Interim Audit Report of the Audit 

Division 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 the Act.' 

The audit determines 

whether the committee 

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 Committee (p. 2) 

The Washington State Republican Party is a state party committee 

headquartered in Bellevue, Washington. For more information, 

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

Financial Activity (p. 2) 

Federal Receipts 

o Contributions from Individuals $1,844,135 

o Contributions from Political Committees 900,961 

o Transfers from Affiliated and Other 

Political Committees 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 Operating Expenditures $3,753,148 

0 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 

Levin Receipts $15,000 

Levin Disbursements $32,000 

Findings and Recommendations (p. 3) 

• MisstatementofFinancial Activity (Finding 1) 

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

• Reporting ofDebts and Obligations (Finding 3) 

2 U.S.C. §438(b). 
Interim Audit Report of the Audit 

Division 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 

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. Misstatementof Financial Activity 4 

Finding 2. MisstatementofFinancial Activity-Levin Fund 6 

Finding 3. Reporting of Debts and Obligations 8 
Part I 

Background 

Authority for Audit 

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

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 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 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 if the reports filed by a particular committee 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 committee operations necessary to the review. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration October 14,1975 

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

Headquarters Bellevue, Washington 

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 FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and Recordkeeping 

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 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

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

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

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

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

were understated by $697,155, disbursements were understated by $1,062,382 and ending 

cash-on-hand was overstated by $362,753. The Audit staff recommends that WSRP 

amend its disclosure reports to correct these misstatements. (For more detail, see p. 4) 

Finding 2. Misstatement of Financial Activity - Levin 

Fund 

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

beginning 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, disbursements were 

understated by $15,000 and ending cash-on-hand was overstated by $12,500. The Audit 

staff recommends that WSRP amend its disclosure reports to correct these misstatements. 

(For more detail, see p. 6) 

Finding 3. Reporting of Debts and Obligations 

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

to report in calendar years 2009 and 2010. Debts totaling $361,838 were not reported. 

The Audit staff recommends that WSRP amend its disclosure reports to disclose these 

debts on Schedule D (Debts and Obligations). (For more detail, see p. 8) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity 

Summary 

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

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, receipts 

were understated by $697,155, disbursements were understated by $1,062,382 and ending 

cash-on-hand was overstated by $362,753. The Audit staff reconunends that WSRP 

amend its disclosure reports to correct these misstatements. 

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). 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 to bank records for 

2009 and 2010. It determined that WSRP misstated the begiiming cash balance and 

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

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

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

misstatements, if known. 
2009 Committee Activity 

Reported Bank Records Discrepancy 

Begiiming 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 

The beginning cash-on-hand was understated by $30,321 and is unexplained, but likely 

resulted from prior period discrepancies. 

The overstatement of receipts resulted from the following: 

• 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 accoimts - $63,190 

• Transfers from affiliated committee and non-federal account 

not reported + 15,097 

• Unexplained differences + 2.452 

Net Overstatement of Receipts $45.641 

2010 Committee Activity 

Reported Bank Records Discrepancy 

Beginning 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: 

6 

• Transfer from Levin Fund not reported + $3,000 

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

• Transfers from political committees not reported + 487,215 

• Contributions from individuals 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 JIJfi97.155 

The imderstatement of disbursements resulted from the following: 

• Payroll expenditures not reported + $33,457 

• Expenditures not reported + 1,023,213 

• Transfers to political committees 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 expenditures not reported included costs associated 

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

The $362,753 overstatement of the ending cash-on-hand was the result of the 

misstatements described above. 

B. Interim Audit Report & Audit Division Recommendation 

This matter was discussed with WSRP representatives at the exit conference. WSRP 

representatives made no comment on this matter. 

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

WSRP amend its disclosure reports to correct the misstatements for both 2009 and 2010, 

and amend its most recently filed report to correct the cash-on-hand balance with an 

explanation that the change resulted from a prior period audit adjustment. 

Further, WSRP should reconcile the cash balance of its most recent report to identify any 

subsequent discrepancies that may affect the adjustment recommended by the Audit staff. 

I Finding 2. Misstatement of Financial Activity - Levin 

Summary 

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

beginning cash-on-hand and disbursements for 2009 and a misstatement of disbursements 

and ending cash-on-hand for 2010. For 2009, WSRP overstated begiiming cash-on-hand 
by $32,499 and overstated disbursements by $32,499. In 2010, disbursements were 

understated by $15,000 and ending cash-on-hand was overstated by $12,500. The Audit 

staff recommends that WSRP amend its disclosure reports to correct these misstatements. 

Legal standard 

Contents of Levin Reports. Each report must disclose: 

• The amount of cash-on-hand for Levin fiinds at the beginning and end of the 

reporting period; 

• The total amount of Levin fund receipts and disbursements (including allocation 

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

• 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 to bank records 

for 2009 and 2010. It determined that WSRP misstated begiiming cash balance and 

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

following charts outline the discrepancies for 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 

$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 

The begiiming cash balance was overstated by $32,499 and is unexplained, but likely 

resulted from prior period discrepancies. 

The overstatement of disbursements resulted when WSRP erroneously reported transfers 

of $32,499 to the federal account. These transactions are also identified as an adjustment 

to the federal bank reconciliation (see Finding 1, page 5). These transfers appear to have 

been reported to correct the overstatement of cash-on-hand at January 1,2009. 
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 tiie federal account. The $12,500 

overstatement of the ending cash balance was the result of the misstated receipts and 

disbursements noted above. 

B. Interim Audit Report & Audit Division Recommendation 

This matter was discussed with WSRP representatives at the exit conference. WSRP 

representatives made no comment on this matter. 

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

WSRP amend its disclosure reports to correct the misstatements for both 2009 and 2010.^ 

I 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. Debts totaling $361,838 were not reported. 

The Audit staff recommends that WSRP amend its disclosure reports to disclose tiiese 

debts on Schedule D (Debts and Obligations). 

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 each debt and obligation was incurred or extinguished. 11 CFR 

§104.11(a). 

WSRP has not reported any Levin activity for calendar year 2011. 
C. Itemizing Debts and Obligations. 

• Once it has been outstanding 60 days from the 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 Analysis 

A. Facts 

The Audit staff reviewed vendor invoices and computer files containing WSRP 

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

timely, it carried outstanding balances with five vendors that were not disclosed as debts 

on Schedule D. 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 this matter. 

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

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, a 

schedule was provided that includes the amount of each debt required to be reported for each reporting 

period.