July 11, 2019 

MEMORANDUM 

To: The Commission 

Through: Alec Palmer 

 Staff Director 

From: Patricia C. Orrock 

Chief Compliance Officer 

Dayna C. Brown 

Acting Assistant Staff Director 

Audit Division 

Zuzana O. Pacious 

 Audit Manager 

By: Camilla Reminsky 

 Lead Auditor 

Subject: Audit Division Recommendation Memorandum on the Ambulatory 

Surgery Center Association PAC (ASCAPAC) (A17-08) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presented the Draft Final Audit Report (DFAR) to the Ambulatory Surgery 

Center Association PAC (ASCAPAC) on April 15, 2019 (see attachment). ASCAPAC did 

not request an audit hearing. 

 

This memorandum provides the Audit staff’s recommendation for each finding outlined in 

the DFAR. 

ASCAPAC provided additional information in response to the DFAR, as discussed below. 

Finding 1. Misstatement of Financial Activity 

In response to the DFAR, ASCAPAC filed amended disclosure reports that 

corrected the public record. 

The Audit staff recommends that the Commission find that ASCAPAC misstated 

$16,834 in receipts for calendar year 2015. 

for cr

for PCO
2 

Finding 2. Receipt of Prohibited Contributions 

In response to the DFAR, ASCAPAC submitted the following additional 

documentation:

Prohibited Contributions Untimely Resolved ($48,904) 

 62 contributions totaling $48,9041, were untimely refunded by ASCAPAC. 

Prohibited Contributions Not Resolved ($31,124) 

ASCAPAC submitted documentation for contributions totaling $31,124 from LLCs 

that it stated “did not elect to file federal tax returns as a corporation.” Based on the 

submitted documentation, the Audit staff determined that these contributions remain 

impermissible for the following reasons: 

 Documentation was not submitted showing the contributions had been 

attributed to the non-corporate partner(s) of the incorporated LLC for 23 

contributions totaling $22,574. 

 Documentation was not submitted showing whether the LLC elected to file 

with the IRS as a corporation or a partnership for four contributions totaling 

$2,550. 

 Documentation submitted showed the LLC elected to file with the IRS as a 

corporation for three contributions totaling $3,500. 

 Documentation submitted does not support ASCAPAC’s assertion that four 

contributions totaling $2,500 were made only from the non-corporate 

partners. 

Contributions Where Permissibility Was Demonstrated ($12,995) 

 Documentation was submitted showing that the LLC elected to file with the 

IRS as a partnership for three contributions totaling $8,575 in response to 

the Interim Audit Report. 

 Documentation was submitted showing the LLC elected to file with the IRS 

as a partnership for three contributions totaling $4,4202

 in response to the 

DFAR. 

Thus, the amount of contributions that were from prohibited sources was reduced to 

$80,0283

. 

The Audit staff recommends that the Commission find that ASCAPAC received 

contributions totaling $80,028 from prohibited sources. 

Finding 3. Recordkeeping for Receipts

In response to the DFAR, ASCAPAC stated that it updated its policies and 

procedures, created new compliance and information-sharing systems, engaged an 

internal review of 2017 and 2018 contributions and contracted with an outside 

 

1

 ASCAPAC submitted copies of the issued checks and agreed to provide the copies of the processed 

checks or bank statement(s) when they become available. To date, the Audit staff has verified refunds 

totaling $34,693 with bank records. 2

 Amount also includes a $120 difference where the Audit staff inadvertently recorded the incorrect amount 

for two checks due to illegible copies. 3

 $80,028 = $93,023 (see DFAR, page 3) - $8,575 - $4,420. The deductions are the amounts ASCAPAC 

was able to demonstrate were from permissible sources. 
3 

vendor to ensure compliance with FEC regulations. ASCAPAC also submitted 

missing documentation for receipts totaling $11,175. 

As a result of ASCAPAC issuing refunds for prohibited contributions (see Finding 

2 above), attribution records are not required for contributions totaling $18,534. 

Thus, the amount of contributions that did not meet the recordkeeping requirements 

of 11 CFR §§102.9 and 104.14(b)(1) was reduced to $48,5744

. 

The Audit staff recommends that the Commission find that ASCAPAC failed to 

maintain records to support contributions totaling $48,574. 

Finding 4. Disclosure of Receipts

In response to the DFAR, ASCAPAC stated that it has updated its policies and 

procedures, created new compliance and information-sharing systems, engaged in 

an internal review of 2017 and 2018 contributions and contracted with an outside 

vendor to ensure compliance with FEC regulations. 

Additionally, ASCAPAC submitted documentation to support that contributions, 

totaling $1,000, disclosed on the audited disclosure reports were correctly reported, 

and filed amendments that corrected the disclosure for contributions totaling 

$67,508. However, ASCAPAC did not comply with the recommendation to amend 

its disclosure reports to correctly disclose $120,115 of the contributions. 

Thus, the amount that did not meet the disclosure requirements of 11 CFR 

§§100.12 and 104.3(a)(4) was reduced to $187,6235

. 

The Audit staff recommends that the Commission find that ASCAPAC failed to 

correctly disclose contributions totaling $187,623. 

Finding 5. Untimely Deposit of Receipts

In response to the DFAR, ASCAPAC stated that it has updated its policies and 

procedures, created new compliance and information-sharing systems, engaged in 

an internal review of 2017 and 2018 contributions and contracted with an outside 

vendor to ensure compliance with FEC regulations. 

The Audit staff recommends that the Commission find that ASCAPAC untimely 

deposited contributions totaling $84,333. 

 

The Office of General Counsel has reviewed this memorandum and concurs with the 

recommendations. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 30 

days of the Commission’s vote. 

In case of an objection, Directive No. 70 states that the Audit Division 

Recommendation Memorandum will be placed on the next regularly scheduled open 

session agenda. 

 

4

 $48,574 = $67,108 (see DFAR, page 3) - $18,534 

5

 $187,623 = $193,623 (see DFAR, page 3-4) -$1,000- $5,000 (resolved in response to the IAR). 
4 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Camilla Reminsky or Zuzana Pacious at 

694-1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on the Ambulatory Surgery Center 

Association PAC (ASCAPAC) 

cc: Office of General Counsel 
Draft Final Audit Report of the 

Audit Division on the 

Ambulatory Surgery Center 

Association PAC (ASCAPAC) 

(January 1, 2015 – December 31, 2016) 

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.1

 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 Committee (p. 2)

The Ambulatory Surgery Center Association PAC (ASCAPAC) 

is a separated segregated fund- trade association. It qualified for 

multi-candidate status and is headquartered in Alexandria, 

Virginia. For more information, see the chart on the Committee 

Organization, p. 2. 

Financial Activity (p. 2)

 Receipts

o Contributions from Individuals 

o Contributions from Other 

Political Committees 

o Offsets to Operating 

Expenditures 

o Refund of Contribution Made to 

Federal Candidate 

Total Receipts

$ 361,090 

11,322 

1,481 

1,000 

$ 374,893 

 Disbursements

o Contributions to Federal 

Candidates/Committees 

o Transfers to Affiliated 

Committees 

o Operating Expenditures 

o Refunds of Contributions to 

Individuals 

Total Disbursements

$ 269,000 

14,872 

6,618 

1,850

$ 292,340 

Findings and Recommendations (p. 3) 

 Misstatement of Financial Activity (Finding 1) 

 Receipt of Prohibited Contributions (Finding 2) 

 Recordkeeping for Receipts (Finding 3) 

 Disclosure of Receipts (Finding 4) 

 Untimely Deposit of Receipts (Finding 5) 

 

1

 52 U.S.C. §30111(b). 
Draft Final Audit Report of the 

Audit Division on the Ambulatory 

Surgery Center Association PAC 

(ASCAPAC) 

(January 1, 2015 – December 31, 2016)
Table of Contents 

 Page

Part I. Background 

 Authority for Audit 1 

 Scope of Audit 1 

 Limitations 1 

Part II. Overview of Committee 

Committee Organization 2 

 Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 5

Finding 2. Receipt of Prohibited Contributions 7

Finding 3. Recordkeeping for Receipts 12

Finding 4. Disclosure of Receipts 14

Finding 5. Untimely Deposit of Receipts 17
 1

 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the Ambulatory Surgery Center Association PAC 

(ASCAPAC), 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 52 U.S.C. 

§30111(b), which permits the Commission to conduct audits and field investigations of 

any political committee that is required to file a report under 52 U.S.C. §30104. Prior to 

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

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

particular committee meet the threshold requirements for substantial compliance with the 

Act. 52 U.S.C. §30111(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; 

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 contributions to candidate committees; 

6. the consistency between reported figures and bank records; 

7. the completeness of records; and 

8. other committee operations necessary to the review. 

Limitations 

ASCAPAC did not comply with the recordkeeping requirements, 11 CFR §§102.9 and 

104.14(b)(1), which require committees to maintain a copy of contributor checks in 

excess of $50 and to keep an account of all contributions received by or on behalf of the 

political committee. Under the dual attribution rule for partnerships, the contribution is 

attributable to the partnership, and to each individual partner as specified by the 

contributing partnership (11 CFR §110.1(e)). The lack of contributor checks and the 

attribution information for each partner for contributions from partnerships, limited the 

Audit staff’s testing of all contributions received via credit card or check that may have 

exceeded the limits. Likewise, the Audit staff was not able to verify the accuracy of 

disclosure information for and the permissibility of contributions received via check or 

credit card due to the lack of the aforementioned records. (See Findings 3 and 4). 
 2 

Part II 

Overview of Committee 

Committee Organization 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1, 2015 $ 118,102 

Receipts 

o Contributions from Individuals 361,090 

o Contributions from Other Political 

Committees 

11,322 

o Offsets to Operating Expenditures 1,481 

o Refund of Contribution Made to Federal 

Candidates 

1,000 

Total Receipts $ 374,893 

Disbursements 

o Contributions to Federal 

Candidates/Committees 

269,000 

o Transfers to Affiliated Committees 14,872 

o Operating Expenditures 6,618 

o Refunds of Contributions to Individuals 1,850 

Total Disbursements $ 292,340

Cash-on-hand @ December 31, 2016 $ 200,655 

Important Dates 

 Date of Registration May 25, 2006 

 Audit Coverage January 1, 2015 – December 31, 2016 

Headquarters Alexandria, VA 

Bank Information 

 Bank Depositories Two 

 Bank Accounts Two checking 

Treasurer 

 Treasurer When Audit Was Conducted John Greenwich 

 Treasurer During Period Covered by Audit John Greenwich (10/1/13 – Present) 

Management Information 

 Attended FEC Campaign Finance Seminar Yes 

 Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 
 3

 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of ASCAPAC’s reported activity with its bank 

records revealed a misstatement of receipts for calendar year 2015. Specifically, 

ASCAPAC understated its receipts by $16,834. In response to the Interim Audit Report 

recommendation, ASCAPAC stated that some receipts were inadvertently deposited into 

the wrong bank account and agreed to file amended disclosure reports. (For more detail, 

see p. 5.) 

Finding 2. Receipt of Prohibited Contributions

During audit fieldwork, a review of contributions from individuals revealed that 

ASCAPAC received 102 contributions, totaling $93,023, from apparent prohibited 

sources. In response to the Interim Audit Report recommendation, ASCAPAC submitted 

documentation for contributions totaling $43,121 and stated contributions totaling 

$35,271 would be refunded or given to an eligible charity. Furthermore, for the 

remaining contributions totaling $14,631, ASCAPAC stated that it had not yet received 

all the contributor responses attesting to tax status, but reasonably expected that half of 

the contributions would be deemed permissible. 

Based on the documentation submitted, the Audit staff agreed with ASCAPAC that 

contributions totaling $8,575, were not from prohibited sources. Thus, the outstanding 

contributions, totaling $84,448, remain from prohibited sources. (For more detail, see p. 

7.) 

Finding 3. Recordkeeping for Receipts 

During audit fieldwork, the Audit staff reviewed documentation provided by ASCAPAC 

and determined that it did not maintain adequate documentation for receipts totaling 

$67,108. In response to the Interim Audit Report recommendation, ASCAPAC stated 

that it conducted an “exhaustive effort” to collect the missing documentation and updated 

its procedures and policies to ensure proper recordkeeping. ASCAPAC submitted 

adequate documentation for receipts totaling $9,199. However, receipts totaling $57,909, 

still lack documentation to support its disclosure reports. (For more detail, see p. 12.) 

Finding 4. Disclosure of Receipts 

During audit fieldwork, the Audit staff identified 124 contributions totaling $193,6232 

that were incorrectly disclosed or missing the required disclosure information. In 

 

2

 After reviewing the response to the Interim Audit Report, the Audit staff removed 30 contributions 

totaling $3,948 from the finding. These contributions were not required to be itemized and therefore not 

subject to proper disclosure requirements. The finding has been updated to reflect this decrease. 
 4

 

response to the Interim Audit Report recommendation, ASCAPAC stated that it has 

conducted an “exhaustive effort” to collect the information required and submitted 

documentation to support its original disclosure reports. ASCAPAC also stated that it 

would file amendments to correct the outstanding disclosure errors. Based on the 

documentation submitted, the Audit staff agrees with ASCAPAC that two contributions 

totaling $5,000 were correctly disclosed. However, contributions totaling $188,623 

remain either incorrectly disclosed or missing. (For more detail, see p. 14.) 

Finding 5. Untimely Deposit of Receipts 

During audit fieldwork, the Audit staff determined that ASCAPAC did not deposit 106 

contributions totaling $84,333 within 10 days of receipt. In response to the Interim Audit 

Report recommendation, ASCAPAC stated that its policy is to deposit all checks within 

10 days of receipt, and that it has worked with its credit card vendor to ensure the timely 

transfer of contributions. ASCAPAC also stated it has implemented a procedure that all 

checks will be date stamped upon receipt to ensure a record is maintained. (For more 

detail, see p. 17.) 
 5

 

Part IV 

Findings and Recommendations

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of ASCAPAC’s reported activity with its bank 

records revealed a misstatement of receipts for calendar year 2015. Specifically, 

ASCAPAC understated its receipts by $16,834. In response to the Interim Audit Report 

recommendation, ASCAPAC stated that some receipts were inadvertently deposited into 

the wrong bank account and agreed to file amended disclosure reports. 

Legal Standard 

Contents of (Federal) Reports. Each report must disclose: 

 The amount of cash on hand at the beginning and end of the reporting period; 

 The total amount of receipts for the reporting period and for the calendar year; 

 The total amount of disbursements for the reporting period and for the calendar year; 

and 

 Certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104(b)(1), (2), (3), (4), and (7). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled ASCAPAC’s reported financial 

activity with its bank records for calendar years 2015 and 2016. The reconciliation 

identified that ASCAPAC misstated its receipts in 2015. The following chart details the 

discrepancies between ASCAPAC’s disclosure reports and bank activity. The 

succeeding paragraphs explain why the discrepancies occurred. 

2015 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash on Hand @ 

January 1, 2015 

$ 121,494 $ 118,102 $3,392 

Overstated 

Receipts $ 176,749 $ 193,583 ($16,834) 

Understated 

Disbursements $ 124,490 $ 133,412 ($8,922) 

Understated 

Ending Cash on Hand @ 

December 31, 2015 

$ 173,753 $ 178,273 ($4,520) 

Understated 

The beginning cash on hand was overstated by $3,392. The Audit staff identified a 

discrepancy of $2,500 due to a disbursement check that cleared the bank in 2014, but was 
 6

 

not reported until 2015. The remaining $892 is the result of prior period reporting 

discrepancies. 

The net understatement of receipts resulted from the following: 

 Trade Association funds erroneously deposited in the Federal 

account, not reported (See explanation below) + 11,560 

 Contributions from individuals, not reported + 5,000 

 Contributions from individuals reported, not supported 

by bank deposits - 500 

 Offset to operating disbursements not reported + 95 

 Unexplained difference + 679 

Net Understatement of Receipts $ 16,834

The $4,520 understatement of the ending cash on hand was a result of the reporting 

discrepancies described above, as well as disbursement reporting discrepancies. 

ASCAPAC deposited checks from individuals and offsets to operating expenditures 

totaling $11,5603

 that were either dues or offsets to the Ambulatory Surgery Association, 

or donations to their advocacy fund. These erroneously deposited checks were not 

reported, as well as the transfers to accounts not related to ASCAPAC. 52 U.S.C. 

§30104(b) requires that all receipts and disbursements be reported and as such, both the 

receipt of these funds and the subsequent transfers are required to be reported. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatement of the 2015 receipts at the exit conference and 

provided ASCAPAC representatives with schedules detailing the misstated activity. In 

response to the exit conference, ASCAPAC representatives stated that the unreported 

activity consisted of receipts that were deposited to the ASCAPAC account in error and 

were later transferred out. ASCAPAC representatives further stated that they would 

amend the disclosure reports to include this activity. 

The Interim Audit Report recommended that ASCAPAC amend its disclosure reports to 

correct the misstatements noted above. In addition, the Interim Audit Report 

recommended that ASCAPAC reconcile the cash on hand on its most recently filed 

disclosure report to account for the recommended adjustments and identify any 

subsequent discrepancies, as necessary. 

 

 

3

 ASCAPAC transferred $9,060 of these contributions to a non-ASCAPAC bank account in 2015 and 

stated that the remaining $2,500, intended for an advocacy fund, will also be transferred to a nonASCAPAC bank account. To date, ASCAPAC has not provided documentation to verify the remaining 

transfer. 
 7

 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, ASCAPAC submitted a 

reconciliation of receipts. The reconciliation indicated that receipts totaling $11,7344

were inadvertently deposited into the wrong bank account, and were then transferred to 

the correct account. ASCAPAC stated it would file amended disclosure reports to correct 

the misstatement.5

 

Finding 2. Receipt of Prohibited Contributions 

Summary 

During audit fieldwork, a review of contributions from individuals revealed that 

ASCAPAC received 102 contributions, totaling $93,023, from apparent prohibited 

sources. In response to the Interim Audit Report recommendation, ASCAPAC submitted 

documentation for contributions totaling $43,121 and stated contributions totaling 

$35,271 would be refunded or given to an eligible charity. Furthermore, for the 

remaining contributions totaling $14,631, ASCAPAC stated that it had not yet received 

all the contributor responses attesting to tax status, but reasonably expected that half of 

the contributions would be deemed permissible. 

Based on the documentation submitted, the Audit staff agreed with ASCAPAC that 

contributions totaling $8,575, were not from prohibited sources. Thus, the outstanding 

contributions, totaling $84,448, remain from prohibited sources. 

Legal Standard 

A. Receipt of Prohibited Contributions General Prohibition. Candidates and 

committees may not accept contributions (in the form of money, in-kind contributions 

or loans): 

1. In the name of another; or 

2. From the treasury funds of the following prohibited sources: 

Corporations (this means any incorporated organization, including a non-stock 

corporation, an incorporated membership organization, and an incorporated 

cooperative); 

3. Federal Government Contractors (including partnerships, individuals, and sole 

proprietors who have contracts with the federal government); and 

4. Foreign Nationals (including individuals who are not U.S. citizens and not 

lawfully admitted for permanent residence; foreign governments and foreign 

political parties; and groups organized under the laws of a foreign country or 

groups whose principal place of business is in a foreign country, as defined in 22 

U.S.C. §611(b). 52 U.S.C. §§30118, 30119, 30121, and 30122. 

 

4

 These receipts included $11,560 identified in Section A as “Trade Association funds erroneously 

deposited in the Federal account;” and $174 identified as “Unexplained differences.” See also footnote 

3. 5

 ASCAPAC filed amended disclosure reports on March 29, 2019, after the Interim Audit Report response 

period. The Audit staff is reviewing these amendments and will address them in the subsequent Audit 

Division Recommendation Memorandum and the Final Audit Report of the Commission. 
 8

 

B. Receipt of Prohibited Corporate Contributions. Political committees may not 

accept contributions from the general treasury funds of corporations. This prohibition 

applies to any type of corporation including a non-stock corporation, as incorporated 

membership organization, and an incorporated cooperative. 52 U.S.C. §30118. 

C. Definition of Limited Liability Company. A limited liability company (LLC) is a 

business entity recognized as an LLC under the laws of the State in which it was 

established. 11 CFR §110.1(g)(1). 

D. Application of Limits and Prohibition to LLC Contributions. A contribution 

from an LLC is subject to contribution limits and prohibitions, depending on several 

factors, as explained below: 

1. LLC as Partnership. The contribution is considered a contribution from a 

partnership if the LLC chooses to be treated as a partnership under Internal 

Revenue Service (IRS) tax rules, or if it makes no choice at all about its tax status. 

A contribution by partnership is attributed to each partner by his or her share of 

the partnership profits. 11 CFR §110.1 (e)(1) and (g)(2). 

2. LLC as Corporation. The contribution is considered a corporate contribution-and 

is barred under the Act-if the LLC chooses to be treated as a corporation under 

IRS rules, or if its shares are traded publicly. 11 CFR §110.1(g)(3). 

3. LLC with Single Member. The contribution is considered a contribution from a 

single individual if the LLC is a single-member LLC that has not chosen to be 

treated as a corporation under IRS rules. 11 CFR §110.1 (g)(4). 

E. Limited Liability Company’s Responsibility to Notify Recipient Committee. At 

the time it makes a contribution, an LLC must notify the recipient committee: 

 That it is eligible to make the contribution; and 

 In the case of an LLC that considers itself a partnership (for tax purposes), how 

the contribution should be attributed among the LLC’s members. 11 CFR 

§110.1(g)(5). 

F. Questionable Contributions. It is the Treasurer’s responsibility to ensure that all 

contributions are lawful. 11 CFR §103.3(b). If a committee receives a contribution 

that appears to be prohibited (a questionable contribution), it must follow the 

procedures below: 

1. Within 10 days after the treasurer receives the questionable contribution, the 

committee must either: 

 Return the contribution to the contributor without depositing it; or 

 Deposit the contribution (and follow the steps below). 11 CFR 

§103.3(b)(1). 

2. If the committee deposits the questionable contribution, it may not spend the 

funds and must be prepared to refund them. It must therefore maintain 

sufficient funds to make the refunds or establish a separate account in a 

campaign depository for possibly illegal contributions. 11 CFR §103.3 (b)(4). 
 9

 

3. The committee must keep a written record explaining why the contribution 

may be prohibited and must include this information when reporting the 

receipt of the contribution. 11 CFR §103.3(b)(5). 

4. Within 30 days of the treasurer’s receipt of the questionable contribution, the 

committee must make at least one written or oral request for evidence that the 

contribution is legal. Evidence of legality includes, for example, a written 

statement from the contributor explaining why the contribution is legal or an 

oral explanation that is recorded by the committee in a memorandum. 11 CFR 

§103.3(b)(1). 

5. Within these 30 days, the committee must either: 

 Confirm the legality of the contribution; or 

 Refund the contribution to the contributor and note the refund on the report 

covering the period in which the refund was made. 11 CFR §103.3(b)(1). 

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff identified contributions that appeared to be from 

prohibited sources. The following chart details the source of these receipts.

Apparent Prohibited Contributions 

Type of Review 100% 

Contributions from Limited Liability Companies (LLC) $75,462 

Contributions from Corporations $16,412 

Contributions from Professional Limited Liability Companies (PLLC) $649 

Contributions from Limited Liability Partnerships (LLP) $5006

Total of Prohibited Contributions $93,023 

B. Additional Information: 

For contributions from corporations, the Audit staff verified the corporate status of the 

entities, as of the date of the contribution, with the applicable Secretary of State offices. 

For contributions from Limited Liability Companies (LLC) and Limited Liability 

Partnerships (LLP), ASCAPAC provided documentation for $44,194 stating that the 

partnership elected to be treated as a corporation for tax purposes, or that they had a 

corporate partner. For the remaining $31,768 from LLCs and LLPs, ASCAPAC did not 

provide documentation. 

The Audit staff verified the corporate status with the appropriate Secretaries of State for 

contributions from corporations totaling $16,412 to ASCAPAC. 

 

6

 This was a single contribution from a partnership where both partners were incorporated entities. 
 10

 

ASCAPAC did not maintain a separate account for questionable contributions. However, 

there was a sufficient balance in its bank account to make refunds of the apparent 

prohibited contributions. 

The contributions originated primarily from surgery centers that were members of the 

Ambulatory Surgery Center Association.

C. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with ASCAPAC representatives during the exit 

conference and provided a schedule of the apparent prohibited contributions. ASCAPAC 

representatives stated that the committee “continues to conduct an extensive, multimodal 

effort to collect documentation of the tax filing status...” and have provided additional 

information regarding the eligibility of the contributions to the Audit staff. In addition, 

they stated that ASCAPAC is in the process of issuing refunds and will provide details 

once the refund process is completed. 

ASCAPAC representatives further stated: “...the Committee accepted contributions from 

LLCs based on the understanding of the following points: 

1. An ASC [Ambulatory Surgery Center], by definition, is owned wholly or 

in part by a single physician or partnership of physicians, and as such 

represents an inherently permissible donor under FEC rules and 

regulations. 

2. FEC guidance consistently informs Committees that the contributing LLC is 

the party affirmatively responsible for notifying the Committee of donor 

eligibility status. The Committee objects to any assertion by the Audit staff that 

this affirmative duty somehow rests with it as the recipient PAC. Likewise, the 

Committee rejects any allegation by the Audit staff that the PAC's staff did 

anything other than seek full compliance with the "best efforts" obligations set 

forth in FEC rules and regulations, the Campaign Guide for Corporate and 

Labor Organizations, and other applicable Commission guidance.” 

The Audit staff noted that although the contributor is responsible for providing eligibility 

of its contribution, 11 CFR §103.3(b) states that it is the treasurer’s responsibility to 

ensure that all contributions are lawful and to maintain a record of documentation to that 

effect. According to the best efforts provisions in 11 CFR §103.3(b), ASCAPAC did not 

demonstrate best efforts because it did not provide statements from the business entities 

attesting to the legality of their contributions or refund the potentially prohibited 

contributions. 

The Interim Audit Report recommended that ASCAPAC: 

 Provide documentation demonstrating that the apparent prohibited contributions 

totaling $93,023 were made with permissible funds or were timely resolved. This 

documentation should include records that were not made available to the Audit 

staff during the audit, including tax status information provided by the 
 11

 

contributors, or timely refunds (copies of the front and back of negotiated refund 

checks). 

 Absent documentation that the funds were permissible or were timely resolved, 

ASCAPAC must refund these apparent prohibited contributions to the 

contributors or disgorge them to a governmental entity or to a qualified charitable 

organization.7 ASCAPAC should provide proof of any refunds and/or 

disgorgement by providing the front and back of the negotiated refund checks. 

 If funds are not available to make the necessary refunds or disgorgement, 

ASCAPAC should disclose the contributions requiring refunds on Schedule D 

(Debts and Obligations) until funds become available to make such refunds. 

D. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, ASCAPAC stated that it has 

undergone an “exhaustive effort” to determine the corporate status of all the contributors 

in question, and submitted supporting documentation. 

ASCAPAC addressed prohibited contributions in the following three categories, 

however, the Audit staff could not associate the documentation submitted to the total 

amounts addressed in the narrative portion of the response: 

Contributions categorized as permissible ($43,121) 

ASCAPAC stated that contributions totaling $43,121 were permissible. Of these, 

contributions totaling $37,621 were from “eligible” LLCs with a corporate partner, which 

is allowable as long as no part of the contribution is attributed to the corporation. 

Additionally, ASCAPAC stated contributions totaling $5,500 were received from LLC 

partnerships with no corporate partner. 

Based on documentation submitted, the Audit staff determined that contributions totaling

$26,649 were from LLCs and LLPs that elected to be taxed as partnerships by the 

IRS. Of this amount, contributions totaling: 

 $16,074 were from LLCs owned by another LLC and/or a corporate partner. 

Since documentation was not submitted showing tax status of the LLC partner, 

nor that the contribution was made entirely from the non-corporate partner(s)’ 

share of the profits, these contributions remain impermissible. 

 $500 was from an LLP owned by two corporate partners. As this contribution is 

entirely from corporate entities, the contribution is impermissible. 

 $1,500 were from an LLC that elected to be taxed as a partnership by the IRS, but 

since the documentation provided stated that the partners were unaware that a 

contribution had been made, these contributions remain impermissible.

 $8,575 were from LLCs/LLPs that were not owned by another LLC and/or 

corporate partner. The Audit staff agrees with ASCAPAC that these are 

contributions from permissible sources. 

 

7

 See 26 U.S.C §170(c). 
 12

 

Contributions categorized as prohibited ($35,271) 

ASCAPAC stated that contributions totaling $35,271 were received from corporations or 

partnerships that elected to be treated as corporations for tax purposes, and agreed to 

issue refunds. Based on the documentation submitted, the Audit staff verified 

contributions totaling $19,124 were from LLCs that elected to be treated as a 

corporations for tax purposes, and $7,115 were from corporations, and thus remain 

impermissible. 

Contributions without donor response ($14,631) 

ASCAPAC stated they did not receive responses from contributors attesting to tax status 

for contributions totaling $14,631, despite multiple attempts. However, based on the 

number of responses already received, ASCAPAC reasonably expects that 55%, or 

$8,047 will be deemed permissible. Therefore, ASCAPAC estimated that it would 

refund or disgorge to an eligible charity the remainder of the contributions. ASCAPAC 

would adjust the actual refund amount based on responses from its contributors. 

The Audit staff maintains that unless ASCAPAC submits documentation to demonstrate 

these contributions were received from permissible sources, they must still be refunded. 

Corrective Action Taken in Response to the Interim Audit Report 

Total Apparent Prohibited Contributions as of Interim Audit Report $93,023 

Contributions from Partnerships 

(Supporting documentation provided by committee) $8,575 

Contributions Refunded $0 

Prohibited Contributions – Not Resolved $84,448 

In summary, the remaining apparent prohibited contributions not resolved or refunded 

total $84,448 ($93,023 - $8,575). As such, ASCAPAC should either issue a refund to the 

contributors, disgorge the funds to a governmental entity or to a qualified charitable 

organization, or report them as debts on Schedule D until paid. 

Finding 3. Recordkeeping for Receipts 

Summary 

During audit fieldwork, the Audit staff reviewed documentation provided by ASCAPAC 

and determined that it did not maintain adequate documentation for receipts totaling 

$67,108. In response to the Interim Audit Report recommendation, ASCAPAC stated 

that it conducted an “exhaustive effort” to collect the missing documentation and updated 

its procedures and policies to ensure proper recordkeeping. ASCAPAC submitted 
 13

 

adequate documentation for receipts totaling $9,199. However, receipts totaling $57,909, 

still lack documentation to support its disclosure reports. 

Legal Standard 

A. Recordkeeping. Political committees must keep records of:

 All contributions received by or on behalf of the committee; 

 The name and address of any person who makes a contribution in excess of $50, 

together with the date and amount of the contribution; and 

 The occupation and name of employer of any individual whose contributions 

aggregate more than $200 during a calendar year, together with the date and 

amount of any such contributions. 52 U.S.C. §30102(c) and 11 CFR §102.9(a). 

B. Retention of Check Copies. For contributions in excess of $50, committees must 

maintain a photocopy or digital image of the check or written instrument. 11 CFR 

§102.9(a)(4). 

C. Maintaining Records. Committees must maintain records that provide in sufficient 

detail the necessary information and data from which filed reports may be verified 

and checked for accuracy and completeness. 11 CFR §104.14(b)(1). 

D. Preserving Records and Copies of Reports. Committees must preserve these 

records for 3 years after a report is filed. 52 U.S.C. §30102(d). 

E. Dual Attribution Rule for Partnerships. Contributions from business entities 

should provide information pertaining to the proportion of the contribution 

attributable to each partner. Contributions from partnerships are both attributable to 

the partnership, and to each individual partner as specified by the contributing 

partnership. 11 CFR §110.1(e) and 52 Fed. Reg. 760, 764-765 (Jan. 9, 1987). 

Facts and Analysis 

A. Facts 

The Audit staff’s review of contribution records indicated that ASCAPAC failed to 

maintain copies of contribution checks or other written instruments for contributions over 

$50, totaling $6,378. Furthermore, contributions from business entities, totaling $60,730, 

were not annotated with the attribution information for each partner. The total missing 

contribution checks and attributions totaled $67,108 and represented 19% of the total 

contributions received from individuals that required record retention. By not retaining 

the required checks and attributions, ASCAPAC did not comply with recordkeeping 

requirements. 

When the Audit staff requested the missing records, ASCAPAC representatives stated 

that they did not maintain these records.8

 However, during audit fieldwork, ASCAPAC 

 

8

 ASCAPAC did maintain a database with the attribution information for each partner, however, a review 

of subsequent responses from contributing entities indicated that the information recorded in the 

database often was incorrect, and could not be relied upon. 
 14

 

representatives reached out to the contributing entities and requested the attribution 

information. 

As a result of the missing records, the Audit staff was unable to verify the attribution to 

each partner from partnerships. (See Limitations, p. 1.) 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the missing records and provided schedules to ASCAPAC 

representatives at the exit conference. ASCAPAC representatives stated that they did not 

maintain original records documenting partnership attributions, however, after the 

beginning of fieldwork, partnership attributions were requested from all of the business 

entities that made contributions. ASCAPAC provided the Audit staff with attribution 

records after the exit conference,9

 and stated that it would amend its disclosure reports to 

reflect the updated information. 

The Interim Audit Report recommended that ASCAPAC: 

 Provide the requested attribution records; 

 Develop and implement a plan to obtain and maintain records as the law requires, 

for the partners to whom a partnership’s contribution was attributed; and 

 Submit any comments it deemed relevant to this matter. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, ASCAPAC stated that it has 

conducted an “exhaustive effort” to collect and provide the requested documentation. 

Additionally, ASCAPAC stated that it has updated its policies and procedures to ensure 

proper recordkeeping. 

Based on the documentation provided, Audit staff determined that ASCAPAC submitted 

adequate attribution records from business entities for contributions totaling $9,199. 

However, receipts totaling $57,909, still lack documentation to support the disclosure 

reports. 

Finding 4. Disclosure of Receipts 

Summary 

During audit fieldwork, the Audit staff identified 124 contributions totaling $193,62310 

that were incorrectly disclosed or missing the required disclosure information. In 

response to the Interim Audit Report recommendation, ASCAPAC stated that it has 

conducted an “exhaustive effort” to collect the information required and submitted 

documentation to support its original disclosure reports. ASCAPAC also stated that it 

would file amendments to correct the outstanding disclosure errors. Based on the 

documentation submitted, the Audit staff agrees with ASCAPAC that two contributions 

 

9

 Totals in the Facts section reflect the records received. 10 See footnote 2. 
 15

 

totaling $5,000 were correctly disclosed. However, contributions totaling $188,623 

remain either incorrectly disclosed or missing the required disclosure information. 

Legal Standard 

Required Information for Contributions. For each itemized contribution, the 

committee must provide the following information: 

 The contributor’s full name and address (including zip code); 

 The contributor’s occupation and the name of his or her employer (for individual 

contributors); 

 The date of receipt (the date the committee received the contribution); 

 The amount of the contribution; and 

 The calendar year-to-date total of all contributions from the same individual. 11 

CFR §§100.12 and 104.3(a)(4) and 52 U.S.C. §30104(b)(3)(A). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff identified 124 contributions reported on Schedule 

A totaling $193,62311 that were incorrectly disclosed or missing the required disclosure 

information. These reporting errors consisted of the following:12

 58 contributions from individuals and business entities totaling $79,728 that 

incorrectly disclosed the contributors’ name; 

 42 contributions from individuals and business entities totaling $52,195 that 

incorrectly disclosed the contribution dates; and 

 53 contributions from partnerships totaling $109,532 that incorrectly disclosed the 

partnership attribution for the contributions. 

The Audit staff was not able to verify disclosure information for 89 contributions totaling 

$60,730 from business partnerships due to the lack of records showing each partner’s 

attribution.13

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the disclosure items at the exit conference and provided 

schedules of contributions disclosed incorrectly. ASCAPAC representatives stated that 

they would amend the required disclosure reports to reflect information received from 

donors. 

The Interim Audit Report recommended that ASCAPAC amend its disclosure reports to 

correctly disclose these contributions on Schedule A, and provide any other comments it 

deemed necessary. 

 

11 See footnote 2. 

12 These three groups of errors and their respective dollar value exceed the amount of total errors of 124 

totaling $193,623 because 29 contributions totaling $47,832 had multiple disclosure errors. Each 

contribution was counted once toward the total errors, even if there were multiple errors. 13 See Limitations, p. 1. 
 16

 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, ASCAPAC stated that it 

conducted an “exhaustive effort” to collect the records, and submitted documentation to 

support its original disclosure reports. ASCAPAC also stated it would file amendments 

to correct the outstanding disclosure issues. The Audit staff reviewed the documentation 

and agrees that for two contributions, totaling $5,000, ASCAPAC correctly disclosed the 

required information. 

ASCAPAC addressed 38 of the contributions that incorrectly disclosed the contributors’ 

name in the following three categories: 

 ASCAPAC stated that 16 credit card contributions from individuals that were 

reported as received from business entities and cited for being incorrectly reported 

were, in fact, correctly reported. The credit card submission forms only 

transmitted the name of the individual cardholder, not the company. ASCAPAC 

explained that the additional documentation submitted contained written 

confirmation that the reported business entity names accurately reflect the donors. 

The Audit staff does not agree with the explanation provided by ASCAPAC. The 

Audit staff reviewed the submitted documentation and determined that it did not 

state that the credit card contributions were from the business entity. For these 

credit card contributions, the Audit staff recommends ASCAPAC submit 

confirmation that the contributions originated from the business entity and not the 

individual named on the card. 

 ASCAPAC stated that 13 contributions were prohibited and will be refunded or 

disgorged to an eligible charity. 

The Audit staff agrees with ASCAPAC, but maintains that, regardless of the 

permissibility of a contribution, certain information such as the name, address, 

date and amount of contribution, and the aggregate total for the contributor, must 

be disclosed correctly.

 ASCAPAC stated that nine contributions were disclosed with a name other than 

that on the check, and it would amend its disclosure reports to show the correct 

name. 

The Audit staff agrees with ASCAPAC, and its stated resolution would correct 

the public record. 

 

As a result, contributions totaling $188,623 ($193,623 - $5,000) remain either incorrectly 

disclosed or missing information and amended disclosure reports are still required.14 

 

14 See footnote 5. 
 17

 

Finding 5. Untimely Deposit of Receipts 

Summary 

During audit fieldwork, the Audit staff determined that ASCAPAC did not deposit 106 

contributions totaling $84,333 within 10 days of receipt. In response to the Interim Audit 

Report recommendation, ASCAPAC stated that its policy is to deposit all checks within 

10 days of receipt, and that it has worked with its credit card vendor to ensure the timely 

transfer of contributions. ASCAPAC also stated it has implemented a procedure that all 

checks will be date stamped upon receipt to ensure a record is maintained. 

Legal Standard 

A. Deposit of Receipts. The treasurer of a political committee must deposit 

contributions (or return them to the contributors without being deposited) within 10 

days of the treasurer’s receipt of the contribution. 11 CFR §103.3(a). 

B. Receipt of Contributions. Every person who receives a contribution for an 

authorized political committee shall, no later than 10 days after receipt, forward such 

contribution to the treasurer. If the amount of the contribution is in excess of $50, 

such person shall also forward to the treasurer the name and address of the contributor 

and the date of receipt of the contribution. If the amount of the contribution is in 

excess of $200, such person shall forward the contribution, the identification of the 

contributor in accordance with 11 CFR §100.12, and the date of receipt of the 

contribution. Date of receipt shall be the date such person obtains possession of the 

contribution. 52 U.S.C. §30102(b)(2) and 11 CFR §102.8(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed available contribution records and 

identified 106 contributions totaling $84,333 which ASCAPAC did not deposit within 10 

days. This amount represents 23% of the total contributions from individuals. 

The Audit staff compared the reported receipt dates15 to the deposit dates and determined 

that it took ASCAPAC, on average, 22 days to deposit these contributions. The untimely 

deposit of contributions ranged from a minimum of 14 days to a maximum of 74 days.16 

 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with ASCAPAC representatives during the exit 

conference and provided schedules detailing the untimely deposited contributions. 

ASCAPAC representatives did not provide any comments related to this matter at that 

time. 

 

15 The Audit staff verified the date reported on the disclosure reports was the date received stamped in the 

contributor records. The Audit staff used the date of the check or the credit card merchant received date 

to determine timeliness for contributions with no date stamp. 16 Of these untimely deposited contributions, 70 contributions totaling $55,993 were not disclosed with the 

correct date on the disclosure reports. See Finding 4, p. 14. 
 18

 

In response to the exit conference, ASCAPAC representatives stated that ASCAPAC’s 

policy was to deposit all checks within 10 days of receipt. The representatives stated that 

two items on the list were erroneous deposits and therefore were not subject to the 10 day 

deposit regulation. The Audit staff noted that all deposits must be made within 10 days 

of ASCAPAC’s receipt, according to 11 CFR § 103.3(a), regardless of whether or not 

they were made in error. 

In addition, other contributions were received by its compliance consultant and were 

deposited to a credit card holding account. ASCAPAC classified that account, “as a cash 

account on the Committee’s ledger and the funds were received on the date that the donor 

initiated the credit card charge.” ASCAPAC further stated that those funds were 

subsequently credited to its checking account and should not be considered untimely 

deposited. The Audit staff noted that the funds in the credit card holding account were 

not accessible by ASCAPAC staff until they were deposited to its checking account. 

Therefore, the Audit staff considered these credit card contributions not deposited timely. 

ASCAPAC representatives stated that they do not consider the remaining items on the list 

to be deposited untimely, however, they do not have documentation of the receipt date. 

However, to comply with the 10 day deposit regulation in the future, ASCAPAC has 

implemented a procedure where all contributions are date stamped upon receipt in order 

to ensure that the date of receipt is documented. 

In accordance with 11 CFR § 102.8(a), such a procedure should help ensure that the date 

of receipt is documented and is the date ASCAPAC obtains possession of the 

contribution. ASCAPAC should then ensure that its deposit is made within 10 days of 

receiving a contribution to comply with 11 CFR § 103.3(a). Finally, ASCAPAC should 

ensure that the recorded receipt day is accurately reflected on its disclosure reports. 

 

The Interim Audit Report recommended that ASCAPAC: 

 Provide documentation demonstrating that the contributions in question were 

deposited timely; 

 Clarify whether the credit card holding account was its own depository; and 

 Submit any comments it deemed relevant to this matter. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, ASCAPAC stated that its 

policy is to deposit all checks within 10 days of receipt, and that it has worked with its 

credit card vendor to ensure the timely transfer of contributions. ASCAPAC also stated it 

has implemented a procedure that all checks will be date stamped upon receipt to ensure 

a record is maintained.