FEDERAL ELECTION COMMISSION WASHINGTON, D.C. 20463

 

 November 5, 2018 

MEMORANDUM

TO: Patricia C. Orrock

 Chief Compliance Officer

 Thomas E. Hintermister

 Assistant Staff Director

 Audit Division

FROM: Neven F. Stipanovic 

 Acting Associate General Counsel

 Policy Division

 Lorenzo Holloway 

 Assistant General Counsel

 Compliance Advice 

Joshua Blume 

Attorney 

SUBJECT: Interim Audit Report on the Oklahoma Democratic Party (LRA 1075) 

I. INTRODUCTION 

The Office of the General Counsel has reviewed the Interim Audit Report (“IAR”) on the 

Oklahoma Democratic Party (“the Committee”). The IAR contains three findings: Misstatement 

of Financial Activity (Finding 1); Misstatement of Levin Fund Activity (Finding 2); and 

Recordkeeping for Employees (Finding 3). We concur with the findings in the IAR. We 

recommend, however, that a debt reporting error discussed in the cover memorandum, classified 

as by the Audit Division, be classified as instead. If you 

have any questions, please contact Joshua Blume, the attorney assigned to this audit. 

II. REPORTING OF DEBTS AND OBLIGATIONS (Cover Memorandum)

In its cover memorandum accompanying the transmission of the IAR to this office for 

review, the Audit Division notes that the IAR does not contain a finding regarding the 

Committee’s reporting of debts and obligations despite the existence of reporting errors in this 
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Oklahoma Democratic Party (LRA 1075) 

Page 2 

 

category. The Audit Division notes that the Committee erred in reporting one debt that was 

extinguished in 2013 but explains that this error was that did not exceed the 

Audit Division’s materiality thresholds. As explained below, in our view the reporting of this 

extinguished debt is better classified as . 

 The Audit Division assigned the reporting errors to 

. First, the Committee failed to report ongoing debts 

to three vendors totaling . The Audit Division classified these as . 

Second, the Committee affirmatively reported ongoing debt to one vendor, with beginning and 

ending balances of , which had in fact been fully extinguished in 2013. The Audit 

Division classified this error differently – as rather than as 

. 

Neither the concept of nor that of as set forth in 

expressly contemplates the situation discussed here, in which a committee 

reports a debt that does not actually exist. 

. 

 The Audit Division classified the error as on the ground that the 

opening and closing balances of the debt were reported inaccurately. Under this classification, 

the Committee erred by reporting a debt with opening and closing balances of , while the 

correct balances should have been reported instead as zero. However, a non-existent debt is not 

conceptually the same as an existing debt reported inaccurately, and classifying it as such would 

misconstrue the true nature of the error involved. Amending a report to correct an existing debt 

would cure the error because the amendment would reflect how the debt should have been 

reported. However, a non-existent debt would not be corrected by amending the report because 

it would continue to report inaccurately that the debt exists, only reflecting zero opening and 

 

1

 

 

 
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Oklahoma Democratic Party (LRA 1075) 

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closing balances.2 Correcting a reported debt that does not exist is most accurately amended by 

altogether removing the debt from the report.3 

. The error 

involved here consists in reporting a debt that should not have been reported. 

We therefore recommend that the Audit 

Division reclassify the error in question as . 

 

 

2

 Indeed, although the Audit Division has identified the erroneous report of the debt’s opening and closing 

balances as the basis for , it could equally have identified any of the other types of 

as the basis. A non-existent debt cannot be 

 for example. In our view, this fact further supports the classification of the error as 

one of rather than .

3