Final Audit Report of the 

Commission on the 

TeaPartyExpress.org 

(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 coiripliance 

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. 2) 

TeaPartyExpress.org is an unauthorized, qualified, non-party 

political action committee headquartered in Willows, California. 

For more information, see the chart on the Committee 

Organization, p. 2. 

Financial Activity (p. 2) 

Receipts 

o Contributions from Individuals $ 10,135,860 

o Refunds of Contributions Made 

to Federal Candidates $2,500 

o Other Receipts 32;666 

Total Receipts $ 10,171,026 

Disbursements 

o Operating Expenditures $ 8,320,177 

o Contributions to Federal 

Candidates/Other Committees 259,500 

o Independent Expenditures 680,735 

o Contribution Refunds 19,685 

o Other Disbursements 77,827 

Total Disbursements $ 9,357,924 

Commission Findings (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Disclosure of Occupation/Name of Employer (Finding 2) 

• Reporting of Apparent Independent Expenditures (Finding 3) 

• Recordkeeping for Communications (Finding 4) 

• Failure to Itemize Debts and Obligations (Finding 5) 

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

Commission on the 

TeaPartyBxpress.org 

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

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Audit Hearing 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Commission Findings 3 

Part IV. Commission Findings 

Finding 1. Misstatement of Financial Activity S 

Finding 2. Disclosure of Occupation/Name of Employer 8 

Finding 3. Reporting of Apparent Independent Expenditures 10 

Finding 4. Recordkeeping for Communications 1S 

Finding S. Failure to Itemize Debt and Obligations 17 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the TeaPartyExpress.org^ (TPE), undertaken by the 

Audit Division of the Federal Election Commission (the Commission) in accordance v^th 

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 conducting any audit under this subsection, the 

Commission must 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. 52 U.S.C. §30111(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the consistency between reported figures and bank records; 

2. the disclosure of individual contributors' occupation and name of employer; 

3. the disclosure of independent expenditures; 

4. the disclosure of debts and obligations pertaining to independent and apparent 

independent expenditures; 

5. the completeness of records; and 

6. other committee operations necessary to the review. 

Audit Hearing 

TPE declined the opportimity for a hearing before the Commission on the matters 

presented in this, report. 

^ The committee's name during the audit period was Our Country Deserves Better TeaPartyExpress.Org 

and was subsequently changed on'May IS, 201S. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration August 18,2008 

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

Headquarters Willows, California 

Bank Information 

• Bank Depositories Three 

• Bank Accounts Three Checking; One Savings 

Treasurer 

• Treasurer When Audit Was Conducted Kelly Lawler 

• Treasurer During Period Covered by Audit Betty Presley (1/1/2011 - 4/7/2011) 

Kelly Lawler (4/8/2011 - Present) 

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 S20,252 

Receipts 

o Contributions from Individuals 10,135,860 

o ' Refunds of Contributions Made to Federal 

Candidates/Other Committees 2,500 

o Other Receipts 32,666 

Total Receipts S10,171,026 

Disbursements 

o Operating Expenditures 7,474,867 

o Contributions to Federal Candidates/Other 

Committees 259,500 

o Independent Expenditures 1,529,257' 

o Contribution Refunds 19,685 

6 Other Disbursements 74,615 

Total Disbursements $9,357,924 

Cash-on-hand ® December 31,2012 $833354 

^ This amount, as well as the amount for operating expenditures and other disbursements, has been revised as a 

result of the Commission's final consideration of Finding 3. 
Part III 

Summaries 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

A comparison of TPE's reported figures with its bank records indicated that in 2011, 

receipts and ending cash-on-hand were understated by $133,667 and $127,193, 

respectively. In 2012, beginning cash-on-hand was understated by $127,193, receipts 

were overstated by $129,547, disbursements were understated by $5,244, and ending 

cash-on-hand was overstated by $65,710. Subsequent to audit notification, TPE amended 

its disclosure reports and partially corrected certain misstatements. . 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE explained that during the time of activity it experienced challenges 

with the data. TPE stated it was willing to amend reports as needed, however, has not 

done so as of yet. As such, TPE has not complied with the recommendation. 

The Commission approved a finding that TPE misstated its financial activity for the 

calendar years 2011 and 2012. (For more detail, see p. 5.) 

Finding 2. Disclosure of Occupation/Name of Employer 

A review of all cdritributions fixim individuals requiring itemization indicated that 2,896 

contributions totaling $549,694 lacked disclosure of occupation/name of employer. 

During the audit, TPE demonstrated "best efforts" to obtain, maintain and submit the 

missing occupation/name of employer information to materially correct the disclosure 

errors. Since TPE's corrective action occurred after audit notification, the matter was 

included in the Interim Audit Report. 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE stated it has significantly improved its process for collecting and 

reporting occupation/name of employer from individuals and that it has always practiced 

"best efforts." TPE stated it created a system internally which obtains the information 

faster and in .time for the new report filings. 

The Commission approved a finding that TPE failed to disclose occupation/name of 

employer information from individuals totaling $549,694. (For more detail, see p. 8.) 

Finding 3. Reporting of Apparent Independent 

Expenditures 

During audit fieldwork, the Audit staff reviewed independent expenditures totaling 

$680,735 that TPE disclosed on Schedule E (Itemized Independent Expenditures). 

However, the Audit staff identified additional expenditures totaling $848,522 (845,310 + 

3,212) which appeared to be media-related independent expenditures that TPE disclosed 

on Schedule B, Line 21b (Operating Expenditures) and Line 29 (Other Disbursements). 
4 

Of the $680,735 independent expenditures reported on Schedule E, TPE did not file 

24/48-hour reports for seven expenditures totaling $28,003. Additionally, of the 

$848,522 disclosed as operating expenditures and other disbursements which appeared to 

be independent expenditures, TPE did not file any 24/48-hour reports. 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE stated that the identified communications in question were for 

fiindraising and not electioneering purposes. TPE did not address the 24/48-hour reports 

specifically but stated that the bulk of the activity was towards fundraising and that the 

identified communications were for fundraising and not for electioneering purposes. 

The Commission approved a finding that TPE failed to properly disclose independent 

expenditures totaling $848,522. In addition, the Commission approved a finding that 

TPE did not file 24/48-hour reports totaling $28,003 for independent expenditures 

reported on Schedule E; and that TPE did not file 24/48-hour reports for additional 

apparent independent expenditures totaling $848,522. (For more detail, see p. 10.) 

Finding 4. Recordkeeping for Communications 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of 

the information and proper classification of transactions disclosed on reports. TPE 

reported 340 (237+103) expenditures totaling $3,792,648 (2,302,864 + 1,489,784), on 

Schedule B, Line 21b (Operating Expenditures) or Line 29 (Other Disbursements) with 

purposes such as "Postage & Delivery", "Printing & Mailshop" or "PAC Fundraising 

Postage & Delivery." Documentation provided by TPE was insufficient to make a 

determination pertaining to the purpose for these disbursements and verification as an 

operating or other expense. 

TPE did not submit a response to the Interim Audit Rqjort. In response tp Ae Draft Final 

Audit Repprt, TPE stated that it has provided copies of invoices and payments made but 

experienced challenges collecting further information from its consultants and email 

vendor. TPE added that it has changed its collection process pertaining to the details of 

the communications. 

The Commission approved a finding that TPE did not provide the necessary records 

pertaining to disbursements totaling $3,792,648. (For more detail, see p. 15.) 

Finding 5. Failure to Itemize Debts and Obligations 

During audit fieldwork and in the course of review of independent and apparent 

independent expenditures, the Audit staff noted that TPE failed to properly disclose debts 

and obligations pertaining to these expenditures totaling $310,561. 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE stated it was willing to amend its reports as needed, however, has not 

done so as of yet. As such, TPE has not complied with the recommendation. 

The Corrimission approved a finding that TPE failed to itemize debts and obligations 

totaling $310,561. (For more detail, see p. 17.) 
Part IV 

Commission Findings 

I Finding 1. Misstatement of Financial Activity 

Summary 

A comparison of TPE's reported figures with its bank records indicated that in 2011, 

receipts and ending cash-on-hand were understated by $133,667 and $127,193, 

respectively. In 2012, beginning cash-on-hand was understated by $127,193, receipts 

were overstated by $129,547, disbursements were understated by $5,244, and ending 

casb-on-band was overstated by $65,710. Subsequent to audit notification, TPE amended 

its disclosure reports and partially corrected certain misstatements. 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE explained that during the time of activity it experienced challenges 

with the data. TPE stated it was willing to amend reports as needed, however, has not 

done so as of yet. As such, TPE has not complied with the recommendation. 

I^e Commission approved a finding that TPE misstated its financial activity for the 

calendar years 2011 and 2012. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• the amount of cash-on-band 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)(l), (2), (3), (4), and 

(5). 

Facts and Analysis 

A. Facts 

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

its bank records for calendar years 2011 and 2012. The reconciliation determined that 

TPE misstated receipts and ending casb-on-band for 2011, and receipts, disbursements 

and ending cash balance for 2012. The following charts outline the discrepancies 

between TPE's disclosure reports and its bank records. The succeeding paragraphs 

explain why the discrepancies occurred. 
2011 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2011 

$21,661 $20,252 $1,409 

Overstated 

Receipts $3,668,329 $3,801,996 $133,667 

Understated 

Disbursements $3,617,405 $3,622,469 $5,064 

Understated 

Ending Cash Balance 

@ December 31,2011 

$72,585 $199,779 $127,194 

Understated 

The beginning cash balance was overstated by $1,409 and is unexplained, but likely 

resulted from prior-period discrepancies. 

The understatement of receipts resulted from the following; 

• Unitemized contributions from individuals, not reported 

on TPE's 2011 Mid-Year report 

• Returned contributions not reported as negative receipts 

• Unexplained differences 

Net Understatement of Receipts 

+_ 

+ 

$103,315 

1,015 

31,367 

8133,667 

The $127,193 understatement of the ending cash balance resulted from the misstatements 

described above. 

2012 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2012 

$72,586 $199,779 $127,193 

Understated 

Receipts $6,498,577 $6,369,030 $129,547 

• Overstated 

Disbursements $5,730,211 $5,735,455 $5,244 

Understated 

Ending Cash Balance 

@ December 31,2012 

$899,064 $833,354 $65,710 

Overstated 

The overstatement of receipts resulted from the following: 

• Contributions from individuals not traced to bank 

• Credit card contribution chargebacks for previously 

reported contributions 

Overstatement of Receipts 

The imderstatement of disbursements resulted from the following: 

• Disbursements clearing bank, not reported 

• Reported disbursements not traced to bank 

• Credit card contribution chargebacks reported as 

disbursements 

• Unexplained differences 

Net Understatement of Disbursements 

$125,487 

mo 

$350,475 

341,136 

4,060 

S5.244 
7 

The majority of disbursements TPE failed to report cleared the bank in November 2012 

and should have been disclosed on TPE's 2012 Post-General report. During the same 

period, TPE reported a single transaction of $334,091 which did not clear the bank. 

Based on the available information, the Audit staff was unable to detennine whether the 

reporting of the single transaction of $334,091 was in relation to those disbursements 

identified as not reported on the 2012 Post-General report. 

The net overstatement of the ending cash balance resulted from the misstatements 

described above, as well as from a $58,112 mathematical discrepancy in calculating the 

ending cash balance. 

Subsequent to audit notification, TPE filed amended 2012 reports in April 2014. The 

Audit staff analyzed the amended information and determined that the amendments 

corrected some but not all of the identified misstatements. 

B. Interim Audit Report and Audit Division Recommendation 

The Audit staff discussed the misstatements for 2011 and 2012 with TPE's representative 

during the exit conference and provided copies of relevant work papers detailing the 

remaining misstatements. TPE provided no comments related to this matter in its 

response to the exit conference. 

The Interim Audit Report recommended that TPE file an amended 2011 Mid-Year Report 

to disclose the additional Unitemized Contributions from Individuals totaling $103,315 

on Line 1 l(a)(ii). The Interim Audit Report further recommended that the most recent 

disclosure report be amended to show the adjusted cash-on-hand balance with an 

explanation that it resulted from audit adjustment from a prior period. 

C. Committee Response to Interim Audit Report 

TPE did not submit a response to the Interim Audit Report, nor did it file amended 

disclosure reports. The Audit staff considered this matter unresolved. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that TPE amended its 2012 reports I 

subsequent to audit notification and corrected some of the identified misstatements. 

However, TPE did not file amended reports to correct the misstatement of financial 

activity for the calendar year 2011, nor did it correct the most recent disclosure report to 

show Ae adjusted cash-on-hand balance with a corresponding explanation. 

E. Committee Response to Draft Final Audit Report 

In response to the Draft Final Audit Report, TPE explained that during the time of 

activity it experienced challenges with the data. TPE stated it was willing to amend 

reports as needed, however, has not done so as of yet. As such, TPE has not complied 

with the recommendation. 

Commission Conclusion 

On November 2,2016, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that TPE 

misstated its financial activity for calendar years 2011 and 2012. 

The Commission approved the Audit staff's recommendation. 
Finding 2. Disclosure of Occupation/Name of Employer 

Summary 

A review of all contributions from individuals requiring itemization indicated that 2,896 

contributions totaling $549,694 lacked disclosure of occupation/name of employer. 

During the audit, TPE demonstrated "best efforts" to obtain, maintain and submit the 

missing occupation/name of employer information to materially correct the disclosure 

errors. Since TPE's corrective action occurred after audit notification, the matter was 

included in the Interim Audit Report. 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE stated it has significantly improved its process for collecting and 

reporting occupation/name of employer from individuals and that it has always practiced 

"best efforts." TPE stated it created a system internally which obtains the information 

faster and in time for the new report filings. 

The Commission approved a finding that TPE failed to disclose occupation/name of 

employer information from individuals totaling $549,694. 

Legal Standard 

A. 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 (including zip code); 

• 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;, wd 

• the calendar year-to-date total of all contributions from the same individual. 52 

U.S.C. §30104(b)(3)(A) and 11 CFR §§ 100.12 and 104.3(a)(4)(i). 

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

shows that the committee used best efforts (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) and 11 CFR § 104.7(a). 

C. 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 full name, mailing address, occupation, 

and name of employer; and 

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

o Note: The request and statement must appear in a clear and conspicuous 

manner on any response material included in a solicitation. 

• Within 30 days of 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. 
9 

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

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

contained in the conunittee'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 

A review of all itemized contributions from individuals indicated that 2,896 contributions 

totaling $549,694, or 25 percent of the dollar value of individual contributions required to 

be itemized by TPE, lacked disclosure of occupation/name of employer. The conhibutor 

entries with missing information were either disclosed with the notation "n/a"; "Best 

Efforts Made"; or were left blank on the Schedules A (Itemized Receipts). 

During audit fieldwork, the Audit staff reviewed the receipt documents provided by TPE 

to determine if TPE had utilized "best efforts" to obtain, maintain and submit the missing 

information. TPE presented 391 follow-up letters sent to contributors requesting the 

occupation/name of employer. In response to these letters, TPE provided the necessary 

occupation/name of employer information obtained from 137 individuals. For the 

remaining 254 individuals, no further occupation/name of employer information was 

provided. The Audit staff reviewed TPE's disclosure reports filed after the audit 

notification and determined that TPE amended its reports to materially disclose the 

missing occupation/name of employer information. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff presented this matter to the TPE representative at the exit conference and 

noted that TPE has materially resolved this matter and no further action was required. 

However, because TPE's corrective action was taken after the audit notification, the 

matter was presented in the Interim Audit Report. 

The Interim Audit Report recommended that TPE provide any comments it deemed 

necessary with respect to this matter. 

C. Committee Response to Interim Audit Report 

TPE did not submit a response the Interim Audit Report, however, the Audit staff 

considered this matter resolved. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that TPE has materially resolved this matter 

and recommended that TPE provide any comments it deemed necessary. 

E. Committee Response to Draft Final Audit Report 

In its response to the Draft Final Audit Report, TPE stated it has significantly improved 

its process for collecting and reporting occupation/name of employer information from 

individuals. 
10 

Commission Conclusion 

On November 2,2016, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that TPE 

failed to disclose occupation/name of employer information from individuals totaling 

$549,694. 

The Commission approved the Audit staffs recommendation. 

Finding 3. Reporting of Apparent Independent 

ESxpenditures 

Summary 

During audit fieldwork, the Audit staff reviewed independent expenditures totaling 

$680,735 that TPE disclosed on Schedule E (Itemized Independent Expenditures). 

However, the Audit staff identified additional expenditures totaling $848,522 (845,310 + 

3,212) which appeared to be media-related independent expenditures that TPE disclosed 

on Schedule B, Line 21b (Operating Expenditures) and Line 29 (Other Disbursements). 

Of the $680,735 independent expenditures reported on Schedule E, TPE did not file 

24/48-hour reports for seven expenditures totaling $28,003. Additionally, of the 

$848,522 disclosed as operating expenditures and other disbursements which appeared to 

be independent expenditures, TPE did not file any 24/48-hour reports. 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE stated that the identified communications in question were for 

fundraising and not electioneering purposes. TPE did not address the 24/48-hour reports 

specifically but stated that the bulk of the activity was towards fundraising and that the 

identified communications were for fundraising and not for electioneering purposes. 

The Commission approved a finding that TPE failed to properly disclose independent 

expenditures totaling $848,522. In addition, the Commission approved a finding that 

TPE did not file 24/48-hour reports totaling $28,003 for independent expenditures 

reported on Schedule E; and that TPE did not file 24/48-hour reports for additional 

apparent independent expenditures totaling $848,522. 

Legal Standard 

A. Definition of Independent Expenditures. An independent expenditure is an 

expenditure made for a communication expressly advocating the election or defeat of a 

clearly identified candidate that is not made in cooperation, consultation, or concert with, 

or at the request or suggestion of, a candidate, a candidate's authorized committee, or 

their agents, or a political party or its agents. 

A clearly identified candidate is one whose name, nickname, photograph or drawing 

appears, or whose identity is apparent through unambiguous reference, such as "your 

Congressman," or through an unambiguous reference to his or her status as a candidate, 

such as "the Democratic presidential nominee" or "Republican candidate for Senate in 

this state." 

Expressly advocating means any communication that: 
11 

• Uses phrases such as "vote for the President" or "re-elect your Congressman" or 

communications of campaign slogan(s) or individual word(s), which in context 

can have no other reasonable meaning than to urge election or defeat of one or 

more clearly identified candidates; or 

• When taken as a whole and with limited references to external events, such as 

proximity to the election, could be interpreted by a reasonable person only as 

advocating the election or defeat of one or more clearly identified candidates. 11 

CFR §§ 100.16(a), 100.17 and 100.22. 

is. Disclosure Requirements - Generai Guidelines. An independent expenditure shall 

be reported on Schedule E if, when added to other independent expenditures made to 

the same payee during the same calendar year, it exceeds $200. Independent 

expenditures made (i.e., publicly disseminated) prior to payment should be disclosed 

as memo entries on Schedule E and as a debt on Schedule D. Independent 

expenditures of $200 or less need not be itemized, though the committee must report 

the total of those expenditures on line (b) on Schedule E. 11 CFR §§ 104.3(b)(3)(vii), 

104.4(a) and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour Reports). Any 

independent expenditures aggregating $1,000 or more, with respect to any given 

election, and made afier the 20"* day but more than 24 hours before the day of an 

election must be reported and the report must be received by the Commission within 

24 hours afier the expenditure is made. A 24-hour report is required for each 

additional $1,000 that aggregates. The 24-hour report must be filed on a .Schedule E. 

The date that a communication is publicly disseminated serves as the date that the 

Committee must use to determine whether the total amount of independent 

expenditures has, in the aggregate, reached or exceeded the threshold reporting 

amount of $1,000. 11 CFR §§ 104.4(f) and 104.5(g)(2). 

D. Independent Expenditure Reports (48-Hour Reports). Any independent 

expenditures aggregating $10,000 or more with respect to any given election, at any time 

during a calendar year, up to and including the 20th day before an election, must disclose 

this activity within 48 hours each time that the expenditures aggregate $10,000 or more. 

The repprts must be filed with the Commission within 48 hours afier the expenditure is 

made. A 48-hour report is required each time additional independent expenditures 

aggregate $10,000 or more. The date that a communication is publicly disseminated 

serves as the date that the committee must use to determine whether the total amount of 

independent expenditures has, in the aggregate, reached or exceeded the tlureshold 

reporting amount of $ 10,000. 11 CFR §§ 104.4(f) and 104.5(g)(1). 

E. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which 

the filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. CFR §104.14(b)(l). 
12 

Facts and Analysis 

A. Reporting of Apparent Independent Expenditures 

1. Facts 

During audit fieldwork, the Audit staff reviewed disbursements to ensure the 

reporting completeness and accuracy of independent expenditures that TPE disclosed 

on Schedule E. The Audit staff noted that TPE correctly disclosed independent 

expenditures totaling $680,735 on Schedule E, however, made additional mediarelated expenditures totaling $848,522 and disclosed themi as operating expenditures 

or other disbursements that may be considered independent expenditures. A 

breakdown of the analysis for these expenditures is as follows: 

a) Independent Expenditures Reported as Operating Expenditures and 

Other Disbursements (Associated Invoice Provided) 

TPE made 235 apparent independent expenditures totaling $845,310 for 

which it provided supporting documentation such as invoices, scripts, ads, 

solicitation letters, etc. 

i) For apparent independent expenditures totaling $829,427, the 

communication contained language expressly advocating the election 

or defeat of clearly identified candidates. 11 CFR § 100.22(a). This 

amount mostly consists of costs associated with 17 fundraising letters 

each containing express advocacy. 

ii) For apparent independent expenditures totaling $15,883, the 

communication could only be interpreted as containing the advocacy 

of election or defeat of one clearly identified candidate. 11 CFR§ 

100.22(b). 

b) Independent Expenditures Reported as Operating Expenditures and 

Other Disbursements (Nolhvoice Associated) 

TPE made fifteen apparent independent expenditures which were reported 

as operating expenditures or other disbursements. The Audit staff 

considers the disbursements to be apparent independent expenditures for 

the following reasons: 

i) Communications Without Invoice -TPE provided eight 

telecommunication scripts; however, the Audit staff was not able to 

associate these scripts with any invoices or with a particular 

disbursement. Therefore, the amount spent for these eight 

telecommunications scripts is unknown. These scripts contain express 

advocacy language by calling for the "defeat of Barack Obama", "elect 

a new president", or "put Ronmey and Paul in White House." 11 CFR 

§ 100.22(a). 

ii) Details on Invoice- There were seven independent expenditure emails 

totaling $3,212 that were supported by an invoice, however, the 

invoice could not be traced to the disbursement database or bank.'* . 

Five of these independent expenditure emails totaling $2,288 

contained express advocacy language calling for the "defeat of Dick 

Lugar." 11 CFR § 100.22(a). Two independent expenditure emails 

totaling $924 could only be interpreted as containing the advocacy of 

Discrepancies between actual and reported disbursements are discussed in Finding 1. (See p.S.) 
13 

election or defeat of one clearly identified candidate. 11 CFR§ 100.22 

(b). 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented the schedule of disclosure errors for 

apparent independent expenditures. The TPE representative had no immediate 

comments, however, in response to the exit conference, provided additional e-mail 

communications and invoices which the Audit staff reviewed and incorporated into 

this finding. 

The Interim Audit Report recommended that TPE provide: 

• Documentation and evidence that apparent independent expenditures noted 

above did not require reporting as independent expenditures. Evidence should 

have included invoices with the corresponding communications and, where 

applicable, TPE's payment information; or 

• Absent such evidence, TPE should have amended its reports to disclose these 

disbursements as independent expenditures on Schedule E and should have 

submitted revised procedures for reporting independent expenditures. 

3. Committee Response to Interim Audit Report 

TPE did not submit a response to the Interim Audit Report, nor did it file amended 

disclosure reports. Absent evidence that the expenditures in question did not require 

reporting as independent expenditures, the Audit staff considers these expenditures to 

be independent expenditures. 

4. Draft Final Audit Report 

The Draft Final Audit Report noted that no documentation or evidence was provided 

by TPE to substantiate that apparent independent expenditures totaling $848,522 did 

not require reporting as independent expenditures. In addition, TPE did not amend 

its reports to disclose these disbursements as independent expenditures on Schedule 

E. 

5. Committee Response to Draft Final Audit Report 

In response to the Draft Final Audit Report, TPE stated that the identified 

communications in question were for fUndraising and not electioneering purposes. 

Absent evidence that these expenditures are not independent expenditures and do not 

require reporting as independent, expenditures,, the Audit staff maintained that these 

expenditures were independent expenditures.' 

Cpmmission Conclusion 

On November 2,2016, the Commission considered the Audit Division 

Recommendation Memorandum in which the Audit staff recommended that the 

Commission find that TPE did not properly disclose independent expenditures 

totaling $848,522. 

The Commission approved the Audit staffs recommendation. 
14 

B. Failure to File 24/48 Reports for Independent Expenditures 

1. Facts 

The Audit staff reviewed 24/48-hour reports filed by TPE, as well as the apparent 

independent expenditures noted above, to determine whether additional reporting of a 

24/48-hour report was required.' The following was noted: 

a) Independent Expenditures Reported on Schedule E (Independent 

Expenditure Schedule) 

TPE failed to file 24-hour reports totaling $15,539 and 48-hour reports 

totaling $12,464. For each of these communications, records indicate that 

TPE publicly disseminated the communication within the 24/48-hour 

reporting period. 

b) Apparent Independent Expenditures Reported as Operating 

Expenditures and Other Disbursements 

For apparent independent expenditures totaling $848,522 (845,310 + 

3,212) noted above, TPE did not file 24 or 48-hour reports. No 

documentation or information was available pertaining to the date of 

public dissemination for these communications; therefore, the Audit staff 

was not able to determine whether or not such reports were required to be 

filed. 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff provided the TPE representative with a 

schedule of undisclosed 24/48-hour reports. The TPE representative did not provide 

any comments at that time. 

The Interim Audit Report recommended that TPE provide documentation to support 

that the 24/48-hour reports, totaling $84, were timely filed or that the reports were not 

required. Such documentation should have included support for the dates of public 

dissemination to determine whether a filing of a 24/48-hour report was required. 

3. Committee Response to Interim Audit Report 

TPE did not submit a response to the Interim Audit Report. Absent evidence that the 

expenditures in question did not require reporting as independent expenditures and 

did not require 24/48-hour reports, the Audit staff considers these expenditures as 

requiring 24/48- hour reports. 

4. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that TPE did not provide documentation 

to support that the 24/48-hour reports totaling $848,522 were timely filed or that the 

filing of these reports was not required. 

s The date the expenditure is publicly distributed serves as the date that the independent expenditure is 

made for purposes of the additional 24/48-hour report filing requirement. In the absence of a known date 

for public dissemination, the Audit staff used the invoice date or date of incurrence to determine if a 

24/48-hour report was required. 
15 

5. Committee Response to Draft Final Audit Report 

In response to the Draft Final Audit Report, TPE did not address the 24/48-hour 

reports specifically but stated that the bulk of the activity was towards fiindraising 

and that the identified communications were for fundraising and not for 

electioneering purposes. 

Commission Conclusion 

On November 2,2016, the Commission considered the Audit Division 

Recommendation Memorandum in which the Audit staff recommended that the 

Corrunission find that TPE did not file 24/48-hour reports totaling $28,003 for 

independent expenditures reported on Schedule E; and that TPE did not file 24/48-

hour reports for additional apparent independent expenditures totaling $848,522. 

The Commission approved the Audit staffs recommendation. 

Finding 4. Recordkeeping for Commmnications 

Summary 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of 

the information and proper classification of transactions disclosed on reports. TPE 

reported 340 (237+103) expenditures totaling $3,792,648 (2,302,864 + 1,489,784), on 

Schedule B, Line 21b (Operating Expenditures) or Line 29 (Other Disbursements) with 

purposes such as "Postage & Delivery", "Printing & Mailshop" or "PAC Fundraising 

Postage i& Delivery.!' .Documentation provided by TPE was insufficient to make a 

determination pertaining to the purpose for these disbursements and verification as an 

operating or oAer expense. 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE stated that it has provided copies of invoices and payments made but 

experienced challenges collecting further information fi-om its consultants and email 

vendor. TPE added that it has changed its collection process pertaining to the details of 

the communications. 

The Commission approved a finding that TPE did not provide the necessary records 

pertaining to disbursements totaling $3,792,648. 

Legal Standard 

A. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which 

the filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

B. Preserving Records and Copies of Reports. The treasurer of a political corrimittee 

must preserve all records and copies of reports for 3 years after the report is filed. 52 

U.S.C. §30102(d). 
16 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of 

the information and proper classification of transactions disclosed on reports. TPE made 

340 expenditures totaling $3,792,648 for which documentation was insufficient to make a 

determination pertaining to whether these disbursements were correctly reported on 

Schedule B, Line 21b (Operating Expenditures) or Line 29 (Other Disbursements). 

The Audit staffs analysis of the documentation that was provided, including the 

reconciled committee's database, invoices, and bank statements, determined the 

following: 

• Disbursements - No Invoices or Copies of Communications Provided 

f$2302.864^ 

Disbursements totaling $2,302,864 were paid to direct mail vendors and reflected 

on the committee's database and/or disclosed on Schedule B with purposes such 

as "Postage & Delivery", "Printing & Mailshop" or "PAC Fundraising Postage & 

Delivery." The Audit staff requested copies of the invoices and the associated 

direct mail piece for each of the disbursements. To date, these invoices or other 

information to. associate the payments to these communications have not been 

provided. 

• Disbursements - Invoices Provided - Not Able to Associate with Conies of 

Communications ($1.489.7841 

Disbursements totaling $1,489,784 were paid to direct mail vendors and were 

reflected on the TPE's database and/or disclosed on Schedule B with purposes 

such as "email newsletter", "PAC online advertising" or "PAC fundraising 

emails." For these disbursements, TPE provided copies of invoices as well as 

cancelled checks but did not provide information about the related mail 

communications. Without sufficient details, the Audit staff is unable to verify 

TPE's reporting itemization of these amounts as operating expenditures or other 

disbursements. The Audit staff requested information that would allow an 

association between these invoices and the communications, however, TPE has 

not responded to that request. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented a schedule of the disbursements for 

which further records were necessary to verify the accuracy of TPE's reporting. TPE 

representatives provided additional e-mail communications, invoices, and two ads which 

the Audit staff reviewed and incorporated into this finding. The Audit staff provided an 

updated schedule of disbursements for which further records were necessary to verify the 

accuracy of TPE's reporting and requested that TPE provide additional invoices and 

information that would associate each invoice to the corresponding communication. TPE 

representatives responded via e-mail and stated that TPE would provide additional 

documents, however, TPE has not done so to date. 

The Interim Audit Report recommended that TPE provide, in sufficient detail, the 

necessary information from which the reported operating expenditures and other 

disbursements totaling $3,792,648 might have been verified or explained. Such records 
17 

were to include copies of invoices and identification of the associated communications, 

and, where applicable, pertinent information associating each communication with an 

invoice(s). 

C. Committee Response to Interim Audit Report 

TPE did not submit a response to the Interim Audit Report. Absent the further 

documentation as recommended, the Audit staff considered the documentation provided 

to be insufficient. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that TPE did not provide the necessary 

information from which the reported operating and other disbursements totaling 

$3,792,648 may be verified or explained. 

E. Committee's Response to Draft Final Audit Report 

In response to the Draft Final Audit Report, TPE stated that it has provided copies of 

invoices and payments made but experienced challenges collecting further information 

from its consultants and email vendor. TPE further stated it has changed its collection 

process for obtaining the details of the communications. 

Commission Conclusion 

On November 2,2016, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that TPE 

did not provide the necessary records pertaining to disbursements totaling $3,792,648. 

The Commission approved the Audit staffs recommendation. 

Finding 5. Failure to Itemize Debt and Obligations 

Summary 

During audit fieldwork and in the course of review of independent and apparent 

independent expenditures, the Audit staff noted that TPE failed to properly disclose debts 

and obligations pertaining to these expenditures totaling $310,561. 

TPE did not submit a response to the Interim Audit Report. In response to the Draft Final 

Audit Report, TPE stated it was willing to amend its reports as needed, however, has not 

done so as of yet. As such, TPE has not complied with the recommendation. 

The Commission approved a finding that TPE failed to itemize debts and obligations 

totaling $310,561. 

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. 

52 U.S.C. §30104(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Itemizing Debts and Obligations. 

• A debt of $500 or less must be reported once it has been outstanding 60 days from 

the date incurred (the date of the transaction); the committee reports it on the next 

regularly scheduled report. 
18 

• A debt exceeding $500 must be disclosed in the report that covers the date on 

which the debt was incurred. 11 CFR § 104.11 (b). 

Facts and Analsrsis 

A. Facts 

During audit fieldwork, and in course of the review of independent and apparent 

independent expenditures, the Audit staff noted that TPE failed to properly disclose debts 

and obligations owed to 19 vendors totaling $310,561.® Tlie amounts were outstanding 

for a range of between 34 to 207 days and were mostly for advertising, media, printing, 

and mailing services. The incorrect disclosure consists of vendors with debts not 

reported as well as vendors for which the reported debt amount was understated. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff presented this matter to the TPE representative at the exit conference and 

provided schedules detailing the debt amounts which were incorrectly reported or 

unreported during the audited period. The TPE representative offered no comments in 

response to the exit conference. 

The Interim Audit Report recommended that TPE provide documentation demonstrating 

that these expenditures did not require reporting or were properly reported on Schedules 

D. Absent such documentation, TPE should have amended its reports to correct the 

disclosure of debts and obligations totaling $310,561. 

C. Committee Response to Interim Audit Report 

TPE did not submit a response to the Interim Audit Report, nor did it file amended 

disclosure reports. Absent the filing of amended reports to include the debts owed, the 

Audit staff considered the matter unresolved. 

D. Drafit Final Audit Report 

The Draft Final Audit Report acknowledged that TPE did not provide documentation 

demonstrating that expenditures totaling $310,561 did not require reporting or were 

properly reported on Schedules D; and that TPE did not file amended reports to correct 

the disclosure of these debts and obligations. 

E. Committee's Response to Draft Final Audit Report 

In response to the Draft Final Audit Report, TPE stated it was willing to amend its reports 

as needed, however, has not done so as of yet. 

Commission Conclusion 

On November 2,2016, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission find that TPE 

failed to itemize debts and obligations totaling $310,561. 

The Cbniihission approved the Aiidit staffs recommendation. 

Each debt amount was counted once, even if it required disclosure over multiple reporting periods.