FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

September 8, 2009 

MEMORANDUM 

To:	 Judith Ingram 

Press Officer 

From: Joseph F. StOltJ:z
 

Assistant Staff .. tor
 

Audit Divisio 

Subject:	 Public Issuance of the Audit Report on the Committee on Arrangements for 

the 2008 Republican National Convention 

Attached please find a copy of the audit report on the Committee on Arrangements 

for the 2008 Republican National Convention, which was approved by the Commission on 

August 27, 2009. 

All parties involved have received informational copies of the report and the report 

may be released to the public on September 8, 2009. 

Attachment as stated 

cc:	 Office of General Counsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library 

lTD Web 

-

FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

August 31,2009 

Timothy J. Morgan, Treasurer 

Committee on Arrangements for the 2008 

Republican National Convention 

310 First Street, SE 

Washington, DC 20003 

Dear Mr. Morgan: 

Attached please find the Report of the Audit Division on the Committee on 

Arrangements for the 2008 Republican National Convention (COA). The Commission 

approved the report on August 27,2009. As noted in the report, the Commission may 

pursue any of the matters discussed in an enforcement action. 

The report reflects COA's interim repayment made on July 27,2009 in the amount 

of $2.7 million. In accordance with 11 CFR §§9007.2(c)(1) and (d)(1), the Commission 

has made a determination that a repayment to the Secretary of the Treasury in the amount 

of $1 ,081 ,624 is required within 90 calendar days after the service of this report (November 

30,2009). The amount owed is the remainder of unspent funds from the $16,820,760 

provided to COA to finance the Republican National Convention (see Finding 1). 

Should you dispute the Commission's determination that a repayment is required, 

Commission regulations at 11 CFR §9008.12(c) provide you with an opportunity to submit 

in writing, within 60 calendar days after service of the Commission's notice (October 30, 

2009), legal and factual materials to demonstrate that no repayment, or a lesser repayment, 

is required. In addition to the submission of written materials, you may request an 

opportunity to address the Commission in open session. The request for an oral hearing 

should identify the repayment matters that win-be addressed and your presentation must be 

based on the legal and factual materials submitted. 

The Commission will consider any written legal and factual materials submitted 

within the 60-day period when deciding whether to revise the repayment determination. 

Such materials may be submitted by counsel. If you decide to file a response to the 

repayment determination, please contact Lorenzo Holloway of the Office of General 

Counsel at (202) 694-1650 or toll free at (800) 424-9530. If you do not dispute this 

determination within the 60-day period provided, it will be considered final. 
2 

The Commission approved report will be placed on the public record on September 8, 

2009. Should you have any questions regarding the public release of the report, please contact 

the Commission's Press Office at (202) 694-1220. Any questions you have related to matters 

covered during the audit or in the report should be directed to Zuzana Pacious or Marty Favin of 

the Audit Division at (202) 694-1200 or toll free at (800) 424-9530. 

Sincerely, 

Assistant 

JO~t!: Staff Director 

Audit Division 

Attachment as stated 
Report of the 

Audit Division on the Committee 

on Arrangements for the 2008 

Republican National Convention 

April 11, 2006 - December 31, 2008 

Why the Audit 

Was Done 

Federal law requires the 

Commission to audit the 

national committee of a 

party who receives 

payments for presidential .. . I nommatmg conventIOns. 

The audit examines the 

receipt and use of Federal 

funds and whether the 

committee otherwise 

complied with the 

limitations, prohibitions 

and disclosure 

requirements ofthe 

election law. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any ofthe 

matters discussed in this 

report. 

About the Committee (p. 2)
 

The Committee on Arrangements for the 2008 Republican National
 

Convention (COA) was responsible for the day to day arrangements
 

and operations of the Republican Presidential nominating convention.
 

COA is headquartered in Washington, DC. For more information,
 

see chart on the Committee Organization, p. 2.
 

Financial Activity (p. 2) 

• Receipts 

o Federal Funds $16,820,760 

o Loans Received 450,000 

o Offsets to Convention Expenditures 87,038 

o Total Receipts $17,357,798 

• Disbursements 

o Convention Expenditures $14,300,088 

o Loan Repayments 450,000 

o Total Disbursements $14,750,088 

Finding and Recommendation (p.3) 

• Net Outstanding Convention Expenses 

I 26 U.S.c. §9008(g) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1
 

Scope ofAudit 1
 

Inventory of Committee Records 1
 

Part II. Overview of Committee
 

Committee Organization 2
 

Overview ofFinancial Activity 2
 

Part III. Summary
 

Finding and Recommendation 3
 

Summary ofAmount Owed to the U.S. Treasury 3
 

Part IV. Finding and Recommendation 

Net Outstanding Convention Expenses 4
 
Part I 

Background 

Authority for Audit 

This report is based on an audit ofthe Committee on Arrangements for the 2008 

Republican National Convention (COA), undertaken by the Audit Division of the Federal 

Election Commission (the Commission) as mandated by Section 9008(g) of Title 26 of 

the United States Code. That section directs the Commission to conduct an examination 

and audit of the payments for presidential nominating conventions no later than 

December 31 of the calendar year in which the presidential nominating convention 

involved is held. 

Scope of Audit 

This audit examined: 

1.	 The disclosure of receipts and loans. 

2.	 The disclosure of disbursements, debts and obligations. 

3.	 The recordkeeping process and completeness ofrecords. 

4.	 The consistency between reported figures and bank records. 

5.	 The accuracy ofthe Statement ofNet Outstanding Convention Expenses. 

6.	 The committee's compliance with requirements concerning expenditures for 

convention expenses. 

7.	 Other committee operations necessary to the review. 

Inventory of Committee Records 

The Audit staff routinely conducts an inventory of committee records before it begins the 

audit fieldwork. The COA records were materially complete and the fieldwork began 

immediately. 
2 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date ofRegistration 

• Audit Coverage 

Committee on Arrangements for the 

2008 Republican National Convention 

April 3, 2006 

April 11, 2006 - December 31, 2008 

Headquarters Washington, DC 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Three Checking Accounts 

Treasurers 

• Treasurer When Audit Was Conducted Timothy J. Morgan 

• Treasurer During Period Covered by Audit Jay C. Banning (4/3/06 - 5/15/07) 

Timothy 1. Morgan (5/16/07 - Present) 

Mana~ement Information 

• Attended FEC Campaign Finance Seminar Yes 

• Used Commonly Available Campaign 

Management Software Package Yes 

•	 Who Handled Accounting and Paid Staff 

Recordkeeping Tasks 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand (iiJ April 11, 2006 $0 

0 Federal Funds 16,820,760 

0 Loans Received 450,000 

0 Offsets to Convention Expenditures 87,038 

Total Receipts 17,357,798 

0 Convention Expenditures 14,300,088 

0 Loan Repayments 450,000 

Total Disbursements $ 14,750,088 

Cash on hand @ December 31, 2008 $ 2,607,710 
3
 

Part III 

SUDlmaries 

Finding and Recommendation 

Net Outstanding Convention Expenses 

The COA received $16,820,760 to finance the Republican National Convention. The Statement 

of Net Outstanding Convention Expenses (NOCE), as calculated by the Audit staff at the time of 

the Preliminary Audit Report, showed an amount of unspent funds. The Audit staff 

recommended that the COA provide documentation demonstrating that either no repayment of 

unspent funds was due, or a lesser amount was due. Pursuant to 11 CFR §9008.12(b)(5), COA 

was required to make an interim repayment by July 30,2009. 

In response, COA demonstrated that adjustments to the actual and estimated winding down costs 

were required to account for the most recent financial activity. Likewise, a small adjustment to 

the receivable amount was made to correctly reflect the production advance withheld by the 

media vendor. On July 27,2009, COA made an interim repayment of$2.7 million. 

The Audit staff recommends that the Commission make a detennination that the remaining 

portion of unspent funds, $1,081,624, is repayable to the United States Treasury. (For more 

detail, see p. 4) 

Summary of Amounts Owed to the U.S. Treasury 

Net Outstanding Convention 

Ex enses ­ Su Ius 

$ 3,781,624 

Less: Pa ent Received 7/2712009 (2,700,000) 

Net Amount Owed to the United 

States Treasur 

$ 1,081,624 
4 

Part IV
 

Finding and Recommendation
 

INet Outstanding Convention Expenses 

Summary 

The COA received $16,820,760 to finance the Republican National Convention. The Statement 

of Net Outstanding Convention Expenses (NOCE), as calculated by the Audit staff at the time of 

the Preliminary Audit Report, showed an amount of unspent funds. The Audit staff 

recommended that the COA provide documentation demonstrating that either no repayment of 

unspent funds was due, or a lesser amount was due. Pursuant to 11 CFR §9008.12(b)(5), COA 

was required to make an interim repayment by July 30, 2009. 

In response, COA demonstrated that adjustments to the actual and estimated winding down costs 

were required to account for the most recent financial activity. Likewise, a small adjustment to 

the receivable amount was made to correctly reflect the production advance withheld by the 

media vendor. On July 27,2009, COA made an interim repayment of$2.7 million. 

The Audit staff recommends that the Commission make a determination that the remaining 

portion of unspent funds, $1,081,624, is repayable to the United States Treasury. 

Legal Standard 

A. Entitlement to Payments From the Fund. The national committee of a major party shall be 

entitled to payments with respect to any presidential nominating convention, in amounts that, in 

the aggregate shall not exceed $4,000,000, as adjusted by the Consumer Price Index. The major 

party entitlement for the 2008 nominating convention was $16,820,760. 26 U.S.C. §9008(b)(1) 

& (5). 

B. Repayments. Any portion of the entitlement that remains unspent after all convention 

expenses have been paid, shall be returned to the Secretary of the Treasury. The national 

committee or convention committee shall make an interim repayment of unspent funds based on 

the financial position ofthe committee as ofthe end of the ninth month following the last day of 

the convention, allowing for a reasonable amount as determined by the Commission to be 

withheld for unanticipated contingencies. The interim repayment shall be made no later than 30 

calendar days after the end of the ninth month following the last day of the convention. 11 CFR 

§9008.12(b)(5). 

C. Repayment Determination Procedures. The Commission will follow the same repayment 

determination procedures, and the committee has the same rights and obligations as are provided 

for repayment determinations involving publicly funded candidates under 11 CFR 9007.2(c) 

through (h). 11 CFR §9008.12(c). 
5
 

D. Net Outstanding Campaign Expenses (NOCE). A convention committee shall file, no later 

than sixty days after the last day ofthe convention, a statement of that committee's "net 

outstanding convention expenses." This statement must contain, among other things: 

•	 The total of all committee assets including cash on hand, amounts owed to the committee 

and capital assets listed at their fair market value; 

•	 The total of all outstanding obligations for qualified campaign expenses; and 

•	 An estimate of necessary winding-down costs. 11 CFR §9008.1 O(g). 

Facts and Analysis 

For the 2008 election, each major political party was entitled to receive $16,820,760 to finance 

its national presidential nominating convention. The 2008 Republican National Convention 

ended on September 4,2008. The COA filed a Statement ofNet Outstanding Convention 

Expenses as of October 19, 2008. The Audit staff reviewed financial activity through July 31, 

2009, and estimated the winding down cost in preparing the figures shown below. 

Committee on Arrangements for the 2008 Republican National Convention
 

Statement of Net Outstanding Convention Expenses
 

As of October 19, 2008
 

Prepared Through July 31, 2009
 

Assets 

Cash in Bank	 $3,726,622 

Accounts Receivable	 1,543,971 [a] 

Total Assets	 $5,270,593 

Liabilities 

Accounts Payable for Qualified Convention	 $1,066,221 

Expenses at 10/19/08 

Winding Down Costs: 

Actual (10/20/08 - 7/31/09)	 $367,498 

Estimated (8/1/09 - 1/31/1 0)	 55,250 422,748 

Total Liabilities	 $1,488,969 

Net Outstanding Convention Expenses (Surplus) as of October 19,2008 $3,781,624 

Footnotes to NOCE Statement: 

[a]	 As of October 19, 2008, this figure included a credit balance of $241 ,350 held by the media 

vendor for future bills. A portion of this advance, $191,350, was refunded to eOA in 

June 2009. The vendor plans to refund the remaining balance of $50,000 by September 1,2009. 

The documents provided by the media vendor suggest that no additional bills had to be paid. 
6 

The NOCE as calculated by the Audit staff shows a surplus, or an amount of unspent funds, of 

$3,781,624. 

Preliminary Audit Report Recommendation and Committee Response 

The Audit staff recommended that COA provide documentation demonstrating that either: (a) no 

repayment of unspent funds is due, or (b) a lesser amount is due. Pursuant to 11 CFR 

§9008.12(b)(5), COA was required to make an interim repayment by July 30,2009. 

In response, COA demonstrated that adjustments to the actual and estimated winding down costs 

were required to account for the most recent financial activity. Likewise, a small adjustment to 

the accounts receivable amount was made to correctly reflect the production advance withheld 

by the media vendor.2 On July 27,2009, COA made an interim repayment of$2.7 million. 

In follow-up communications, CGA representatives were in agreement with the revised figures 

presented by the Audit staff. The adjustments are included in the calculation of the amount of 

unspent funds in the NOCE Statement presented above. COA also stated that prior to 

termination it is prepared to make a repayment of the remaining unspent funds minus the 

necessary expenses to wind down the committee. In the meantime, COA will continue to 

provide the Commission with monthly updates on its financial position. 

Recommendation 

The Audit staff recommends that the Commission make a determination that the remaining 

portion of unspent funds, $1,081,624, is repayable to the United States Treasury. 

2 Based on the most recent cost report provided by the media vendor, the actual production advance withheld was 

$241,350 instead of the previously reported $238,790.