Part II

Overview of Committee

Committee Organization

Important Dates

American Federation of State County &
Municipal! Employees — PEOPLE, Qualified

* Date of Registration

April, 20, 1972

« Audit Coverage

January 1, 2001 — December 31, 2002

Headquarters

Washington, D.C.

Bank Information

* Bank Depositories

4

e Bank Accounts

§ Federal and 2 Non-Federal Accounts

Treasurer

@ Treasurer When Audit Was Conducted William Lucy

* Treasurer During Period Covered by Audit William Lucy

Management Information

* Attended FEC Campaign Finance Seminar Yes

© Used Commonly Available Campaign Yes
Management Software Package

© Who Handled Accounting and Recordkeeping Paid Staff

Tasks

Overview of Financial Activity

(Audited Amounts)
Cash on hand @ January 1, 2001 $402,738
‘© Contributions from Individuals 7,637,530
© Transfers From Affiliates 1,206,048
© Refunds of Contributions made to Federal 11,000
Candidates
© Other Receipts 27,255
Total Receipts $ 8,881,833
© Federal Operating Expenditures 42,301
© Transfers to Affiliates 5,186,678
© Contributions to Federal Candidates 3,244,000
©. Independent Expenditures 10,825
©. Other Disbursements 3,504
Total Disbursements $ 8,487,308
Cash on hand @ December 31, 2002 $ 797,263



« For each reporting period containing these memo entries, include a “memo text”
entry stating “Per the FEC Audit, the memo entries on Schedule B, Line 29, are
disbursements made from the committee’s Non-Federal account. The sources of
these disbursements are federal funds transferred to the Non-Federal account and
reported on Schedule B, Line 22.”

In response, AFSCME filed amended reports correctly disclosing the disbursements
discussed above.

[Finding 2, Reporting of Debts and Obligations

Summary

The Audit staff identified debts and obligations totaling $19,276 that were not reported
on Schedules D, Line 10 (Debts and Obligations). AFSCME complied with the Audit
staff's recommendation by filing amended reports correctly disclosing these 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) and104.11(a).

B. Separate Schedules. A political committee must file separate schedules for debts
owed by the committee and debts owed to the committee, together with a statement
explaining the circumstances and conditions under which each debt and obligation
was incurred or extinguished. 11 CFR §104.11{a).

C. 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.

« 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 Analysis

During a review of AFSCME’s operating expenditures, the Audit staff identified invoices
from Union People Products totaling $19,276 that were not reported as debts on
Schedules D, Line 10 (Debts and Obligations), as required.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that AFSCME file amended reports, including Schedules
D, Line 10 reporting these debts and obligations.

In response, AFSCME filed amended reports correctly disclosing the debts and
obligations discussed above.


Part I
Background

Authority for Audit

This report is based on an audit of the American Federation of State County & Municipal
Employees - PEOPLE, Qualified (AFSCME) 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.
8434. 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 committec meet the threshold requirements for substantial compliance

with the Act. 2 U.S.C. §438(b).

Scope of Audit

This audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The disclosure of disbursements, debts, and obligations.
The consistency between reported figures and bank records.
The completeness of records.

Other committee operations necessary to the review.

Navweypr

Changes to the Law

On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act
of 2002 (BCRA). The BCRA contains many substantial and technical changes to the
federal campaign finance law. Most of the changes became effective November 6, 2002.
Except for the period November 7, 2002, through December 31, 2002, the period covered
by this audit pre-dates these changes. Therefore, the statulory and regulatory
requirements cited in this report are primarily those that were in effect prior to November
7, 2002.


Part III
Summaries

Findings and Recommendations

Finding 1. Disclosure of Disbursements

The Audit staff identified disbursements totaling $2,026,926 that were not reported on
Schedules B (Itemized Disbursements). These disbursements were made from
AFSCME’s Non-Federal account and the purpose of these disbursements included
federal activity that required disclosure. AFSCME complied with the Audit staff's
recommendation by filing amended reports correctly disclosing these disbursements.
(For more detail, see p. 4)

Finding 2. Reporting of Debts and Obligations

The Audit staff identified debts and obligations totaling $19,276 that were not reported
on Schedules D, Line 10 (Debts and Obligations). AFSCME complied with the Audit
staff’s recommendation by filing amended reports correctly disclosing these debts and
obligations. (For more detail, see p. 5)


FEDERAL ELECTION COMMISSION

WASHINGTON, DC 20464

January 19, 2005

MEMORANDUM
TO: PRESS OFFICE
; ; is
FROM: JOSEPH F. STOLTZ (/ 9.
ASSISTANT STA RECTOR
AUDIT DIVISION

SUBJECT: | PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON
THE AMERICAN FEDERATION OF STATE COUNTY & MUNICIPAL
EMPLOYEES - PEOPLE, QUALIFIED (A03-50)

Attached please find a copy of the final audit report and related documents on the
American Federation of State County & Municipal Employees - PEOPLE, Qualified,
which was approved by the Commission on January 7, 2005.

Informational copies of the report have been received by all parties involved and
the report may be released to the public.

Atlachment as stated

ce: Office of Gencral Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library
Web Manager


Part IV
Findings and Recommendations

| Finding 1. Disclosure of Disbursements

Summary

The Audit staff identified disbursements totaling $2,026,926 that were not reported on
Schedules B (Itemized Disbursements). These disbursements were made from
AFSCME's Non-Federal account and the purpose of these disbursements included
federal activity that required disclosure. AFSCME complied with the Audit staff's
recommendation by filing amended reports correctly disclosing these disbursements.

Legal Standard

When operating expenditures to the same person exceed $200 in a calendar year, the

committee must report the:

« Amount,

e Date when the expenditures were made;

© Name and address of the payee; and

«© Purpose (a brief description of why the disbursement was made). 2 U.S.C.
§434(b)(5(A) and 11 CFR §104.3(b)(3)Ki).

Facts and Analysis

AFSCMEP’s Federal account is funded primarily by payroll deduction contributions from
its members. During the period covered by the audit, approximately 58% of all federal
funds were transferred from its Federal account to its Non-Federal account. These
transfers were reported on Schedule B, Line 22 (Transfers to Affiliated/Other Party
Committees) and were the sole source of the Non-Federal account’s funding.

During a review of AF ‘SCME’s Non-Federal account disbursements, the Audit staff
identified expenditures totaling $2,026,926 that should have been paid from the Federal
account. The majority of these disbursements were to Union People Products for
“PEOPLE” labeled merchandise used as incentives for the SSF’s fundraising (i.c. SSF
membership renewal).’ As noted above, no impermissible funds were used since the
Non-Federal account was funded solely by transfers from the Federal account.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that AF SCME:
e File amended reports, including Schedules B, Line 29, reporting these
disbursements as memo entries’; and,

2 The audit staff acknowledges that AFSCME could have used treasury funds to pay these fundraising
costs and would not have been required to report them to the Commission. 11 CFR §114.1(a}(2).

3 Starting in February of 2003, AFSCME began making these disbursements from its Federal account and
included them on Line 21(b) of their disclosure reports.


Report of the Audit Division on
the American Federation of
State County & Municipal

Employees — PEOPLE, Qualified
January 1, 2001 - December 31, 2002

Why the Audit About the Committee (p. 2)

Was Done The American Federation of State County & Municipal

Federal law permits the Employees — PEOPLE, Qualified (AFSCME) is a separate
Commission to conduct segregated fund (SSF) headquartered in Washington, D.C. For
audits and field more information, see chart on the Committee Organization, p. 2.
investigations of any

political committee that is Financial Activity (p. 2)
required to file reports

« Receipts
under the Federal © Contributions from Individuals § 7,637,530
foxy the Act o. Transfers from Affiliates 1,206,048
Commission enerall o Refunds of Contributions made

generay to Federal Candidates 11,000
conducts such audits © Other Receipts 27,255
when a committee © Total Receipts § 8,881,833
appears not to have met
the threshold e Disbursements
requirements for o Federal Operating Expenditures $ 42,301
substantial compliance ©. Transfers to Affiliates 5,186,678
with the Act.! The audit o Contributions to Federal
determines whether the Candidates 3,244,000
committee complied with o Independent Expenditures 10,825
the limitations, o Other Disbursements 3,504
prohibitions and o Total Disbursements $ 8,487,308
disclosure requirements
of the Act.

Findings and Recommendations (p. 3)

Future Action © Disclosure of Disbursements (Finding 1)
The Commission may e Reporting of Debts and Obligations (Finding 2)

initiate an enforcement
action, at a later time,
with respect to any of the
matters discussed in this
report.

1 2ULS.C. §438(b).


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Changes to the Law

Part Il. Overview of the Committee
Committee Organization
Overview of Financial Activity

Part III]. Summaries
Findings and Recommendations

Part IV. Findings and Recommendations
Finding 1. Disclosure of Disbursements
Finding 2. Reporting of Debts and Obligations

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