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FEDERAL ELECTION COMI\11SSION

H.?Cj K SIIU iT N.\\'.

\V/\~HING lON,ll(. 204b.\

REPORT OF THE AUDIT DIVISION

ON

POTTS FOR CONGRESS COMMITTEE

I. Backgrounc!

A. Overv; ew

This report is based on an audit of the Potts for

Congress Committee (lithe Committee") undertaken by the Audit

Division of the Federal Election Commission in accordance with

the COfflmission's audit policy to determine whether there has

been compliance with the provisions of the Federal Election Carnpai~n Act of 1971, as amended (lithe Act"). The audit was

conducted pursuant to Section 438(a)(8) which directs the

Commission to make from time to time audits and field investigations with respect to reports and statements filed under

the provisions of the Act.

The Committee registered with the Federal Election

Commission on March 22, 1976. in support of Pobert l. Potts, d

candidate for election to the office of Representative from the

Fifth (5th) Conqressiona1 District of Alabama. The Committee.

maintains its headquarters in Florence, Alabama.

The audit covered the period from March 17, 1976, the

inception date of the Committee through June 30, 1977, the final

coverage date of the latest report filed by the Committee at the

close of the audit. During that period, the Committee reported

a beginning cash balance of $-0-, total receipts of $79,462.06,

total expenditures of $79,037.02, and a closing cash balance on

Dec em be r 31, 1976 0 f $42 5 • 04 • 11

This audit report is based on documents and working

papers which support each of the factual statements. They fO~M

part of the record upon which the Commission based its decisions

on the matters in the report and were available to Commissioners

and appropriate staff for review.

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The Committee was

for the first two

"\\If""filed on April 7, ~(W~~, :" ~'1~ ': i: "-.# \. :: ... tIT~'1 .- ",. ," I. '" "t' •

exempt from filing disclosure reports

quarters of 1977. The FEe Forms 3a were

1977, and July 12, 1977 •
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B. Key Personnel

The principal officers of the Committee were Mr. Robert

E. Jones, III, Chairman, and Mr. Donald H. Patterson, Treasurer,

during the period of the audit.

c. Scope

The audit included such tests as verification of

reported receipts and expenditures and individual transactions;

review of required supporting documentation; analysis of

Committee debts and obligations; and, such other audit procedures

as deemed necessary under the circumstances.

II. Auditor's Statement and Description of Findings

It is the opinion of the Audit staff, based upon examination

of the reports and statements filed and the records presented, that except for the deficiencies noted below, the reports and

statements of the Potts for Congress Committee fairly present the

financial activities of the committee for the period covered by the audit. Further, except as noted below, no material problems in complying with the Federal Election Campaign Act were

discovered during the course of the audit.

A. Excessive Cash Contributions

Section 441g of Title 2, United States Code, prohibits

any person from making contributions of currency to or for

the benefit of any candidate which, in the aggregate, exceed

$100, with respect to any campaiqn for nomination for election,

or for election, to Federal office.

Section ll0.4(c)(2) of the Commission's Regulations requires a candidate or committee receiving a cash contribution

in excess of $100 to promptly return the amount over $100 to

the contributor.

Our review of the contribution records disclosed four

(4) contributors who gave currency in excess of $100. One (1)

contributor gave cash of $500, two (2) contributors gave cash

of $250 each, and one (1) contributor gave $200 in cash. The

Committee officials stated that they were not aware of the

prohibition in the Act or the requirement of the Commission's

Regulations regarding excessive contributions of cash. Per the

Audit staff's request, the Committee refunded the contributions

of currency in excess of S100 and on February 9, 1978, submitted

to the Audit staff information disclosing that the contributions

had been refunded •
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Recommendation

We recommend that no further action be taken by the

Commission on this matter.

B. Corporate Contributions

Section 441b(a) of Title 2, United States Code,

prohibits any corporation from making a contribution in

connection with any Federal election.

Our review of the contribution records disclosed that

the Committee inadvertently accepted a corporate contribution

for $25.00 on March 25, 1976. Per our request, the Committee

refunded the contribution and on November 18, 1977, submitted

to the Audit staff information disclosing that the contribution

had been refunded.

Recommendation

We recommend that no further action be taken by the

Commission on this matter.

C. Itemization of Expenditures

Section 434(b){9) of Title 2, United States Code,

requires a political committee to disclose the name and

address of each person to whom expenditures have been made

by or on behalf of the committee which in the aggregate exceed $100, together with the amount, date, and purpose of

each such expenditure.

Our examination of the Committee expenditure records

rev cal edthat 15 expen di t ures (2 6. 32r

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itemizable expenditures were not itemized on the disclosure

rep0 r' t s . The 15 expen di t ures totall ed $648. 18 (. 84I:~) 0 f the

$76,885.32 in itemizable expenditures. This was a result of the

Committee not maintaining an aggregation system to identify multiple expenditures of less than S100, but aggregating in

excess of $100 to the same person. Per our request, the

Committee filed an amended report properly disclosing this

information on October 26, 1977.

Recommendation

We recommend no further action be taken by the Commission

on this matter .

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Section 432(d) of Title 2, United States Code, requires the treasurer to obtain and to keep a receipted bill, stating the

particulars, for every expenditure made by or on behalf of a

political committee in excess of $100, and for any such exp~nditures in a lesser amount if the aqgregate amount of

such expenditures to the same person during the calendar year exceeds $100.

Our examination revealed that the Committee had no

vouchers to support 35 (61.4~) of the 57 itemizable expenditures. The 35 expenditures totalled $40.131.82 (52.20~ of itemizable

expenditures). The Committee thought that they had substantially complied with the law and that their recordkeeping procedures were

adequate to support the expenditures. Per our request. the

Committee contacted the vendors and obtained additional documentation for the 35 expenditures.

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Supporting Documentation

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Recommendation

We recommend no further action be taken by the Commission

on this matter.

E. Authorization of Principal Campaign Committee

by a Candidate

Section 432(e)(1) of Title 2, United States Code,

requires each individual who is a candidate for Federal office

to designate a political committee to serve as his principal

campaign committee.

Our examination revealed there was no record of the

filing of FEe Form 2 by the Candidate authorizing a principal campaign committee. Jhe Candidate thought this form had been

filed. On October 26, 1977, the Candidate filed FEC Form 2

designating the Potts for Congress Committee as his principal

campaign committee.

Recommendation

We will recommend that no further action be taken by the

Commission on this matter .

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• Robert Potts I Potts for Congress Conmittee

CONG~ESSluNAL ~GO[T KEPORT

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Alabama

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District:

C~ndidate/Cc~roi:~ee:

State:

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Location: Huntsville - Northern Alabama

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-.. Political ?ar~y Affiliation: Democrat

Major Opponent(s): John Eyster (D), Ronnie Flippo (D), Lynn Greer (0),

Jyles Machen (D1, Gene McLain (0)

~. Other Candida:as ~udi~=d: Eyster, Flippo, Greer, Machen, McLain

Prirn~y ~l~c~~on - ,

Votes Cast: Ger-~rai Elec~icn - Ronald Flippo - Unopposed

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Tbtal Recei~:s fer ?ericd:

Flippo 25,343

Machen 17,059

Potts 14,553

$79,462.06

Eyster 22,456 ~1cLain 11,679

Greer 5,283

Total Expendi:ures for ?eriod: $79,037.02

First ~1ec:~~ (;7 a~pi~cabla): N/A

* Flippo won run-off•

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