FEDERAL ELECTION COMMISSION

WA5HI--CTOr-.. 0 C 204b3

L~/0725S9

July 25, 1989

MEl-iORANDUM

TO:

FROM:

FRED EILAND

CHIEF, PRESS OFFICE

ROBERT J. COSTA 'f;v fSJ=-_"1 J2-~/81 ASSISTANT STAFF DIRECTOR

AUDIT DIVISION

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SUBJECT: PUBLIC ISSUANCE OF THE REPORT OF THE

AUDIT DIVISION ON THE NEVADA REPUBLICAN

STATE CENTRAL CO~~1ITTEE

Attached please find a copy of the final Report of the Audit

Division on the Nevada Republican State Central Committee, which

was approved by the Commission on July 17, 1989.

Informational copies of the report have been received by all

parties involved and the report may be released to the public.

Attachments as stated

a: cc: Office of General Counsel

Office of Public Disclosure

Reports Analysis Division

FEe Library
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FEDERAL ELECTION COMMISSION

WA5HI:-.;GTON 0 C 2().1b3

A87-2l

July 19, 1989

Mr. Dan J. Peterson, Treasurer

Nevada Republican State Central

Committee

Fish Lake Valley Via

Tonopah, N.V. 89049

Dear Mr. Peterson:

Enclosed for your information is a copy of the final audit

report of the Nevada Republican State Central Committee which was

approved by the Commission on July 17, 1989.

Upon confirmation that your informational copy of the report

has been received (within approximately three days), it will be

released pUblicly by the Commission.

Should you have any questions regarding the public release

of this report, please contact Mr. Fred Eiland of the

Commission's Press Office at (202) 376-3155 or toll free at (800)

424-9530. Any questions you may yet have related to matters

covered during the audit or in the audit report should be

directed to Mr. Raymond Lisi or Mr. Rick Halter of the Audit

Division at (20~ 376-5320 or toll free at (800) 424-9530.

Robe r t J. Csta

Assistant Staff Director

for the Audit Division

Enclosure as stated
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FEDERAL ELECTION COMMISSION

WASHING10S. 0 C 204&3

REPORT OF THE AUDIT DIVISION

ON THE

NEVADA REPUBLICAN STATE CENTRAL COMMITTEE

~. Background

A. Overview

This report is based on an audit of the Nevada ~epublican State Central Committee ("the Committee"), undertaken

by the Audit Division of the Federal Election Commission in

accordance with the Commission's audit policy to determine

whether there has been compliance with the provisions of the

Federal Election Campaign Act of 1971, as amended ("the Actft ) •

The audit was conducted pursuant to Section 438(b) of Title 2 of ~he United States Code which states, in part, that the Commission

may conduct audits and field investigations of any political

committee required to file a report under Section 434 of this ~itle. Prior to conducting any audit under this section, the

Commission shall 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.

The Committee registered with the Federal Election

Commission on November 28, 1977. The Committee maintains its

headquarters in Reno, Nevada. The audit covered the period

January 1, 1985 through December 31, 1986. The Committee

reported a cash balance on January 1, 1985 of $26,317.00: total

receipts of $475,348.00; total disbursements of $447,435.00: and

a cash balance on December 31, 1986 of $54,230.00.

This audit report is based on documents and workpapers

which support ~ach of its factual statements. They form part of

the record upon which the Commission based its decisions on the

matters in the report and were available to the Commissioners and

appropriate staff for review.

B. Key Personnel

The Treasurers of the Committee during the period

covered by the audit were Mr. Kenneth Sawyer from January 1, 1985

to June 30, 1985 and Mr. Robert Seale from July 1, 1985 to

December 31, 1986.
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C. Scope

The audit included such tests as verification of total

receipts and expenditures and individual transactions, review of

required supporting documentation7 analysis of Committee debts

and obligations7 and such other audit procedures as deemed

necessary under the circumstances.

II. Audit Findings and Recommendations

A. Prohibited Transfer of Funds

Section 44lb of Title 2 of the United States Code

states in relevant part, that, it is unlawful for any corporation

whatever or any labor organization to make a contribution or

expenditure in connection with any election to any political

office, or for any candidate or political committee, knowingly to

accept or receive any contribution prohibited by this section.

Section 102.5(a) (1) (i) of Title 11 of the Code of

Federal Regulations states in part that organizations that are

political committees under the Act may establish a separate

federal account in a depository in accordance with 11 CFR Part

103. Such account shall be treated as a separate federal

political committee which shall comply with the requirements of

the Act including the registration and reporting requirements of

11 CFR Parts 102 and 104. Only funds subject to the prohibitions

and limitations of the Act shall be deposited in such separate federal account. All disbursements, contributions, expenditures

and transfers by the committee in connection with any federal

election shall be made from its federal account. No transfers ~ay be made to such federal account from any other account(s)

maintained by such organization for the purpose of financing

activity in connection with non-federal elections.

Nevada State Law, Section 294.A does not prohibit

political committees from accepting contributions from corporate

and labor union sources.

The Committee maintains separate bank accounts for its

federal and non-federal activity. The Audit staff's review of

transactions between the Committee's federal and non-federal

accounts revealed that on 12/31/85 the non-federal account

transferred $5iOOO to the federal account. The purpose of the

transfer was for the repayment of a 12/5/85 loan made to the nonfederal account by the federal account. On April 9, 1986,

inquiry was made to the Committee regarding the transaction by

the Federal Election Commission's Reports Analysis Division. On

April 25, 1986, the Committee in response to the inquiry returned

$5,000 to the non-federal account from the federal account. In

addition, in a letter accompanying documentation relative to the

April 25th transfer, the Treasurer stated the Committee would

refrain from making loans from the federal account to the nonfederal account.
In the interim audit report, the Audit staff recommended that

within 30 days of service of this report that the Committee

provide the Audit staff with any additional comments which the

Committee deems appropriate regarding these transactions. As of

June 30, 1989, no response was received.

Recommendation '1

The Audit staff recommends no further action on this matter.

B. Matters Referred to the Office of General Counsel

Certain matters noted during the audit have been

referred to the Commission's Office of General Counsel.

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