FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

April 20.2015 

MEMORANDUM 

To: • 

Through: 

From: 

The Commission 

Alec Palmer 

iStaff Director . 

^/fVo 

By: 

Subject: 

Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. Hintermistef"^^ 

Assistant Staff Director 

Audit Division 

Douglas Kodi 

Audit 

Paula Nurthen ^p. 

Lead Auditor 

Audit Division Recommendation Memorandum on the Oakland County 

Democratic Party (OCDP) (A 12-02) 

Pursuant to Cothmission Directive No. 70 (PEC Directive on Processing Audit Reports), 

the Audit staff presents its recommendations below and discusses the findings in the 

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

this memorandum and concurs with'the recommendations. 

Finding 1. Misstatement of Financial Activity 

The Audit staiff determined that, for 2012, OCDP understated its reported receipts, 

disbursements and ending cash by $90,487, $60,715 and $33,279, respectively. 

. Subsequent to the exit conference, OCDP amended its reports and materially 

. corrected its misstatements. In response to the Interim Audit Report (lAR) 

recommendation and the DpAR, OCDP stated it has begun the process of 

complying with all recommendations. 

The Audit st^ recommends that the Commission find that OCDP misstated its 

financial activity for calendar year 2012. 
Finding 2. Recordkeeping for Employees 

For the period covered by the audit, OCDP did not maintain any monthly payroll 

logs, as required, to document the percentage of time each employee spent on 

federal election activity. For 2011 and 2012, the Audit staff identified payments to 

OCDP employees totaling $107,SSS, for which monthly payroll logs were not 

maintained. This consisted entirely of payroll which was allocated between 

federal and non-federal funds. In response to the lAR recommendation and the 

DFAR, OCDP stated it has begun the process of complying with all 

recommendations. 

The Audit staff recommends that the Commission find that OCDP failed to 

maintain monthly payroll logs to document the time employees spent on federal 

election activity totaling $ 107,SSS. 

Finding 3. Disclosure of Occupation and Name of Employer 

A review of all contributions from individuals requiring itemization indicated that 

35 contributions totaling $7,389 lacked disclosure of occupation and/or name of 

employer. In addition, there was no evidence that "best efforts" were attempted to 

obtain, maintain and submit the missing disclosure information. In response to the 

lAR recommendation and the DFAR, OCDP stated it has begun the process of 

complying with all recommendations. 

The Audit staff recommends that the Commission find that OCDP failed to 

disclose occupation and/or name of employer information for contributions from 

individuals totaling $7,389 and did not demonstrate "best efforts" to obtain, 

maintain, and submit disclosure information with respect to these contributions. 

Finding 4. Recordkeeping for Receipts 

During audit fieldwork, it was noted that QCDP did not maintain adequate 

documentation and did not properly report receipts from its gaming activities 

totaling $ 1,820,466 for the 2012 election cycle. In response to the IAR 

recommendation and the DFAR, OCDP stated it has begun the process of 

complying with all recommendations. 

The Audit staff recommends that the Commission find that OCDP failed to 

maintain adequate documentation for its gaming activities and did not properly 

report its receipts from gaming activities totaling $1,820,466. 

Finding S. Use of the Campaign Depository 

The Audit staffs review of OCDP's gaming operations found that OCDP did not 

deposit most of its gaming receipts into its designated campaign depository, as 

required. During the audit period, OCDP collected $1,820,466 from its bi-weekly 

gaming activities but did not deposit $1,370,304 into its campaign depository. In 

response to the lAR recommendation and the DFAR, OCDP stated it has begun 

the process of complying with all recommendations. 
The Audit staff recommends that the Commission find that OCDP failed to 

properly utilize its designated campaign depository for most of its gaming receipts 

totaling $1,370,304. 

The Committee 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 Paula Nurthen or Douglas Kodish at 694-

1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on the Oakland County Democratic 

Party 

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

Audit Division on the Oakland 

County Democratic Party 

(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 Aat 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 

the threshold 

requirements for 

substantial compliance 

with ^e Art aiiHit 

determi 

co: 

the 

prohibitii 

disclosure 

of the Act. 

Future Actioi 

The Commission I 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committee 

The Oakland County Demi 

headquartered in Southfiel 

the chart on the Commi 

is a local party committee 

.. For more information, see 

ion, p. 3. 

Financia! 

• Receipts 

o Contribution 

o Contributions 

j^es 

o Non 

AApunt 

o 0 

Total RdVipts 

Disburseml 

icpenditures 

isbursements 

^ Total Disbursements 

$ 1,933,148 

56,849 

49,859 

7,120 

S 2,046,976 

$ 2,045,934 

14,930 

S 2,060,864 

Findings and Recommendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Disclosure of Occupation and Name of Employer (Finding 3) 

• Recordkeeping for Receipts (Finding 4) 

• Use of the Campaign Depository (Finding 5) 

' On September 1,2014, the Federal Election Campaign Act of 1971, as amended ("the Act"), was 

transferred from Title 2 of the United States Code to new Title S2 of the United States Code. 

' 52 U.S.C. §30111(b) (formerly 2 U.S.C. §438(b)). 
Draft Final Audit Report of the 

Audit Division on the Oakland 

County Democratic Party 

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

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recom 

Finding I. Misstatement of Financial Activity 

Finding 2. Recordkeeping for En^oyees 

Finding 3. Disclosure of OccupaWM^ Name of 

Finding 4. Recordkeeping for 

Findings. Use of the Campaign D 
reports filed by 

littee meet the threshold 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the Oakland County Democratic Party (CCD?), undertaken by 

the Audit Division of the Federal Election Commission (the Commission) in acco^ance vdth 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) (formerly 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 52 U.S.C. §30104 (formerly 2 U.S.C. §434). PniteLto conducting any audit 

under this subsection, the Coinmission must perform an internal 

selected committees to determine if the reports filed by a partii 

requirements for substantial compliance with the Act. 

52 U.S.C. §30111(b) (formerly 2 U.S.C. §438(b)). 

Scope of Audit 

This audit examined: 

1. the receipt of excessive contributions and loans; 

the receipt of contributions from prohibited sources; 

the disclosure of contributions recei 

the disclosure of individual contributor taioation and 

the disclosure of disbursements, debts a^o 

the disclosure of expenses allocated betw«n f( 

the consistency betweenjamrted figures 

the completeness of 

other committee "ndMjlii— nedBary to the 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

ederal accounts; 

Commissio 

Requei^l 

Reco: 

Pursuant to 

Consideration d: 

unaffiliated with 

covering the 2010 eh 

logs under 11 CFR §1 

funds. 

lissl^Cpnsideration of a Legal Question -

fyeei 

slicy^tatement Establishing a Program for Requesting 

I by the Commission," several state party committees 

early consideration of a legal question raised during audits 

le. Specifically, the Commission addressed whether monthly time 

!)(1) were required for employees paid with 100 percent federal 

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

to keep a monthly log for employees paid exclusively with federal fUnds. Exercising its 

prosecutorial discretion, however, the Commission 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 funds and reported as such. The Audit staff informed 

OCDP representatives of the payroll log requirement and of the Commission's decision not to 
pursue recordkeeping violations for failure to keep payroll logs for salaries paid and correctly 

reported as 100 percent federal. Finding 2 of this audit report (Recordkeeping for Employees) 

does not include any OCDP employees paid with 100 percent federal funds and reported as such. 

Directive 69 and Request for Early Commission Consideration of a Legal 

Question - Recordkeeping for Receipts 

Pursuant to Commission Directive 69, the Commission's guidance was requested by the Office 

of Compliance and the Office of General Counsel on an issue addressing what recordkeeping 

requirements under 52 U.S.C. §30102(c) (formerly 2 U.S.C. §432(c)) and 11 CFR §102.9(a) 

applied to contributions received by OCDP during bi-weekly "bingo nights."' A subsequent 

request was made to the Commission by OCDP on the same issue undtg Ae Commission's 

"Policy Statement Establishing a Program for Requesting Consideo^^if Legal Questions by 

the Commission." Specifically, the Commission was asked whedj^^CDP's gaming nights 

corisisted of three separate fundraising events rather than a sind^^lSlkl for purposes of applying 

the recordkeeping requirements under 11 CFR §102.9(a).^ 

The Coimnission concluded on the Directive 69 Guid^ on the ReqH 

Consideration, by votes of 6-0, that OCDP's bingQ|B|2fs ^constitute i 

fundraising events and that OCDP was required miten n^nbutions exc 

received during each bingo night. See Finding 4, Rec^ ng for Receipts.' 

' The term bingo is used to refer to all OCDP gaming activity, which includes bingo, progressive bingo, and 

charity ticket sales. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration June 11,1976 

• Audit Coverage January December 31,2012 

Headquarters Snufhfi^R MT 

Bank Information 

• Bank Depositories 

• Bank Accounts jJ fhderal anSSgj non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Ryar^sund: 12/297Wri/28/14; 

lkle|^R^ Pike: 1/29^ - present 

• Treasurer During Period Covered by Audit WKBixby: 1/01/11 -12/28/11; 

R^ISesund: 12/29/11-12/31/12 

Management Information 

• Attended Commission Campaign Finance SefHB^ No 

Who Handled Accounting and! 

Tasks 

if Finvcial Activity 

Lounts) 

S 26,378 

Receipts m ^ 

o Contributionln|Dm Individrals 1,933,148 

o Contributions ii|^|PoliticvCoinmittees 56,849 

o Transfers from Account 49,859 

o Other Receipts jr 7,120 

Total Receipts S 2,046.976 

Disbursements 

o Operating Expenditures 2.045,934 

o Other Disbursements 14,930 

Total Disbursements S 2,060,864 

Cash-on-hand @ December 31,2012 $ 12,490 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwprk, a comparison of OCDP's reported financial activity with its bank 

records revealed that, for 2012, OCDP understated its reported receipts, disbi^ements 

and ending cash by $90,487, $60,715, and $33,279, respectively^^g^sequenit to the exit 

conference, OCDP amended its reports and materially correct^^imsstatements. In 

response to the Interim Audit Report recommendation, OCD^Mated it has begun the 

process of complying with all recommendations. (For n^gedeilQ^e p. 6.) 

Finding 2. Recordkeeping for Bi 

During audit fieldwork, the Audit staff determig^that OC 

monthly payroll logs, as required, to doc 

spent in connection with a federal election. For 2C 

payments to OCDP employees totaling $107,555, for^ 

not maintained. This consisted entir^fifpayroll whic 

and non-federal funds. In response toWtetocLm Audit! 

tes 

)P did not maraw^y 

of time eaclr^^oyee 

the Audit s^ identified 

monthly payroll logs were 

^.allocated between federal 

immendation, OCDP 

stated it has begun the process of compl. 

see p. 7.) 

Finding 3. D^loslCH^of Oc 

A review of all ccgpnln^ns fr« individuals' 

contributions totaling ^1^89 la&<Ldisclosure 

In addition, no 

informatifl^BeWHkaxerciSSa^n respoi 

recomji^dation, O 

ktions. (FoiHUine det 

^conun«lations. (For more detail. 

tion and Name of Employer 

ng itemization indicated that 35 

Occupation and/or name of employer, 

to obtain, maintain and submit the 

to the Interim Audit Report 

the process of complying with all 

p. 8.) 

Findin^^^RecorKeeping for Receipts 

During audit niwork, itjBs noted that OCDP did not maintain adequate 

documentation arnnU^^roperly report receipts from its gaming activities totaling 

$1,820,466 for the 2lmr election cycle. OCDP reported gaming receipts as un-itemized 

individual contributiras in accordance with requirements for receipts from individuals 

contributing $50 or less at fundraising events. However, the average contribution from 

OCDP's bi-weekly gaming events was approximately $88 per person, which requires 

more extensive recordkeeping activities. In response to the Interim Audit Report . 

recommendation, OCDP stated it has begun the process of complying with all 

recommendations. However, OCDP said it disagreed with certain unspecified aspects of 

the report that concerned its gaming activities. (For more detail, see p. 10.) 
Finding 5. Use of the Campaign Depository 

A review of OCDP's gaming operations found that OCDP did not deposit most of its 

gaming receipts into its designated campaign depository as required. During the audit 

period, OCDP collected $1,820,466 from its bi-weekly gaming activities but only 

deposited $450,162 into its campaign depository. OCDP disbursed the majority of these 

cash receipts ($1,370,304) directly to prize winners and game workers. In response to the 

Interim Audit Report recommendation, OCDP stated it has begun the process of 

complying with all. recommendations. However, OCDP said it disagreed with certain 

unspecified aspects of the report that concerned its gaming activities. (For more detail, 

seep. 12.) 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of OCDP's reported financial activity with its bank 

records revealed that, for 2012, OCDP understated its reported receipts, disbursements 

and ending cash by $90,487, $60,715 and $33,279, respectively^Ajj^quent to the exit 

conference, OCDP amended its reports and materially correc^g^s m^statements. In 

response to the Interim Audit Report recommendation, OCliWfcated it has begun the 

process of complying with all recommendations. 

Lendo; 

Legal Standard 

Contents of Reports. Each report must discloj 

• the amount of cash-on-hand at the be; 

• the total amount of receipts for the reporting 

• the total amount of disbursement§^for the reportin: 

and 

• certain transactions that require itenH^^n Schedule 

Schedule B (Itemized Disbursements^ slR^&.§30104i 

(formerly 2 U.S.C. §434(b)(l), (2), (3\4) 

reporting ] 

calendapyear; 

ipd and for the calendar year; 

lized Receipts) or 

(1), (2), (3), (4) and (5) 

Facts smd Anali 

A. Facts 

During audh 

with its 

for 2QJ^n receipts,^ 

disQE^^^s and succel 

the missSments. 

led OCDP's reported financial activity 

the^lQ^ar yearrzOl 1 and 2012 and identified misstatements 

iding cash. The following chart outlines the 

I explain, to the extent possible, the reasons for 

2012 Activity^®^ 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January 1,2012 $5,356 $8,863 $3,507 

Understated 

Receipts $937,760 $1,028,247 $90,487 

Understated 

Disbursements $963,905 $1,024,620 $60,715 

Understated 

Ending Cash Balance 

@ December 31,2012 ($20,789) $12,490 $33,279 

Understated 
The understatement of receipts resulted from the following. 

• Gaming receipts not reported^ 

• Transfers from non-federal account not reported 

• In-kind contributions not reported 

Understatement of Receipts 

The tmderstatement of disbursements resulted from the following. 

• Gaming expenditures not reported 

• Operating expenditures not reported 

• Expenditures reported twice 

• Operating expenditures incorrectly reported 

• Unexplained difference 

Net Understatement of Disbursements 

The understatement of the beginning and ending casli 

misstatements and the misstatements described 

$ 76,233 

12,178 

2.076 

$ ?0.487 

$ 36,229 

33,899 

(10,056) 

167 

476 

B. Interim Audit Report & Audit Divisio: 

At the exit conference, the Audit staff explained 

schedules to OCDP representatives. The represental 

Subsequent to the exit conference, 

misstatements. The Interim Audit 

additional comments it considered relevdtt to 

C. Committee Respoj 

In response to the I 

information rei 

from prior year 

its and pro'^ed 

to amend their reports. 

materially corrected its 

provide any 

ion, OCDP provided no additional 

Fin 

Sum 

During ai 

monthly pa; 

spent in coimecl 

payments to CCD! 

not maintained. 

ing for Employees 

^udit staff determined that OCDP did not maintain any 

, to document the percentage of time each employee 

election. For 2011 and 2012, the Audit staff identified 

Syees totaling $107,555, for which monthly payroll logs were 

sisted entirely of payroll which was allocated between federal 

and non-federal funds. In response to the Interim Audit Report recommendation, OCDP 

stated it has begun the process of complying with all recommendations. 

Legal Standard 

Maintenance of Monthly Logs. Committees must keep a monthly log of the percentage 

of time each employee spends in connection with a federal election. Allocations of 

salaries, wages, and fringe benefits are to be undertaken as follows: 

See Finding 4, page 10. 
8 

• Employees who spend 2S percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or have their pay allocated as administrative costs; 

• Employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and, 

• Employees who spend none of their compensated time in a given month on 

federal election activities may be paid entirely with funds that comply with State 

law. llCFR§106.7(dXl). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements foj^^oll.^OCDP did not 

maintain any monthly logs or equivalent records to docun^ffi^rcentage of time each 

employee spent in connection with federal election activA Thelmogs are required to 

document the proper allocation of federal and non-^^^\nds usffi^ay employee 

salaries and wages. For 2011 and 2012, logs wera^ mSlntained for; 

payroll. The total of $107,555 consisted entirelmf payroU. which was i 

federal and non-federal funds. 

—X ^ — 

555® in 

B. Interim Audit Report & Audit ^ision Recom^lteation 

At the exit conference and during aumfiel^ork, the A 

recordkeeping issue with OCDP repre^lfe|MLl^e 

did maintain some records for one indivi|yia^^Q^|pt keep 

individuals. No records were provided. 

' discussed the payroll 

I indicated that they 

srds for all required 

For OCDP employecmiatw^mud with i 

the Interim Audit jnA^cconwnded that i 

• evidence that rn^piy tinUfiSS were i 

time^^i^^ee i. 

a nJdWffMBfcfai momuLpsyroir 

location of federal and non-federal funds, 

^provide the following: 

led to document the percentage of 

flh a federal election; or 

I in the future. 

C. Cn^^ee Respoi 

In respon^m^e Interim! 

the recomin^mion to im^ 

Intei^^udit Report 

lit R^ort recommendation, OCDP agreed to comply with 

It a plan to maintain monthly payroll logs in the future. 

Finding 3. Digglosttre of Occupation and Name of Employer 

Summary 

A review of all contributions from individuals requiring itemization indicated that 35 

contributions totaling $7,389 lacked disclosure of occupation and/or name of employer. 

In addition, there was no evidence that "best efforts" to obtain, maintain and submit the 

information had been exercised. In response to the Interim Audit Report 

^ See Part 1, Background, Commission Guidance. Request for Early Commission Consideration of a 

Legal Question - Recordkeeping for Employees, Page 1. Payroll is stated net of taxes and benefits. 
Fecommendation, OCDP stated it has begun the process of complying with all 

recommendations. 

Legal Standard 

A. Itemization required for Contributions from Individuals. A political committee 

other than an authorized committee must itemize any contribution from an individual if it 

exceeds $200 per calendar year, either by itself or when combined with other 

contributions from the same contributor. 52 U.S.C §30104(bX3)(A) (formerly 2 U.S.C. 

§434(b)(3)(A)). . 

B. Required Information for Contributions from Individuals. For each itemized 

contribution from an individual, the committee must provide thj 

• The contributor's full name and address; 

• The contributor's occupation and the name of 

• The date of receipt (the date the committee reived 

• The amount of the contribution; and 

• The calendar year-to-date total of all adRhibutions from th^ 

11 CFR §§100.12 and 104.3(a)(4)^4K? U.S.^30104(b)(3)' 

U.S.C. §434(b)(3)(A)). 

ivdng information: 

employer; 

itribution); 

individual. 

Iy2 

C. Best Efforts Ensures Compliant 

shows that the committee used best ei 

the information required by the Act, th^ 

considered in compliance with the Act. 

When the trean||of a political committee 

below) t^^n, maintain, and submit 

t's reportsrMKcords will be 

U.S^6flig2(i) ^Smerly 2 U.S.C. §432(i)). 

D. Definition of BestJ 

have used "best effq 

• All writ 

o A clear i 

Lpf« 

id the c(;|[!Qnittee will be considered to 

littee satilEed all of the following criteria: 

- contribution^pcluded: 

iitor'sJBl name, mailing address, occupation. 

reporting is required by Federal law. 

if the contribution, the treasurer made at least one 

irmation, in either a written request or a 

(ithin 30 

: to obtain tlil 

ited oral 

The d^S^rer reporH any contributor information that, although not initially 

provideiOT&&e c^mbutor, was obtained in a follow-up communication or was 

contained mraronmittee's records or in prior reports that the committee filed 

during the sa^Ttwo-year election cycle. 11 CFR § 104.7(b). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed all reported contributions from individuals to 

determine if the required contributor information was disclosed. The review indicated 

that OCDP did not adequately disclose both the occupation and the name of the employer 

for nearly all identified errors. There were 35 errors equaling $7,389. All of the errors 

disclosed a notation, "Information Requested" on the Schedule A, Itemized Receipts, 

filed with the Commission. 
10 

Although requested, OCDP did not provide any records to demonstrate evidence of any 

best efforts procedures or follow-up requests for missing contributor information. As a 

result, OCDP did not make "best efforts" to obtain, maintain and report the missing 

occupation and name of employer information. 

B. Interim Audit Report & Audit Division Recommendation 

Prior to the exit conference, OCDP was provided schedules of the contributions requiring 

additional disclosure information. One of OCDP's representatives stated that missing 

contributor information was partly due to problems with its database. He also stated that 

the provided schedules would be reviewed and any comments concerning OCDP's best 

efforts procedures would be submitted in writing. No documents ^pporting OCDP's 

best efforts were submitted. 

The Interim Audit Report recommended that OCDP take i 

• provide documentation such as phone logs, returned^ 

contributor contact information sheets or other i 

efforts were made to obtain, maintain, and suhi^th^ 

information; or 

• absent such documentation, make an i 

required information was missing or incomple 

contacts (such as copies of letter^ the contrib 

OCDP's reports to disclose any iiWfclUHation ob 

dng action: 

itribiH^lgtters, completed 

; whicha^bpnstrated that best 

3uired dis 

1 individuals; 

^cumientatioftof such 

/or phone logs), and amend 

[those contacts. 

C. Committee Response to Interim Al^itl 

In response to the Interim Audit Report 

the recommendation tgnjfl^^onstrate 

to obtain the missin^ffinfribuAiuformatio] 

conformity with h^^Hfcrts. 

)P agreed to comply with 

Tt had ex^Ksed best efforte or to attempt 

[ its disclosure reports in 

During ( 

documentatiS 

$1,820,466 

individual contribl! 

contributing $50 or I 

)ing for Receipts 

noted that OCDP did not maintain adequate 

perly report receipts from its gaming activities totaling 

ion cycle. OCDP reported gaming receipts as un-itemized 

accordance with requirements for receipts from individuals 

fimdraising events. However, the average contribution from 

OCDP's bi-weekly gaming events was approximately $88 per person, which requires 

more extensive recordkeeping activities. In response to the Interim Audit Report 

recommendation, OCDP stated it has begun the process of complying with all 

recommendations. However, OCDP said it disagreed with certain unspecified aspects of 

the report that concerned its gaming activities. 

Legal Standard 

A. Recordkeeping. Political committees must keep records of: 

• All contributions received by or on behalf of the committee; 

• The name and address of any person who makes a contribution in excess of $50, 

together with the date and amount of the contribution; and 
11 

• The occupation and name of employer of any individual whose contributions 

aggregate more than $200 during a calendar year, together with the date and 

amount of any such contributions. 52 U.S.C. §30102(c) (formerly 2 U.S.C. 

§432(c)). 

B. Retention of Check Copies. For contributions in excess of $50, committees must 

maintain a photocopy or digital image of the check or written instrument. 11 CFR 

§102.9(a)(4). 

C. Preserving Records and Copies of Reports. Committees must preserve these 

records for 3 years after a report is filed. 52 U.S.C. §30102(d) (fojperly 2 U.S.C. 

§432(d)). 

Facts and Analysis 

A. Facts 

OCDP did not maintain adequate documentation j 

its bi-weekly gaming activities totaling $1,820^ 

Michigan state law governs Michigan gamir 

Accordingly, records were kept of the number of i 

gaming cards, books and tickets sold (all gaming sale 

However, federal election laws and reg 

committees and those rules require a dii 

requirements for contributions. The levef 

committees is a function^sUmiContributic 

ply to 

receipts for 

L2012 electioil^^ej 

ceeping^^irements. 

I quantity^d price of 

tions are for cash). 

I of federal political 

and reporting 

Tthe records and reports of 

Idual contributors. 

During the audit j 

did not exceed the $5C 

name of the evgitwd thi 

receipts 

requirg^mts for recSH^^m ^ 

1 OCDP eviwhe AC 

approxiifim^ $88 per penm, per^ 

^and filed reports as if contributions 

ly requires records to identify the 

for the event. OCDP reported gaming 

indivnreal contributions in accordance with 

dduals contributing $50 or less. However, based on 

calculated that contributions averaged 

[ght. As such, no reasonable assurance could be 

provided thCH^viduals adding the gaming activities contributed $50 or less. 

Accordingly,il|mnply wj« the recordkeeping requirements, OCDP needs to collect 

more contributo^tttema^n for its gaming events. 

The Commission coifSidered OCDP's position that each gaming activity held during a 

night was a separate event for aggregation purposes and that their records and reporting 

were adequate. As part of its consideration, the Commission sought information about 

separation of gaming activities and their administrative functions. In anticipation of these 

questions, the Audit staff held a teleconference with Committee personnel and were told 

' This amount does not include errors in recordkeeping for checks deposited into Oakland's accounts that 

were not associated with gaming activities projected to total S 1,970. 

^ In addition to the improper reporting of gaming receipts, OCDP did not report $76,233 mentioned 

in Finding I, Misstatement of Financial Activity. 

' This recordkeeping threshold is discussed in the Federal Election Commission Campaign Guide for 

Political Parly Committees and in Advisory Opinions 1981-48 and 1980-99. 
12 

that they had only one hall for all gaming activities; separate personnel were not used for 

the different gaming activities; and all gaming activity tickets could be purchased at any 

of the ticket purchase locations. No additional information was provided that would 

indicate separation of gaming activities. As previously noted, the average gaming night 

contribution was approximately $88 per person, so OCDP could not reasonably assure 

that contributions received aggregated to amounts of $50 or less a night. Based on the 

above information, the Commission concluded' that OCDP's bingo nights were not 

separate fimdraising events, but were one event, and that OCDP was required to obtain 

the name and address of any person who made contributions in excess of $50 during a 

gaming night, and then identify and report those contributors whose aggregate 

contributions exceeded $200 during a calendar year. As a result, the Audit staff 

calculated that OCDP did not properly record and account for cjj^^tions totaling 

$1,820,466, or 89% of OCDP's total contributions. 

B. Interim Audit Report & Audit Division Recomm 

At the exit conference, the Audit staff presented this 

representatives as an open issue for which additiq^iff^oi 

sought. It was subsequently presented to OCD 

The Interim Audit Report recommended that 0Cl51 

its gaming night contributions did not exceed $50 pei^ 

OCDP should develop and implemerMbuIan to obtain 

ssion gui 

Ives as a 

to OCDP 

would be 

• the name, address, date and i 

and 

• the occupation^dl^fi of emplo) 

aggregate moi^nan wHkduring a i 

amount of^ffiftich conUutions. 

demorfStrating that 

ibutor. Absent such records, 

a record of: 

confuting more than $50; 

any indRdual whose contributions 

year, together with the date and 

C. Commi 

In respoi lendation, OCDP stated it has begun the 

ions. However, OCDP said it disagreed with 

that concerned its gaming activities. 

Finding 5; ,e Campaign Depository 

Summary 

A review of OCDP'^lming operations found that OCDP did not deposit most of its 

gaming receipts into its designated campaign depository as required. During the audit 

period, OCDP collected $1,820,4(56 from its bi-weekly gaming activities but only 

deposited $450,162 into its campaign depository. OCDP disbursed the majority of these 

cash receipts ($1,370,304) directly to prize winners and game workers. In response to the 

Interim Audit Report recommendation, OCDP stated it has begun the process of 

complying with all recommendations. However, OCDP said it disagreed with certain 

unspecified aspects of the report that concerned its gaming activities. 

' See Pait 1, Background, Commission Guidance, Directive 69 and Request for Early Commission 

Consideration of a Legal Question - Recordkeeping for Receipts, Page 2. 
13 

Legal Standard 

A. Depositories. Each political committee shall designate one or more state banks, 

federally chartered depository institutions (including a national bank), or depository 

institutions, the deposits or accounts of which are insured by the Federal Deposit 

Insurance Corporation, Federal Savings and Loan Insurance Corporation, or the National 

Credit Union Administration, as its campaign depository or depositories. Each political 

committee shall maintain at least one checking account or transaction account at one of 

its depositories. All receipts received by such committee shall be deposited in such 

accounts. No disbursements may be made (other than petty cash disWsements) by such 

committee except by check drawn on such accounts in accordance with this section. 

52 U.S.C. §30102(h)(1).(formerly 2 U.S.C. §432(h)(l)) and 11 §103.2. 

B. Deposit of Receipts and Disbursements. All receipts by^olitical committee shall 

be deposited in account(s) established pursuant to 11 

contribution may be, within 10 days of the treasurer's 

without being deposited. The treasurer of the coi 

such deposits. All deposits shall be made within^mays 

committee shall make all disbursements by ch^^&r simili 

its designated campaign depository, except 

petty cash fund maintained pursuant to 11 CFR § II 

the depository for investment purposes, but shall be 

such fiinds are used to make exnendirafce^ 11 CFR §10! 

intain a i 

except that any 

to the contributor 

be r^iAjuible for making 

if the treasuTn|receipt. A 

drafts drawi^^toraccount at 

$100 or lessjpae ftom a 

may be trafufened from 

to the depository before 

C. Petty Cash Fund. A political cor 

which it may make expenditures not in ( 

transaction. 

It is the duty of 

disbursements. The 

• Ni 

cash fund out of 

terson per purchase or 

written journal of all petty cash 

hom any disbursement is made. 

I fdr1 candidate, the joumal shall include the name of that 

Ice (including State arid Congressional district) sought by 

iFR §102.11. 

Facts and Anal; 

A. Facts 

The Audit staff reviewed OCDP's records of its bi-weekly gaming events and found that 

OCDP did not deposit most of its gaming receipts into its designated campaign 
14 

depository as required by 11 CFR §103.3(a).'° During the audit period, OCDP collected 

funds from 204 gaming events totaling $1,820,466. However, OCDP only deposited 

funds totaling $450,162 to its campaign depository, after having disbursed the majority of 

funds collected ($1,370,304) to prize winners and to game workers. These cash 

paymerits did not utilize a petty cash fund for cash payments of $100 or less and checks 

(or similar drafts) for amounts disbursed over $ 100. 

For the audit period, OCDP made total expenditures of $2,060,864 with gaming 

expenditures comprising $1,711,394 of this ainount (83% of toi 

discussed above, cash payments comprised the majority of 

However, for most recurring expenses, checks were used, 

made for hall rentals, gaming supplies, advertising and o^ger ii 

The table below summarizes cash payment activr 

itures). As 

expenditures, 

lents by check were 

ling $341,090. 

[payment. Disbursements 

i to individuals and 

ount and purpose for 

mainflMB of individual payments, 

were repm^ as lump sum payments to "Non 

'rizes $S0 or Less" (no individual payee 

" 'ided). 

llaneous gaming expenses paid to gaming 

kersm^Oll were not maintained. These disbursements 

included as un-itemized expenditures in reported totals. 

B. Interim AudiTO^^& Audit Division Recommendation 

At the exit conferen»The Audit staff initially presented an open issue for recordkeeping 

for amounts of $50 m less to OCDP representatives. This issue was later expanded to 

include all cash disbursements and subsequently presented to OCDP representatives as a 

finding for failure to utilize a campaign depository for all cash transactions. 

The Commission noted in a prior audit of OCDP. approved on March 28,2001, that OCDP paid prizes 

using cash received iiom the sale of bingo cards. As a result of the prior audit, matters were referred to 

the Office of Genera! Counsel for further enforcement (See MUR S236). In that matter, the 

Commission found that OCDP had violated the requirement to deposit all its receipts and that it failed 

to properly itemize gaming disbursements. In the conciliation agreement with the Commission, OCDP 

agreed to correctly disclose all financial activity related to its bingo account, deposit all receipts from its 

bingo games into its designated depository and properly itemize disbursements that aggxgate in excess 

of S200 from its bingo account. 
15 

In subsequent discussions about cash disbursements, OCDP responded that it complied 

with the Act's required use of a check or "similar draft" by using a "voucher system." 

Under the voucher system, prize winners fill out and redeem vouchers for cash. OCDP 

stated that it has used this system for years and the Michigan State Lottery Bureau was 

aware of it and permitted its use.. 

In addition, OCDP cited two Advisory Opinions, 1982-25 and 1993-04, where the 

Commission allowed wire transfers and computerized bill paying, respectively, to satisfy 

the requirement of a similar draff. OCDP stated that, as in those opinions, the vouchers 

are not "operative commercial instruments" like checks, but they ve documentation of 

the prize payment transaction, which is the goal of the regulation^^DP indicated that 

the vouchers satisfy the requirements of a "similar draft" whj^Pvoiding the practical 

problems of writing and processing thousands of checks. 

Although OCDP cited wire transfers and computeriu||jnni(ig as elt^dons to the similar 

draft requirement, the Audit staff noted the regul^jfBEs ^beyond sirnpAj^cumentation 

requirements and that they specifically required|^ use of^campaign d^nkoty as cited 

above. Using a campaign depository ensures^mn^apei^||n linking disra^ients to 

a 3"* party payor/record keeper and provides for a^Olida^eaisblosure histO^ for audit 

purposes. 

DP devel^ 

liptsi 

The Interim Audit Report recomrn 

to ensure that a campaign depository is 

gaming transactions made with cash. 

C. Committee ResatfKe to* 

In response to theJWMm Audil 

process of complying^^all 

certain unspefij£ei^speci 

nplement procedures 

disbursements, including 

ion, OCDP stated it has begun the 

on^tiowever, OCDP said it disagreed with 

icemed ite gaming activities. 

" See Advisory Opinions 1993-04 and 1986-18.