% 

FEDERAL ELECTION COMMISSION 

WASHINGTON. D.C. 20463 

2015 DEC-7 

December 7,20 IS 

MEMORANDUM 

To: 

Through: 

From: 

By: 

Subject: 

The Commission 

Alec Palmer ^ 

Staff Director " 

Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. HintermisteF"^ 

Assistant Staff Director 

Audit Division 

Rickida Morcomb 

Audit Manager 

Rosa Crussiah ^ ^ 

Lead Auditor 

Audit Division Recommendation Memorandum on the Oklahoma 

Democratic Party (ODP) (A 12-06) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presents its recommendations below and discusses the findings in the 

attached Draft Final Audit Report (DFAR). The Office of General Counsel has reviewed 

this memorandum and concurs with the recommendations. 

Finding 1. Misstatement of Financial Activity 

The Audit staff determined that for 2011, ODP understated its beginning cash 

balance by S7,S37. ODP also understated its receipts by $6,977 and disbursements 

by $12,759. For 2012, ODP understated its receipts by $12,899 and disbursements 

by $10,450. Subsequent to the exit conference, ODP amended its reports and 

materially corrected its misstatements for 2011, but not for 2012. In response to 

the Interim Audit Report recommendation, ODP filed amended disclosure reports 

that materially corrected the 2012 misstatements. ODP had no additional 

comments in response to the DFAR. 

The Audit staff recommends that the Commission find that ODP misstated its 

financial activity for calendar years 2011 and 2012. 
Finding 2. Misstatement of Financial Activity - Levin Fund 

The Audit staff determined that for 2011, ODP understated its beginning Levin 

cash balance by $5,705. ODP also understated its Levin receipts by $6,015 and its 

Levin disbursements by $8,624. For 2012, ODP understated its Levin receipts by 

$31,000 and its Levin disbursements by $ 15,422. In addition, ODP overstated its 

Levin ending cash balance for 2012 by $3,984. In response to the Interim Audit 

Report recommendation, ODP filed amended disclosure reports that did not 

materially correct the Levin misstatements for 2011 or 2012. However, in its 

subsequent response to the DEAR, ODP filed amended disclosure reports that 

materially corrected the Levin misstatements. 

The Audit staff recommends that the Commission find that ODP misstated its 

Levin activity for calendar years 2011 and 2012. 

Finding 3. Reporting of Debts and Obligations 

The Audit staff determined that ODP failed to report debts and obligations owed to 

five vendors totaling $56,387 on Schedule D (Debts and Obligations). Subsequent 

to the exit conference, ODP amended its reports to correctly disclose $17,953 of 

these debts and obligations previously not reported on Schedule D. In response to 

the Interim Audit Report recommendation, ODP filed amended disclosure reports 

that materially corrected the remaining debts. ODP had no additional comments in 

response to the DEAR. 

The Audit staff recommends that the Commission find that ODP failed to disclose 

debts and obligations totaling $56,387 on Schedule D. 

Finding 4. Recordkeeping for Employees 

For the period covered by the audit, ODP did not maintain monthly payroll logs or 

equivalent records, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2011 and 2012, ODP did not 

maintain monthly logs for $201,551 in payroll reported on Schedule H4 (Payments 

for Allocable Expenses). There was no payroll paid exclusively with non-federal 

funds. . 

Subsequent to the audit and as stated in the DEAR, ODP filed amended reports 

disclosing the entire payroll of $201,551 as federal election activity. The Audit 

staff verified that ODP had not made the transfers from its non-federal account to 

cover the $201,551 now reported as 100 percent federal election activity. As such, 

no further action was necessary with respect to the payroll totaling $201,551 and 

paid with 100 percent federal fiinds.' 

The Audit staff recommends that the Commission find that ODP failed to maintain 

monthly payroll logs totaling $201,551 to document the percentage of time each 

employee spent in connection with a federal election. 

' On November 28,2012, the Commission concluded, by a vote of S-I, that 11 C.F.R 106.7(d)(1) does 

require committees to keep a monthly log for employees paid exclusively with federal funds. Exercising its 

prosecutorial discretion the Commission decided not to pursue recordkeeping violations for employees paid 

with 100% federal funds and reponed as such. 
OOP did not request an audit hearing. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 

30 days of the Commission's vote. 

In case of an objection, Directive No. 70 states that the Audit Division Recommendation 

Memorandum will be placed on the next regularly scheduled open session agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Rosa Crussiah or Rickida Morcomb at 694-

1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on the Oklahoma Democratic Pany 

cc: Office of General Counsel 
Draft Final Audit Report of the 

Audit Division on the Oklahoma 

Democratic Party^ 

(January 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 

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, prohibitit • 

disclosure requirements ' 

the Act. 

Futus^\ctioii 

The.' jission may 

initiate ar^^orcement 

action, at a with 

respect to any ^||g.matters 

discussed in this I 

W 

About the Committee (p. 2) 

The Oklahoma Democratic Party is a^te party committee 

headquartered in Oklahoma City, C^^bqia. For more information, 

see the chart on Committee O tion, p. 2. 

Financial A^w^ (p. 3) 

• Receipts 

o Contriblm^^rom In^iduals 

o Contributions^:. if 

Committees 

o >^.Transfers from 'Other 

"'^l^ommittees ^ 

o ^Sra^^i)erating ^^res 

o Tr%sfe'r«f- .• '• fede^A 

Le^ Fimt 

Total Rec^^^s 

Disburseii^nts 

o Operating Expenditures 

- "^-ansfers^^Affiliated/Other Party 

o • Election Activity 

Other Disbursements 

i1 Disbursements 

Levin Receipts 

Levin Disbursements 

$252,651 

144,946 

289,642 

416 

119,124 

S 806,779 

$803,118 

7,000 

17,219 

350 

S 827,687 

$54,222 

$63,754 

Findings and Recommendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

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

• Reporting of Debts and Obligations (Finding 3) 

• Recordkeeping for Employees (Finding 4) 

' On May 18.2011, the Commission received a Statement of Organiaation from the Democratic Party of 

Oklahoma officially changing its name to Oklahoma Democratic Party. 

- 52 U.S.C. §30111(b). 
Draft Final Audit Report of the 

Audit Division on the 

Oklahoma Democratic Party 

(January 1, 2011 - December 31, 2012) 

X 

\ 

\ 

% 

% 

4 
Table of Contents 

>/ 

''i 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 2 

Overviewof Financial Activity . 3 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recom^cnjd.i I i< 

Finding I. Misstatement of Financial Activity ^ 

Finding 2. Misstatement of Financial Activity- i^.'d 8 

Findings. Reporting of Debts an^^^^gations 11 

Finding 4. Recordkeeping for Emp^jW~ 12 

r 

A 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Oklahoma Democratic Party (GDP), 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 52 U.S.C. §30111(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. Prior to conduc^g any audit under this 

subsection, the Commission must perform an internal review filed by selected 

committees to determine if the reports filed by a particular c^^ittee meet the threshold 

requirements for substantial compliance with the Act. 5" *lfs^ >111(b). 

Scope of Audit 

Following Commission-approved procedures, 

factors and as a result, this audit examined: 

1. the disclosure of individual contributors' 6 : 

the disclosure of disbursements, debts and obli 

ff evalu 

the disclosure of expenses allocated between feder^^ jbon-federal, and Levin 

2. 

3. 

accounts; ' 

4. the consistency between reported 1 

5. the completeness of records; and 

6. other committee operations necessary ^ 

Commission (iuidan 

us risk 

e of emi 1 

•r 

Request for Early ( issio 

Pursuant to the Commisi^' 

Considerat^j^^ml Qu 

unaffili^^Twith OD^^uest 

audits^ji^yering the 20 

morithl) 

percent fe 

logs under 

nds. 

. «.• .:lude 

a Legal Question 

Establishing a Program for Requesting 

IS by tfE^^l^mission," several state party committees 

ly consideration of a legal question raised during 

Specifically, the Commission addressed whether 

FR |M6.7(d)(l) were required for employees paid with 100 

The Commis- .:lu^; by a vote of 5-1, that 11 CFR § 106.7(d)(1) does require 

committees to kei • .i n^psnthly log for employees paid exclusively with federal funds. 

Exercising its prosec6%rial 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 federal funds and reported as 

such. The Audit staff informed ODP 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. This audit 

report does not include any findings or recommendations with respect to ODP employees 

paid with 100 percent federal funds and reported as such. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration October 9.1984 ' 

• Audit Coverage January 1,201^ December 31,2012 

Headquarters Oklahom .^^klahoma 

Bank Information • 

• Bank Depositories One^^fe., 

• Bank Accounts l]}^e Federal; One Noii 1; One 

Treasurer ' V 

• Treasurer When Audit Was Conducted D( .^ell ' 

• Treasurer During Period Covered by V. Donna May 14,2011 - Present 

Linda Gray^illi March 20, 2008 -

M. 201 f 

Management Information %. 

• Attended Commission C ... n Finance %, 

Seminar % \ 

• Who Handled Ac^- * and'*^ 

Recordkeeping Task? ^ 

?^aid Staff 
Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ® January 1,2011 S 28,041 

Receipts 

o Contributions from Individuals 252,651 

o Contributions from Political Committees 144,946 

o Transfers from Affiliated/Other Party 

Committees 

289,642 

o Offsets to Operating Expenditures // -416 

o Transfers from Non-federal & Levin Funds y ,119.124 

Total Receipts #' -'79 

Disbursements 

o Operating Expenditures ^ n. 

o Transfers to Affiliated/Other Party 7 

Committees 'W 

o Federal Election Activity 17,219' 

o Other Disbursements 350 

Total Disbursements = 827,687 

Cash-on-hand December 31,2012 S 7,133 

% f 

Levin Cash-on-hand Januarv 1,2011 510,705 

Total Levin Receipts ^ J' $54,222 

Total Levin Disbursen^ts % $63,754 

Levin Cash-on-hand'^^m-ii mbir 31.2012 51,173 

<• 

i 

IF 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

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

records revealed a misstatement for the beginning cash balance in 2011 and receipts and 

disbursements in 2011 and 2012. Beginning cash on January l.^U. was understated by 

$7,537. For 2011, GDP understated its receipts by $6,977 anj^^isbursements by 

$ 12,759. In 2012, GDP understated its receipts by $ 12,88^^ lisbursements by 

$ 10,450. Subsequent to the exit conference, GDP amen^b^its (ts which materially 

corrected the misstatements for 2011, but not for 201^^.. mrresponsliS le Interim Audit 

Report recommendation, GDP filed amended discjo^re^Tepbrts thai . ly corrected 

the misstatements for 2012. 

(For more detail, see p. 6.) 

Finding 2. Misstatement of Financ&l Activity - Levin 

Fund 

During audit fieldwork, a comparison .if G1^'' eported --v' • itivity with bank records 

revealed a misstatement of its cash bal -E'CC - disbi nents for 2011 and 

2012 Levin activity. For 2011, GDP i.- .:.-^tate^^ii^^ -wipts by $6,015 and its 

Levin disbursements b^^24 Fhe begiiii^g cash b for the Levin account in 

2011 was also under^^ed S'!./05. In 201^^^, GDP understated its Levin receipts by 

$31,000 and its L^vit^bui .-ncmts by $15,422. Jhe ending cash balance for 2012 was 

overstated by $3,984. n. - .-L . . "nterii^JiCudit Report recommendation, GDP 

filed amem .. h( ::r.en^^ports did not materially correct the Levin 

misstate^:-

(For 3 detail, seeif^- ^ 

Findi^^.. Reporting of Debts and Obligations 

During audit^^work, th^udit staff determined that GDP failed to report debts and 

obligations owM:' /e valors totaling $56,387 on Schedule D (Debts and 

Gbligations). Si - j- ^^'io the exit conference, GDP amended its reports which 

correctly disclosed $^^53 in debts and obligations previously not reported on Schedule 

D. In response to thb' Interim Audit Report recommendation, GDP filed amended 

disclosure reports that materially corrected the debt reported on Schedule D. 

(For more detail, see p. 11.) 

Finding 4. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that GDP 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 originally 

identified payments to GDP employees totaling $201,551, for which GDP did not 

maintain monthly payroll logs. This consisted of payroll which was allocated with 

federal and non-federal funds. There was no payroll paid exclusively with non-federal 
funds. Subsequent to the exit conference, ODP amended its reports to disclose $79,437 

of the employees salaries, previously reported as allocated expenses, as 100 percent 

federal expenses. 

The Audit staff verified the change in ODP's amended reports, and in light of the 

Commission's guidance with respect to recordkeeping for employees paid with 100 

percent federal funds and reported as such, the Audit staff concluded that no further 

action was necessary with respect to recordkeeping for the $79,437 in employees salaries. 

In response to the Interim Audit Report recommendation, ODP amended its reports to 

disclose $111,603 of the employees salaries, previously reported as allocated expenses, as 

100 percent federal expenses. The Audit staff could not identi^^%cemaining employee 

salaries totaling $10,511 ($201,551 - $79,437 - $111,603) oi^i^mended reports. ODP 

also stated it has implemented procedures to ensure that tim^l^^s are maintained for 

any employee who is paid in whole, or in part, with non-<^eral ODP complied 

with the Interim Audit Report recommendation by ir^jgiiSWiting a'^i • maintain 

payroll logs in the future. 

(For more detail, see p. 12.) 

/ 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

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

records revealed a misstatement for the beginning cash balance in 2011 and receipts and 

disbursements in 2011 and 2012. Beginning cash on January 1,2011, was understated by 

$7,537. For 2011, GDP understated its receipts by $6,977 and 

$12,759. In 2012, GDP understated its receipts by $12,889 

$10,450. Subsequent to the exit conference, GDP ame: 

corrected the misstatements for 2011 but not for 2012. 

Report recommendation, GDP filed amended disclos 

the misstatements for 2012. 

Legal Standard 

Contents of Reports. Each report must disch 

• the amount of cash-on-hand at the beginning am 

bursements by 

ents by 

>rts which materially 

the Interim Audit 

rially corrected 

• the total amount of receipts for tKlf 

• the total amount of disbursements 

and 

• certain transactions that require itemi 

Schedule B (Itemize^^^o .-sements). 

Facts and Ansd 

mg perioc 

e reporting period; 

r the calendar year; 

A. Facts 

As part of_^ 

with i 

missi 

charts o 

and the su 

ming periiK. or the calendar year; 

(Itemized Receipts) or 

:)(!), (2), (3), (4) and (5). 

rk '. A >nciled GDP's reported financial activity 

recordsTl^i^jOl 1 1^2012. The reconciliation identified that GDP 

cash i. T, for 2011 and 2012. The following 

the discrep^^es between GDP's disclosure reports and its bank records, 

paragra^s explain why these discrepancies occurred. 

2011 Commiiiii- .'^ivit# 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2011 

$20,504 $28,041 $7,537 

Understated 

Receipts $305,062 $312,039 $6,977 

Understated 

Disbursements $310,126 $322,885 $12,759 

Understated 

Ending Cash Balance @ 

December 31,2011 

$15,490-' $17,195 $1,705 

Understated 

' ODP miscalculated its ending cash balance by reporting a beginning cash balance in one report different 

than the ending cash balance of the previous report. This created a mathematical discrepancy of SSO. 
The beginning cash balance was understated by $7,537 and is unexplained but likely 

resulted from prior period discrepancies. 

The understatement of receipts resulted from the following: 

• Contributions from individuals not reported 

• Transfers from Levin/Non-federal accounts not reported 

and amount incorrectly reported 

• Reported contributions from individuals not supported by 

deposit 

Net Understatement of Receipts 

The understatement of disbursements resulted from the followi^. 

• Bank fees, other disbursements and cash withdraw. ;] 

• Payments for insurance, event expenses, phone, 

financial services, and taxes not reported 

• Payments for salaries and wages not reporter 

• Contribution refunds not reported 

• Reported payments for taxes, consult^^^^pphonc'^prvices, 

and other disbursements not supported by 

Net Understatement of Disbursements 

+ $1,765 

+ 5,602 

. 390 

+ $6,977 

+ $2,443 

+ 6,740 

1,591 

5,010 

3,025 

The S1,705 understatement of the endii 

described above. 

jUJSi 

ilance resi^^. >m the misstatements 

2012 Committee Activi 

Beginning Cash B 

January 1,2012 -

Ri-|iiii ii-ii Bank !<• rds 

$17,195 

Receipts 

Disbi • -eni-

^11'. • $494,740 

Endii _ Balance (p 

December 

$494,352 

,^$3,670" 

$504,802 

$7,133 

The understate resulted from the following: 

• Contribution^^pn individuals not reported 

Transfers from Non-federal account not reponed 

Reported offsets not supported by deposit 

Unexplained differences 

Net Understatement of Receipts 

Discrepancy 

The understatement of disbursements resulted from the following: 

• Bank fees and credit card payments not reported 

$1,705 

Understated 

$12,889 

Understated 

$10,450 

Understated 

$3,463 

Understated 

+ 

+ 

$5,387 

13,135 

6,005 

372 

$4,112 

ODP miscalculated its ending cash balance by reporting a beginning cash balance in one report different 

than the ending cash balance of the previous report. This created a mathematical discrepancy of S681. 
Payments for rent, insurance, event expenses, telephone services. 

8 

taxes and other disbursements not reported + 15,494 

Payments for salaries & wages not reported + 6,272 

Contribution to a political party and travel reimbursement 

not reported + 2,180 

Transfer to Non-federal account not reported + 500 

Reported bank fees, credit card and tax payments not supported 

by a check or debit - 5,495 

Reported payment for salaries and wages not supported by a 

check or debit - 1,442 

• Reported payments for office supplies, shipping, telephor 

consulting services, and other disbursements not sup] 

a check or debit 

Net Understatement of Disbursements 

The $3,463 understatement of the ending cash balam^^ii^ulted from^ 

described above. ^ 

11,171 

sstatements 

B. Interim Audit Report &. Audit Division Keett^in ii 

The Audit staff discussed the misstatements with OiH* 

conference. ODP representatives stated that they wou 

review each issue. The Audit staff pro^^workpapers 

financial activity to ODP representativei^a^^lb&.exit confe: 

conference, ODP filed amended reports 

2011. For 2012, ODP filed amended 

,-5' 

activity. The amended; 

the amendments v 

not precl 

•r:.ie notification of the audit. 

The Interim Audit Repo: 

the remair / :emen 

lentatives at the exit 

nd after having time to 

ing all misstatements of 

Subsequent to the exit 

its financial activity for 

ially correct its financial 

from the audit report because 

that Q, amend its disclosure reports to correct 

, and adjust the cash-on-hand balance 

as neces^^ , ..i eceii^^ort, noting that the adjustment is the result of priorperiodi^dit adjustmc ^The li^^n^Audit Report further recommended that ODP 

recoiiclii^e ending casftro'. and ^ance of its most recent report to identify any 

subsequer^ijji-. -epancies I'; nay affect the recommended adjustment. 

C. Committee 

In response to the 

reports for 2011 and 

,|ii Interim Audit Report 

'Audit Report recommendation, ODP filed amended disclosure 

that materially corrected the misstatements. 

Finding 2. Misstatement of Financial Activity - Levin 

Fund 

Summary 

During audit fieldwork, a comparison of ODP's reported Levin activity with bank records 

revealed a misstatement of its cash balance, receipts and disbursements for 2011 and 

2012 Levin activity. For 2011, ODP understated its Levin receipts by $6,015 and its 

Levin disbursements by $8,624. The beginning cash balance for the Levin account in 
2011 was also understated by $5,705. In 2012, ODP understated its Levin receipts by 

$31,000 and its Levin disbursements by $15,422. The ending cash balance for 2012 was 

overstated by $3,984. In response to the Interim Audit Report recommendation, ODP 

filed amended reports; however, the amended reports did not materially correct the Levin 

misstatements: 

Legal Standard 

Contents of Levin Reports. Each report must disclose: 

• The amount of cash-on-hand for Levin funds 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 Schedul (Itemized Receipts of 

Levin Funds) or Schedule L-B (Itemized Disbursem 

§300.36 (b)(2)(B). 

Facts and Analysis 

A. Facts 

As part of the audit fieldwork, the Audit staff recoricl 

financial activity with its Levin bank,records for 201 

identified that ODP misstated its cash^" 

2012. The following charts outline the 

and its Levin bank records, and the succ 

discrepancies occurred. 

4-

2011 Committee 1 • ii» Xciivil! 

Beginning Cash 

January 1, 

Recei 

DisBu 

Reported 

$17,207 

•_ Z. 

Funds). IICFR 

*'s reported Levin fund 

12. The reconciliation 

;, receipts bursements for 2011 and 

icies betwe (i^P disclosure reports 

»expiiSin why these 

Ending C 

December 31, 

»• • 20,583 * 

$4,720' 

ik Records 

$10,705 

$23,222 

$29,207 

$4,720 

Discrepancy 

$5,705 

Understated 

$6,015 

Understated 

$8,624 

Understated 

$0 

The beginning cash ce was understated by $5,705 and is unexplained but likely 

resulted from prior period discrepancies. 

The understatement of receipts resulted from the following: 

• Transfer from a Federal account not reported 

• Contribution from an individual not reported 

Understatement of Levin-funds Receipts 

+ 

+ 

$1,015 

5.000 

Mm 

^ ODP miscalculated its ending cash balance by reporting a beginning cash balance in one report different 

than the ending cash balance of the previous report. This created a mathematical discrepancy of S3,096. 
The understatement of disbursements resulted from the following: 

• Transfer to a Federal account not reported 

• Transfer to the Non-federal account not reported 

• Payment to a vendor not reported 

Understatement of Levin-funds Disbursements 

+ 

+ 

+ 

10 

SS,600 

2,009 

I.OIS 

JS^ 

2012 Committee Levin Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2012 

$4,720 $4,720 $0 

Receipts $0 $31,000 $31,000 

Understated 

Disbursements $19,125 $34«'- $15,422 

•- Understated 

Ending Cash Balance @ 

December 31,2012 

$5,157" . ^il.l73 $3,984 

Overstated 

The understatement of receipts resulted from Jh^^lowinp 

• Contributions from individuals not report) 

• Receipt not reported 

Understatement of Levin-full-' Meceipts > 

f ; foil-

.y 

+ 

$30,000 

1,000 

The understatement of disbursements 

• Payments for event expenses and 

Transfers to a Ft count not 

Reported trar^' ' .^^deral accotot reported" twice and 

not support^^^ a chec^r debit 

Reported paytw' a ^^dor reported and 

not sujmorted by i 

jii" enl^ii 1 • vin-Tul^ Disbursements 

+ 

+ 

$10,015 

14,969 

4,562 

5,000 

The$^M4 oversta 

describe£%b. 

II cash balance resulted from the misstatements 

B. Interim \iid|^epori A Audit Division Recommendation 

The Audit staff Sii^gse^ I* • '-evin fund misstatements with ODP representatives at the 

exit conference, of^^'presentatives stated that they would respond after having time to 

review each issue. Tlie Audit staff provided workpapers detailing the misstatements of 

Levin fund financial activity to ODP representatives after the exit conference. 

The Interim Audit Report recommended that ODP amend its disclosure reports to correct 

the Levin misstatements noted above, and adjust the Levin cash balance as necessary on 

its most recent report, noting that the adjustment is the result of prior-period audit 

adjustments. The Interim Audit Report further recommended that ODP reconcile the 

* ODP miscalculated its ending cash balance by reporting a beginning cash balance in one report different 

than the ending cash balance of the previous report. This created a mathematical discrepancy of S 19,362. 
11 

Levin cash balance on its most recent report to identify any subsequent discrepancies that 

could affect the recommended adjustment. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, ODP filed amended disclosure 

reports; however, ODP did not materially correct any Levin activity. The amended 

disclosure reports only included Schedule L (Aggregation Page: Levin Funds) with zero 

balances. ODP did not file any Schedule L-A (Itemized Receipts of Levin Funds) or 

Schedule L-B (Itemized Disbursements of Levin Funds), as required to correct the Levin 

misstatements. As such, ODP did not fully comply with the Interim Audit Report 

recommendation. 

Finding 3. Reporting of Debts and ObJi||.iUpns 

Summary 

During audit fieldwork, the Audit staff determin^^at ODP failed to ts and 

obligations owed to five vendors totaling $56.^^on Schedule D (Debts 

Obligations). Subsequent to the exit conference,'0]|£ an^^e^ its reports y&Wich 

correctly disclosed $17,953 in debts and obligations'^^^sly not reported on Schedule 

D. In response to the Interim Audit Import recommenm^^, ODP filed amended 

disclosure reports that materially corr^ debt report^ " edule D. 

Legal Standard ^ 

A. Continuous Reportinj^equired. A pt|iti^ coiAti^gb''must disclose the amount 

and nature of outstandm^^^and obligati^s until thoK debts are extinguished. 

52 U.S.C. §30104(^J®(form^ 2 U.S.C. §%4(b)(8)), 11 CFR §§ 104.3(d) and 

104.11(a). 

B. Itemiziii;! living jiul f i|i|^.iii 

• Once:- o.^tan^^^O days from the date incurred, a debt of $500 or less 

: be reported ^ cxn^ijiarly scheduled report. 

(ceeding $^ ,ist b^^isclosed in the report that covers the date on which 

the deW v» - incurrei CFll § 104.11 (b). 

Facta and A -sis # 

A. Facts jy 

During audit fieldwork, the Audit staff reviewed disbursement records and disclosure 

reports for proper reporting of debts and obligations. This review identified debts owed 

to five vendors totaling $56,387^ that ODP failed to report on Schedule D. Of these 

debts, $24,848 was owed to a credit card company; $17,953 was owed to two vendors 

relative to catering charges for a single event; $7,188 was owed to a printing company; 

and $6,398 was owed for the rental of a facility for an event in April 2012. These debts 

were outstanding for a range of 45 to 227 days from invoice to payment date. As of 

' Each debt in this amount was counted once, even if it required disclosure over multiple periods. In order 

for ODP to correctly file amended reports, schedules were provided that included the amount of each debt 

required to be reported for each reporting period. 
12 

December 31, 2012, $24,708 of this debt remained outstanding. OOP did not report any 

debt on Schedule D during the audit period. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the reporting of debts and obligations with OOP representatives 

and provided schedules detailing the transactions requiring disclosure. OOP 

representatives had no comments on this matter. Subsequent to the exit conference, ODP 

filed amended reports to correctly disclose $17,953 in debts and obligations on Schedule 

D; thus leaving $38,434 to be itemized on Schedule D. The amended reports did not 

preclude this matter from the audit report because the amendments were filed after 

notification of the audit. 

The Interim Audit Report recommended that ODP provide < 

that the remaining $38,434 in debts and obligations disc -

reporting on Schedule D. 

entation demonstrating 

did not require 

C. Committee Response to Interim Audit Repc 

In response to the Interim Audit Report recomi^dation, QDP filed an 

reports that materially corrected the committe'e* 

ODP reported a total of $43,490 of the $56,387 in di 

:losu] 

losure 

debts and obll^tions. 

obligations on Schedule D. 

Finding 4. Recordkeeping fc§^mployegB 

Summary 

During audit fieldwo 

monthly payroll k 

spent in connectio- .i 

identified payments to (SU 

maintain n • DII 

federal 0 

fun - sequent to 

of I -• .-sij; pyees salaric 

federal exj 

it staff deter 

to docume 

election. 

ned tl . V: did not maintain any 

the percentage of time each employee 

1 and 2012, the Audit staff originally 

lin^^O 1,551, for which ODP did not 

of payroll which was allocated with 

re was no payroll paid exclusively with non-federal 

t co1^l^|!^ce, ODP amended its reports to disclose $79,437 

'ious^reported as allocated expenses, as 100 percent 

The Audit staff^^ed t^> uige in ODP's amended reports, and in light of the 

Commission's gui^^b^fth respect to recordkeeping for employees paid with 100 

percent federal funds^d reported as such, the Audit staff concluded that no further 

action was necessary with respect to recordkeeping for the $79,437 in employees salaries. 

In response to the Interim Audit Report recommendation, ODP amended its reports to 

disclose $111,603 of the employees salaries, previously reported as allocated expenses, as 

100 percent federal expenses. The Audit staff could not identify the remaining 

employees salaries totaling $10,511 ($201,551 - $79,437 - $111,603) on the amended 

reports. ODP also stated it has implemented procedures to ensure that time sheets are 

maintained for any employee who is paid in whole, or in part, with non-federal funds. 

ODP has complied with the Interim Audit Report recommendation by implementing a 

plan to maintain payroll logs in the future. 
13 

Legal Standard 

Maintenance of Monthly Logs. Party 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 compiensated time in a given 

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

or be 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, 

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

election activities may be paid entirely with funds that comoly with state law. 11 

CFR§106.7(d)(l). . .... 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewedj 

maintain any monthly payroll logs or equivale 

lime each employee spent in connection wilh'a 

to document the proper allocation of federal and noil 

lursements for pi L OOP did not 

irds tor^ocument the'p' tage of 

eleclto- These logs ^ required 

ll funds used to ^y employee 

salaries and wages. For 2011 and 20^2, OOP did not im||dly maintain monthly logs for 

$201,551* in payroll.' This amount ; payroll for ^ . J — 

Schedule H4 (Payments for Allocable ^^^^and paid 

and non-federal fUnds during the same m^th'T" no 

with non-federal funds. 

B. Interim Audit 

The Audit staff di 

during the audit field 

questions fq 

issue. S 

payrol^ji^penditures 

inste'ad=^i^deral activi 

correct thiSf^or by comp: 

expenditures' 

amended repo: 

Election Activity 

tion 

exit" 

fed^ 

yees initially reported on 

^allocation of federal 

>11 paid exclusively 

it Divisioii^ecommendation 

:eeping re%^ment with OOP representatives 

mfe^ce. OOP representatives asked 

respond af^er having time to review this 

jerence, uuP representatives responded that these 

net:^^ reported as shared federal/non-federal activity, 

y. Fu^^r, OOP representatives stated that they plan to 

isively amending OOP's reports and disclosing these 

activity. Subsequent to the exit conference, GDP filed 

$79,437 in payroll on Schedule B, Line 30b (Federal 

with Federal Funds); thus, leaving $122,114 still on 

It 

irely 

Schedule H4. The AWt staff verified that GDP had not made the transfers frpm its nonfederal account to cdver the $79,437 now reported as 100 percent federal election 

activity. As such, no further action was recommended with respect to the payroll totaling 

$79,437 paid with 100 percent federal funds.'" The amended reports did not preclude this 

' This amount includes unreported salary payments totaling $7,172 to employees that also received other 

salaiy payments during the audit period that were reported on Schedule H4. This amount is SI,111 

higher than the S200,440 salary presented in LRA 978 due to calculations based on salary transactions 

reported on Schedule H4 rather than salary transactions in ODP's database. 

* This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such (see Part I, Background, Commission Guidance, Request for Early Commission Consideration of a 

Legal Question, Page 1). Payroll amounts are stated net of taxes and fringe benefits. 

See Part 1, Background, Commission Guidance, Request for Early Commission Consideration of a L.egal 

Question, Page 1. 

10 
14 

matter from the audit report because the amendments were filed after notification of the 

audit. 

The Interim Audit Report recommended that ODP provide evidence that it maintained 

monthly time logs to document the percentage of time an employee spent in connection 

with a federal election; or implement a plan to maintain monthly payroll logs in the future 

for the remaining SI22,114 in payroll reported on Schedule H4. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, ODP filed amended reports 

disclosing $111,603 in employees salaries, previously reported as allocated, on Schedule 

B as 100 percent federal expenses. OOP's amended reports do^^dtj^close the remaining 

$ 10,511 ($201,551 - $79,437 - $ 111,603) in salaries. This ai includes unreported 

salaries totaling $6,272 for calendar year 2012 from Find^' gage 6, and $4,239 in 

employee salaries that was previously reported on Schedt^b provided no 

additional explanation on the amended reports. The Ajy|^it%aff verif lat ODP had not 

made the transfers from its non-federal account ta^^er the payroll n nted as 100 

percent federal election activity. '' / 

In addition, ODP stated that it has implemented p .t- ^sure that titne sheets are 

maintained for any employee who is gaid in whole, O" with non-federal funds. As 

such, ODP has complied with the Inter.i:. \ adit Report rfe^jmendation by 

implementing a plan to maintain mont }gs in the^' ^ 

4