Interim Audit Report of the 

Audit Division on the American 

Financial Services Association 

PAC 

(January 1, 2013 - December 31, 2014) 

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 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.' T^e 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 of the 

matters discussed in this 

report. 

About the Committee (p. 2) 

The American Financial Services Association PAC is a qualified, 

non-party political action committee headquartered in 

Washington, D.C. For more information, see the chart on the 

Committee Organization, p.2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions fi-om Individuals 

o Contributions from Other 

Political Committees 

o Other Receipts 

Total Receipts 

• Disbursements 

o Transfers to Affiliated/Other 

Party Committees 

o Contributions to Federal 

Candidates/Other Committees 

o Other Disbursements 

Total Disbursements 

$ 820,603 

10,000 

24,380 

S 854,983 

$ 22,000 

735,850 

25,304 

$ 783,154 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Excessive Contributions Made to Federal Candidates 

(Finding 2) 

52 U.S.C. §30111(b). 
Interim Audit Report of the Audit 

Division on the 

American Financial Services 

Association PAC 

(January 1, 2013 - December 31, 2014) 
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 III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding!. Misstatement of Financial Activity 4 

Finding 2. Excessive Contributions Made to Federal Candidates 7 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the American Financial Services Association PAC 

(AFSAPAC), 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 52 U.S.C. 

§30111(b), which permits the Commission to conduct audits and field investigations of 

any political conmiittee that is required to file a report under 52 U.S.C. §30104. 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 committee meet the threshold requirements for substantial compliance with the 

Act. 52 U.S.C. §30111(b). . 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the disclosure of individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; 

3. contributions to candidate committees; 

4. the consistency between reported figures and bank records; 

5. other committee operations necessary to the review. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration March 17,1976 

e Audit Coverage January 1,2013 - December 31,2014 

Headquarters Washington, D.C. 

Bank Information 

• Bank Depositories Two 

e Bank Accounts Two 

Treasurer 

• Treasurer When Audit Was Conducted Bill Himpler 

• Treasurer During Period Covered by Aiidit Bill Himpler 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ® January 1,2013 $ 246,207 

Receipts 

o Contributions from Individuals 820,603 

o Contributions from Other Political 10,000 

Committees 

o Other Receipts 24,380 

Total Receipts $854,983 

Disbursements 

o Transfers to Affiliated/Other Party 

Committees 

22,000 

o Contributions to Federal Candidates/Other 735,850 

Committees 

o Other Disbursements 25,304 

Total Disbursements $ 783,154 

Cash-on-hand @ December 31,2014 $ 318,036 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

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

bank records revealed a misstatement of receipts, disbursements, and the beginning and 

ending cash balances for 2013, and the beginning and ending cash balances for 2014. For 

2013, AFSAPAC understated the beginning cash balance by $113,536, understated 

receipts by $10,081, understated disbursements by $67,905, and understated the ending 

cash balance by $55,712. For 2014, AFSAPAC understated the beginning cash balance 

by $55,712, and the ending cash balance by $53,393. Multiple amendments were filed 

after the beginning of the audit for both 2013 and 2014, but tbey did not fully correct the 

misstated amounts. The Audit staff recommends that AFSAPAC amend its most recently 

filed disclosure report to correct the misstatements. 

In addition, AFSAPAC's original reports for 2013 and 2014 materially understated 

receipts by $310,683. AFSAPAC attempted to correct these misstatements and filed 

amended reports for each reporting period during the 2 year cycle; filing multiple 

amendments to correct these errors. The Audit staff recommends that AFSAPAC provide 

any additional comments it deems necessary with respect to this matter. (For more detail, 

see p. 4.) 

Finding 2. E«xcessive Contributions Made to Federal 

Candidates 

AFSAPAC made 11 contributions to seven federal candidate committees that, when 

aggregated with 22 previous contributions, appear to have exceeded the contribution limit 

by $18,000. In response to the exit conference, AFSAPAC redesignated contributions of 

$17,000, and has sought or obtained refunds for the remaining amount. The Audit staff 

recommends AFSAPAC amend its reports to correctly disclose the redesignation of 

contributions made and provide evidence of refunds received, or evidence demonstrating 

that the contributions were not excessive. (For more detail, see p. 7.) 
Part IV 

Findings and Recommendations 

Finding 1, Misstatement of Financial Activity 

Summary 

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

bank records revealed a misstatement of receipts, disbursements, and the beginning and 

ending cash balances for 2013, and the beginning and ending cash balances for 2014. For 

2013, AFSAPAC understated the begiiming cash balance by $113,536, understated 

receipts by $10,081, understated disbursements by $67,905, and understated the ending 

cash balance by $55,712. For 2014, AFSAPAC understated the beginning cash balance 

by $55,712, and the ending cash balance by $53,393. Multiple amendments were filed 

after the beginning of the audit for both 2013 and 2014, but they did not fully correct the 

misstated amounts. The Audit staff recommends that AFSAPAC amend its most recently 

filed disclosure report to correct the misstatements. 

In addition, AFSAPAC's original reports for 2013 and 2014 materially understated 

receipts by $310,683. AFSAPAC attempted to correct these misstatements and filed 

amended reports for each reporting period during the 2 year cycle; filing multiple 

amendments to correct these errors. The Audit staff recommends that AFSAPAC 

provide any additional comments it deems necessary with respect to this matter. 

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 Disbursements). 52 U.S.C. §30104 (b) (1), (2), (3), (4) 

and (5). 

Facts and Analysis 

A. Misstatement of Financial Activity- Most Recent Reports Filed Prior to the 

Audit 

1. Facts 

As part of this audit, the Audit staff reconciled AFSAPAC's reported financial 

activity with its bank records for calendar years 2013 and 2014. The following charts 

outline the discrepancies between AFSAPAC's disclosure reports and its bank 

records. Succeeding paragraphs explain why the discrepancies occurred. 
2013 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2013 

$132,671 $246,207 $113,536 

Understated 

Receipts $380,743 $390,824 $10,081 

Understated 

Disbursements $293,006 $360,911 $67,905 

Understated 

Ending Cash Balance 

@ December 31,2013 

$220,408 $276,120 $55,712 

. Understated 

The beginning cash balance was understated by $ 113,536 and the discrepancy is 

unexplained, but it likely resulted from prior period misstatements. 

The understatement of receipts resulted from the following: 

• Contributions from individuals, amount not reported (net) $5,500 

• Unreported other receipts 10,775 

• Unexplained difference (6.1941 

Net Understatement of Receipts $10.081 

The understatement of disbursements resulted from the following: 

• Contributions to political committees not reported $48,100 

• Contribution refunds not reported 5,000 

• Bank Fees Not Reported 2,485 

• Disbursement to Sponsor's account not reported 10,775 

• Unexplained difference 1.545 

Net Understatement of Disbursements $67.905 

2014 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2014 

$220,408 $276,120 $55,712 

Understated 

Receipts $462,985 $464,159 $1,174 

Understated 

Disbursements $418,751 $422,243 $3,492 

Understated 

Ending Cash Balance 

@ December 31,2014 

$264,642 $318,036 $53,394 

Understated 
The $53,394 understatement of the 2014 ending cash balance resulted mostly from 

reporting discrepancies noted above from the prior year. 

AFSAPAC filed amended reports on January 13,2016, subsequent to the audit 

notification letter, dated November 18,2015. These reports disclosed a cash increase 

of $42,915 for 2013. However, the amendments only minimally corrected the 

reporting discrepancies for 2013, and the beginning and ending cash balances for 

2014 remained materially misstated. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatements for 2013 and 2014 with AFSAPAC's 

representatives during the exit conference and provided copies of relevant work 

papers detailing the misstatements. In response, AFSAPAC representative stated that 

it filed amended reports to correct the misstatements; however, the amendments were 

filed after AFSAPAC was notified of the audit and the amounts were still misstated as 

described in the preceding paragraph. 

The Audit staff recommends that, within 30 calendar days of service of this report, 

AFSAPAC amend its disclosure reports to correct the misstatements for both 2013 

and 2014. In addition, the Audit staff recommends that AFSAPAC amend its most 

recently filed report to correct the cash-on-hand balance with an explanation that the 

change resulted from a prior period audit adjustment. 

Further, AFSAPAC should reconcile the cash balance of its most recent report to 

identify any subsequent discrepancies that may affect the adjustment recommended 

by the Audit staff. 

B. Misstatement of Financial Activity - Original Reports Filed 

1. Facts 

In addition to reconciling AFSAPAC's most recent reports (filed prior to audit 

notification) with its bank statements, the Audit staff also compared its originally 

filed reports with its bank statements. The purpose of this additional reconciliation 

was to identify the degree to which AFSAPAC had misstated its original filings.. 

From this review, the Audit staff determined that AFSAPAC understated its 

receipts by $310,683, for the two-year period that ended December 31,2014. 

However, as shown in the charts above, under discrepancies for receipts, AFSAPAC 

filed amendments that corrected all but $11,255 ($10,081 + $1,174) of this receipt 

understatement. 

The Audit Staff also noted that AFSAPAC filed multiple amended reports for every 

filing period for 2013 and 2014, filing a total of 151 amendments. For example, for 

the August 2013 monthly report, AFSAPAC filed amended reports 3 times in 2014,2 

times in 2015, and 1 time in 2016. 

2. Interim Audit Report & Audit Division Recommendation 
The Audit staff discussed AFSAPAC's understatement of receipts contained in the 

original reports it filed at the exit conference. In response, an AFSAPAC 

representative made a rebuttal to the potential understatement finding by providing 

information about the corrections made in its amended filings. The Audit staff 

explained to the representative that amendments have no impact on the finding since 

the finding is based upon the original reports filed. 

The Audit staff recommends that, within 30 calendar days of service of this report, 

AFSAPAC provide any additional comments it deems necessary with respect to this 

matter. 

Finding 2. Excessive Contributions Made to Federal 

Candidates 

Summary 

AFSAPAC made 11 contributions to seven federal candidate committees that, when 

aggregated with 22 previous contributions, appear to have exceeded the contribution limit 

by $18,000. In response to the exit conference, AFSAPAC redesignated contributions of 

$17,000, and has sought or obtained refunds for the remaining amount. The Audit staff 

recommends AFSAPAC amend its reports to correctly disclose the.redesignation of 

contributions made and provide evidence of refunds received, or evidence demonstrating 

that the contributions were not excessive. 

Legal Standard 

A. Contribution Defined. A gift, subscription, loan (except when made in accordance 

with 11 CFR §§100.82 and 100.83), advance, or deposit of money or anything of value 

made by any person for the purpose of influencing any election for Federal office is a 

contribution. 11 CFR § 100.52(a). 

B. Contribution Limits. No multicandidate political committee shall make contributions 

to any candidate and his authorized political committees with respect to any election for 

Federal office which, in the aggregate, exceed $5,000. 52 U.S.C. §30116 (a)(l)(2)(A). 

C. Definition of Multicandidate Committee. 

• A multicandidate committee is a political committee (other than an authorized 

candidate committee) that has satisfied the following 3 requirements: 

• It has been registered under the federal election campaign law for at least 6 

months. 

• It has received contributions from more than 50 cpntributors. 

• It has made contributions to at least 5 federal candidates. (This last 

requirement does not apply to state party committees.) 52 U.S.C. 

§30116(a)(4). 

• A political committee affiliated with another political committee that has already 

qualified as a multicandidate committee automatically becomes a multicandidate 

committee by virtue of that affiliation. But it shares the contributions limits with its 

affiliated committee. 52 U.S.C. §30116(a)(5). 
Facts and Analjrsis 

A. Facts 

The Audit staff reviewed AFSAPAC's reported contributions made to federal candidate 

committees totaling $492,000. Of this amount, 11 contributions to seven federal 

candidate committees when aggregated with 22 other contributions appear to exceed the 

contribution limit by $18,000. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented the excessive contribution matter to 

AFS APAC representatives and provided a schedule of potentially excessive 

contributions. The Audit staff explained that the excessive contributions resulted fh)m 

aggregation with other contributions made to the same comrhittees for the same election. 

The Audit staff asked AFSAPAC's representatives to provide an explanation and 

documentation for any item on the schedule that they believed to be incorrect. The 

representatives stated that they would review the items and provide an appropriate 

response. 

In response to the exit conference, AFSAPAC's representative did not mention any, 

corrections to the schedule of excessive contributions, but did provide the Audit staff 

redesignation letters that were sent out to six of the excessive recipient committees for 

$17,000 of the excessive $18,000 amount. For the remaining excessive contributions, it 

was noted that a refund had been received and another refund was being sought. The 

Audit staff recommends that within 30 calendar days of service of this report, 

AFSAPAC: 

• Amends its reports to properly report the elections for which the contributions 

totaling $17,000 were redesignated; and 

• Provide evidence of the contribution reftmd checks and their deposit totaling $ 1,000; 

or 

• Provide evidence demonstrating that the contributions for $18,000 (or an appropriate 

subset of this amoimt, based on other documentation provided) were not excessive or 

any additional conunents it feels are necessary with respect to this matter.