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FEDERAL ELECTION COMMISSION

WASHINGTON. D,C. Z046J

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MEMORARDUM

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THROUGH:

FROM:

FRED ElLARD

PRESS OFFICE

BOB COSTA

JUDY HAWItIRS

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SUBJECT: PUBLIC ISSUANCE OF FINAL AUDIT

REPORT - MICHIGAR REPUBLICAR

STATE COMMITTEE

Attached please ~£ind a copy of the final audit report

of the Michiqan Republican State Committee which was approved

by the Commission on July 9, 1980.

Informational copies of the report have been received by

all parties involved and this report may be released to the

pUblic as of today, January 13, 1981.

Attachment as stated

cc: FEC Library

RAD

--PU1i'iic Record
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FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

..PEPO~T OF THE AUDIT DIVISION.

ON THE

MICHIGAN REPUBLICAN S'!'~.~E CmmITTEE

I • Background

A. Overview

This report is based on an audit of the ~~ichigan

Republican State Committee ("the Committee") undertaken by

the 1'.udit nivision of the Federal F:1ection Commission in

accordance with the Commission's audit policy to determine

whether there has-heen compliance with the provisions of

the Federal Election Campaign Act of 1971, as amended ("the

Act"). ~he audit was conducted pursuant to ~ection 43S(a) ('3)

of Title 2, Vnited States Code, which directs the Commission

to make from time to time audits and field investigations

with respect to reports and statements filed under the

provisions of the Act.

~he Committee registered with the Comptroller ~enera1 of the Vnited States on July 10, 1975, as a state

committee representing the ~~ichigan ~epub1ican Party. mhe

Committee maintains its headquarters in Lansing, ~~ichiqan.

~he audit covered the period· January 1, 1976, throu~h September 30, 1978. mhe Co~ittee reported beginning

cash on January 1, 1976, of $1,210.42, total receipts of ~1,636,628.79, total expenditures of $1,606,146.64, and

ending cash on September 30, 1978, of $34,904.57. !/

~his audit report is based on documents and working

papers supportina each of the factual statements. ~hey

form part" of the" record upon which the Commission hased its

decisions on the matters in this report and were avai1ah1e

to Commissioners and appropriate staff for review.

!/ nifference of ~3,212.00 resulting fro~ the rommittee's overstatement of beginning cash for 1977.
Section~44lb(a) .of Title. 2 of the United States Code

states, in part, that it is unlawful.forariy corporation or

labor organization to make a contribution or expenditure in

connection with any Federal election to political. office and it

is unlawful for any political committee ,to knowingly acceptor

receive any contribution from a corporation or .labor organi- zation. ., " , .

C. Transfers From N6n~Federal Account

Based upon the Audit staff·' s recommendation, the Committee

filed 'amendments on January 15, 1980, itemizing the transfers.

Therefore, we recommend no further action be taken on this matter.

Recommendation

,TheComrnitteeagreed to file an amended report itemiz~

ing the 'transfers as required.

During the course of, the audit it was determined that

the Committee ,did not itemize 140: transfers from:political

organizations, totaling $45,726;26. This represents approximately

'35% of the,number and 3% ,of the dollar amount of all transfers;

received.

II..-Audit Findings and Recommendations

A. Other -matters' noted during the" audit, were; referred"to'

the Commission' s Office' of General Counsel, on February :5, .1980

for consideration.

G. Scope .. "

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The audit' included sucli tests as verification of

total reported receipts, and expenditures and individual transactions~ review of required supporting documentation~

analysis of Committee debts·and obligations~ and, such 9ther,

audit procedures 'as deemed necessary under,the ..circumstances. , " ..

'·B. Disclosure' of Transfers-In

.," ",,:, Section 434 (b) (4) of Title. 2 of. the united States " Code states, in part, that each report shall disclose the name:

,and address of each political committee from which.the reporting

,committee received any transfers of. funds, .together with the - amC\unts,and datesof'all transfers. .

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B. Key Personnel

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period covered by the audit were Mr.William'F. McLaughlin" . Chairman, and Mr. Leo Farhat, Treasurer.
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Section l02.6(a) (2) of Title 11 Code of Federal Regulations states, in part, that any political committee which has

made transfers to or on behalf of any candidate for Federal

office shall either:

(i) Est~blish a separate Federal campaign committee

which shall register as a political committee. The Federal

campaign committee shall establish a segregated Federal account

in either a national or State bank1 or

(ii) Establish a single committee with a single account

to make contributions to Federal and non-Federal candidates,

but only if all contributions received are permissible under

the Act•••

In addition, Section l02.6(b) (2) states, in part,

that the committee in (a) (2) (i) and (ii) of this section may

not receive transfers from an account or committee established

by a State committee; "'subordinate committee established by a

State committee, or another political committee, except from a

committee set out in paragraph (a) (i) and (ii) of this section.

During the course of the audit it was determined

that the Committee received a transfer of $8,787.48 on July 31,

1978, from the Michigan Republican State Finance Committee

(MRSFC) non-Federal account, an unregistered committee. The

State of Michigan does not prohibit the acceptance of contributions from labor unions for state and local elections•

The Committee agreed to reimburse the MRSFC state

(non-Federal) account the amount of the transfer.

Recommendation

Based upon the Audit staff's recommendation, the Committee

reimbursed the MRSFC state account the amount of the transfer

and provided evidence of the reimbursement. Therefore, we

recommended no further action be taken on this matter.