Interim Audit Report of the 

Audit Division on the Minnesota 

Democratic-Farmer-Labor Party 

(Januaiy 1, 2007 - December 31, 2008) 

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.' 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 of the 

matters discussed in this 

report. 

About the Committee (p. 2) 

The Minnesota Democratic-Farmer-Labor Party is a state party 

committee with headquarters in St. Paul, Minnesota. For more 

information, see the chart on the Committee Organization, p. 2. 

Financial Activity (p. 3) 

Receipts 

o Individual Contributions $ 1,839,117 

o Political Committee Contributions 2,233,845 

o Transfers from Affiliates 5,898,356 

o Transfers from Non-Federal 2,394,428 

Accounts 

o Recount Fund Contributions 694,850 

o Offsets and Other Receipts 1,042,345 

Total Receipts $ 14,102,941 

Disbursements 

o Operating Expenditures $ 6,458,425 

o Federal Election Activity 6,398,033 

o Transfers to Non-Federal 287,061 

Accounts 

o Contributions to Candidates 20,000 

o Coordinated Expenditures 266,844 

o Recount Expenditures 660,719 

Total Disbursements $ 14,091,082 

Findings and Recommendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Over-funding of Federal Accounts by Non-Federal Accounts 

(Finding 2) 

2U.S.C. §438(b). 
Interim Audit Report of the Audit 

Division on the Minnesota 

Democratic-Farmer-Labor Party 

(January 1, 2007 - December 31, 2008) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Limitations 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 3 

Part III. Smnmaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 5 

Finding 2. Over-funding of Federal Accounts by Non-Federal Accounts 10 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Miimesota Democratic-Farmer-Labor Party 

(MNDFL), 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 2 U.S.C. 

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

political committee that is required to file a report under 2 U.S.C. §434. Prior to 

conducting any audit under this subsection, the Commission must perform an intemal 

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. 2 U.S.C. §438(b). 

Scope of Audit 

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

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

4. the disclosure of disbursements, debts and obligations; 

5. the disclosure of expenses allocated between federal and non-federal accounts; 

6. the consistency between reported figures and bank records; 

7. the completeness of records; and 

8. other committee operations necessary to the review. 

Limitations 

The Audit staffs review of the transfer activity between the committee's federal and nonfederal accounts was limited because the MNDFL did not maintain adequate records to 

support the transfers. 
Part II 

Overview of Committee 

Cominittee Organization 

Important Dates 

• Date of Registration July 15,1975^ 

• Audit Coverage January 1,2007 - December 31,2008 

Headquarters St. Paul, Minnesota 

Bank Information 

• Bank Depositories Three 

• Bank Accounts 13 Federal Accounts 

Five Non-Federal Accounts 

Treasurer 

• Treasurer When Audit Was Conducted Lori Sellner [as of February 18,2009] 

• Treasurer During Period Covered by Audit William J. Davis 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

^ Tlie conimittee registered with Uie Secretary of tlie Senate as tlie Minnesota Dollars for Democrats (a federal 

committee of the Minnesota Democratic-Farmer-Labor State Party). In 1980, the committee filed an Amended 

Statement of Organization, changing the name of the committee to the Minnesota Democratic-Farmer-Labor Party. 
Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1,2007 $ 225,904 

Receipts 

o Individual Contributions $ 1,839,117 

o Political Conmiittee Contributions 2,233,845 

o Transfers from Affiliates 5,898,356 

o Transfers from Non-Federal Accounts 2,394,428 

o Recount Fund Contributions 694,850 

o Offsets and Other Receipts 1,042,345 

Total Receipts $ 14,102,941 

Disbursements 

o Operating Expenditures $ 6,458,425 

o Federal Election Activity 6,398,033 

o Transfers to Non-Federal Accounts 287,061 

o Contributions to Candidates 20,000 

o Coordinated Expenditures 266,844 

o Recount Expenditures 660.719 

Total Disbursements $ 14,091,082 

Cash on hand @ December 31,2008 $ 237,763 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

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

bank records revealed a misstatement of receipts and disbursements in calendar years 

2007 and 2008. The misstatements were due mainly to unreported transfers from the nonfederal accounts to the Payroll account and unreported receipts and operating 

expenditures. For 2007, the MNDFL understated the begiiming cash-on-hand by 

$12,957, receipts by $441,228, disbursements by $469,230 and overstated the ending 

cash-on-hand by $15,045. For 2008, the MNDFL understated receipts by $1,303,611, 

disbursements by $1,205,799 and the ending cash-on-hand by $82,767. The Audit staff 

recommends that the MNDFL amend its disclosure reports to correct the misstatements 

for both 2007 and 2008. 

In addition, the Audit staff identified an apparent prohibited contribution contained 

within the unreported receipts. The Audit staff recommends that the MNDFL either 

demonstrate that the contributor was permitted to make the contribution or refund the 

contribution. (For more detail, see p. 5) 

Finding 2. Over-funding of Federal Accounts by NonFederal Accounts 

During audit fieldwork, an analysis of the MNDFL's transfers from its non-federal 

accounts indicated that the MNDFL overfunded its federal accounts by $277,103. The 

overfunding resulted from unsupported transfers from the non-federal accounts to the 

federal accounts, an overfunding of the Payroll account for the non-federal portion of 

payroll, reported federal activity paid from the non-federal accounts and an underfunding 

of the federal accounts for the non-federal share of allocable activity. 

The Audit staff reconmiends that the MNDFL provide documentation to show that it did 

not overfund its federal accounts. If the MNDFL provides no additional documentation, 

the Audit staff recommends that the MNDFL reimburse the non-federal accounts 

$277,103. (For more detail, see p. 10) 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

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

bank records revealed a misstatement of receipts and disbursements in calendar years 

2007 and 2008. The misstatements were due mainly to unreported transfers from the nonfederal accounts to the Payroll account and unreported receipts and operating 

expenditures. For 2007, the MNDFL understated the begiiming cash-on-hand by 

$12,957, receipts by $441,228, disbursements by $469,230 and overstated the ending 

cash-on-hand by $15,045. For 2008, the MNDFL understated receipts by $1,303,611, 

disbursements by $1,205,799 and the ending cash-on-hand by $82,767. The Audit staff 

recommends that the MNDFL amend its disclosure reports to correct the misstatements 

for both 2007 and 2008. 

In addition, the Audit staff identified an apparent prohibited contribution contained 

within the unreported receipts. The Audit staff recommends that the MNDFL either 

demonstrate that the contributor was permitted to make the contribution or refund the 

contribution. 

Legal Standard 

A. Contents of Reports. Each report must disclose: 

• the amount of cash on hand at the begiiming 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). 2 U.S.C. §434(b)(l), (2), (3) and (4). 

B. Receipt of Prohibited Contributions - General Prohibition. Candidates and 

committees may not accept contributions (in the form of money, in-kind contributions or 

loans) from the treasury funds of the following prohibited sources: 

• corporations (this means any incorporated organization, including a non-stock 

corporation, an incorporated membership organization, and an incorporated 

cooperative); 

• labor organizations; or 

• national banks. 2 U.S.C. §441b. 

C. Contributions by Limited Liability Companies (LLC). A limited liability 

company is a business entity that is recognized as same under the laws of the state in 

which it is established. An LLC that elects to be treated as a corporation by the Intemal 

Revenue Service under 26 CFR 301.7701-3 shall be considered a corporation pursuant to 
11 CFR Part 114. An LLC that makes a contribution to a candidate or committee shall 

provide information as to how the contribution is to be attributed and affirm that it is 

eligible to make the contribution. 11 CFR § 110.1(g). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled the MNDFL's reported activity with its 

bank records and identified a misstatement of receipts and disbursements for calendar 

years 2007 and 2008. The following charts detail the discrepancies between the totals on 

the MNDFL's disclosure reports and bank records. Succeeding paragraphs explain why 

the discrepancies occurred, if known. 

2007Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

©January 1,2007 

$212,947 $225,904 $12,957 

Understated 

Receipts $1,381,869 $1,823,097 $441,228 

Understated 

Disbursements $1,409,884 $1,879,114 $469,230 

Understated 

Ending Cash Balance @ 

December 31, 2007 

$184,932 $169,887 $15,045 

Overstated 

The $12,957 understatement of the beginning cash balance was due mainly to prior 

period reporting discrepancies. 

The understatement of receipts was the net result of the following: 

• Unreported transfers from the non-federal account(s) to the 

Payroll Account for 100 percent non-federal payroll and 

benefits 

• Unreported non-payroll transfers from the non-federal 

account(s) 

• Non-federal share of vendor refunds reported as a negative 

receipt on Schedule H-3^ 

• Transfer from the non-federal account reported twice 

• Unexplained difference 

Net Understatement of Receipts 

$ 395,072 

46,040 

24,261 

(5,000) 

(19.145) 

$ 441.228 

^ A refund of the federal and non-federal share of allocable activity may be disclosed either as negative 

entries on Schedule H-4 or as a receipt on Line IS of Schedule A and a disbursement to the non-federal 

account for the non-federal share on Schedule H-4. 
The understatement of disbursements was the net result of the following: 

• Unreported 100 percent non-federal salaries, taxes and benefits $ 431,292 

paid from the Payroll account and federal account(s) 

Unreported transfer to the non-federal account 7,000 

Non-federal share of vendor refunds reported as a negative 24,261 

receipt on Schedule H-3 

Unreported operating expenditures 12,630 

Reported disbursements subsequently voided with no (1,392) 

adjustment made to reports 

Reported disbursements that did not clear the federal account(s) (4,173) 

Unexplained difference (388) 

Net Understatement of Disbursements $ 469.230 

The $15,045 overstatement of the ending cash balance resulted from the reporting 

discrepancies noted above. 

2008 Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1, 2008 

184.932 $169,887 $15,045 

Overstated 

Receipts $10,976,233 $12,279,844 $1,303,611 

Understated 

Disbursements $11,006,170 $12,211,969 $1,205,799 

Understated 

Ending Cash Balance @ 

December 31, 2008 

$154,996 $237,763 $82,767 

Understated 

The understatement of receipts was the net result of the following: 

• Unreported transfers from the non-federal account(s) to the $ 827,853 

Payroll Account for 100 percent non-federal payroll and 

benefits 

• Unreported non-payroll transfers from the non-federal 108.975 

account(s) 

• Non-federal share of vendor refunds reported as a negative 2.716 

receipt on Schedule H-3 

• Unreported receipts^ 402,186 

• Unreported in-kind contributions 13,127 

• Reported receipt deposited in the non-federal account (14,627) 

• Reported receipts that did not clear the federal account(s) (21,243) 

• Unexplained difference a5.376) 

Net Understatement of Receipts $ 1.303.611 

^ Includes a $150,000 non-federal receipt deposited into the federal account in error (funds were transferred 

to the non-federal account), an $81,000 reimbursement from the non-federal account for a non-federal 

expenditure paid by the federal account in error, a $61,000 transfer from a national party committee and a 

$16,000 transfer from an authorized committee. 
The understatement of disbursements was the net result of the following: 

Unreported 100 percent non-federal salaries, taxes and benefits $ 591,524 

paid from the Payroll account and federal account(s) 

Non-federal share of vendor refunds reported as a negative 2,716 

receipt on Schedule H-3 

Unreported operating expenditures 406,312 

Unreported bank and credit card fees 38.345 

Unreported transfers to non-federal account(s) 251,450 

Reported disbursements paid from the non-federal account(s) (51,105) 

Unreported in-kind contributions 16,111 

Reported disbursements subsequently voided with no (33,666) 

adjustment made to reports 

Reported disbursements that did not clear the federal account(s) (24,356) 

Unexplained difference 8.468 

Net Understatement of Disbursements $ 1.205.799 

The $82,767 understatement of the ending cash balance resulted from the reporting 

discrepancies noted above. 

The discrepancies in financial activity noted above occurred primarily because the 

MNDFL did not report certain payroll transactions involving the Payroll account and the 

federal administrative accounts. The MNDFL separated its employees into two classes: 

100 percent federal and 100 percent non-federal. A MNDFL representative stated that 

the MNDFL established the system to ease the administrative burden of payroll 

processing. If an employee spent any time working on federal activity during the pay 

period, he or she was paid 100 percent from federal funds transferred to the Payroll 

account and the MNDFL disclosed the salary payments on Schedule B. If an employee 

spent the pay period working solely on non-federal activity, the MNDFL paid them 100 

percent from non-federal funds transferred to the Payroll account, but did not report the 

salary and related costs. 

The MNDFL paid all salaries and related employee taxes from one Payroll account 

administered by MNDFL staff and paid employee health insurance and retirement 

benefits from the federal administrative accounts. Transfers from the federal and nonfederal accounts funded the Payroll account. The Audit staff included the Payroll 

account as a federal account.^ The MNDFL disclosed only the federal activity paid out of 

the Payroll account and the portion of benefits relating to federal employees paid from 

the federal administrative accounts. An analysis of the salaries paid to all employees 

during the audit period showed that the MNDFL paid $3,176,793 (81 percent) of the 

salaries as 100 percent federal and $756,744 (19 percent) as 100 percent non-federal. 

^ There was no allocated payroll. 

^ A federal account means an account at a campaign depository that contains funds to be used in connection 

with a Federal election. 11 CFR §300.2(f). 
Subsequent to the period under audit, the MNDFL established a separate non-federal 

Payroll account. 

The MNDFL also processed the payroll costs for the employees of three federal 

candidate conunittees and included them in the payroll amounts above. The candidate 

committees reimbursed the MNDFL to offset the payroll costs for their employees. The 

MNDFL and the candidate committees properly disclosed the salary payments and 

reimbursements. The MNDFL made expenditures for salary payments totaling $731,449 

and the candidate committees reimbursed the MNDFL $705,734. The salary payments in 

excess of the reimbursement amount ($25,715) resulted in an in-kind contribution to the 

candidates from the MNDFL.^ 

A $10,000 contribution from South Clinton Street Investments, LLC (SCSI) was included 

among the 2008 unreported in-kind contributions. During the 2008 Democratic National 

Convention held in Denver, Colorado, the MNDFL contracted with the Four Points by 

Sheraton Denver Southeast to provide catering services for the Minnesota State 

delegation. On August 24,2008, the coinmittee paid the hotel a deposit of $17,634. The 

hotel provided catering services on August 25 - 29, 2008, totaling $36,943. leaving a 

balance due of $19,309. On September 22,2008, the hotel applied a $10,000 check 

drawn on the operating account of SCSI to the MNDFL's account. The MNDFL did not 

report this in-kind contribution and the Audit staff did not find any documentation in the 

MNDFL's files to show that SCSI was permitted to make the contribution. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference. Audit staff provided the MNDFL representatives with workpapers 

detailing the misstatements of financial activity, including the apparent prohibited 

contribution. Regarding the Payroll account, counsel for the MNDFL stated that the 

Payroll account was neither a federal nor a non-federal account, but merely a passthrough account established to reduce the administrative workload of the MNDFL, and 

only the expenditures related to federal activity needed to be reported.^ 

Audit staff and the MNDFL representative discussed the contribution from SCSI before 

and at the exit conference. Audit staff requested that MNDFL provide information and/or 

documentation to show that the payment was either not a contribution or that SCSI was 

permitted to make a contribution. To date, the MNDFL has not submitted any additional 

documentation conceming this matter. 

^ The Audit staff concluded that the excess salary payments made on behalf of two of the candidates were 

permissible because they did not exceed the contribution limit for a state party committee to a federal 

candidate. For the remaining candidate, the in-kind contribution exceeded the contribution limit by 

$ 11,368. Since the MNDFL had not exceeded its limit for coordinated expenditures for this candidate, the 

Audit staff concluded that the excess payments were permissible. 

^ In the Final Audit Report of the Commission on the Georgia Federal Elections Committee, where funds 

were transferred from federal and non-federal accounts to a payroll escrow account at the request of a third 

party payroll vendor that could not draw funds from two different accounts, the Commission concluded that 

the committee did not have to further amend its reports in relation to transactions involving the payroll 

escrow account. 
10 

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

MNDFL: 

• amend its reports to correct the misstatements for 2007 and 2008 as noted above; 

• amend its most recent report to coirect the cash-on-hand balance with an 

explanation that the change resulted from a prior period audit adjustment; 

• reconcile the cash balance of its most recent report to identify any subsequent 

discrepancies that may affect the adjustment recommended by the Audit staff; and 

• provide evidence to show that the unreported in-kind payment made by South 

Clinton Street Investments, LLC was either not a contribution or that SCSI was 

permitted to make a contribution. Absent such evidence, the Audit staff 

recommends that the MNDFL report the in-kind contribution and refund $10,000 

to South Clinton Street Investments, LLC. 

Finding 2. Over-funding of Federal Accounts by NonFederal Accounts 

Summary 

During audit fieldwork. an analysis of the MNDFL's transfers from its non-federal 

accounts indicated that the coinmittee may have overfunded its federal accounts by as 

much as $277,103. The overfunding resulted from unsupported transfers from the nonfederal accounts to the federal accounts, an overfunding of the Payroll account for the 

non-federal portion of payroll, reported federal activity paid from the non-federal 

accounts and an underfimding of the federal accounts for the non-federal share of 

allocable activity. 

The Audit staff recommends that the MNDFL provide documentation to show that it did 

not overfund its federal accounts. If the MNDFL provides no additional documentation, 

the Audit staff recommends that the MNDFL reimburse the non-federal accounts 

$277,103. 

Legal Standard 

A. Accounts for Federal and Non-Federal Activity. A party committee that finances 

political activity in connection with both federal and non-federal elections may establish 

two accounts (federal and non-federal) and allocate shared expenses - expenses that 

simultaneously support federal and non-federal election activity - between the two 

accounts. Altematively, the committee may conduct both federal and non-federal activity 

from one bank account, which is considered a federal account. 11 CFR §102.5(a)(l)(i). 

B. Federal v. Non-Federal Account. The federal account may contain only those funds 

that are permissible under the federal election law. The non-federal account may contain 

funds that are not permitted under the federal law (but are legal under state law), such as 

contributions that exceed the limits of the federal law and contributions from otherwise 

prohibited sources, such as corporations and labor organizations. 11 CFR §102.5(a)(l)(i) 

and (a)(3). 
11 

C. Transfers. Generally, a political conmiittee may not transfer funds from its nonfederal account to its federal account, except when die conmiittee follows specific mles 

for paying for shared federal/non-federal election activity. 11 CFR §§102.5(a)(l)(i) and 

106.5(g). 

D. Paying for Allocable Expenses. The Commission regulations offer party conmiittees 

two ways to pay for allocable, shared federal/non-federal expenses. 

• They may pay the entire amount of the shared expense from the federal account 

and transfer funds from the non-federal account to the federal account to cover the 

non-federal share of that expense; or 

• They may establish a separate allocation account into which the committee 

deposits funds from both its federal and non-federal accounts solely for the 

purpose of paying the allocable expenses of shared federal/non-federal activities. 

11 CFR §106.5(g)(l)(i) and (ii)(A). 

£. Reporting Allocable Expenses. A political committee that allocates federal/nonfederal expenses must report each disbursement it makes from its federal account (or 

separate allocation account) to pay for a shared federal/non-federal expense. Conimittees 

report these kinds of disbursements on Schedule H-4. 11 CFR §104.17(b). 

F. Salaries and Wages. Conmiittees must keep a monthly log of the percentage of time 

each employee spends in connection with a Federal election. Employees who spend 25 

percent or less of their compensated time in a given month on Federal election activity or 

on activities in connection with a Federal election must either be paid only from the 

Federal account or be allocated as an administrative cost. 11 CFR § 106.7(d)(1). 

Facts and Analysis 

A. Facts 

The MNDFL reported a total of $1,055,437 as the non-federal share of allocated activity 

and reported $1,041,688 in transfers from the non-federal accounts to the federal 

accounts, resulting in an underfunding of $13,748. The Audit staff did not find any 

documentation to support the amounts transferred from the non-federal accounts to 

reimburse the federal account for the non-federal share of allocated activity. 

The MNDFL used a single Payroll account to pay employee salaries (both 100 percent 

federal and 100 percent non-federal - no employee salaries were allocated) and related 

taxes. The MNDFL paid employee benefits out of a federal administrative account and 

transferred funds from the federal and non-federal accounts to the Payroll account to pay 

salaries and taxes. The MNDFL did not report any of the non-federal payroll activity. 

The Audit staff identified total non-federal payroll expenditures of $1,129,157. including 

$756,744 for salaries, $226,155 for taxes and $146,257 for benefits. The MNDFL 

transferred a total of $1,215,520 from the non-federal accounts to the Payroll account for 

its share of payroll, resulting in an overfunding of $86,363 for the non-federal portion.^ 

^ See committee statement concerning the Payroll account on page 8. 
12 

Transactions with limited documentation 

The MNDFL reported $51,105 as federal activity paid from the non-federal accounts. 

Due to the lack of supporting documentation, the Audit staff was unable to determine if 

the MNDFL reimbursed the non-federal accounts for any of this reported federal 

activity. 

The MNDFL also made unsupported transfers from the non-federal accounts to the 

federal accounts totaling $38,263 for 2007 and $115,120 for 2008. Due to the lack of 

supporting documentation, the Audit staff was unable to determine if the transfers from 

the non-federal account were for the non-federal portion of shared activity. 

When this reported federal activity paid from the non-federal accounts and the 

unsupported transfers from the non-federal accounts are included with reported shared 

activity and non-federal payroll activity, it appears that the committee overfunded the 

federal accounts by $277,103. 

However, it is noted that the Audit staff identified a total of $103,450 in transfers from 

the federal accounts to non-federal accounts that lacked adequate supporting 

documentation detailing the purpose of the transfer. If supported by documentation that 

shows the transfers were related to any of the activity noted above, the amount of 

overfunding by the non-federal accounts may be reduced. 

In summary, the overfunding by the non-federal accounts is due to: 

Underfunding of non-federal portion of shared activity ($ 13,748) 

Overfunding of non-federal payroll 86,363 

Unsupported transfers from non-federal accounts 153,383 

Reported federal activity paid from non-federal accounts 51.105 

Total over-fimding by the non-federal account $ 277.103 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff provided the MNDFL representatives with 

workpapers detailing the transfer activity noted above. Committee representatives 

provided no additional comments. 

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

MNDFL provide documentation that shows: 

• the MNDFL did not make disbursements from the non-federal accounts for the 

purpose of financing federal activity; 

• reported federal activity paid from the non-federal accounts was reimbursed by 

the federal accounts; and 

• the unsupported transfers from the non-federal accounts were made for purposes 

other than federal activity. 
13 

Ll addition, the Audit staff recommends that the MNDFL provide any additional 

comments and/or documentation that details the purpose of the transfers of $103,450 

made from the federal accounts to the non-federal accounts. 

If the MNDFL is unable to provide any documentation to reduce the amount of 

overfunding noted above, the Audit staff recommends that the MNDFL reimburse 

$277,103 to the non-federal account.