FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

November 5,2013 

MEMORANDUM 

To: The Commission 

Through: Alec Palmer 

StaffDirector 

From: Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. Hintermister "'^is^v 

Assistant Staff Director 

Audit Division 

Zuzana O. Pacious Lj/ ' 

Audit Manager ^ 

Kendrick Smith 

Audit Manager 

By: Christopher Carrell f^jfJ 

Lead Auditor / A T 

Subject: Audit Division Recommendation Memorandum on the Caesars 

Entertainment Corporation Political Action Committee (A12-01) 

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

the Audit staff presents its recommendation(s) below and discusses the finding(s) in the 

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

this memorandum and concurs with the recoinmendation(s). 

Misstatement of Financial Activity - 2011 and 2012 

In response to the Interim Audit Report, Caesars Entertainment Corporation 

Political Action Committee (CECPAC), filed amendments that materially 

complied with the recommendation. CECPAC had no additional comments in 

response to the DFAR. 

The Audit staff reconimends that the Commission find that CECPAC misstated its 

financial activity for calendar years 2011 and 2012. 
Misstatement of Financial Activity - Increased Activity 

In response to the Interim Audit Report, CECPAC stated that its management was 

unaware that the original reports partially disclosed its receipts and disbursements 

and that the committee would implement more rigorous intemal reviews as well as 

periodic financial reconciliations. CECEPAC had no additional comments in 

response to the DFAR. 

The Audit staff recommends that the Commission find diat CECPAC's original 

reports were materially misstated. 

CECPAC 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 Christopher Carrell or Zuzana Pacious at 

694-1200. 

Attachments: 

- Draft Final Audit Report of the Audit Division on the Caesars Entertainment 

Corporation Political Action Committee 

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

Audit Division on the Caesars 

Entertainment Corporation 

Political Action Committee 

(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 

Conunission 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, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any matter 

discussed in this report. 

About the Committee (p. 2) 

The Caesars Entertainment Corporation Political Action 

Committee is a non-party separate segregated fund of Caesars 

Entertainment Corporation, headquartered m Las Vegas, Nevada. 

For more information, see the chart on the Committee 

Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals $ 328,196 

Total Receipts $ 328,196 

• Disbursements 

o Contributions to Federal 

Candidates/Other Committees $ 308,430 

o Operating Expenditures 18,909 

o Other Disbursements 20,126 

Total Disbursements $ 347,465 

Finding and Reconmiendation (p. 3) 

Misstatement of Financial Activity 

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

Audit Division on tlie 

Caesars Entertainment 

Corporation Political Action 

Committee 

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

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part in. Sunmiary 

Finding and Reconunendation 3 

Part IV. Finding and Recommendation 

Misstatement of Financial Activity 4 
Parti 

Backgroimd 

Authority for Audit 

This report is based on an audit of the Caesars Entertainment Coiporation Political 

Action Committee (CECPAC)^, 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 repoit under 2 U.S.C. §434. Prior to 

conducting any audit under this subsection, the Commission must perform an intemal 

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. 2 U-S.C. §438(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; and 

3. other committee operations necessary to the review. 

^ The committee's name during the audit period was Caesars Entertainment Political Action Committee. It 

was changed on June 4,2013. 
Part II 

Overview of Committee 

Coinmittee Organization 

Important Dates 

• Date of Registration December 11,1989 

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

Headquarters Las Vegas, Nevada 

Bank Information 

• Bank Depositories One 

• Bank Accounts One Federal 

Treasurer 

• Treasurer When Audit Was Conducted Meredith Hartstem 

• Treasurer During Period Covered by Audit Meredith Hartstem 

Management Information 

• Attended Conunission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1,2011 $ 132,248 

Receipts 

o Contributions from Individuals 328.196 

Total Receipts $328,196 

Disbursements 

o Contributions to Federal Candidates/Other 

Conunittees 

308,430 

o Operating Expenditures 18,909 

o Other Disbursements 20,126 

Total Disbursements $347,465 

Cash-on-hand @ December 31,2012 $ 112,979 
Part III 

Summary 

Finding and Recommendation 

Misstatement of Financial Activity 

During audit fieldwork, a comparison of CECPAC's reported fmancial activity with 

its bank records revealed a misstatement of receipts and the beginning and ending 

cash balances for 2011 and receipts, disbursements, and the beginning and ending 

cash balances for 2012. For 2011, CECPAC understated the beginning cash balance 

by $38,481, understated receipts by $6,701, and understated the ending cash balance 

by $44,997. For 2012, CECPAC understated receipts by $9,995, disbursements by 

$22,265, and the ending cash balance by $32,727. Following the exit conference held 

at the end of audit fieldwork, CECPAC amended its reports to materially correct these 

misstatements. 

In addition, CECPAC's original reports for 2011 and 2012 materially understated 

receipts and disbursements. Specifically, CECPAC's original reports understated 

receipts by $151,950 and understated disbursements by $91,495. Amended reports 

filed prior to the notification of this audit did not correct the misstated financial 

activity. 

In response to the Interim Audit Report recommendations, CECPAC stated that it 

would not submit an additional response since, in response to die audit, it had already 

filed amended reports that materially corrected the misstatements. CECPAC also 

indicated that it would implement more rigorous intemal reviews as well as periodic 

financial reconciliations. (For more detail, see p. 4.) 
Part IV 

Finding and Reconmiendation 

I Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of CECPAC's reported financial aaivity widi 

its bank records revealed a misstatement of receipts and the beginning and ending 

cash balances for 2011 and receipts, disbursements, and the beginning and ending 

cash balances for 2012. For 2011, CECPAC understated the beginning cash balance 

by $38,481, understated receipts by $6,701, and understated the ending cash balance 

by $44,997. For 2012, CECPAC understated receipts by $9,995. disbursements by 

$22,265, and the ending cash balance by $32,727. Following the exit conference held 

at the end of audit fieldwork. CECPAC amended its reports to materially correct these 

misstatements. 

In addition, CECPAC's original reports for 2011 and 2012 materially understated 

receipts and disbursements. Specifically, CECPAC's original reports understated 

receipts by $151,950 and understated disbursements by $91,495. Amended reports 

filed prior to the notification of this audit did not correct the misstated financial 

activity. 

In response to the Interim Audit Report recommendations, CECPAC stated that it 

would not submit an additional response since, in response to the audit, it had already 

filed amended reports diat materially corrected die misstatements. CECPAC also 

indicated that it would implement more rigorous intemal reviews as well as periodic 

Hnaneial reconciliations. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• the amount of cash-on-hand 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 Disbuisements). 2 U.S.C. §434(b) (1). (2), 

(3), (4) and (5). 
Facts and Analysis 

A. Misstatement of Financial Activity - 2011 and 2012 

1. Facts 

As part of this audit, die Audit staff reconciled CECPAC's reported financial 

activity with its bank records for calendar years 2011 and 2012. The following 

charts outline die discrepancies between CECPAC's disclosure reports and its 

bank records. Succeeding paragraphs explain why the discrepancies occurred. 

2011 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2011 

$93,767 $132,248 $38,481 

Understated 

Receipts $155,900 $162,601 $6,701 

Understated 

Disbursements $181,258 $181,443 $185 

Understated 

Ending Cash Balance 

©December 31,2011 

$68,409 $113,406 $44,997 

Understated 

The beginning cash balance was understated by $38,481 and the discrepancy is 

unexplained, but it likely resulted from prior period discrepancies. 

The $6,701 understatement of receipts was a result of contributions from 

individuals, totaling $6,681, diat were not reported and an unexplained difference 

of $20. 

The $44,997 understatement of die ending cash balance was a result of die 

reporting discrepancies described above as well as the $185 understatement of 

disbursements. 

2012 Conmiittee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2012 

$68,409 $113,406 $44,997 

Understated 

Receipts $155,600 $165,595 $9,995 

Understated 

Disbursements $143,757 $166,022 $22,265 

Understated 

Ending Cash Balance 

©December 31.2012 

$80,252 $112,979 $32,727 

Understated 

The understatement of receipts was the result of contributions from individuals, 

totaling $9,995, that were not reported. 
The $22,265 net understatement of disbursements was a result of contributions to 

federal candidates/other committees, totaling $22,500, that were not reported, and 

an unexplained difference of ($235). 

The $32,727 understatement of die ending cash balance was a result of the 

reporting discrepancies noted above. 

CECPAC filed amended reports on Febmary 20 and 21,2013, subsequent to die 

Audit Notification Letter dated December 4,2012. These reports disclosed 

previously unreported contributions from individuals totaling $9,995. However, 

die amended reports disclosed only $5,000 of die previously unreported 

contributions to federal candidates and/or other coinmittees totaling $22,500. 

Thus, die disbursements remained materially misstated for calendar year 2012. 

2. Interim Audit Report and Audit Division Recommendation 

The Audit staff discussed die misstatements for 2011 and 2012 widi CECPAC's 

representative during the exit conference and provided copies of relevant work 

papers detailing the misstatements. In response, CECPAC filed amended reports 

diat materially corrected the misstatements. 

The Interim Audit Report recommended that CECPAC provide any additional 

comments it considered necessary with respect to this matter. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, CECPAC stated diat it 

would not submit an additional response since it had already filed amended 

reports that materially corrected die misstatements. 

B. Misstatement of Financial Activity - Increased Activity 

1. Facts 

In addition to examining CECPAC's most recent reports filed prior to die audit 

notification, die Audit staff compared CECPAC's originally filed reports with 

bank records and discovered a $151,950 understatement of receipts and a $91,495 

understatement of disbursements over die two-year period (2011 and 2012). 

These figures include the $6,701 understatement of receipts from 2011 and the 

$9,995 and $22,265 understatement of receipts and disbursements, respectively, 

from 2012 discussed in Section A (Misstatement of Financial Activity - 2011 and 

2012)^ 

2. Interim Audit Report and Audit Division Reconmiendation 

^ The amended reports reviewed by tfae Audit staff to detennine the misstatements identified in 

Section A did not correct ail the misstated activity identified by the Audit staff in its review of 

CECPAC originally filed reports. Howevo:, in response to this audit, CECPAC filed amendments to 

materially correct die misstated activity identified by the Audit staff. 
The Audit staff discussed the understatement of receipts and disbursements on its 

original reports filed with the CECPAC representative during the exit conference 

and provided copies of relevant work papers detailing die receipts and 

disbursements not reported. In response, the CECPAC representative stated diat 

the management was not aware that the original reports contained only partially 

reported receipts and/or disbursements. As a result, CECPAC management 

indicated it would implement more rigorous intemal reviews as well as periodic 

financial reconciliations. 

The Interim Audit Report recommended that CECPAC provide any additional 

comments it considered necessary with respect to the misstatement of activity on 

its original reports. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation. CECPAC stated that it 

would not submit an additional response widi respect to the misstatements 

identified on its original reports. 
Misstatement of Financial Activity - Increased Activity 

In response to the Interim Audit Report, CECPAC stated that its management was 

unaware that the original reports partially disclosed its receipts and disbursements 

and diat die committee would implement more rigorous intemal reviews as well as 

periodic financial reconciliations. CECEPAC had no additional coinments in 

response to the DFAR. 

The Audit staff recommends diat die Commission find diat CECPAC's original 

reports were materially misstated. 

CECPAC did not request an audit hearing. 

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

30 days of the Commission's vote. 

In case of an objection. Directive No. 70 states diat die Audit Division Recommendation 

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

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

Should you have any questions, please contact Christopher Carrell or Zuzana Pacious at 

694-1200. 

Attachments: 

- Draft Final Audit Report of die Audit Division on die Caesars Entertainment 

Corporation Political Action Committee 

cc: Office of General Counsel