FEDERAL ELEtTION COMMISSjON 

WASHINGTON, b.C. 20463 

MEMORANDUM Novum 

TO: 

FROM: 

Patricia C. Orrock 

Chief Compliance Officer 

Thomas Hintermister 

Assistant Staff Director 

Audit Division 

Lisa J. Stevenson 

Deputy General Counsel - Law 

Lorenzo Holloway _ 

Assistant General Counsel 

Compliance Advice 

Danita C. Alberico iltiL 

Attorney 

SUBJECT: Proposed Interim Audit Report on the Oklahoma Democratic Party (LRA 978) 

I. INTRODUCTION 

The Office of General Counsel has reviewed the proposed Interim Audit Report C'lAR") 

on the Oklahoma Democratic Party ("the Committee"). The lAR contains four findings: 1) 

Misstatement of Financial Activity; 2) Misstatement of Financial Activity - Levin Fund; 3) 

Reporting of Debts and Obligations; and 4) Recordkeeping for Employees.' We address 

recordkeeping for employees (Finding 4). We concur with any issues not specifically discussed 

in this memorandum. If you have any questions, please contact Danita C. Alberico, the attorney 

assigned to this audit. 

' We recommend that the Commission consider this document in Executive Session because the Commission 

may eventually decide to pursue an investigation of matters contained in the proposed lAR. 11 C.F.R. §§ 2.4(a) and 

(bX6). 
Comments to the Interim Audit Report 

Oklahoma Democratic Party 

(LRA 978) 

Page 2 

II. RECORDKEEPING FOR EMPLOYEES 

The Office of General Counsel's comments focus on the finding that the Committee did 

not maintain monthly payroll logs for the percentage of time each employee spent on activity in 

connection with a federal election in accordance with 11 C.F.R. § 106.7(d)(1). The auditors 

found that the amount of payroll allocated between federal and non-federal employees for whom 

logs were not maintained totaled $200,440. Subsequent to the exit conference, the Committee 

informed the Audit Division that its payroll expenditures were erroneously reported as shared 

federal/non-federal activity. The Committee stated that its payroll totaling $200,440 was for 

100% federal activity, was paid with 100% federal funds, and should have been reported as such. 

The Committee advised the Audit staff that it intended to amend its reports to correctly disclose 

these expenditures as solely federal activity. The proposed lAR recoimnends that the Committee 

provide evidence that it maintained monthly time logs or implement a plan to maintain monthly 

payroll logs to track the percentage of time each employee spends in connection with a federal 

election. 

The Audit Division's lAR recoimnendation is based on the Commission regulation that 

requires a state party committee to "keep a monthly log of the percentage of time each employee 

spends in cormection with a Federal election." 11 C.F.R. § 106.7(d)(1). To determine if it must 

allocate the salary, wages, and benefits of its employees, a state party committee must examine 

the percentage of time that its employees spend on federal election activities ("FEA") or activity 

in cormection with federal elections. Salaries and benefits of employees who spend more than 

25% of their compensated time on FEA or activities in cormection with a federal election in a 

given month must be paid only from a federal account. 52 U.S.C. § 30I01(20)(A)(iv); 11 C.F.R. 

§ 106.7(d)(l)(ii). Salaries and benefits of employees who spend 25% or less of their time on 

FEA or activities in connection with a federal election may be allocated as administrative costs 

or paid from the federal account. 11 C.F.R. §§106.7(c)(l) and 106.7(d)(l)(i). Salaries and 

benefits of employees who spend none of their compensated time on FEA or activities in 

cormection with a federal election may be paid entirely with funds that comply with state law. 

11 C.F.R. § 106.7(d)(l)(iii). 

The Commission analyzed the requirements of this regulation in response to a request for 

legal consideration in which several state party committees asked the Commission to consider 

whether the monthly time log requirement applies to employees who are paid with 100% federal 

funds. The Commission concluded that the time log requirement applies even if the employees 

are paid exclusively with federal flmds. However, the Commission determined, as an exercise of 

prosecutorial discretion, that it would not pursue recordkeeping violations for the failure to keep 

time logs for employee salaries paid with 100% federal funds and reported as such. Commission 

Certifications in the Matter of Request for Consideration of a Legal Question, LRA 917 

(Vermont Democratic Party) (Nov. 30,2012), and LRA 921 (Democratic Party of Illinois) 

(Nov. 30,2012). 

In light of the Commission's conclusion in the request for legal consideration, we do not 

think it is appropriate ~ where the Committee contends that it paid $200,440 with 100% federal 

funds ~ to include a finding in the audit report for this amount and to require a plan to implement 
Comments to the Interim Audit Report 

Oklahoma Democratic Party 

(LRA978) 

Page 3 

monthly payroll logs simply because the Committee initially reported this activity as allocable 

between federal and non-federal funds. The Committee's contention, if supported by the filing 

of amended disclosure reports, suggests that its original reporting of the $200,440 in activity as 

"allocable" was erroneous. Given the Committee's apparent exclusive use of the federal funds to 

pay its employees, the Committee's intended amendments to characterize the activity as paid 

solely with federal funds appear reasonable. In light of the Commission's decision to not pursue 

a finding for failure to maintain logs when a committee pays salaries with 100% federal fimds, 

we do not think that a finding requiring the Committee to provide additional evidence that it 

maintained logs or to implement a plan to maintain logs for salaries paid exclusively with federal 

funds is warranted so long as the Committee files the amended disclosure reports prior to the 

Commission's issuance of the Final Audit Report on the Committee. See Office of General 

Counsel Conunents on Interim Audit Report on the South Dakota Democratic Party (LRA 885), 

p. 2.