FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C 20463 

May 2, 2013 

MEMORANDUM 

TO: Patricia C. Orrock 

Chief Compliance Officer 

Thomas Hintermister 

Assistant Staff Director 

Audit Division 

FROM: Lisa J. Stevenson j 

Deputy General Counsel - Law W ^ 

Lorenzo Holloway (•'ft^"""-*-^ 

Assistant General CounseW-^ 

Compliance Advice 

Danita C. Alberico 

Attorney 

SUBJECT: Proposed Interim Audit Report on the Republican Party of lowa (LRA 891) 

I. INTRODUCTION 

The Office of the General Counsel reviewed the proposed Interim Audit Report C*IAR") on 

the Republican Party of Iowa ("the Committee"). Our comments address the lAR's two findings: 

Finding I - Recordkeeping for Employees; and. Finding 2 - Failure to Itemize Debts and 

Obligations.' If you have any questions, please contact Danita C. Alberico, the attomey assigned 

to this audit. 

' We recommend that the Commission consider this document in Executive Session because the Commission 

may eventually decide to pursue an investigation of matters contained in the proposed lAR. 11 C.F.R. §§ 2.4(a) and 

(b)(6). 
Comments to the Interim Audit Report 

Republican Party of lowa (LRA 891) 

Page 2 

n. RECORDKEEPING FOR EMPLOYEES (Finding 1) 

The proposed lAR found that the Committee did not maintain monthly payroll logs for the 

percentage of time each employee spent on federal election activity in accordance with 

11 C.F.R. § 106.7(d)(1). The auditors found that the amount of federal and non/federal funds paid 

for employees, including contract workers, for which logs were not maintained totaled $534,866. 

Of this amount, the Committee paid a total of $19,490 to its contract workers. In the absence of 

providing monthly payroll logs, the proposed lAR recommends that the Committee implement a 

plan to maintain monthly payroll logs to track the percentage of time each employee spends on 

federal election activity for payroll not reported and paid with 100% federal fimds. 

In two pending audits, the Commission considered whether the payroll recordkeeping 

requirement under 11 CF.R. § 106.7(d)(1) should be applied to individuals who perform work for 

committees as "contract" workers. In those audits, the Commission did not approve, by the 

required four votes, the Audit Division's recommendations to include contract workers within the 

scope of the section 106.7(d)(1) monthiy payroll log requirement, and the recordkeeping findings 

as to the contract workers were removed from the reports (two Commissioners voted for the 

original recommendations). The Commission's guidance had previously been sought on this issue 

pursuant to Commission Directive 69, and the recommendation of the Audit Division and the 

Office of General Counsel to include contract workers within the scope of the recordkeeping 

requirement failed to receive the affirmative vote of four or more Commissioners. Pursuant to 

Directive 69, the Office of Compliance proceeded, in the two pending audits previously 

referenced, to include the payroll for contract workers within the recordkeeping finding in the 

interim Audit Report as submitted to the Commission. Wc understand that the Office of 

Compliance also is proceeding in this audit to include the payroll for contract workers within the 

recordkeeping finding. 

Pursuant to Directive 69, the Audit Division may continue to include in the proposed lAR 

consideration of contract workers in determining whether and/or the extent to which the 

Comminee complied with the monthly payroll log requirement under 11 C.F.R. § 106.7(d)(1). We 

recommend that the Audit Division make a note of its inclusion, and the Commission's prior 

decisions in the two pending audits, in its cover memo transmitting the proposed 1 AR to the 

Commission.^ 

in. FAILURE TO ITEMIZE DEBTS AND OBLIGATIONS (Finding 2) 

The proposed lAR identified debts and obligations totaling $186,515 that were not 

disclosed on Schedules D (Debts and Obligations). The auditors recommend that, absent 

documentation demonstrating that these expenditures were not required to be reported on 

Schedule D, the Committee amend its disclosure reports to properly disclose the debts and 
Comments to the Interim Audit Report 

Republican Pany of Iowa (LRA 891) 

Page 3 

obligations. The auditors advised this Office that the issues in this finding are identical to the 

issues presented in the proposed Draft.Final Audit Report on the California Republican Party/V8 

("California") which is pending before the Commission. 

In the California audit, the Conunission did not approve the recommended finding by the 

required four votes. Some of the Commissioners argued that the issue was not that the Committee 

failed to report its debts and obligations but rather that it failed to accurately or timely disclose 

them and that since the Committee eventually disclosed its debts and obligations accurately, the 

issue did not warrant a finding. The Commission decided to move the matter to the "Additional 

Issues" section of California's Proposed Final Audit Report. In light of the outcome of this issue in 

the California audit, wc recommend that the auditors bring to the Commission's attention, in the 

cover memorandum transmitting the proposed lAR, that Finding 2 presents thu same issues as 

those in the California audit. To assist the Commission, the cover memorandum should explain 

why this type of disclosure issue is included as a finding.