 

The Commission approved a finding that FOSA filed in an untimely manner or failed to 

file 48-hour notices for 169 contributions totaling $243,750, that were made prior to the 

primary and general elections. 

Legal Standard 

A. Last-Minute Contributions (48-Hour Notices). Campaign committees must file 

special notices regarding contributions of $1,000 or more received less than 20 days 

but more than 48 hours before any election in which the candidate is ruiming. This 

rule applies to all types of contributions to any authorized committee of the candidate, 

including: 

• contributions from the candidate; 

• loans from the candidate and other non-bank sources; and 

• endorsements or guarantees of loans from banks. 11 CFR § 104.5(f). 

B. Reporting by Recipient Committee. When a candidate committee receives 

earmarked contributions through a conduit, each individual contribution should be 

itemized when the individual's total contributions to the committee aggregate over 

$200 per election cycle. This itemization must include: 

• the full name; 

• address; 

• occupation and employer of the contributor; and 

• date the contribution was received by the conduit. 11 CFR §110.6(c)(2)(ii)(C). 

Contributions from Political Action Committees, authorized committees, or other 

political committees must be itemized regardless of the amount contributed. 11 CFR 

§ 104.3(a)(4). 

In addition, the total contribution(s) transmitted through the conduit should be itemized 

on Schedule A as a memo entry. The conduit's full name and address must be provided, 

along with the date when the candidate committee received the contribution and the total 

amount. 11 CFR §110.6(c)(2). 
Facts and Analysis 

A. Facts 

The Audit staff reviewed contributions of $1,000 or more that FOSA received during the 

48-hour notice filing periods for the primary (May 20,2010 - June 5,2010) and general 

(October 14,2010 - October 30,2010) elections. FOSA filed in an untimely manner or 

failed to file 48-hour notices for 169 contributions totaling $243,750, as summarized 

below. 

Primary General Total 

48-Hour Notices Not Filed $31,200 

(21) 

$115,450 

(88) 

$146,650 

(109) 

48-Hour Notices Filed Late, 

but Before the Election 

$51,500 

(29) 

$0 $51,500 

(29) 

48-Hour Notices Filed After 

the Election 

$45,600 

(31) 

$0 $45,600 

(31) 

TOTALS $128,300 

(81) 

$115,450 

(88) 

$243,750 

(169) 

Primary election contributions for which notices were filed late (prior to or after the 

election) or not filed included 53 earmarked contributions totaling $86,100. General 

election contributions for which notices were not filed included 12 earmarked 

contributions in the amount of $21,100. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the filing of 48-hour notices with FOSA's counsel at the exit 

conference and subsequently provided schedules of the contributions for which FOSA 

did not file 48-hour notices or filed them in an untimely manner. FOSA's counsel 

expressed concem that these notices were not filed or were filed in an untimely manner 

and stated that FOSA had established a system under which the finance director would 

examine the contributions received on a daily basis to identify those that required such 

notices. Counsel further stated that FOSA would attempt to determine why the required 

notices were not filed. 

The Audit staff recommended that FOSA provide evidence that the 48-hour notices were 

not required to be filed or were filed in a timely manner, or provide any further comments 

it considered relevant. 

C. Committee Response to Interim Audit Report 

FOSA submitted comments regarding its failure to file 48-hour notices. FOSA stated that 

it makes no excuses, but that it made a good-faith effort to file the notices. 

By way of explanation, FOSA noted that "Sharron Angle was not the favored 

'establishment' candidate in the GOP Primary, but began to receive small dollar 

contributions from across the country..." FOSA added that the endorsement of the Tea 
Party Express and the win in the June 2010 Nevada GOP Primary led to FOSA receiving 

far more contributions than previously anticipated. FOSA pointed out that the funds 

received were equivalent in volume to those received for a Presidential campaign, 

without the infrastructure already in place to handle such volume. 

FOSA also noted that the notices not filed for the general election period comprise less 

than 2% of the total amount of contributions during the 48-hour notice reporting period. 

FOSA reiterated that there was no intent to fail to comply with the law, but the 

contribution processing system in place could not handle the large number of donations 

received. 

D. Draft Final Audit Report 

The Draft Final Audit Report noted that, in response to the Interim Audit Report, FOSA 

submitted comments to explain the untimely filed and non-filed 48-hour notices. 

E. Committee Response to Draft Final Audit Report 

FOSA submitted a response to the Draft Final Audit Report stating that it had no 

additional comments on this matter. 

Commission Conclusion 

On October 17, 2012, the Commission considered the Audit Division Recommendation 

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

filed in an untimely manner, or failed to file, 48-hour notices totaling $243,750. 

The Commission approved the Audit staff's recommendation. 

Finding 2. Reporting of Debts and Obligations 

Summary 

The Audit staff identified debts, totaling $2,287,080, that FOSA did not itemize on 

Schedule D (Debts and Obligations). In response to the Interim Audit Report 

recommendation, FOSA amended its reports to materially correct the reporting of debts 

and obligations. FOSA also stated that the debt reporting problems were due to a 

breakdown in communications between vendors and committee staff. 

The Commission approved a finding that FOSA failed to itemize debts on Schedule D 

totaling $2,287,080. 

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. Itemizing Debts and Obligations. 

• A debt or obligation 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 

the debt or obligation on the next regularly scheduled report. 

• A debt or obligation 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 

A. Facts 

The Audit staff reviewed FOSA's invoices and computer files containing disbursements 

made in 2009 and 2010 to 19 selected vendors and identified debts totaling $1,442,452 

that were reported on Schedule D. However, FOSA did not report debts totaling 

$2,287,080 on Schedule D as required.^ The majority of these debts should have been 

reported on the 2010 October Quarterly and 12-Day Pre-General reports. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the reporting of debts and obligations with FOSA's counsel at 

the exit conference and subsequently provided workpapers detailing the unreported debts. 

Counsel stated that FOSA would look into this issue. Documentation provided by FOSA 

subsequent to the exit conference was considered in the "Facts" section presented above. 

The Audit staff recommended that absent evidence that the debts did not require 

disclosure, FOSA should amend its reports to itemize these debts and obligations on the 

appropriate Schedule D and provide any further comments it considered relevant. 

C. Committee Response to Interim Audit Report 

In response, FOSA amended its reports to materially correct the reporting of debts and 

obligations. FOSA also provided a written explanation stating that the vendors were 

under the impression that FOSA was provided the information to disclose all outstanding 

debts and obligations in a timely manner. FOSA staff, however, were either unaware that 

the information needed to be reported, or did not receive the information. FOSA 

admitted that, whatever the cause, ".. .the amounts were apparently not reported as 

debts." 

In addition, FOSA noted that when preparing its response to the Interim Audit Report, it 

had discussed this matter with the vendors involved and expressed to them that each 

should review its procedures to ensure better communication with political committees in 

the future. 

D. Draft Final Audit Report 

The Draft Final Audit Report noted that, in response to the Interim Audit Report, FOSA 

amended its reports to materially correct the reporting of debts and obligations, and 

provided additional comments. 

~ This is the sum of the total unreported debt balance for each of the 19 vendors during the period covered 

by the audit (debts only counted when incurred). 
E. Committee Response to Draft Final Audit Report 

FOSA submitted a response to the Draft Final Audit Report stating that it had no 

additional comments on this matter. 

Commission Conclusion 

On October 17,2012, the Commission considered the Audit Division Recommendation 

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

failed to itemize debts totaling $2,287,080. 

The Commission approved the Audit staffs recommendation.