Final Audit Report of the 

Commission on the Washington 

State Republican Party 

January 1, 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 (the Act). 

The Commission generally 

conducts such audits when a 

committee appears not to 

have met the threshold 

requirements for substantial 

compliance with tiie Act.' 

The audit determines 

whether the conunittee 

complied with the 

limitations, prohibitions and 

disclosure requirements of 

tiie 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 Conunittee (p. 2) 

The Washington State Republican Party is a state party committee 

headquartered in Bellevue. Washington. For more information, 

see the chart on tiie Committee Organization, p. 2. 

Financial Activity (p. 3) 

Federal Receipts 

o Contributions from Individuals $1,844,135 

o Contributions from Political Committees 900,961 

o Transfers from Affiliated and Other 

Political Conunittees 527,887 

0 Transfers from Non-federal and Levin 

Funds 462,069 

o Other Receipts 44,356 

Total Federal Receipts $3,779,408 

Federal Disbursements 

o Operatmg Expenditures $3,753,148 

0 Transfers to Affiliated and Otiier Political 

Committees 32,334 

o Contributions to Otiier Committees 27,900 

o Federal Election Activity 103,626 

o Refunds/Other Disbursements 23,837 

Total Federal Disbursements $3,940,845 

Levin Receipts $15,000 

Levin Disbursements $32,000 

Conunission Findings (p. 4) 

• Misstatement of Fuiancial Activity (Finding 1) 

• Misstatement of Financial Activity - Levin Fund (Finding 2) 

• Reporting of Debts and Obligations (Finding 3) 

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

the Washington State Republican Party 

January 1, 2009 - December 31, 2010 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Audit Hearing 1 

Part II. Overview of Conunittee 

Committee Organization 2 

Overview of Financial Activity 3 

Part III. Smnmaries 

Commission Findings 4 

Part IV. Conunission Findings 

Finding 1. Misstatementof Financial Activity 5 

Finding 2. Misstatement of Financial Activity - Levin Fund 8 

Finding 3. Reporting of Debts and Obligations 11 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Washington State Republican Party (WSRP), 

undertaken by tiie 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 tiie 

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 coinmittee 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 disclosure of individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; 

3. the disclosure of expenses allocated between federal and non-federal accounts; 

4. the consistency between reported figures and bank records; 

5. the completeness of records; and 

6. other coinmittee operations necessary to the review. 

Audit Hearing 

WSRP requested a hearing before the Commission. The request was granted and the 

hearing was held on June 27.2012. At tiie hearing. WSRP addressed one issue related to 

the misstatement of financial activity. 
Part II 

Overview of Comniittee 

Committee Organization 

Important Dates 

• Date of Registration October 14,1975 

• Audit Coverage January 1,2009 - December 31,2010 

Headquarters Bellevue. Washmgton 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Eleven Federal. Nine Non-federal, and One 

Levin 

Treasurer 

• Treasurer When Audit Was Conducted Colleen Morse 

• Treasurer During Period Covered by Audit Ed Mitchell: Febmary 19.2005 - July 18. 

2009 

Colleen Morse: July 19. 2009 - Present 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeepmg Tasks 

Paid Staff 
Overview of Financial Activity 

(Audited Amounts) 

Federal Cash-on-hand @ January 1,2009 $ 155,272 

o Contributions from Individuals 1.844.135 

o Contributions from Political Committees 900.961 

o Transfers from Affiliated and Other Political 

Committees 527.887 

o Transfers from Non-federal and Levin 

Funds 462,069 

o Other Receipts 44,356 

Total Federal Receipts $3,779,408 

o Operating Expenditures 3,753,148 

o Transfers to Affiliated and Other Political 

Committees 32.334 

o Contributions to Other Committees 27.900 

o Federal Election Activity 103.626 

o Refunds/Other Disbursements 23,837 

Total Federal Disbursements $3,940,845 

Federal Cash-on-hand @ December 31,2010 $ (6,165)^ 

Levin Cash-on-hand @ January 1,2009 $ 17,001 

Total Levin Receipts $ 15,000 

Total Levin Disbursements $ 32,000 

Levin Cash-on-hand @ December 31,2010 $ 1 

Ending cash-on-hand was negative due to outstanding checks as of December 31,2010. 
Part III 

Summaries 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

A comparison of WSRP's reported activity with bank records revealed a misstatement of 

its beginning cash-on-hand and receipts for 2009 and a misstatement of receipts, 

disbursements and ending cash-on-hand for 2010. For 2009, WSRP understated 

beginning cash-on-hand by $30,321 and overstated receipts by $45,641. In 2010, WSRP 

understated receipts by $697,155 and disbursements by $1,062,382 and it overstated 

ending cash-on-hand by $362,753. In response to the Interim Audit Report, WSRP filed 

amended reports that materially corrected the misstatements. 

The Commission approved a finding that WSRP misstated financial activity for 2009 and 

2010. (For more detail, see p. 5.) 

Finding 2. Misstatement of Financial Activity - Levin 

Fund 

A comparison of WSRP's reported Levin activity with bank records revealed a 

misstatement of its begiiming cash-on-hand and disbursements for 2009 and a 

misstatement of disbursements and ending cash-on-hand for 2010. For 2009, WSRP 

overstated beginning cash-on-hand by $32,499 and overstated disbursements by $32,499. 

In 2010. WSRP understated disbursements by $15,000 and overstated ending cash-onhand by $12,500. In response to tiie Interim Audit Report. WSRP filed amended reports 

that corrected the misstatements. 

The Commission approved a finding that WSRP misstated Levin financial activity for 

2009 and 2010. (For more detail, see p. 8.) 

Finding 3. Reporting of Debts and Obligations 

During audit fieldwork. tiie Audit staff identified debts to five vendors tiiat WSRP failed 

to report in calendar years 2009 and 2010. WSRP did not report debts totaling $361,838. 

In response to the Interim Audit Report. WSRP amended its reports to disclose these 

debts. 

The Commission approved a finding tiiat WSRP failed to report debts for 2009 and 2010. 

(For more detail, see p. 11.) 
Part IV 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

Summary 

A comparison of WSRP's reported activity with bank records revealed a misstatement of 

its beginning cash-on-hand and receipts for 2009 and a misstatement of receipts, 

disbursements and ending cash-on-hand for 2010. For 2009. WSRP understated 

beginning cash-on-hand by $30,321 and overstated receipts by $45,641. In 2010, WSRP 

understated receipts by $697,155 and disbursements by $1,062,382 and it overstated 

ending cash-on-hand by $362,753. In response to tiie Interim Audit Report, WSRP filed 

amended reports that materially corrected the misstatements. 

The Coinmission approved a finding that WSRP misstated financial activity for 2009 and 

2010. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• the amount of cash-on-hand at the beginning and end of the reporting period; 

• tiie total amount of receipts for the reporting period and for the calendar year; 

• tiie total amoimt of disbursements for the reporting period and for the calendar year; 

and 

• certain transactions tiiat require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 2 U.S.C. §434(b)(l), (2), (3), (4) and (5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled reported activity with bank records for 

2009 and 2010. It determined tiiat WSRP misstated tiie beginning cash balance and 

receipts for 2009 and receipts, disbursements and ending cash balance for 2010. The 

following charts outline the discrepancies in the cash balances, receipts and 

disbursements for each year. The succeeding paragraphs address the reasons for the 

misstatements. 
2009 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1,2009 

$124,951 $155,272 $30,321 

Understated 

Receipts $852,256 $806,615 $45,641 

Overstated 

Disbursements $970,577 $952,783 $17,794 

Overstated 

Ending Cash Balance 

@ December 31,2009 

$6,630 $9,104 $2,474 

Understated 

WSRP understated tiie beginning cash-on-hand by $30,321. WSRP did not explain tiie 

discrepancy, but it likely resulted from prior period discrepancies. 

The overstatement of receipts resulted from the following factors. 

• Reported transfers from Levin ($32,499) and non-federal accounts 

($30,691) that were not supported by bank deposits or checks/debits 

by the transferring accounts 

• Transfers from affiliated committee and non-federal account that were 

not reported 

• Unexplained differences 

Net Overstatement of Receipts 

$ (63.190) 

15,097 

2.452 

$(45.641) 

2010 Committee Activity 

Reported Bank Records Discrepancy 

Begmning Cash Balance 

@ January 1. 2010 

$6,630 $9,104 $2,474 

Understated 

Receipts $2,275,638 $2,972,793 $697,155 

Understated 

Disbursements $1,925,680 $2,988,062 $1,062,382 

Understated 

Ending Cash Balance 

@ December 31,2010 

$356,588 -$6,165 $362,753 

Overstated 
The understatement of receipts resulted from the following factors. 

• Transfer from Levin account not reported $ 3,000 

• Transfers from non-federal accounts not reported 109,078 

• Transfers from political coinmittees not reported 487,215 

• Contributions from mdividuals not reported 93,337 

• In-kind contributions not reported as receipts 10,976 

• Reported transfer not supported by bank deposits (11,675) 

• Reported contribution not supported by bank deposit (5,000) 

• Unexplained differences 10.224 

Net Understatement of Receipts $697.155 

The understatement of disbursements resulted from the following factors. 

• Payroll expenditures not reported $ 33,457 

• Operating Expenditures not reported 1.023.213 

• Transfers to political conunittees not reported 25.000 

• Contributions to other committees not reported 10.000 

• Reported disbursements not supported by checks or debits (24,185) 

• Unexplained differences (5.103) 

Net Understatement of Disbursements $1.062.382 

The majority of the $1,023,213 in operating expenditures not reported included costs 

associated with mail pieces provided by nine vendors, totaling $882,966. 

The $362,753 overstatement of the endmg cash-on-hand resulted from the misstatements 

described above. 

B. Interim Audit Report & Audit Division Recommendation 

Audit staff discussed this matter with WSRP representatives at the exit conference. 

WSRP representatives made no comment on this matter. 

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

correct the misstatements for both 2009 and 2010. and amend its most recentiy filed 

report to correct the cash-on-hand balance with an explanation that the change resulted 

from a prior period audit adjustment. 

Further, the Audit staff recommended that WSRP reconcile the cash balance of its most 

recent report to identify any subsequent discrepancies that might affect the adjustment 

recommended by the Audit staff. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report. WSRP filed amended reports that materially 

corrected the misstatements. 

In addition, a WSRP representative explained that Audit staff should have treated a 

$43,921 disbursement from a federal account and a transfer of an identical amoimt from 

the non-federal account to the federal account- both of which were included as 

unreported in the Interim Audit Report ~ as reversing transactions. These transactions 

involved a payment mistakenly made from a federal account for non-federal activity and 
tiie subsequent reimbursement from the non-federal account. WSRP mcluded both 

transactions in the amended reports. 

D. Draft Final Audit Report 

The Draft Final Audit Report noted that, in response to tiie Interim Audit Report, WSRP 

filed amended reports that materially corrected the misstatements as recommended by the 

Audit staff. 

E. Committee Response to the Draft Final Audit Report 

WSRP requested an audit hearing for the Commission to consider whether an unreported 

disbursement of $43,921 made on August 5, 2010, and a corresponding unreported 

receipt in the same amount on August 12,2010, should have been included in the 

misstatement total. 

F. Audit Hearing 

During the audit hearing, counsel for WSRP reiterated that the unreported disbursement 

of $43,921 made on August 5,2010, was a payment for non-federal activity tiiat WSRP 

made in error from the federal account, and the unreported receipt in the same amount on 

August 12,2010, was the subsequent reimbursement from the non-federal account. Both 

transactions occurred in the same reporting period. As a consequence. WSRP stated its 

belief that these offsetting transactions were obvious errors and that it should not have 

been required to include these transactions on its disclosure report. 

Commission Conclusion 

On September 13.2012. tiie Commission considered tiie Audit Division 

Recommendation Memorandum in which tiie Audit staff (1) maintained that the 

reversing transactions questioned by WSRP during the audit hearing should be reported 

and included as part of tiie WSRP activity that was misstated for 2010. and (2) 

recommended that the Commission find WSRP misstated its financial activity in 2009 

and 2010. 

The Commission approved the Audit staffs recommendation. 

I Finding 2. Misstatement of Financial Activity - Levin Fund 

Smnmary 

A comparison of WSRP's reported Levin activity with bank records revealed a 

misstatement of its begiiming cash-on-hand and disbursements for 2009 and a 

misstatement of disbursements and ending cash-on-hand for 2010. For 2009. WSRP 

overstated beginning cash-on-hand by $32,499 and overstated disbursements by $32,499. 

In 2010, WSRP understated disbursements by $15,000 and overstated ending cash-onhand by $12,500. In response to tiie Interim Audit Report. WSRP filed amended reports 

tiiat corrected the misstatements. 

The Commission approved a finding tiiat WSRP misstated Levin financial activity for 

2009 and 2010. 
Legal Standard 

Contents of Levin Reports. Each report must disclose: 

• the amount of cash-on-hand for Levin fimds at the beginning and end of the reporting 

period; 

• the total amount of Levin fimd receipts and disbursements (including allocation 

transfers) for the reportmg period and for the calendar year; and 

• certain transactions that require itemization on Schedule L-A (Itemized Receipts of 

Levin Funds) or Schedule L-B (Itemized Disbursements of Levin Funds). 11 CFR 

§300.36 (b)(2)(B). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled reported Levin activity with bank 

records for 2009 and 2010. It determined tiiat WSRP misstated begiiming cash-on-hand 

and disbursements for 2009 and disbursements and ending cash-on-hand for 2010. The 

following charts outiine the discrepancies for tiie cash balances, receipts, and 

disbursements for each year. The succeeding paragraphs address the reasons for the 

misstatements. 

2009 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1,2009 

$49,500 $17,001 $32,499 

Overstated 

Receipts $0 $0 $0 

Disbursements $49,499 $17,000 $32,499 

Overstated 

Ending Cash Balance 

@ December 31.2009 

$1 $1 $0 

WSRP overstated tiie beginning cash balance by $32,499. WSRP did not explain tiie 

discrepancy, but it likely resulted from prior period discrepancies. 

The overstatement of disbursements resulted when WSRP erroneously reported transfers 

of $32,499 to tiie federal account. WSRP also identified these transactions as an 

adjustment to tiie federal bank reconciliation. (See Finding 1. page 5.) These transfers 

appear to have been reported to correct the overstatement of cash-on-hand as of January 

1.2009. 
10 

2010 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1.2010 

$1 $1 $0 

Receipts $12,500 $15,000 $2,500 

Understated 

Disbursements $0 $15,000 $15,000 

Understated 

Ending Cash Balance 

@ December 31.2010 

$12,501 $1 $12,500 

Overstated 

WSRP did not report a $15,000 transfer it made to the federal account. The $12,500 

overstatement of the ending cash balance resulted from the misstated receipts and 

disbursements noted above. 

B. Interim Audit Report & Audit Division Recommendation 

Audit staff discussed this matter with WSRP representatives at the exit conference. 

WSRP representatives made no comment on this matter. 

The Interim Audit Report reconunended tiiat WSRP amend its disclosure reports to 

correct the misstatements for both 2009 and 2010.^ 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report, WSRP filed amended reports tiiat corrected tiie 

misstatements. 

D. Draft Final Audit Report 

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

filed amended reports that corrected the misstatements as recommended by the Audit 

staff. 

£. Committee Response to the Draft Final Audit Report 

WSRP made no comment on this finding. 

Conunission Conclusion 

On September 13,2012, tiie Conunission considered tiie Audit Division 

Reconunendation Memorandum in which the Audit staff recommended that the 

Commission find that WSRP misstated its Levin fund financial activity for calendar years 

2009 and 2010. 

The Commission approved the Audit staffs recommendation. 

WSRP has not reported any Levin activity for calendar year 2011. 
11 

Finding 3. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff identified debts to five vendors that WSRP failed 

to report in calendar years 2009 and 2010. WSRP did not report debts totaling $361,838. 

In response to the Interim Audit Report, WSRP amended its reports to disclose these 

debts. 

The Commission approved a finding tiiat WSRP failed to report debts for 2009 and 2010. 

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. Separate Schedules. A political committee must file separate schedules for debts 

owed by and to the committee with a statement explaining the circumstances and 

conditions under which it incurred or extinguished each debt and obligation. 

llCFR§104.11(a). 

C. Itemizing Debts and Obligations. 

• Once it has been outstanding 60 days from tiie date incurred, a debt of $500 or 

less must be reported on the next regularly scheduled report. 

• A debt exceeding $500 must be disclosed in the report that covers the date on 

which tiie debt was incurred. 11 CFR §104.11(b). 

Facts and Analjrsis 

A. Facts 

The Audit staff reviewed vendor invoices and computer files containmg WSRP 

disbursements made in 2009 and 2010. Although WSRP paid tiie majority of invoices in 

a timely manner, it carried outstanding balances with five vendors that were not disclosed 

as debts on Schedule D (Debts and Obligations). The debts totaled $361,838.* 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff informed WSRP representatives of this matter at the exit conference and 

provided schedules detailing the undisclosed debts for each reporting period. WSRP 

representatives made no comment on tiiis matter. 

The Interim Audit Report recommended that WSRP amend its reports to disclose the 

debts and obligations addressed above. 

* Each debt in this amount was counted once. In order for WSRP to correctly file amended reports. Audit 

staff provided a schedule that included the amount of each debt required to be reported for each reporting 

period. 
12 

C. Committee Response to Interim Audit Report 

In response to tiie Interim Audit Report. WSRP filed amended reports disclosing the 

debts and obligations. 

D. Draft Final Audit Report 

The Draft Final Audit Report noted that, in response to tiie Interim Audit Report. WSRP 

filed amended reports disclosing the debts and obligations. 

E. Committee Response to the Draft Final Audit Report 

WSRP made no comment on this finding. 

Commission Conclusion 

On September 13.2012. the Commission considered the Audit Division 

Recommendation Memorandum in which the Audit staff recommended that the 

Coinmission find tiiat WSRP failed to report debts to vendors for calendar years 2009 and 

2010. 

The Commission approved the Audit staff's recommendation.