FEDERAL ELECTIO'J COMMISSION AK0066423

August 2, 1995

MEMORANDUM

TO:

FROM:

RON M. HARRIS, PRESS OFFICER

PRESS OFFICE

ROBERT J. COSTA ~~­ ASSISTANT STAFF DIRE~~ AUDIT DIVISION

SUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

PARKER FOR CONGRESS

Attached please find a copy of the final audit report

and related documents on Parker for Congress which was

approved by the Commission on July 25, 1995.

Informational copies of the report have been received by

all parties involved and the report may be released to the

public.

Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure

Reports Analysis Division

FEe Library

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REPORT OF THE AUDIT DIVISION

ON

Parker for Congress

Approved July 25, 1995

FEDERAL ELECI10N COMMISSION

999 E STREET, N.W.

WASmNGTON, D.C.
TABLE OF CONTENTS

PARKER FOR CONGRESS

Page

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Executive Summary

Final Audit Report

Background

Findings

Transmittal to Comaittee

Chronology

1

3

3

5

9

11
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FEDERAL ELECTION COrv1~1ISSI0N

FINAL AUDIT REPORT

ON

PARKER FOR CONGRESS

EXECUTIVE SUMMARY

Parker for Congress (the Committee) registered with the

Clerk of the u.s. House of Representatives on November 18,

1993, as the principal campaign committee for Wayne Parker,

Jr., Republican candidate for the u.s. House of Representatives

from the state of Alabama.

The audit was conducted pursuant to 2 U.S.C. Section

438(b), which states, that the Commission may conduct audits of

any political committee whose reports fail to meet the

threshold level of compliance set by the Commission.

The findings of the audit were presented to the Comaittee

at an exit conference held at the completion of field work on

April 27, 1995, and later, in an inter~ audit report. The

Committee's responses to those findings are included in this

final audit report.

The following is an overview of the findings contained in

the final audit report.

Apparent Excessiv~ Contributions from Individuals- 2

U.S.C. Section 441{a)(1)(A); 11 CFR Sections: l03.3(b){3) and

(4); 110.1(b); and lOO.1(k). The Committee received 19

contributions from individuals which exceeded the donor's

limitations by $5,435. This problem was created by the

Committee's policy of erroneously attributing contributions to

the contributor check account holders, rather than to the

actual check siqner(s). The Committee complied with the

interim audit report recommendation by refunding the excessive

portions to each of the contributors and pro~'iding the Audit

staff with copies of the front and back of the negotiated

refund checks.

Disclosure of Contributions from Individuals - 2 U.S.C.

Sections 434(b)(3)(A) and 431(13)(A); 11 CFR Sections 104.7(a)

and (b). The Committee failed to disclose occupation and/or

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name of employer information for 31% of its contributions

requiring such disclosure. Ninety-eight percent of the errors

occurred during the 1994 Third Quarter, Pre-General, and Post

General reporting periods. The Committee did not demonstrate

best efforts to obtain this information. The Committee

complied with the interim audit report recommendation by

submitting amended Schedules A disclosing the required

information. Where the information could not be obtained, the

Committee submitted letters documenting its efforts to acq~i~e

it.

Itemization of Disbursements - 2 U.S.C. Section 434(b)(S)

(A). The Committee had a material, but isolated disbursement

disclosure error contained in its 1994 Pre-General Schedules B.

The Committee itemized $52,000 in transfers between bank

accounts rather than $51,288 in actual payments to vendors made

with the transferred funds. The Committee complied with the

interim audit report recommendation by submitting complete,

amended Schedules B for the 1994 Pre-General reporting period

which correctly itemized the actual disbursements and omitted

the erroneously reported transfers.

~age 2, Approved 7/25/95
fEDERAL ELECTION COMMISSION

WASHINCTON 0 ( 2(\4b4

REPORt' OF IftIB AooI'1' DIVISIOII

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I. Background

A. Audit Authority

This report is based on an audit of Parker for Congress (the COJDittee) undertaken by the Audit Division of the Federal

Election Commis.ion in accordance with the p~i.ions of the

Federal Election Caapaign Act of 1971; .s aaended (the Act). The

audit was co~ucted pursuant to section 438(b) of Title 2 of the

United States Code whIch .~.w., in -part, that the- e~..ion may

conduct audits and field investigations of any political committee

required to file a report under section 434 of this title. Prior

to conducting any audit under this subsection, the Ce-ission

shall perfora an internal review of reports filed by selected

cOBDittees to deteraine if the reports filed by • particular cOBDittee aeet the threshold requi~nts for substantial

ca.pliance with the Act.

The audit covered the period frca the date of the

Committee's first bank transactien on OCtober 13, 1993, through

December 31, 1994.!1 The Ca.aittee reported a beginning cash

balance at Nove.ber 10, 1993 of zero; total receipts for the

period of $433,084; total disburs8118nts for the period of

$426,481; and an ending cash balance on December 31, 1994 of $6,673.~1

The Committee's first filing lists the reporting period as

beginning on November 10, 1993.

2/ The amounts do not foot due to math errors on the Committee's

summary pages. All figures in this report have been rounded

to the nearest dollar.

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Be Campaign Organization

The Committee registered with the Clerk of the U.S.

House of Representatives on November 18, 1993 as the principal

campaign committee for Wayne Parker, Jr., Republican candidate for

the u.s. House of Representatives, District 5, from the state of

Alabama. The Committee maintains its headquarters in Huntsville,

Alabama.

The audit indicated that 92% ($398,157) of the

Committee's receipt~ were contributions from individuals. The

balance was from off~ets to operating expenditures, interest, and

contributions from political party and candidate committees.

This report is based on documents and workpapers which

support each of its factual statements. They form part of the

record upon which the Commission based its decisions on the

matters in the report and were available to Commissioners and

appropriate staff for review.

c. Key Personnel

The current Treasurer of the Commi~tee and the Treasure~

during the period covered by the audit is Mr. Stan McDonald. ..

D.

1.

2.

3.

Audit Scope and Procedures

The audit covered the following general categories:

The receipt of contributions or loans in excess of the

statutory l~itations (Finding II.A);

the receipt of contributions from prohibited sources,

such as those from corporations or labor organizations;

proper disclosure of contributions from individuals,

political committees and other entities, to include the

itemization of contributions when required, as well as,

the completeness and accuracy of the information

disclosed (Finding II.B.);

4. proper disclosure of disbursements including the

itemization of disbursements when reqUired, as well as,

the completeness and accuracy of the information

disclosed (Finding II.C.);

5. proper disclosure of campaign debts and obligations;

6. the accuracy of total reported receipts, disbursements

and cash balances as compared to campaign bank records;

7. adequate recordkeeping for campaign transactions; and

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8. other audit procedures that were deemed necessAry in the

situation.

Unless specifically discussed below, no material

non-compliance was detected. It should be notAj that the

Commission may pursue f.urther any of the matters discussed in this

report in an enforcement action.

II. Findings and Recommendations

A. Apparent Excessive Contributions from Individuals

Section 441a(a)(1)(A) of Title 2 of the United States

Code states that no person shall make contributions to any

candidate and his authorized political committees with respect to

any election for Federal office which, in the aggregate, exceed

$1,000.

Section l03.3(b)(3) of Title 11 of the Code of Federal

Regulations states, in part, that contributions which exceed the

contribution limitation may be deposited into a campaign

depository. If any such contribution is deposited, the treasurer

may request redesignation or reattribution of the contribution in

accordance with 11 CFR 110.1(b) and 110.1(k), as appropriate. If

a redesignation or reattribution is not obtained, the treasurer

shall, within 60 days of the treasurer's receipt of the

contribution, refund the contribution to the contributor.

Section l03.3(b)(4) of Title 11 of the Code of Federal

Regulations states, in part, that any contribution which appears

to be illegal and which is deposited into a caapaign depository

shall not be used for any disbursements by the political comaittee

until the contribution has been dete~ined to be legal. The

political committee must either establish a separate account in a

campaign depository for such contributions or maintain sufficient

funds to make all such refunds.

Section 110.1(k) of Title 11 of the Code of Federal

Regulation states, in part, that any contribution made by more

than one person, except for a contribution made by a partnership,

shall include the signature of each contributor on the check,

money order, or other negotiable instrument or in a separate

writing. A contribution made by more than one person that does

not indicate the amount to be attributed to each contributor shall

be attributed equally to each contributor. If a contribution to a

candidate on its face or when aggregated with other contributions

from the same contributor exceeds the limitations on

contributions, the treasurer may ask the contributor whether the

contribution was intended as a joint contribution by more than one

person. A contribution shall be considered to be reattributed to

another contributor if the treasurer of the recipient political

committee asks the contributor whether the contribution is

intended to be a joint contribution by more than one person, and

informs the contributor that he or she may request the return of

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the excessive portion of the contribution if it is not intended t

be a joint contribution; and within sixty days from the date of

the treasurer's receipt of the contribution, the contributors

provide the treasurer with a written reattribution of the

contribution, which is signed by each contributor, and which

indicates the amount to be attributed to each contributor if equal

attribution is not intended.

The Audit staff discovered that the Committee would

often attribute contributions received on joint accounts to both

spouses without having the ~equired signatures. Written

reattributions were not requested by the Committee for theBe

contributions. In addition, the Audit staff noted instances where

on its Schedules A the Committee itemized contributions from the

contributor and his or her spouse (Mr. and Mrs.) instead of

disclosing these items from the signatory of the contributor

check. A Committee official explained that they erroneously

attributed contributions to the contributor check account holders,

as opposed to the check signers.

As a result of this Committee practice, the Audit staff

identified 19 contributions totaling $5,435, from 12 individuals,

which were in excess of the contribution limitation. Eighteen of

the contributions, totaling $5,245, were not refunded. One

excessive contribution in the amount of $190 was refunded, but n~

in a timely manner.

With the exception of a brief period in 1995, the

Committee maintained sufiicient funds in its bank accounts to

warrant the assertion that the apparent excessive contributions

were not used for campaign activities in accordance with 11 CPR

103.3(b) (4).

At the exit conference, a schedule of apparent excessive

contributions was prOVided to the Committee. Committee officials

stated that they would refund the excessive portions of the

contributions. The Audit staff suggested the Committee change its

system of recording and reporting contributions drawn on joint

accounts so that contributions were correctly attributed to the

individual(s) who made them. Committe~ officials said they would

make the suggested changes to their system.

In response to the exit conference, Committee officials

stated that all of the excessive contributions identified during

the audit had been refunded. The Committee said that evidence

would be provided once the refund checks cleared the bank.

In the interim audit report the Audit staff recommended

that the Committee prOVide evidence of the refunds, such as copies

of the front and back of the negotiated checks.

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In response to the interim audit report the Committee

provided copies of the negotiated refund checks pertaining to all

excessive contributions identified during the audit. Thus, the

Committee has complied with the Audit staff's recommendation

contained in the interim audit report.

B. Disclosure of Contributions from Individuals

Section 434(b)(3)(A) of Title 2 of the United States

Code requires a political committee to report the identification

of each person who makes a contribution to the committee in an

aggregate amount or value in excess of $200 per calendar year together with the date and amount of such contribution.

Sec~ion 431(13)(A) of Title 2 of the United States Code

defines the term "identification" to be, in the case of any individual, the name, the mailing address, and the occupation of

such individual as well as the name of his or her employer.

Section 104.7(a) and (b) of Titl~ 11 of the Code of

Federal Regulations states, in part, that if best efforts have

been used to obtain, maintain and submit the information required

by the Act for the political cOllllllittee, any report of such

committee shall be considered in compliance with the Act. The

treasurer and the committee will only be deemed to have exercised

best efforts if all of the following are present: all written

solicitations for contributions include a clear request for the

contributor's full name, mailing address, occupation and name of

employer, and include the statement that reporting of such

information is required by Federal law; the treasurer makes at

least one effort, in either a written request or a docU88nted oral req~uest, within thirty days of the receipt of the contribution, to

obtain the information; and t~~ treasurer reports all contributor

information not provided by the contributor, but in the

committee's possession, including information in contributor

records, fun~raising records and previously filed reports, in the

same two year election cycle.

During the Audit staff's review of contributions from

individuals, it was determined that the Committee failed to

disclose occupation and/or name of employer information for 31\ of

its contributions requiring such disclosure. Ninety-eight percent

of these omissions were during the 1994 Third Quarter,

Pre-General, and Post General reporting periods. The Committee

demonstrated no best efforts to obtain the information.

At the exit conference the Committee was advised of the

material error rate and Committee officials agreed to file amended

Schedule A's disclosing the data, and to maintain records of all

efforts to obtain it.

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In the interim audit report the Audit staff recommended

that the Committee submit amended Schedules A for the '1994 Third

Quarter, Pre-General, and Post-General reporting periods,

:isclosing the occupation and name of employer information for

each con~ributor. Where an effort vas made to obtain the

information and no response was offered, the Audit staff

recommended that the Committee submit records documenting its

efforts to obtain the information with their amended Schedules A.

In response to the intertm audit report the Committee

filed the requested amended Schedules A. Where the info~ation

could not be obtained, the Committee submitted documentation

supporting its efforts to acquire it. These submissions

materially corrected the disclosure reports.

C. Itemization of Disbursements

identified

During

an isolated

the review

disclosure

of disbursements,

error in the

the

Ca..ittee#s

audit staff

1994

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Pre-General disclosure report. During this reporting period the

Committee erroneously itemized on SChedule B five transfers from

one bank account to another totaling $52,000. The Ca-mittee

failed to itemize three disburseBents, totaling $51,288 .ade by

the recipient bank account with the transferred funds.

Section 434(b)(S)(A) of Title 2 of the United States

Code state, in part, that each report shall disclose the name and

address of each person to whom an expenditure in an aggregate

amount or value in excess of $200 within the calendar year is made

by the reporting committee to meet a candidate or committee

operating expense, together with the date, amount, and purpose of

such operating expenditure.

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This matter was discussed at the exit conference and was

acknowledq·.::<i by both Committee officials and the Audit staff to be

an isvlat~d! but material error. A schedule of the items

requiring correction was provided to Ca.aittee officials who

agreed to file amended Schedule B's for the 1994 Pre-General

reporting period.

In the inter~ audit report the Audit staff recommended

that the Committee file amended Schedules B for the 1994

Pre-General reporting period removing the transfers from reported

activity and properly itemizing the actual disbursements.

In response to the inter~ audit report the Committee

filed a complete, amended Schedule 8 for the Pre-General reporting

period correctly itemizing ~he identified disbursements and

omitting the erroneously reported transfers.

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WASHINGTON. 0 C. 2~b3

FEDERAL ELECTION COMt"USSION

July 27, 1995

Mr. Stan McDonald, Treasurer

Parker for Congress

4906 Whitesburg Drive

Huntsville, AL 35801

Dear Mr. McDonald:

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Attached please find the Pinal Audit Report on Parker for

Congress. The Comais.ion approved the report on July 25, 1995.

The Commission approved Pinal Audit Report wlll be on the

public record on July 31, 1995. Should you have any questions

regarding the public releaae of the report, pl•••• contact the

Commission's Pre•• Office at (202) 219-4155. Any qu••tiODS you

have related to ..t.ters covered during tbe .u~it or in the

report should be directed to Melinda Jladsen or Joe- SWarinqen ot

the Audit Division at (202) 219-3720 or toll free at (800)

424-9530.

Co.

~~~rt J. Costa

Assistant St.ff Director

Audit Division

Attachment as stated

',[STERn", TOD'" A"WO TOMQRRO"

DEDIC "TED T() KEEPING THE PUBLIC INFORMED

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CHRONOLOGY

?ARKER FOR CONGRESS

Audit Fieldwork 4/17/95 - 4/28/95

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Interim Audit Report to

the CODUDittee

Response Recei'ved to the

InterLm Audit Report

Final Audit Report Approved

6/7/95

7/12/95

7/25/95

Page 11, App~ 7/25/95
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