Draft Final Audit Report of the 

Audit Division on the 

Republican Party of Iowa 

(January 1, 2009 - December 31, 2010) 

Why the Audit 

Was Done 

Federal law permits the 

Conunission to conduct 

audits and field 

investigations of any 

political committee that 

is requured 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 complianc^^^*^ 

with thcAct^The 

determines whether 

committee complied 

with the liniiiations, 

prohibi^^s and 

disclosy^* requirements 

of thi 

Future Action 

The Commissions^ 

initiate an enforcem^ 

action, at a later tim^ 

with respect to any of 

the matters discussed in 

this report. 

About the Comniittee (p. 2) 

The Republican Party of Iowa is a state party coinmittee, 

headquartered in Des Mouies, Iowa..For more mformation, 

see chart on Committee Organization, p^2. 

Financial Activi ^ (p. 2) 

• Receipts 

o Contribut^p from Individuals 

o Contribut^^from Other 

Political CormriittceSj^ 

o Transfers from Polilical 

littees 

1^1 Transfers 

O&'^^ipis TM 

Total 

Disbursements ^' 

h OperatinjrBxpenditures 

i) Federal ]^^bn Activity 

o Allocaicdi^deral/Non-federal 

Kxpcnditures 

|o Coordinated Expenditures 

^o Other Disbursements 

Total Disbursements 

$ 1.130,254 

489.716 

633,129 

325,042 

164,904 

$ 2,743,045 

$ 953,976 

526,610 

931,448 

276,578 

54,736 

$ 2,743;348 

Findings and Recommendations (p. 3) 

Recordkeeping for Employees (Finding 1) 

Failure to Itemize Debts & Obligations (Finding 2) 

2 U.S.C. §438(b). 
Draft Final Audit Report of 

the Audit Division on the 

Republican Party of Iowa 

(January 1, 2009 - December 31, 2010) 

0 

'.41 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Part II. Overview of Conunittee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recomilie 

Finding 1. Recordkeeping for Employees 

Finding 2. Failure to Itemize Deblf & Obligations 

%, 

r 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Republican Party of Iowa (RPIA), imdertaken 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 poli||^ committee that is 

requfred to file a report imder 2 U.S.C. §434. Prior to conduc^^any^udit under this 

subsection, die Commission must perform an intemal revi^^^^ports filed by selected 

conunittees to determine whether the reports filed by a pgp;ull^committee meet the 

threshold requirements for substantial compliance wi^ti^^Act. 2 U.S:yC. §438(b). 

Scope of Audit 

Following Commission-approved procedures;ihc Audit st 

factors and as a result, this audit examined: 

1. 

2. 

3. 

4. 

5. 

6. 

valuated various' risk 

the receipt of excessive contributions and loans; 

the disclosure of individual contri^^s' occupation'^^l^ame of employer; 

the consistency between reported ^^%^^ d bank recoi 

the disclosure of disbursements, deb% aiil 

the completeness of records; and 

other committee opei<^@i^s necessary 

ations; 

Commission'^GIuidance 

Request for Early Conun^on Consi^^gpin of a Legal Question 

Pursuai^ the Coiiiii|^onl "Policy Statement Establishmg a Program for Requesting 

Con^l^^tion of Legai^^stions by ihe Commission." several state party committees 

unaf^^Mwith RPIA i^^sted early consideration of a legal question raised during an 

audit. S^^^ally, the C^^issi(£ addressed whether monthly time logs under 11 CFR 

§ 106.7(d)(l]^^e requireSor employees paid with 100 percent federal fimds. 

The Commission^^^rfd, by a vote of 5-1, that 11 CFR § 106.7(d)(1) does require 

committees to keep Monthly log for employees paid exclusively with federal fiinds. 

Exercising its prosecutorial discretion, however, die Coinmission 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 fimds and reported as 

such. Audit staff informed RPIA representatives of the payroll log requirement and of 

the Conmiission's decision not to pursue recordkeeping violations for failure to keep 

payroll logs for salaries paid and correctly reported as 100 percent federal. Finding 1, 

Recordkeeping for Employees, of this audit report does not include RPIA employees paid 

with 1(X) percent federal funds and reported as such. 
Part II 

Overview of Conimittee 

Committee Organization 

Important Dates 

• Dateof Registration October 14,1975 

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

Headquarters Des Moines. Iowa 

Bank Information 

• Bank Depositories One „ 

• Bank Accounts Four federalj^^^on-federal, and one 

building ^a^n t 

Treasurer Jit* 

• Treasurer When Audit Was Conducted cr&^mns imoms/n 

• Treasurer During Period Covered by Audit Krishna 6/24/08-W^9 

H^tt Rands^l/27/09-7/0^pi^ 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

No • 

• Who Handled Accoimting and 

Recordkeeping Tasks 

, Paid Staff 

Overview of 

^ (Audited 

cisi^ctivity 

ounts) 

Cash-on-hanol^lil^^uary l,'f<i|9 -^^^^ $ 218,208 

Receipts '"W^. 

o Con^Sions from Indiv^^als ' / 1.130,254 

o Conlribl^^s from OtheB^litical^ 

Committe^^ W> 489.716 

o Transfers frol^iiitical Cc^mittees 633.129 

o Non-federal Trail s 325,042 

o Other Receipts ^^M^ 164,904 

Total Receipts $ 2,743,045 

Disbursements 

o Operating Expenditures 953,976 

0 Federal Election Activity 526,610 

0 Allocated Federal/Non-federal Expenditures 931,448 

o Coordinated Expenditures 276,578 

o Other Disbursements 54,736 

Total Disbursements $ 2,743,348 

Cash-on-hand @ December 31,2010 $ 217,905 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Recordkeeping for Employees 

During audit fieldwork. the Audit staff determined that RPIA did not maintain monthly 

payroll logs, as required, to track the percentage of time each employee spent on federal 

election activitv. For 2009 and 2010, the amount of payroll for which logs were required, 

was $476,442.^ This consisted of $334,580, shared federal/no%fcdc^ payroll, and 

$141,862, paid exclusively with non-federal fimds. Subseq^^&o the exit conference. 

RPIA representatives provided the Audit staff with affid^li^^^wo employees 

attesting to the percentage of time spent on federal electiM activ^^ 

. \ \ ^ 

In response to the Interim Audit Report Stated t 

implemented a plan to keep a monthly log of all work performed by staff 

election activity. (For more detail, see p. 4.)' k 

eral 

Finding 2. Failure to Itepiize Debts ^pbligations 

During audit fieldwork, the Audit staf^^|,^that RPIA hs^iled to disclose debts and 

obligations totaling $179,856. In resp(^^ffii|||^^terim AulA^ort recommendation, 

RPIA filed amended reports to correctlylisclosi^J^se debts aftd obligations. (For more 

detail, see p. 5.) • 

1-

w 

^ 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). 
Part IV 

Findings and Recommendations 

I Finding 1. Recordkeeping for Employees I 

Summaxy 

During audit fieldwork, the Audit staff detennined that RPIA did not maintain monthly 

payroll logs, as required, to track the percentage of time each employee spent on federal 

election activitv. For 2009 and 2010, the amount of payroll forj^j ^ logs were required, 

was $476,442.^ This consisted of $334,580, shared federal/n^^derM payroll, and 

$141,862, paid exclusively with non-federal funds. Subseq^^^^the exit conference, 

RPIA representatives provided the Audit staff with affid^b f^^^ o employees 

attesting to the percentage of time spent on federal i^^^ n activiiy.\^^ 

In response to the Interim Audit Report recomm^dation, |tPIA stated that \\ 

implemented a plan to keep a monthly log of dP^'ork perfumed by staff f^ 

election activity. ' \ 

Legal Standard ^ 

Maintenance of Monthly Logs. Party coiniiiittees must keep a mpnthly log of the 

percentage of time each employee spend.s in connection with a fdSeral election. 

Allocations of salaries, wages, and fring^enei'iis arc to ^wi6ertaken as follows: 

• employees who spend 25 percent o^^s ot their ^^ensated time in a given 

month on fede^ clccii^ activities ^pt be paid^ither from the federal account 

or be allocated admi^Erative costs% 

• employees''who.,|^d rSe than 25 pe^ ^ of theu: compensated time in a given 

month on federal^^i^^iiviiies mu^e paid only from a federal account; and, 

• eiri^^yi^^^ospe^^^e of ihcir compensated time in a given month on federal 

.4^tion actmti^inay^paid entirely with funds that comply with state law. 11 

Facts axidMnaljrsis 

A. Facts W 

During fieldwork,^^^^it staff reviewed disbursements made to employees totaling 

$476,442^, for whid^O'IA did not provide monthly payroll logs to document the 

percentage of time tHe employee spent in connection with federal election activity. These 

logs are required to document the proper allocation of federal and non-federal funds used 

to pay these workers. The total of $476,442 consisted of $334,580, for which payroll was 

allocated between federal and non-federal funds, and $141,862 that was paid exclusively 

with non-federal funds. 

^ 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. 
B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the recordkeeping issue with RPIA representatives during audit 

fieldwork and at the exit conference. While the representatives did not address logs or 

other documentation to support the payroll recordkeepmg requurements, they pointed out 

that RPIA Counsel had drafted affidavits to document the work performed by RPIA 

employees. Subsequently, RPIA provided affidavits from two employees who attested to 

the percentage of time they had spent in connection with federal election activity. These 

documents, however, do not resolve the recordkeeping finding because RPIA provided 

the affidavits only after notification of the audit. As such, RPIA did not appear to satisfy 

the requirement to maintain and provide payroll records during o^^ r to audit 

fieldwork. 

The Interim Audit Report recommended that RPIA provi^ evidcn^that it maintained 

monthly time logs to document employees' time sp^^^ Inderal activity, or, 

that it had implemented a plan to maintain montlU^^yroll logs to tra^lie percentage of 

time each employee spends on federal election^ivity. ^^ 

C. Committee Response to Interim Audit Reporl 

In response to the Interim Audit Report recommendat^^gPIA said that it has 

implemented a plan to keep a monthly||^pf all work p^^a^ed by staff for federal 

election activity. RPIA further stated 

Director of RPIA and shared with the 

agreement by these RPIA officials, the 

copy in a secure location. TTiib plan is 

to payroll logs. 

kept and ^^|d^ted by the Executive 

isuf^^^^FIA. Up^aiscussion and 

l o ^ t^^^c l as |)bth an electronic and paper 

con^|t^t with Commission guidance wjth respect 

I Finding 2. Fai: emize Ipfcts & Obligations 

Summfiiy ^ 

Durmj^dit fieldworr^^^Audit siaflkioted that RPIA had failed to disclose debts and 

oblipu^^totaling $17^56. In response to the Interim Audit Report recommendation, 

RPIA fileS^^nded repons to co^ectly disclose these debts and obligations. The Audit 

staff consid^^i^ matter resolved. 

Legal Standard 

A. Continuous Repp^rang Required. A political conunittee must disclose the amount 

and nature of outstaiiding debts and obligations until those debts are extinguished. 

2 U.S.C §434(b)(8) and 11 CFR §§ 104.3(d) and 104.11(a). 

B. Itemizing Debts and Obligations. 

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

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

regularly scheduled report. 

• A debt exceedmg $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 

A. Facts 

During audit fieldwork, the Audit staff used available disbursement records to reconcile 

the accounts^ for two RPIA vendors. These vendors provided RPIA with fundraising, 

telemarketing, phone services and direct mail. The debt balances owed were outstanding 

in almost every reporting period throughout the period covered by the audit. As 

described below, the Audit staff identified debts and obligations totaling $179,856 that 

were not disclosed on Schedule D (Debts and Obligations). This figure was adjusted 

from the Interim Audit Report amount of $ 186,515. 

The Audit staff reviewed invoiced information and identified^^ebt and obligations to one 

of these vendors totaling $166,890 that were previously n(|^^)rlud. This unreported 

debt represents 93% of total reportable debt by RPIA. 

In addition to the unreported debt discussed above^RPIAHmder-repofi^d debt totaling 

$12,966^ to another vendor. ^. 

B. Interim Audit Report & Audit Division Reconp^pUatibn 

The Audit staff presented this matter to RPIA repres^i^L^s at the exit conference and 

provided schedules detailing the unre|f0Fted debts for eal^^orting period for the 

audited cycle. ' ^ ^ . 

The Interim Audit Report recommended aHai RPI.\ provide documentation demonstrating 

that these expenditures did not require rep^^;^on Schedule D. Absent such 

documentation, the In^rini Audit Report furl^r recomihended that RPIA amend its 

reports to disclose^tt^^reporled debts totalii^$ 166.890 and to correct the underreported debt totaiing^^^66. 

Interim Audit Report 

ommendation, RPIA said it had addressed this issue 

C. Commijil^^l(isppi^se to 

In res^^se to the hitil^ Au 

by >yjAiM with its attorneys, acc^^ptlnts and compliance team. RPIA amended its 

reports a^^rrectly disclosed the,^bts and obligations. 

The reconciliation consisted of calculating invoiced and paid amounts for individual reporting periods in 

the 2009-2010 election cycle. The Audit staff then determined whether any outstanding debts were 

correctly disclosed on Schedule D. Each debt amount was counted once, even if it required disclosure 

over multiple reporting periods. 

The total amount reportable to this vendor was $16,039. RPIA reported only $3,073 on its 2009 and 

2010 disclosure reports. The under-reported amount was calculated as follows: $16,039 - $3,073 = 

$12,966.