Interim Audit Report of the 

Audit Division on the Oakland 

County Democratic Party 

(Januaiy 1, 2011 - December 31, 2012) 

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 conunittee 

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. 

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. 3) 

The Oakland County Democratic Party is a local party committee 

headquartered in Southfield, Michigan. For more information, see 

the chart on the Committee Organization, p. 3. 

Financial Activity (p. 3) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Transfers from Non-federal 

Account 

o Other Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Other Disbursements 

Total Disbursements 

$ 1,933,148 

56,849 

49,859 

7,120 

$ 2,046,976 

$ 2,045,934 

14,930 

S 2,060,864 

Findings and Recommendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Disclosure of Occupation and Name of Employer (Finding 3) 

• Recordkeeping for Receipts (Finding 4) 

• Use of the Campaign Depository (Finding 5) 

' On September 1,2014, the Federal Election Campaign Act of 1971, as amended ("the Act"), .was 

transferred from Title 2 of the United States Code to new Title 52 of the United States Code. 

^ 52 U.S.C. §30111(b) (formerly 2 U.S.C. §438(b)). 
Interim Audit Report of the Audit 

Division on the 

Oakland County Democratic Party 

(January 1, 2011 - December 31, 2012) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 3 

Overview of Financial Activity 3 

Part III. Summaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding!. Misstatement of Financial Activity 6 

Finding 2. Recordkeeping for Employees 7 

Finding 3. Disclosure ofOccupation and Name of Employer 8 

Finding 4. Recordkeeping for Receipts 10 

Findings. Use of the Campaign Depository 12 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Oakland County Democratic Party (OCDP), undertaken hy 

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) (formerly 2 U.S.C. §438(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 (formerly 2 U.S.C. §434). Prior to conducting any audit 

under this subsection, the Commission must perform an intemal review of reports filed hy ' 

selected committees to determine if the reports filed by a particular committee meet the tlu%shold 

requirements for substantial compliance with the Act. 

52 U.S.C. §30111(b) (formerly 2 U.S.C. §438(b)). 

Scope of Audit 

This audit examined: 

1. the receipt of excessive contributions and loans; 

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 disbursements, debts and obligations; 

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

7. the consistency between reported figures and bank records; 

8. the completeness of records; and 

9. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question -

Recordkeeping for Employees 

Pursuant to the Commission's "Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission," several state party committees 

unaffiliated with OCDP requested early consideration of a legal question raised during audits 

covering the 2010 election cycle. Specifically, the Commission addressed whether monthly time 

logs under 11 CFR § 106.7(d)(1) were required for employees paid with 100 percent federal 

funds. 

The Commission concluded, by a vote of 5-1, that 11 CFR §106.7(d)(l) does require committees 

to keep a monthly log for employees paid exclusively with federal fluids. Exercising its 

prosecutorial discretion, however, the Commission decided it will not pursue recordkeeping 

violations for the failure to keep time logs or to provide affidavits to account for employee 

salaries paid with 100 percent fbderal funds and reported as such. The Audit staff informed 

OCDP representatives of the payroll log requirement and of the Commission's decision not to 
pursue recordkeeping violations for failure to keep payroll logs for salaries paid and correctly 

reported as 100 percent federal. Finding 2 of this audit report (Recordkeeping for Employees) 

does not include any OCDP employees paid with 100 percent federal funds and reported as such. 

Directive 69 and Request for Early Commission Consideration of a Legal 

Question - Recordkeeping for Receipts 

Pursuant to Commission Directive 69, the Commission's guidance was requested by the Office 

of Compliance and the Office of General Counsel on an issue addressing what recordkeeping 

requirements under 52 U.S.C. §30102(c) (formerly 2 U.S.C. §432(c)) and 11 CFR § 102.9(a) 

applied to contributions received by OCDP during bi-weekly "bingo nights.'" A subsequent 

request was made to the Commission by OCDP on the same issue under the Commission's 

"Policy Statement Establishing a Program for Requesting Consideration of Legal Questions by 

the Commission." Specifically, the Commission was asked whether OCDP's gaming nights 

consisted of three separate fundraising events rather than a single event for purposes of applying 

the recordkeeping requirements under 11 CFR § 102.9(a). 

The Conunission concluded on the Directive 69 Guidance and on the Request for Legal 

Consideration, by votes of 6-0, that OCDP's bingo nights did not constitute three separate 

fundraising events and that OCDP was required to itemize all contributions exceeding $50 

received during each bingo night. See Finding 4, Recordkeeping for Receipts. 

^ The tenii bingo is used to refer to all OCDP gaming activity, which includes bingo, progressive bingo, and 

charity ticket sales. 
Part 11 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration June 11,1976 

• Audit Coverage January 1,2011 - December 31,2012 

Headquarters Southfield, MI 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Two federal and two non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Ryan Gesund: 12/29/11 - 1/28/14; 

Alexander Pike: 1/29/14 - present 

• Treasurer During Period Covered by Audit Jerry Bixby: 1/01/11 - 12/28/11; 

Ryan Gesund: 12/29/11-12/31/12 

Management Information 

• Attended Commission Campaign Finance Seminar No 

• Who Handled Accounting and Recordkeeping 

Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1,2011 S 26,378 

Receipts 

o Contributions from Individuals 1,933,148 

o Contributions from Political Committees 56,849 

o Transfers from Non-federal Account 49,859 

o Other. Receipts 7,120 

Total Receipts S 2,046,976 

Disbursements 

. o Operating Expenditures 2,045,934 

o Other Disbursements 14,930 

Total Disbursements S 2,060,864 

Cash-on-hand @ December 31,2012 S 12,490 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of OCDP's reported financial activity with its bank 

records revealed that, for 2012, OCDP understated its reported receipts, disbursements 

and ending cash by $90,487, $60,715, and $33,279, respectively. Subsequent to the exit 

conference, OCDP amended its reports and materially corrected its misstatements. The 

Audit staff recommends that OCDP provide any additional comments it considers 

relevant to this matter. (For more detail, see p. 6.) 

Finding 2. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that OCDP did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2011 and 2012, the Audit staff identified 

payments to OCDP employees totaling $107,555, for which monthly payroll logs were 

not maintained. This consisted entirely of payroll which was allocated between federal 

and non-federal funds. Absent the provision of monthly time logs that have not been 

made available to date, the Audit staff recommends that OCDP implement a plan to 

maintain such monthly payroll logs in the future. (For more detail, see p. 7.) 

Finding 3. Disclosure of Occupation and Name of Employer 

A review of all contributions from individuals requiring itemization indicated that 35 

contributions totaling $7,389 lacked disclosure of occupation and/or name of employer. 

In addition, there was no evidence that "best efforts" to obtain, maintain and submit the 

information had been exercised. The Audit.staff recommends that OCDP demonstrate 

that it has exercised best efforts to obtain the necessary information or contact each 

contributor for which the information is lacking, submit evidence of such contact, and 

disclose any applicable information received in its amended reports. (For more detail, 

see p. 8.) 

Finding 4. Recordkeeping for Receipts 

During audit fieldwork, it was noted that OCDP did not maintain adequate 

documentation and did not properly report receipts from its gaming activities totaling 

$1,820,466 for the 2012 election cycle. OCDP reported gaming receipts as un-itemized 

individual contributions in accordance with requirements for receipts from individuals 

contributing $50 or less at fimdraising events. However, the average contribution from 

OCDP's bi-weekly gaming events was approximately $88 per person, which requires 

more extensive recordkeeping activities. Therefore, the Audit staff recommends that 

OCDP keep a record of the name and address of any person who makes any contribution 

in excess of $50 during each gaming night, and identify and report those contributors 

making contributions aggregating more than $200 during a calendar year, together with 

the date wd amount of any such contribution. (For more detail, see p. 10.) 
Fihdinjg 5. Use of the Campaign Depository 

A review of OCDP's gaming operations found that OCDP did not deposit most of its 

gaming receipts into its designated campaign depository as required. During the audit 

period, OCDP collected $1,820,466 from its bi-weekly gaming activities but only 

deposited $450,162 into its campaign depository. OCDP disbursed the majority of these 

cash receipts ($1,370,304) directly to prize winners and game workers. The Audit staff 

recommends that OCDP develop and implement procedures to ensure that a campaign 

depository is used for all receipts and disbursements, including gaming transactions made 

with cash. (For more detail, see p. 12.) 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity ' 

Summary 

During audit fieldwork, a comparison of OCDP's reported financial activity with its bank 

records revealed that, for 2012, OCDP understated its reported receipts, disbursements 

and ending cash by $90,487, $60,715 and $33,279, respectively. Subsequent to the exit 

conference, OCDP amended its reports and materially corrected its misstatements. The 

Audit staff recommends that OCDP provide any additional comments it considers 

relevant to this matter. 

Legal Standard 

Contents of 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 (5) 

(formerly 2 U.S.C. §434(b)(l), (2), (3), (4) and (5)). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled OCDP's reported financial activity 

with its bank records for the calendar years 2011 and 2012 and identified misstatements 

for 2012 in receipts, disbursements and ending cash. The following chart outlines the 

discrepancies and succeeding paragraphs explain, to the extent possible, the reasons for 

the misstatements. 

2012 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

(^January 1,2012 $5,356 $8,863 $3,507 

Understated 

Receipts $937,760 $1,028,247 $90,487 

Understated 

Disbursements $963,905 $1,024,620 $60,715 

Understated 

Ending Cash Balance 

@ December 31,2012 ($20,789) $12,490 $33,279 Understated 
The understatement of receipts resulted from the following. 

• Gaming receipts not reported^ $ 76,233 

• Transfers from non-federal account not reported 12,178 

• In-kind contributions not reported 2.076 

Understatement of Receipts $ 90.487 

The understatement of disbursements resulted from the following. 

• Gaming expenditures not reported $ 36,229 

• Operating expenditures not reported 33,899 

• Expenditures reported twice (10,056) 

• Operating expenditures incorrectly reported 167 

• Unexplained difference 476 

Net Understatement of Disbursements $ 60.715 

The understatement of the beginning and ending cash balances resulted from prior year 

misstatements and the misstatements described above. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff explained the misstatements and provided 

schedules to OCDP representatives. The representatives agreed to amend their reports. 

Subsequent to the exit conference, OCDP amended its reports and materially corrected its 

misstatements. The Audit staff recommends that OCDP provide any additional 

comments it considers relevant to this matter. 

Finding 2. Recordkeeping for Employees 

Siimmaiy 

During audit fieldwork, the Audit staff determined that OCDP did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2011 and 2012, the Audit staff identified 

payments to OCDP employees totaling $107,555, for which monthly payroll logs were 

not maintained. This consisted entirely of payroll which was allocated between federal 

and non-federal funds. Absent the provision of monthly time logs that have not been 

made available to date, the Audit staff recommends that OCDP implement a plan to 

maintain such monthly payroll logs in the future. 

Legal Standard 

Maintenance of Monthly Logs. Committees must keep a monthly log of the percentage 

of time each employee spends in connection with a federal election. Allocations of 

salaries, wages, and fnnge benefits are to be undertaken as follows: 

• Employees who spend 25 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or have their pay allocated as administrative costs; 

• Employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and. 

See Finding 4. 
8 

• Employees who spend none of their compensated time in a given month on 

federal election activities may be paid entirely with funds that comply with State 

law. 11 CFR§ 106.7(d)(1). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements for payroll. OCDP did not 

maintain any monthly logs or equivalent records to document the percentage of time each 

employee spent in connection with federal election activity. These logs are required to 

document the proper allocation of federal and non-federal fimds used to pay employee 

salaries and wages. For 2011 and 2012, logs were not maintained for $107,555 in 

payroll. The total of $107,555 consisted entirely of payroll which was allocated between 

federal and non-federal funds. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference and during audit fieldwork, the Audit staff discussed the payroll 

recordkeeping issue vsdth OCDP representatives. The representatives indicated that they 

did maintain some records for one individual but did not keep records for all required 

individuals. No records were provided. 

For OCDP employees that were paid with an allocation of federal and non-federal funds, 

the Audit staff recommends that, within 30 calendar days of receipt of this report, OCDP 

complete the following; 

• provide evidence that monthly time logs were maintained to document the 

percentage of time an employee spent in connection with a federal election; or 

• provide and implement a plan to maintain monthly payroll logs in the future. 

Finding 3. Disclosure of Occupation and Name of Employer 

Summary 

A review of all contributions from individuals requiring itemization indicated that 35 

contributions totaling $7,389 lacked disclosure of occupation and/or name of employer. 

In addition, there was no evidence that "best efforts" to obtain, maintain and submit the 

information had been exercised. The Audit staff recommends that OCDP demonstrate 

that it has exercised best efforts to obtain the necessary information or contact each 

contributor for which the information is lacking, submit evidence of such contact, and 

disclose any applicable information received in its amended reports. 

Legal Standard 

A. Itemization required for Contributions from Individuals. A political committee 

other than an authorized committee must itemize any contribution from an individual if it 

exceeds $200 per calendar year, either by itself or when combined with other 

^ See Part I, Background, Commission Guidance, Request for Early Commission Consideration of a 

Legal Question - Recordkeeping for Employees, Page 1. Payroll is stated net of taxes and benefits. 
contributions from the same contributor. 52 U.S.C §30104(b)(3)(A) (formerly 2 U.S.C. 

§434(b)(3)(A)). 

B. Required Information for Contributions from Individuals. For each itemized 

contribution from an individual, the committee must provide the following information: 

• The contributor's full name and address; 

• The contributor's occupation and the name of his or her employer; 

• 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) (formerly 2 

U.S.C. §434(b)(3)(A)). 

C. Best Efforts Ensures Compliance. When the treasurer of a political committee 

shows that the conunittee used best eiforts (see below) to obtain, maintain, and submit 

the information required by the Act, the committee's reports and records will be 

considered in compliance with the Act. 52 U.S.C. §30102(i) (formerly 2 U.S.C. §432(i)). 

D. Definition of Best Efforts. The treasurer and the committee will be considered to 

have used "best efforts" if the committee satisfied all of the following criteria: 

• All written solicitations for contributions included: 

o A clear request for the contributor's frill name, mailing address, occupation, 

and name of employer; and 

o The statement that such reporting is required by Federal law. 

• Within 30 days after the receipt of the contribution, the treasurer made at least one 

effort to obtain the missing information, in either a written request or a 

documented oral request. 

• The treasurer reported any contributor information that, although not initially 

provided by the contributor, was obtained in a follow-up conununication or was 

contained in the committee's records or in prior reports that the committee filed 

during the same two-year election cycle. 11 CFR § 104.7(b). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed all reported contributions from individuals to 

determine if the required contributor information was disclosed. The review indicated 

that OCDP did not adequately disclose both the occupation and the name of the employer 

for nearly all identified errors. There were 35 errors equaling S7,389. All of the errors 

disclosed a notation, "Information Requested" on the Schedule A, Itemized Receipts, 

filed with the Commission. 

Although requested, OCDP did not provide any records to demonstrate evidence of any 

best efforts procedures or follow-up requests for missing contributor information. As a 

result, OCDP does not appear to have made "best efforts" to obtain, maintain and report 

the missing occupation and name of employer information. 
10 

B. Interim Audit Report & Audit Division Recommendation 

Prior to the exit conference, OCDP was provided schedules of the contributions requiring 

additional disclosure information. One of OCDP's representatives stated that missing 

contributor information was partly due to problems with its database. He also stated that 

the provided schedules would be reviewed and any comments concerning OCDP's best 

efforts procedures would be submitted in writing. No documents supporting OCDP's 

best efforts have been submitted. 

The Audit staff recommends that, within 30 calendar days of service of this report, OCDP 

take the following action: 

• provide documentation such as phone logs, returned contributor letters, completed 

contributor contact information sheets or other materials which demonstrate that best 

efforts were made to obtain, maintain, and submit the required disclosure 

information; or 

• absent such documentation, make an effort to contact those individuals for whom 

required information is missing or incomplete, provide documentation of such 

contacts (such as copies of letters to the contributors and/or phone logs), and amend 

OCDP's reports to disclose any information obtained from Aose contacts. 

Finding 4. Recordkeeping for Receipts 

Summary 

During audit fieldwork, it was noted that OCDP did not maintain adequate 

documentation and did not properly report receipts from its gaming activities totaling 

$1,820,466 for the 2012 election cycle. OCDP reported gaming receipts as un-itemized 

individual contributions in accordance with requirements for receipts from individuals 

contributing $50 or less at fundraising events. However, the average contribution from 

OCDP's bi-weekly gaming events was approximately $88 per person, which requires 

more extensive recordkeeping activities. Therefore, the Audit staff recommends that 

OCDP keep a record of the name and address of any person who makes any contribution 

in excess of $50 during each gaming night, and identify and report those contributors 

making contributions aggregating more than $200 during a calendar year, together with 

the date and amount of any such contribution. 

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 vdth 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) (formerly 2 U.S.C. 

§432(c)). 

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). 
11 

C. 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) (formerly 2 U.S.C. 

§432(d)). 

Facts and Analysis 

A. Facts 

OCDP did not maintain adequate documentation and did not properly report receipts for 

its bi-weekly gaming activities totaling $1,820,466^ for the 2012 election cycle.^ 

Michigan state law governs Michigan gaming activities and recordkeeping requirements. 

Accordingly, records were kept of the number of attendees and the quantity and price of 

gaming cards, books and tickets sold (all gaming sales transactions are for cash). 

However, federal election laws and regulations apply to the activities of federal political 

committees and those rules require a different set of recordkeeping and reporting 

requirements for contributions. The level of detail required in the records and reports of 

committees is a function of the contribution limits for individual contributors. 

During the audit period, OCDP maintained records and filed reports as if contributions 

did not exceed the $50 threshold.' This threshold only requires records to identify the 

name of the event and the total amount received for the event. OCDP reported gaming 

receipts from events as un-itemized individual contributions in accordance with 

requirements for receipts from individuals contributing $50 or less. However, based on 

records from OCDP events, the Audit staff calculated that contributions averaged 

approximately $88 per person, per night. As such, no reasonable assurance could be 

provided that individuals attending the gaming activities contributed $50 or less. 

Accordingly, to comply with the recordkeeping requirements, OCDP needs to collect 

more contributor information for its gaming events. 

The Commission considered OCDP's position that each gaming activity held during a 

night was a separate event for aggregation purposes and that their reco^s and reporting 

were adequate. As part of its consideration, the Commission sought information about 

separation of gaming activities and their administrative functions. In anticipation of these 

questions, the Audit staff held a teleconference with Committee personnel and were told 

that they had only one hall for all gaming activities; separate personnel were not used for 

the different gaming activities; and all gaming activity tickets could be purchased at any 

of the ticket purchase locations. No additional information was provided that would 

indicate separation of gaming activities. It was also discussed whether OCDP could 

reasonably assure that contributions received from individuals aggregated to amounts $50 

or less a night. As noted above, per OCDP's records, the average contribution at a 

gaming night was approximately $88 per person. Based on the above discussions, the 

Commission concluded' that OCDP's bingo nights were not separate fundraising events, 

but were one event, and that OCDP was required to obtain the name and address of any 

This amount does not include errors in recordkeeping for checks deposited into Oakland's accounts that 

were not associated with gaming activities projected to total SI,970. 

In addition to improper reporting of it's gaming receipts, OCDP omitted disclosure of $76,233 mentioned 

in Finding 1, Misstatement of Financial Activity. 

This recordkeeping threshold is discussed in the Federal Election Commission Campaign Guide for 

Political Party Committees and in Advisory Opinions 1981-48 and 1980-99. 

See Part 1, Background, Commission Guidance, Directive 69 and Request for Early Commission 
12 

person who made contributions in excess of $50 during a gaming night, and then identify 

and report those contributors whose aggregate contributions exceeded $200 during a 

calendar year. As a result, the Audit staff calculated that OCDP did not properly record 

and account for contributions totaling $1,820,466, or 89% of OCDP's total contributions. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented this recordkeeping matter to OCDP 

representatives as an open issue for which additional Commission guidance would be 

sought. It was subsequently presented to OCDP representatives as a finding. 

The Audit staff recommends that, within 30 calendar days of receipt of this report, OCDP 

provide records demonstrating that its gaming night contributions did not exceed $50 per 

contributor. Absent such records, OCDP should develop and implement a plan to obtain 

and maintain a record of: 

• the name, address, date and amount of any person contributing more than $50; 

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. 

Finding 5. Use of the Campaign Depository 

Summary 

A review of OCDP's gaming operations found that OCDP did not deposit most of its 

gaming receipts into its designated campaign depository as required. During the audit 

period, OCDP collected $1,820,466 from its bi-weekly gaming activities but only 

deposited $450,162 into its campaign depository. OCDP disbursed the majority of these 

cash receipts ($1,370,304) directly to prize winners and game workers. The Audit staff 

recommends that OCDP develop and implement procedures to ensure that a campaign 

depository is used for all receipts and disbursements, including gaming transactions made 

with cash. 

Legal Standard 

A. Depositories. Each political committee shall designate one or more state banks, 

federally chartered depository institutions (including a national bank), or depository 

institutions, the deposits or accounts of which are insured by the Federal Deposit 

Insurance Corporation, Federal Savings and Loan Insurance Corporation, or the National 

Credit Union Administration, as its campaign depository or depositories. Each political 

committee shall maintain at least one checking account or transaction account at one of 

its depositories. All receipts received by such committee shall be deposited in such 

accounts. No disbursements may be made (other than petty cash disbursements) by such 

committee except by check drawn on such accounts in accordance with this section. 

52 U.S.C. §30102(h)(l) (formerly 2 U.S.C. §432(h)(l)) and 11 CFR §103.2. 

Consideration of a Legal Question - Recordkeeping for Receipts, Page 2. 
13 

B. Deposit of Receipts and Disbursements. All receipts by apolitical committee shall 

be deposited in account(s) established pursuant to 11 CFR §103.2, except that any 

contribution may be, within 10 days of the treasurer's receipt, returned to the contributor 

without being deposited. The treasurer of the committee shall be responsible for making 

such deposits. All deposits shall be made within 10 days of the treasurer's receipt. A 

committee shall make all disbursements by check or similar drafts drawn on an account at 

its designated campaign depository, except for expenditures of $100 or less made fiom a 

petty cash fund maintained pursuant to 11 CFR § 102.11. Funds may be transferred from 

the depository for investment purposes, but shall be retumed to the depository before 

such flinds are used to make expenditures. 11 CFR § 103.3(a). 

C. Petty Cash Fund. A political committee may maintain a petty cash fund out of 

which it may make expenditures not in excess of $100 to any person per purchase or 

transaction. 

It is the duty of the treasurer to keep and maintain a written joumal of all petty cash 

disbursements. The written joumal shall include: 

• Name and address of every person, to whom any disbursement is made, 

• Date, 

• Amount, 

• Purpose, and 

• If disbursement is made for.a candidate, the joumal shall include the name of that 

candidate and the office (including State and Congressional district) sought by 

such candidate. 11 CFR § 102.11. 

Facts and Analysis 

A. Facts 

The Audit staff reviewed OCDP's records of its bi-weekly gaming events and found that 

OCDP did not deposit most of its gaming receipts into its designated campaign 

depository as required by 11 CFR §103.3(a).'° During the audit period, OCDP collected 

funds from 204 gaming events totaling $1,820,466. However, OCDP only deposited 

funds totaling $450,162 to its campaign depository, afrer having disbursed the majority of 

funds collected ($1,370,304) to prize winners and to game workers. These cash 

payments did not utilize a petty cash fund for cash payments of $100 or less and checks 

(or similar draffs) for arriounts disbursed over $100. 

For the audit period, OCDP made total expenditures of $2,060,864 with gaming 

expenditures comprising $1,711,394 of this amount (83% of total expenditures). As 

discussed above, cash payments comprised the majority of gaming expenditures. 

The Commission noted in a prior audit of OCDP, approved on March 28,2001, that OCDP paid prizes 

using cash received Ifom the sale of bingo cards. As a result of the prior audit, matters were referred to 

the Office of General Counsel for further enforcement (See MUR 5236). In that matter, the 

Commission found that OCDP had violated the requirement to deposit all its receipts and that it failed 

to properly itemize gaming disbursements. In the conciliation agreement with the Commission, OCDP 

agreed to correctly disclose all financial activity related to its bingo account, deposit all receipts from its 

bingo games into its designated depository and properly itemize disbursements that aggregate in excess 

of $200 from its bingo account. 
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However, for most recurring expenses, checks were used. Disbursements by check were 

made for hall rentals, gaming supplies, advertising and other items totaling $341,090. 

The table below summarizes cash payment activity for gaming. 

Payment Type Total 

Amount 

Paid 

Description 

Cash Prize 

Payouts 

Exceeding 

$50.00 

$827,861 

Records were maintained for each payment. Disbursements 

were itemized on reports as payments to individuals and 

contained the name, address, date, amount and purpose for 

each payment. 

Cash Prize 

Payouts $50.00 

or Less 

$511,914 

Records were not maintained of individual payments. 

Disbursements were reported as lump sum payments to "Non 

Voucher Bingo Prizes $50 or Less" (no individual payee 

information was provided). 

Other Cash 

Gaining 

Expenses 

$30,529 

Records of miscellaneous gaming expenses paid to gaming 

workers in 2011 were not maintained. These disbursements 

were included as un-itemized expenditures in reported totals. 

Total gaming 

Cash payments U70304 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff initially presented an open issue for recordkeeping 

for amounts of $50 or less to OCDP representatives. This issue was later expanded to 

include all cash disbursements and subsequently presented to OCDP representatives as a 

finding for failure to utilize a campaign depository for all cash transactions. 

In subsequent discussions about, cash disbursements, OCDP responded that it complied 

with the Act's required use of a check or "similar draft" by using a "voucher system." 

Under the voucher system, prize winners fill out and redeem vouchers for cash. OCDP 

stated that it has used this system for years and the Michigan State Lottery Bureau was 

aware of it and permitted its use. 

In addition, OCDP cited two Advisory Opinions, 1982-25 and 1993-04, where the 

Commission allowed wire transfers and computerized bill paying, respectively, to satisfy 

the requirement of a similar draft. OCDP stated that, as in those opinions, the vouchers 

are not "operative commercial instruments" like checks, but they are documentation of 

the prize payment transaction, which is the goal of the regulations. OCDP indicated that 

the vouchers satisfy the requirements of a "similar draft" while ayoiding the practical 

problems of writing and processing thousands of checks. 

Although OCDP cites wire transfers and computerized billing as exceptions to the similar 

draft requirement, the Audit staff notes the regulations go beyond simple documentation 

requirements and that they specifically require the use of a campaign depository as cited 

above. Using a campaign depository ensures a clear paper trail linking disbursements to 
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a 3"* party payor/record keeper and provides for a complete disclosure history for audit 

purposes. 

The Audit staff recotmnends that OCDP develop and implement procedures to ensure 

that a campaign depository is used for all receipts and disbursements, including gaming 

transactions made with cash. 

" See Advisory Opinions 1993-04 and 1986-18.