Interim Audit Report of the 

Audit Division on the Majority 

Committee PAG 

(January 1,2011- December 31,2012) 

Why the Audit 

Was Donie 

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.' 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 Majority Committee PAC is a nonconnected, multi-candidate. 

House leadership, political action committee, headquartered in 

Bakersfield, California. The Leadership PAC Sponsor is 

Congressman Kevin McCarthy. For more information, see the 

Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contribution from Individuals 

o Contributions lh)m Political 

Committees 

o Transfers from Affiliated 

Committees 

o Ofl^s to Operating 

Expenditures 

Total Receipts 

Disbursements 

o Operating Expenditures 

o Contributions to Federal 

Candidates 

o Other Disbursements 

Total Disbursements 

$304,150 

1,412,986 

220,572 

9,850 

$ 1,947,558 

$ 792,934 

1,291,922 

10,833 

$ 2,095,689 

Finding and Recommendation (p. 3) 

Excessive Contributions to Candidates 

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

Division on the 

Majority Committee PAG 

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

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part 11. Overview of Committee 

Committee Oi:ganization 2 

Overviewof Financial Activity 2 

Part 111. Summary 

Finding and Recommendation 3 

Part IV. Finding and Recommendation 

Excessive Contributions to Candidates 4 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Majority Committee PAG (MCP), undertaken by 

the Audit Division of th^ 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 committee 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 consistency between reported figures and bank records; 

2. the disclosures of individual contributor's occupation and name of employer; 

3. the disclosure of contributions to other political committees 

4. travel related expenses; and 

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

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration August 24,2006 

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

Headquarters Bakersfield, CA 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Two Federal 

Treasurer 

• Treasurer When Audit Was Conducted Jill Thomson 

• Treasurer During Period Covered by Audit Conni Brunni: 8/24/06 - 10/18/12 

Jill Thomson: 10/19/12 - Present 

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 1,2011 $205,040 

Receipts 

o Contributions from Individuals 304,150 

o Contributions from Political Committees 1,412.986 

o Transfers from Affiliated Committees 220,572 

o Off^ts to Operating Expenditures 9,850 

Total Receipts $ 1,947,558 

Disbursements 

o Operating Expenditures 792,934 

o Contributions to Federal Candidates . 1,291,922 

o Other Disbursements 10,833 

Total Disbursements S 2,095,689 

Cash-on-hand @ December 31,2012 $ 56,909 
Part III 

Summary 

Finding and Recommendation 

Excessive Contributions to Candidates 

MCP made direct money contributions to nine federal candidate committees that, when 

aggregated with in-kind contributions reported only as travel, appeared to exceed the 

multicandidate contribution limit by $20,110. The in-kind contributions consisted of 

airfare paid by MCP for the leadership PAC's Sponsor to speak or make appearances at 

fundraising events that directly benefitted these committees. The excessive contributions 

are not eligible for redesignation. The Audit staff recommends that MCP provide 

evidence demonstrating that these contributions were not excessive or request refunds for 

I the excessive amount of its contributions and provide evidence for those refunds._(For 

more detail, see p. 4.) 
Part IV 

Finding and Recommendation 

I Finding 1, Excessive Contributions to Candidates 

Summary 

MCP made direct money contributions to nine lederal candidate committees that, when 

aggregated with in-kind contributions, appeared to exceed the multicandidate 

contribution limit by $20,110. The in-kind contributions consisted of airfiue paid by 

MCP for the leadership PAC's Sponsor to speak or make appearances at fundraising 

events that directly benefitted these committees. The excessive contributions are not 

eligible for redesignation. The Audit staff recommends that MCP provide evidence 

demonstrating that these contributions were not excessive or request refunds for the 

excessive amount of its contributions and provide evidence for those refunds. 

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 § 1 OO.S2(a). 

B. In-Kind Contribution. The term, arything of -value, includes in-kind contributions. 

The provision of services at a charge less than the usual and normal charge results in an 

in-kind contribution. The usual and normal charge for a service is the commercially 

reasonable rate that one would expect to pay at the time the services were rendered. The 

value of such a contribution would be the difference between the usual and normal charge 

for the services and the amount the political committee was billed and paid. 11 CFR 

§ 100.52(d). 

C. 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). 

D. Definition of Multicandidate Committee. A multicandidate committee is a political 

committee that: 

• Has b^ registered with the Commission or the Secretary of Senate for at least 6 

months; 

• Has received contributions for Federal candidates from more than 50 persons; and 

• (except for any State political party oiganization) Has made contributions to 5 or 

more Federal candidates. 11 CFR § 100.5(e)(3). 
E. Allocation of Expenses Between Candidates. Expenditures made on behalf of more 

than one clearly identified federal candidate shall be attributed to each such candidate 

according to the benefit expected to be derived. In the case of a publication or broadcast 

communication, the attribution shall be determined by the proportion of space or time 

devoted to all candidates. This mjethod shall be used to allocate payments involving both 

clearly identified federal candidates and one or more clearly identified non-federal 

candidates. 11 CFR §l06.l(a). 

Facts and Analysis 

A. Facts 

The Audit staff reviewed MCP's reported contributions to political committees, totaling 

$1,292,000, and airfare, totaling $178,000. From the review of airfare, the Audit staff 

found in-kind contributions to political committees totaled $94,000. Of this amount, 

contributions to nine federal candidate committees, totaling. $20,110^ appear to be 

excessive contributions, when combined with direct money contributions.^ The in-kind 

contributions consisted of airfare paid by MCP for the leadership PAC's Sponsor to 

speak or make appearances at fundraising events that directly benefitted these federal 

candidate committees. The excessive contributions are not eligible for redesignation. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented a finding for the potentially excessive 

contributions and explained that they resulted from the aggregation of direct money 

contributions and in-kind contributions related to airfare. A schedule of the potentially 

excessive contributions was provided. The Audit staff asked Counsel to provide an 

explanation and documentation for any item on the schedule for which they believed was 

incorrect. Counsel agreed and stated that they may need additional clarification for some 

of the items on the schedule. 

In response to the exit conference. Counsel provided a narrative and documentation for 

three contributions that did not result in excessive contributions. The Audit staff 

removed these items from the schedule and they are not presented as part of the finding 

amount. 

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

• Provide evidence demonstrating that the contributions were not excessive. 

• Absent such evidence, the Audit staff recommends that MCP seek a refund of the 

excessive contributions^ and provide evidence of all refunds received (a copy of the 

fh)nt and back of the endorsed refund check and the bank statement showing the 

deposit). 

^ The amount of air&re/in-kind contributions was allocated equally among different committees based 

upon the number of events attended by the Sponsor. 

^ The amount of direct money contributions was S6S,000. 

* MCP should also provide evidence to support any difference to the excessive amount as calculated by 

the Audit staff relating to the nine federal candidate committees.