Final Audit Report of: the 

Commission on the pemocratic 

State Central Commijttee of CA -

Federal 

January 1, 2007 - December |31, 2008 

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. 

About the Committee (p. 3) , 

The Democratic State Central Committeei of CA - Federal is a 

state party committee headquartered in Sacramento, Califomia. 

For more information, see chart on the Committee Organization, 

p. 3. 

Financial Activity (p. 4) 

• Receipts 

o Contributions from Individuals ' 

Contributions from Political Committees 

Transfers from Nonfederal/Levin jFunds 

Transfers from Affiliated Committees 

Loans Received I 

Offsets to Operating Expenditures 

Otiier Federal Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Federal Election Activity 

o Transfers to Affiliates 

o Contributions to Federal 

Candidates/Committees 

o Independent Expenditures 

o Coordmated Expenditures 

o Loan Repayments 

o Contribution Refunds 

o Other Disbursements 

Total Disbursements 

• Levin Receipts 

• Levin Disbursements 

$2,911,118 

106.051 

3,046,187 

532,621 

200,000 

41,845 

17,360 

$ 6,855,182 

$6,397,658 

903,632 

110,251 

17,500 

11.547 

15,271 

100.000 

7.215 

12.000 

$ 7,575,074 

$241,764 

$285,091 

Commission Finding (p. 4) ; 

Based upon a limited examination of the statements and reports 

filed, and the records presented by the Democratic State Central 

Committee of CA-Federal. no material npn-compliance was 

discovered. ! 

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

Commissioni on the 

Democratic State Central 

I 

Committee of CA-^ederal 

! 

r 

January 1, 2007 - Decembet 31, 2008 
Table of Contents 

I 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance \ 1 

i 

Part II. Overview of Committee 

Committee Organization i 3 

Overview of Financial Activity i 4 

I 

Part III. Commission Finding j 4 
Parti 

Backgroimd 

Authority for Audit 

This report is based on an audit of the Democratic State Central Committee of CAFederal (CALDEMS). undertaken by the Audit Division of the Federal $lection 

Commission (the Commission) in accordance with the Federal Election (Campaign Act of 

1971. as amended (the Act). The Audit Division conducted the audit pujrsuant to 2 

U.S.C. §438(b). which permits the Commission to conduct audits and freld investigations 

of any political committee that is required to file a report under 2 U.S.CJ §434. Prior to 

conducting any audit under this subsection, the Commission must perform an intemal 

review of reports filed by selected committees to determine if the report^ filed by a 

particular committee meet the threshold requirements for substantial coiiipliance with the 

Act. 2 U.S.C. §438(b). 

I 

I 

Scope of Audit 

Following Commission approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: j 

1. The disclosure of individual contributors' occupation and name of employer. 

2. The receipt of contributions from political committees. | 

3. The disclosure of disbursements, debts and obligations. | 

4. The disclosure of expenses allocated between federal, non-federal, ajnd Levin 

accounts. ! 

5. The consistency between reported figures and bank records. | 

6. The completeness of records. j 

7. Other committee operations necessary to the review. | 

I 

Commission Guidance j 

The Office of Compliance (OC). which includes the Reports Analysis Division (RAD) 

and the Audit Division, sought legal guidance from the Office of Generisd Counsel (OGC) 

pursuant to Commission Directive 69. Directive 69 was created to handile questions of 

law that arise from the review of reports filed with the Commission or iii the course of an 

audit of a political committee. Directive 69 also states tiiat certain legal issues may 

warrant Commission consideration early in the reports analysis or auditj process and that 

in such instances, OC and OGC may bring the issue before the Commission for 

consideration. j 

I 

The following question which was circulated to the Commission for consideration arose 

initially relative to RAD's review of CALDEMS' reports and again dui^ing tiie Audit 

staffs review of fimds transferred to local committees. When a state party committee 

transfers funds to a local party committees for allocable activities - in this case, voter 

registration outside the "federal election activity" (FEA) period, should'it send one check 

containing federal and non-federal fimds, following the procedures for allocated 

payments in 11 CFR §106.7, or should it send separate checks drawn on the federal and 

non-federal accounts? j 

! 

I 
I 

If one check is disbursed to local party recipients, the allocated disbursenient is disclosed 

completely but the potential exists for depositing non-federal fimds in thjs local 

recipient's federal accounts without proper disclosure of the transfer-in and the nonfederal share may never be transferred out to the non-federal account. In the altemative, 

if two checks are disbursed to local party recipients, less disclosure thanjnormal may 

result in a disbursement for which the federal and non-federal shares wojuld otherwise be 

reportable. The greater problem is risk of the deposit of non-federal fimds in recipient 

committee federal accounts which are then not subsequentiy properly reported and taken 

out of the federal accounts. I 

i 

Consequentiy. OGC and OC recommended that the Commission agree With the approach 

that the best practice for state committees making payments for allocable voter 

registration outside the FEA period is.to either follow the two check propedure or use one 

allocable check but provide specific instmctions to the recipient commitjtees. The latter 

method would provide notice to the recipient committees that allocable payments 

received from state party committee must be properly reported and segregated. 

I 

I 

The Commission approved this recommendation and as a result, no audit finding on 

CALDEMS' one check method will be included in this audit report. j 

I 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Dateof Registration November 13.1978 

• Audit Coverage January 1.2007 - I)ecember 31. 

2008 

Headquarters Sacramento, Califomia 

! 

Bank Information 1 1 

1 

• Bank Depositories Three ! 

• Bank Accounts 13 : 

Treasurer i 

• Treasurer When Audit Was Conducted Katherine Moret ; 

• Treasurer During Period Covered by Audit Katiierine Moret > 

1 

Management Information ! 

• Attended FEC Campaign Finance Seminar Yes 1 

• Who Handled Accounting and Recordkeeping 

Tasks 

Paid Staff j 

1 
Overview of Financial Activity 

(Audited Amounts) | 

Cash-on-hand @ January 1,2007 $711,109 

o Contributions from Individuals 2,911,118 

o Contributions from Political Committees i 106,051 

o Transfers from Nonfederal/Levin Funds '3,046,187 

o Transfers from Affiliated Committees , 532,621 

o Loans Received 1 200,000 

o Offsets to Operating Expenditures ; 41,845 

o Other Federal Receipts : 17,360 

Total Receipts $6,855,182 

o Operating Expenditures 6,397.658 

o Federal Election Activity , 903,632 

o Transfers to Affiliated Committees 1 110,251 

o Contributions to Federal Candidates/Committees 17,500 

o Independent Expenditures i 11,547 

o Coordinated Expenditures 15,271 

o Loan Repayments ; 100,000 

o Contribution Refimds 7,215 

o Other Disbursements i 12,000 

Total Disbursements $17,575,074 

Cash-on-hand @ December 31,2008 i $(8,783) 

! 

Levin Cash-on-hand @ January 1,2007 1 $95,696 

Total Levin Receipts ;$ 241,764 

Total Levin Disbursements :$ 285,091 

Levin Cash-on-hand @ December 31,2008 : $52,369 

Part III 

Commission Finding 

Based upon a limited examination of the statements and reports filed, ahd the records 

presenteid by the Democratic State Central Committee of CA-Federal, no material noncompliance was discovered. i