Draft Final Audit Report of the 

Audit Division on the NY 

Republican Federal Campaign 

Committee 

(Januaiy 1, 2011 - December 31, 2012) 

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. Cdmpli^ with 

the linaitations, 

prohibitiens.md 

disclosure requirements 

of the Act. • 

About the Committee (p..2) 

The NY Republican Federal Carripaign Committee is a state party 

committee headquartered in Aiblihy, New.York. For more 

information, see the chart on the Comraitt^Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions fromi Iiidividuals 

o Contributions from Political 

Coihinittees 

o Transfera fiom Affiliated and 

Other Political ppmmittees .• 

o Transfers horri Nori-f^eral 

Accounts 

o Other Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

' o Refunds of Contributions 

o Federal Election Activity 

o Other Disbursements 

Total Disbursements 

$ 1,606,371 

257,350 

2,522,875 

1,682,587 

177,507 

S 6,246,690 

$2,921,022 

20,200 

2,716,291 

350.929 

$6,008,442 

Future Action 

The Commission may '• 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

• Disclosure of Occupation/Name of Employer (Finding 3) 

• Reporting of Apparent Independent Expenditures (Finding 4) 

• Recordkeeping for Communications (Finding 5) 

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

Audit Division on the 

NY Republican Federal Campaign 

Committee 

(January 1, 2011 - Deqember 31, 2012) 

* " A .. „ • 

• r 

•v.v • •<* 

i: . •)"' 

* \ 
TieMe of ^ntelits 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part in. Summaries 

Findings and Recommendations 

Part IV. Findings and Recommendail 

Finding!. Misstatement of Finanai ^ l.y%. 

Finding 2. Recordkeeping for E^pii 

Findings. Disclosure of Occupatioi -

Finding 4. Reporting of Apparent lnd.e^d'en ^^riditures 

Findings. Recordkeeping for.Gornmuhic 

-v. 

1 

1 

1. 

2 

2 <-• * 

S 

-. 

5 

8 

10 

12 

17 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the NY Republican Federal Campaign Committee^ (NYR), 

undertdcen 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 52 U.S.C. §30111(b), which permits the Commission to 

conduct audits and field investigations of any political committee that is,'i^uired to file a .report 

under 52 U.S.C. §30104. Prior to conducting any audit under this subUctioiC the Cbmmissibh must 

perform an internal review of reports filed by selected committee? tb ^^rmine if the reports filed 

by a paiticular committee meet the threshold requirements for suB'stantidk^thpllance with the Act. 

52 U.S.C. §30111 (b). . . %. 

ScopeofAudit 

Following Commission-approved procedures, the Audit-?tafr evaluated various risk ^tors and as a 

result, this audit examined: • ' 

1. the disclosure of individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; • * 

3. the disclosure of expenses allocated betwben federal and nori-fqderal accounts; 

4. the consistency between reported figures and bstnl^ records; 

5. the completeness of records; >, ' 

6. the disclosure of independent expenditures; and . • ' 

7. other committee operatipns^ti^^gssary to the review. 

Commission Guidance 

Request for Early Commissi<>|i,jC6iisideratipn..o Question 

Pursuant to t^!,C6ii^ssj^n's "^c^y Statemmt.lEstablishihg a Program for Requesting 

Consideratipn of Legalti^Uestions^.^ Commission," several state party committees unaffiliated 

with NY^requested earlylip^ideratrdn o|;a legal question raised during audits covering the 2010 

election c^cle. Specifically, tp>COmmisaion addressed whether monthly time logs under 11 CFR 

§106.7(d)(l)^e^ required fof^mployees paid with 100 percent federal funds. 

The Commission concluded, bya vote of 5-1, that 11 CFR §106.7(d)(l) does require committees to 

keep a monthly log fe^pmplpyees paid exclusively with federal funds. Exercising its prosecutorial 

discretion, however, the Commission decided it will not pursue recordkeeping violations for the 

failure to keep time logs or to provide affidavits to account for employee salaries paid with 100 

percent federal funds and reported as such. The Audit staff informed NYR representatives of the 

payroll log requirement and of the Commission's decision not to pursue recordkeeping violations 

for failure to keep payroll logs for salaries paid and correctly reported as 100 percent federal. This 

audit report does not include any findings or recommendations with respect to NYR employees paid 

with 100 percent federal funds and reported as such. 

' On December 23,2013, the Commission received a Statement of Organization from the New York Republican Federal 

Campaign Committee officially changing its name to NY Republican Federal Campaign Committee. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration August 2,1976 

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

Headquarters Albany, NevcTork 

Bank Information 

• Bank Depositories Two 

• Bank Accounts EightFederal, Two Non-fed^ak 

Treasurer 

• Treasurer When Audit Was Conducted Johii'IUpdman,(3/18/11 - PresenO 

a Treasurer During Period Covered by Audit Jane CbiHini: 10/5/09 - 3/17/11) 

Management Information 

• Attended Commission Campaign Finam^.^ ^ 

Seminar . ' *• 

Yes 

I * • p 

• Who Handled Accounting and 

Recordkeeping Tasks 

O^rview of Fii 

(Audited. 

PaidSt^. 

lancial Activity 

tiiioiiiits) 

Cash-on-hand j(^\Faiiuary If 20ill ' f". S 59,732 

Receipts.^' - ^ 

o ConBa^utions. from Indi^uals V?.-: >.. • 1.606,371 

o Cdhtri^tigns fiom Politi^fCommijit^s 257.350 

o Transfers i^m Affiliated Other Political 

Committees' \ „ M 2,522,875 

o Transfers from l^sn-federal Accounts 1,682,587 

o Other Receipts 177,507 

Total Receipts S 6.246,690 

Disbursements 

o Operating Expenditures 2,921,022 

o Refunds of Contributions 20,200 

o Federal Election Activity 2,716,291 

o Other Disbursements 350,929 

Total Disbursements S 6,008,442 

Cash-on-hand @ December 31,2012 S 297,980 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of NYR's reported financial a^vity with bank 

records revealed material misstatements in both 2011 and 2012. In response to the 

Interim Audit Report recommendation, NYR stated that, it would be costly and perhaps 

impossible to reconstruct the records necessary to recreate.its filings. NYR did not file 

amended disclosure reports to correct the misstatements. As such, NYR's reported 

financial activity for 2011 and 2012 remains materially misstated for receipts and 

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

# 

Finding 2. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that^Y-R did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal eledtiqn. For 2011 and 2012, the Audit staff identified 

payments to NYR employees totaling S7i3,427 for which NYR did not maintain monthly 

payroll logs. This consisted of payroll which was' allocated with federal and non-federal 

funds. Tliere was no payroll paid exclusively with non-;federal funds. In response to the 

Interim Audit Report recgmrnendation, NYR concurred with the finding by 

acknowledging the need to improve its system for keepinjg and maintaining monthly 

employee payroll logs, and hasjinplemented procedures that will maintain the necessary 

documentation in the'fiiture. (For more detail, see p. 8.) 

Finding 3.. Discloddre bflOccupation/Name of Employer 

A review of contributions fronf individuals requiring itemization indicated that 20S 

contributions totaling $563,191 lacked or had inadequate disclosure of occupation and/or 

name of employer. In addition, "best efforts" to obtain, maintain and submit the 

information had not been^fficiently documented for these contributions. In response to 

the Interim Audit Report recommendation, NYR included memo entries in its most 

recently filed disclosure report providing the missing contributor information. 

(For more detail, see p. .-16.) (• Finding 4. Reporting of Apparent Independent Expenditures 

During audit fieldwork, the Audit staff reviewed expenditures totaling $1,352,118, that 

NYR disclosed on Schedule B, Line 30(b), (Federal Election Activity Paid Entirely with 

Federal Funds), that appear to be apparent independent expenditures that should have 

been disclosed on Schedule E, Line 24, (Independent Expenditures). NYR maintained 

that these expenditures were part of its non-allocable mail program. NYR provided 

documentation supporting the use of volunteers, totaling $209,615. 
Additionally, NYR did not provide sufficient documentation pertaining to dissemination 

dates to verify whether 24/48-hour reports were required to be filed for the apparent 

independent expenditures totaling $1,142,503. 

In response to the Interim Audit Report recommendations, NYR submitted additional 

documentation and reiterated that the expenditures were part of its volunteer mail 

program. (For more detail, see p. 12.) 

Finding 5. Recordkeeping for Communications 

During audit fieldwork, the Audit staff reviewed disbursements tp^Vgfify the accuracy of 

information and proper classification of transactions disclosed.^ reports. The Audit 

staff identified $77,354 for which sufficient records were nc^f-proyid.^. Without a copy 

of the invoices and the associated conununications, the Audit sta^^i^-ltqable to determine 

how NYR should have reported these disbursements. . .^YR'did. not #^riKs this finding 

in its response to the Interim Audit Report. (For morb dethil, see p. 17.-f ^^^.; 

-

• y. 

•6: • ' 

• 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit rieldwork, a comparison of NYR's reported financial activity with bank 

records revealed material misstatements in both 2011 and 2012. In-.response to the 

Interim Audit Report recommendation, NYR stated that, it would be costly and perhaps 

impossible to reconstruct the records necessary to recreate its filL^. NYR did not file 

amended disclosure reports to correct the misstatements. such;^NYR's reported 

financial activity for 2011 and 2012 remains materially.miss;tated for r^beipts and 

disbursements. ' 

Legal Standard 

A. Contents of Reports. Each report must disclose: ^ 

• the amount of cash-on-hand at the beginning and end of the reporting period; 

• the total amount of receipts for the reporting period aiid for the calendar year; 

• the total amount of disbursements for the reporting period .and for the calendar year; 

and M • 

• certain transactions that require itemization on-Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §301p4(b)(l), (2), (3), (4) and (5). 

B. Federal vs. Non-Federd Account. The federal account may not accept funds that 

are not permissible under federal election law. 11 CFR §§l02.5(a)(I)(i) and 11 CFR 

§§102.5(a)(2)(i)-(iii). 

Facts and Analysis 

A.. Facts 

Durl^-audit fieldwork.-the Audit staff reconciled NYR's reported financial activity with 

its bank records for 2011 and 2012. The reconciliation identified that NYR misstated 

receipts arid disbursements for 2011 and 2012. The following charts outline the 

discrepancies between NYR's disclosure reports and its bank records, and the succeeding 

paragraphs explain why the discrepancies occurred. 
2011 Committee Activity 

Reported Bank Records Discrepancy 

Begirming Cash Balance @ 

January 1,2011 

$57,528 $59,732 $2,204 

Understated 

Receipts $1,620,406 $1,825,306 $204,900 

Understated 

Disbursements $1,562,000 $1,753,367 

/ 

$191,367 

Understated 

Ending Cash Balance @ 

December 31,2011 

$115,934 $131,671 $15,737 

Understated 

The beginning cash balance was understated by $2,204.and is unexpl^ihed, but likely 

resulted from prior-period discrepancies. •j: 

The understatement of receipts resulted from tlip^Qllowing: 

• Transfers from non-federal accounts for allowable ac^vity, 

not reported 

• Unreported deposit 

• Non-federal egntributions dep^ilfj^ in the 

federal account, not report^ .. .. • 

• Unexplained differences 

Net Understatement of. Receipts . 

The understatement^^f idisbivfements resulted from the fol lowing: 

• Transfer of n.Qn-federai' contributions to.the non-federal 

account, not ri^brted 

Net credit card charges, tiof reported 

V !••• " ^ • 

+ 

+ 

$14,321 

975 

190,000 

396 

+ 

+ 

$204.900 

190,000 

1,563 

m 

Net Understatement df^js.bursements 

The $15 J37 understaterr^nt of the.ending cash balance resulted from the misstatements 

describe(i,Bbove. 

2012 Committee A6tivi^ 

Reported Bank Records Discrepancy 

Begirming Cash Balance @ 

January 1,2012 

$115,934 $131,671 $15,737 

Understated 

Receipts $4,272,137 $4,421,384 $149,247 

Understated 

Disbursements $4,103,481 $4,255,074 $151,593 

Understated 

Ending Cash Balance @ 

December 31,2012 

$284,590 $297,981 $13,391 

Understated 
The understatement of receipts resulted from the following: 

• Transfers from non-federal accounts for allocable activity, 

not reported 

• Non-federal contributions deposited in the 

federal account, not reported 

• Unexplained differences 

Net Understatement of Receipts 

+ SI 1,750 

+ 157,447 

19,95fi 

+ 0^2.212 

The understatement of disbursements resulted from the fdlloSvini 

Transfer of non-federal contributions to the nbn-feder^y^^ 

account, not reported , - -

Unexplained differences 

Net Understatement of Disbursements 

The $13,391 understatement of the ending cash ^wce resulted from the 

described above. t'f. 

157,447 

L854 

For the $347,447 ($190,000 + $157,447) not rep tyje, NYR stated it used a federal 

account as its merchant account, deppsiting federal and tion^.federal contributions. 

Subsequently, NYR would transfer "a^ l^tributibn that V^i^m^^rally 

impermissible funds^ or that exceeded —. 

federal account. NYR stated that some of the ( 

which the credit cards contributions were 

. • V 

The Audit staff coi 

federal account totl^j^g $3 lOi 

contributions. The Aqajfrgtoffj 

$37,447, hpiveyer, was^bl 

via 12 indmdiiaii;|i^sactiG 

these lifon-federal I 

? ..to the appropriate nonies werg due to the manner in 

I one 

, that were ii 

i.unable to i 

finallyjthOi 

three credit card deposits into the 

ifigd by NYR as non-federal 

ify the bank deposits for the remaining 

transferred to the non-federal account 

it staff was able to verify $321,647 of 

B. Interim Audit Report,^ 

The Auditrs^iffdiscussed'-il 

drted as contributions on the state reports.-

: Audit'Divisipn Recommendation 

I misstatement of receipts and disbursements with the NYR 

represe.ntatives,.at the exit conference. NYR representatives asked questions for 

clarification and'said they: wpuld respond after having lime fo review each issue. The. 

Audit staff provided^ehedules detailing the misstatement of receipts and disbursements. 

In response to the exit conference, NYR stated all federal and non-federal credit card 

contributions were deposited in the federal account as a matter of administrative 

convenience. 

Furthermore, the NYR representatives stated that the order to ensure greater compliance 

and avoid accepting impermissible funds in the federal account, they have implemented a 

^ In response to the exit conlerence, NYR representatives stated these contributions were federally 

permissible. Due to the lack of documentation, the Audit staff was unable to verify the permissibility of 

the contributions. 
new system for processing credit card contributions. Through a new software vendor, 

NYR staff determines whether the contributions should be deposited in the federal or 

non-federal account based on the Commission and New York State Board of Elections 

regulations. Once identified, contributions are deposited directly into the appropriate 

NYR bank account. 

The Interim Audit Report recommended that NYR amend its disclosure reports to correct 

the misstatements noted above and reconcile the cash balance on its most recent report to 

identify any subsequent discrepancies that could affect the recommended adjustments. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, K¥R s^d that, it would be 

costly and perhaps impossible to reconstruct the records hogessary-^'^iKreate its filings. 

Additionally, NYR stated that none of the non-federsd^n&.were u^^i federal 

activities; these funds were not reported on its disck^j^'reports becau^e^y were not 

subject to PEG regulation. NYR elaborated that .the non-federal funds wSH^sl^Med on 

the public record as a part of its state reports. .fl^^lsQ cite^Advi'soiy Opini^^OQ 1-17 

(DNC Services) in support of its position. Howevie^.n the-AdVisory Opinion„fhe 

Commission primarily addressed the question of how^a^n^bnal committee should report 

contributions intended to be split into^ederal and a non-iH/^eral component. Thus to the 

extent that the contributions routed thi^gh the federal accoimt were composite 

contributions, containing both federal ahb noh^/ei^eral component, itjs treatment of these 

would appear to be permissible under the-.reasdtii%'!%^ forth in tHi Advisory Opinion. 

However, in this case, the funds were deposite^m the "composite" nature of 

the contributions, but jpoc^adb^istrative convenience. Therefore, some of the 

contributions intende^to bVwhOlly non-fedtf|d and havihg 'no fi^eral component could 

have been routed thrpugh the f^eral-account.^'The Audit staff requests, that NYR clarify 

with respect to the cbhj^i)}utioh|iat i^sue wheth^M^d to what extent the contribudohs 

involved, were "compoSit^^VconMibutipps^.^ both a federal and a non-federal 

component, :4iidh as, a copy of :the smibitwon device for credit card contributions 

inditodhg that afMeEal/non-j^eral component was raised. 

NYR.^il4 not file amended..disclosu^ reports to correct the misstatements. As such, 

NYR'S^pprted fmariciaf)iptivity f6r 2011 and 2012 remains materially misstated for 

receipts and;.disbursement$: 

Finding 2. I^ecofdkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that NYR did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in coimection with a federal election. For 2011 and 2012, the Audit staff identified 

* Absent clarification of the "composite" nature of these contributions, this could result in a violation of 11 

CFR§ 102.5 (a)(2)(i)-(iii). 
payments to NYR employees totaling $713,427^ for which NYR did not maintain 

monthly payroll logs. This consisted of payroll which was allocated with federal and 

non-federal ilinds. There was no payroll paid exclusively with non-federal iunds. In 

response to the Interim Audit Report recommendation, NYR concurred with the finding 

by acknowledging the need to improve its system for keeping and maintaining monthly 

employee time logs, and has implemented procedures that will maintain the necessary 

documentation in the future. 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a ipphthl^ log of the 

percentage of time each employee spends in connection with a f^eral election. 

Allocations of salaries, wages, and fringe benefits are to be .un^li|aken as follows: 

• employees who spend 25 percent or less of their co|npensd^|-|^e in a given 

month on federal election activities must be pai^ either from th^federal account 

or be allocated as administrative costs; 

• employees who spend more than 25 per^pnt of their compensated tift^Jn a given 

month on federal election activities must be paid only, from a federal ^c^ht; and, 

• employees who spend none of their compens^pd tiiti^iii a given month on federal 

election activities may be paid entirely with flm^^t comply with state law. 11 

CFR § 106.7(d)(1). 

Facts and Anal3rsis 

A. 

During audit fieldwork; ithe Audit staff revieyved disbursements for payroll. NYR did not 

maintain any mont^y payrotl-i^gs or equivalent records to document the percentage of 

time each employee^ spent in co^ection with a Tederal election. These logs are required 

to document the proper'4llocation of federal and^^n-federal funds used to pay employee 

salaries and ^ges. Fo^b^ not maintain monthly logs for 

S713,427 ih c^Qlis Thisliihbunt incluttes'^yroll paid as follows to NYR employees: 

Employees repqrfed on S^^ule iI4 (Disbursements for Allqcafed Federal 

''\and Nonfederal Activity) aii^ paid with allocated federal and non-federal 

filths during the ss^ month (totaling $713,427). . . * •: NYR provided ^e Audit,^ff with affidavits from the former Executive Director 

attesting to the that :he was able to determine those employees who spent less than 

25% of their time in/edefal activity. There was no payroll paid exclusively with nonfederal funds.^ The affidavits provided by NYR do not resolve the recordkeeping finding 

because they do not document the time that an employee spent in connection with a 

federal election and the documents were provided after notification of the audit. 

' This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such. (See Part I, Background, Commission Guidance, Request for Early Commission Consideration of a 

legal Question, l>age I.) Payroll amount does not Include taxes and fnnge benefits. 

' This Is based on the Audit staffs review of the available disbursement records and state reports. 
10 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the lecordkeeping requirement with NYR representatives 

during the audit fieldwork and at the exit conference. NYR representatives asked 

questions for clarification and said they would respond after reviewing each issue. 

Subsequently, NYR representatives stated that contemporaneous payroll logs were not 

kept; however, every effort was made to ensure that employees that spent significant time 

on federal elections were paid properly from the federal account. Further, NYR stated 

that a policy had been adopted and implemented to maintain monthly payroll logs.^ 

The Interim Audit Report recommended that NYR provide montl^y payroll logs that 

indicated the time spent in connection with a federal election apd provide a copy of the 

policy implemented in January 2014. ^' 

C. Committee Response to Interim Audit Report ~ .. 

In response to the Interim Audit Report recommendafion, NYR concurred with the 

finding by stating that it is unable to provide tim^ logs for its employees diiripg the audit 

period, most of whom no longer work for N YR. Tlpwever, NYR stated it has t ^, • 

implemented procedures to ensure it maintains the n^ssaiy documentation in^e future. 

In addition, NYR submitted a copy of its policy and asifmple monthly payroll log. 

Finding 3. Disclosure of Occupation/lfdine of Employer 

Summary 'fA review of contributions from individuaI&.Tequinng iternimtion indicated that 205 

contributions totalin^|54%l;.|l lacked or had-inadequate disclosure of occupation and/or 

name of employer. Jin additieij^/best efforts'^-lp obtain, maintain and submit the 

information h^^ ndt^gen suffi^ntly documented for these contributions. In response to 

the Interim Audit Report-.jecor^^ndationi NYlCfineluded memo entries in its most 

recently filed ,(hsplosure^^ri'prowdi^g^^^^ contributor infomiation. 

Legal 'Standari^.i^,_ ' ^ 

A.; iiemizatipn requii^ for Cbiii^ibiitions from Individuals. A political committee 

other man an authorized ^piitiittee-must itemize any contribution from an individual if it 

exceeds $^0.0 per calendar^ear, either by itself or when combined with other 

cohtributiohl^from the.samb contributor. 52 U.S.C §30104(b)C3XA). 

B. R^uired InfQf'matlon for Contributions from Individuals. For each itemized 

contribution from amindividual, the committee must provide the following information: 

• The contributor's full name and address (including zip code); 

• The contributor's occupation and the name of his or her employer; 

• The date of receipt (the date the committee received the contribution); 

• The amount of the contribution; and 

' The Audit staff did not receive a copy of the policy nor a sample timesheet as noted in the narrative 

supplied by NYR. 
11 

• The calendar year-to-date total of all contributions from the same individual; 

11 CFR §§100.12 and 104.3(a)(4) and 52 U.S.C §30104(b)(3)(A). 

C. Best Efforts Ensures Compliance. When the treasurer of a political conunittee 

shows that the committee used best efforts (see below) to obtain, maintain, and submit 

the information required by the Act, the committee's reports and records will be 

considered in compliance with the Act. 52 U.S.C. §30102(i). 

D. Definition of Best Efforts. The treasurer and the committee wilj be considered to 

have used "best efforts" if the committee satisfied all of the fplloydng-criteria: 

• All written solicitations for contributions included: . 

a A clear request for the contributor's full liame, .m^iiid^address, occupatioh, 

and name of employer;, and ' ^ , 

o The statement that such repoi-tihg. is requited>by'EederaI 

• Within 30 days after the receipt of the contribution, the treasurer iba^ at least one 

effort to obtain the missing ihformatTo.n, Jfreither a ^tten request Or igi. 

documented oral request. ' 

The treasurer reported any contributor information tl^i^-^l^ough not initially provided by 

the contributor, was obtained in a follow-up communicatio'^.pr was contain^ in the 

committee's records or in prior repprte;t 

election cycle. 11 CFR § 104.7(b). 

! committee l^led^during the same two-year 

Facts and Analysis 

A. Facts 

A review of i 

40 percent of the dd 

NYR, lacked or had 1 

A revj^v^of the 

the^iowing: 120 

emiplOyp.^, 77 errors tot 

as "Inm^gtiori Reqt 

inadeqi 

• 

IS indicated that 205 contributions totaling S563,191, or 

^titions. required to be itemized by 

iipation/haime. of employer. 

iJe A ^^ized Receipts) filed with the Commission determined 

i totalii^^334,027 did not disclose the occupation or name of 

J $191,^^ disclosed the occupation or the name of employer 

, and of the eight remaining errors totaling $37,400, seven 

iipation or name of employer as self-employed. 

• NYR didiB'qt i^vide documentation for 95 contributions showing it made followup best effo^S-ror contributions totaling $214,944. 

• N YR had the required documentation for 110 contributions totaling $348,247, 

however this information was not disclosed on its FEC reports. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff discussed this matter with the NYR representatives 

and they asked questions for clarification. Subsequent to the exit conference, NYR 

provided the Audit staff a list of individual contributors with occupation and name of 

employer information omitted. NYR representatives stated that since the 2012 cycle, 

NYR has made a point of sending and keeping records of follow-up correspondence. 
12 

NYR representatives further stated that NYR's record of demonstrating that best efforts 

have been made is supported by the fact that it has not received any Conunission 

Requests for Addition^ Information letters on this issue in the 2013-2014 cycle." 

Further, it has implemented a policy that v^hen additional information arrives, the public 

record will be updated to reflect that information. 

The Interim Audit Report recommended that, NYR establish "best efforts" by amending 

its reports to disclose the missing information relating to the 110 contributions for which 

it had the required documentation. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, NYI^ e^blished "best efforts" 

by including memo entries in its most recent disclosure report spedi^c^ly addressing 91 

contributions totaling $276,197. However, this submission did not rh^i^ally correct the 

disclosure errors. ^ 

Finding 4. Reporting of Apparent Independent 

Expenditures ^ > • " • ^. 

Summary 

During audit fieldwork, the Audit staB^rewjsiiyyed expenditures'.io|aling $1,352,118, that 

NYR disclosed on Schedule B, Line 30(b), (F^e|a[ Election Ai^fvity Paid Entirely with 

Federal Funds), that appear to be apparent<<indep^dent.e^pendifures that should have 

been disclosed on Schedu!ig^]E, Line 24, (Ihdopgndent Expep'ditures). NYR maintained 

that these expenditur^sSXfoi^pto of its non-vocable mail program. NYR provided 

documentation suj^orting the pse of voluntee^ totaling $209,615. 

Additionally, NYR did hot pro^dq sufficient documentation pertaining to dissemination 

dates to verify whether i4^48^h0Ur ^^Hs were required to be filed for the apparent 

independent expeq^itures tom|ing $1,142,503. •. . 

In response to the Interi^.Audit l^jport recommendations, NYR submitted additional 

docurii^ntation and reit^ed that the expenditures were part of its volunteer mail 

program^ 

Legal Standard 

A. Definition of Independent Expenditures. The term "independent expenditure" 

means an expenditqfe by a person for a communication expressly advocating the election 

or defeat of a clearly identified candidate that is not made in coordination vnth any 

candidate or authorized committee or agent of a candidate. No expenditure shall be 

considered independent if the person making the expenditure allows a candidate, a 

candidate's authorized committee or their agents, or a political party committee or its 

agents to become materially involved in decisions regarding the communication as , 

described in 11 CFR 109.21(d)(2), or shares financial responsibility for the cost of | 

production or dissemination with any such person. 11 CFR § 1 GO. 16(a) & (c). I 

' The Audit stafThas verified that the Commission has not sent Requests for Additional Information letters. 
13 

B. Expressly Advocating. Expressly advocating means any communication that - (a) 

Uses phrases such as "vote for the president," "re-elect your Congressman," "support the 

Democratic nominee," "cast your ballot for the Republican challenger for the Republican 

challenger for U.S. Senate in Georgia," accompanied by a picture of one or more 

candidate(s), or communications of campaign slogan(s) or individual word(s), which in 

context can have no other reasonable meaning than to ui:ge the election or defeat of one or 

more clearly identified candidate(s). (b) When taken as a whole and with limited 

reference to external events, such as the proximity to the election, could only be 

interpreted by a reasonable person as containing advocacy of the el^ion or defeat of one 

or more clearly identified candidate(s). 11 CFR §100.22. 

C. Disclosure RequirementsGeneral Guidelines. An iiidepehd^t expenditure shall 

be reported on Schedule E (Itemized Independent Expenditures) if, whto added to other 

independent expenditures made to the same payee during the same cale^& year, it 

exceeds $200. Independent expenditures made (i.e., publicly disseminatedi^-pripr to 

payment should be disclosed as memo entries on. Schedule E and as a debt on^ Schedule 

D. Independent expenditures of $200 or less need'not be itemized, though the committee 

must report the total of those expenditures on line (b) oh S&hedule E. 11 CFR 

§§104.3(b)(3)(vii), 104.4(a)and 104.n. . 

D. Last-Minute Independent Expenditure Reports (24-Hour Reports). Any 

independent expenditures aggregating $l iPOO ofinQte, with respect to any given election, 

and made after the 20"* day but more than 24 hoi^ befere the day of an election, must be 

reported and the rCportinU^ be received by thh Commission within 24 hours after the 

expenditure is madq. .X 24-h^|.report is required each time additional independent 

expenditures aggrej^qte $1 ,OO0;1^ more. The ^te that a communication is publicly 

disseminated seives^di'ihe date|bat the committee must use to determine whether the 

total amount of indepen%nt e^peitidilur^ hu, hi'the aggregate, reached or exceeded the 

threshold^ofttngamouiitf0f$1,000. 11 CFR §§ 104.4(f) and 104.S(g)(2). 

E. .ji^idependent Expehijliture Reports (48-Hour Reports). Any independent 

exp^difures aggregating-$10,000 dr more for an election in any calendar year up to and 

includiiig^fhe 20th day before an election, must be disclosed vrithin 48 hours each time 

the expenmtdres aggregate;.$10,000 or more. The reports must be filed with the 

Commission within 48 hpum after the expenditure is made. 11 CFR §§104.4(f) and 

104.5(g)(1). h.. 

F. Formal Requirements Regarding Reports and Statements. Each political 

cormnittee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which the 

filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. CFR §104.14^)(1). 

G. Volunteer Activity. The payment by a state committee of a political party of the 

costs of campaign materials (such as pins, bumper stickers, handbills, brochures, posters, 

party tabloids or newsletters, and yard signs) used by such committee in connection with 
14 

volunteer activities on behalf of any nominee(s) of such party is not a contribution, 

provided that the conditions below are met. 

1. Such payment is not for costs incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any 

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists. 

2. The portion of the cost of such materials allocable to Federal candidates must be 

paid from contributions subject to the limitations and prohibitions of the Act 

3. Such payment is not made from contributions designated by |^e donor to be spent 

on behalf of a particular candidate for federal office. 

4. Such materials are distributed by volunteers and not by commercial or for-profit 

operations. • ' . 

5. If made by a political committee, such payments stmll be i^l^iarted by the political 

committee as a disbursement in accordance wi^ 11 CFR §ld4i^but need not be 

allocated to specific candidates in committer 'Kports. 

6. The exemption is not applicable to camp^^ materials purchased national 

party committees. 11 CFR §100.87 (a>, (b>/.^c), (d), (e) and (g) and 11 GjpR' 

§100.147 (a), (b), (c), (d), (e) and (g). > . • 

Facts and Analysis 

A. Reporting of Independent Expendifiiire's . 

1- Facts ^ 

During audit fielf^'rj^.the Audit stalT^reViewed disbursements to ensure proper 

reporting. Tlie Audit st^noted that I^YR did not disclose any independent 

expenditui^s^ipn Schedulers, however, (hade apparent media-related expenditures 

totaling Sl,142^'Si03 and disclosed them.as Federal Election Activity on Schedule 

B. NYR maintainsl^t-the^. eypenditures are part of its non-allocable mail 

P|^gra^';;r|;h.e breakdown analysiis'of these expenditures is as follows: 

a. Independehjt'Expendithrcs Reported as Federal Election Activity 

' (Associated Jailer and invoice Provided under 11 CFR §100.22(a)) 

. YR made .88^|isburseihents for apparent independent expenditures for direct 

totaling $81^6,372 for which it provided a copy of the mailer with an 

icidted invoice. According to the Audit staff, each of these direct mailers 

contaiii^ Jwguage expressly advocating the election or defeat of a clearly 

identifiedBandidate as defined under 11 CFR § 100.22(a). 

b. Independent Expenditures Reported as Federal Election Activity 

(Associated Mailer and Invoice Provided under 11 CFR 100.22(b)) 

NYR made 31 apparent independent expenditures for direct mail totaling 

$276,131 for which it provided a copy of the mailer with an associated invoice.-

These communications encouraged the reader to vote for Republicans noting 

various reasons why the Democrats were bad for New York. Based on the 

definition of express advocacy under 11 CFR 100.22(b), the Audit staff 
15 

believes that these communications could only be interpreted by a reasonable 

person as advocating the election or defeat of clearly identified candidate(s). 

c. Volunteer Material Exemption 

To support the volunteer material exemption, NYR representatives provided 

seven affidavits with the associated invoices and mailers from vendors and 

campaign officials, totaling $906,027. The affidavits detailed that the 

volunteers sorted, bundled, bagged and tagged the mail pieces by local zip 

code as part of the NYR "non-allocable volunteer program" during the audit 

period. NYR did not submit affidavits for the remaining.$^36,476 in invoices 

and mailers. Based on the limited documentation proyrSed, the Audit staff 

determined these disbursements totaling $1,142,503 ^d'be apparent 

independent expenditures. : ' . 

In addition to the expenditures discussed above, one invoice tci^'lihg $209,615 

included pictures of a single volunteer ;Working on each indiyidu^mail piece. 

NYR provided signed volunteer fomiS"^j eight m^l pieces which il^eeted the 

volunteer's name, address, the date and fl'^tle qf^lhe.mail piece. The job 

performed was left blank on all of the Cbrm&^fsed. on the dates on the forms, 

it appeared most of this volunteer activity Occii^. immediately prior to the 

2012 General Election. Due.^tQ. the lack pf cl.arity-reg^ing the degree of 

volunteer .invdlvembnt and thiqqu^[^!^ and type(sJo^'§yiience needed to 

qualify a given disbursement ror an^expi^sis.advoeac/^fepmmunicatipn as. 

exempt under the volunteer matdrials-^i^empfidn^ ^e disbursement will not 

deemed an independent expenditure.' '/• 

The Con^ission has ^dressed the hpj)licabili^ of the volunteer materials 

exemption s, the Final'Audit Reports'dflhe Arizona Republican Party, the 

Dempcratic Bx^utkre'^C.p.ii^t^ee pl^lorida; and the Tennessee Republican 

Fa^;^ In these tepoits, the (ifomiiiiSsion recognized a lack of clarity regardingthe applicatipn of theiyplunteer materials exemption. The Commission had 

attempted to fprmulafe a^consensus policy reganling what constitutes 

. substantial voiipjteer inyplvement for the purpose of applying the eyemption', 

•• but this was nev^r achieved. Since a lack of clarity exists concerning the 

application of the'volunteer materials exemption, it follows thitt the type and 

amount of documentation needed to support volunteer involvement is also 

uncletf: .. . 

In view of the uncertainty regarding the amount of volunteer involvement 

needed to qualify for the volunteer materials exemption, as well as the amount 

of documentation required to support such an exemption, the Audit staff 

recommended that, NYR provide more detailed information and 

documentation for any volunteer involvement associated with each mailer. 

' Proposed Interim Enforcement Policy, Agenda Document No. 10-16. 
16 

2. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented a schedule detailing these 

expenditures to NYR representatives. In response to the exit conference, the 

NYR representatives provided invoices, mailers, photographs, signed volunteer 

forms and signed affidavits specifically addressing the volunteer component in 

processing the direct mailers. Further, NYR representatives stated that as a result 

of the audit process, NYR was developing a policy that documents the volunteer 

component of the NYR non-allocable mail program. 

• 1 * 

The Interim Audit Report recommended that NYR provide documentation and 

evidence that apparent independent expenditures to^ing^SL142,S03 did not 

require reporting as independent expenditures. Evidence included 

any documentation such as volunteer timesheej^^chphptogra^hs.to support the 

involvement of volunteers in the processing]'dr$tribution of thei£|nununications 

noted above. Absent such evidence, the In^rim Audit Report recommended that 

NYR amend its reports to disclose these di^ursemenb as independent; 

expenditures on Schedule E and submit re^!^ pro^dures for reporting' 

independent expenditures. -

•t ' 

3. Committee Response to the Ihterim Audit Report ^, 

In response to the Interim Audit'j^j^ r^ommendatiol^ submitted five 

additional affidavits, including fom from vendors and a second affidavit 

from the Executive Director durin^he ai£ifp^^|^d two new direct mail 

pieces'". NYR sta^d-t^t these additipnal affidaVp!detail the active role 

volunteers playel i^t^ production and distributiSn of the mailers, in 

coordinatibn with NYR^imd the former-Executive Director. Further, the affidavit 

from the former.'Executiye Director atte^pd that "[a]ll of the express advocacy 

mailings reportedas activity on Line 30(b) of the Committee's 

FEC;dUelosure repb^ during the ^-12 Election Cycle were part of the 

C'ommitteC^s-'VpIunteer-iNteil Program," and that he "followed the same 

procedures destined in [his earlier affidavit] to ensure there was substantial 

volunteer particip$tion in all-of the mailings* production and distribution." NYR 

maintains that thdsef;;additi6nal affidavits along with the previously submitted 

materials more tha'Csufficiently established that the expenditures were properly, 

reporteil^ non-alldcable mailers under the volunteer materials exemption. Due 

to the labH of a^clear standard for applying the volunteer materials exemption, the 

Audit sta^i^-unable to determine whether sworn affidavits of the nature 

submitted by NYR suffice to document the involvement of volunteers. 

NYR associated two new direct mail pieces with two invoices previously provided. Although both of the 

new direct mail pieces still contain express advocacy, die characteristics of one piece have requalified its 

classification fix>m I i CFR § 100.22(a) to 11 CFR § I00.22(b}, revising the totals to S8S4,SS7 and 

$287,947, respectively. 
17 

B. Failure to File 24/48-Hour Reports for Independent Expenditures 

1. Facts 

In addition to not reporting any independent expenditures during the audit period, 

NYR also did not file 24 or 48-hour reports for any independent expenditures. 

Therefore, the apparent independent expenditures identified above by the Audit 

staff may also have required such filings. 

2. Interim Audit Report & Audit Division Recommendation ': 

At the exit conference, the Audit staff discussed with lepreKntatives the 

requirements for filing 24/48-hour reports. NYR repr^jij^ives did not offer 

any comments regarding this matter. 4 \ 

The Interim Audit Report recommended thatj^ absent documentati^^hd evidence 

that apparent independent expenditures totdling-S1,142,503 did not ^uiie 

reporting as independent expenditures Part.A above), NYR providfL 

documentation to support the date of pubii&di|seminalion for each ^ 

communication to determine whether a 24/48^0uirreport was required. 

3. Committee Response to the Interim Audit Repo'rt^ 

In response to the Interim Audit Report recommendation^- I^ YR submitted 

additional documentation addressjed iii I^i^-^bove. Tlte^Audit staff maintains 

that NYR failed to file 24/48-hour r 

Finding 5. Rt^dordlD^eping for Communications 

Summaiy 

During audit fieldwork, the Audit-'staff cevlevyed'disbursements to verify the accuracy of 

information and; p^^er classification oftransactions disclosed on reports. The Audit 

staff identified $77,3:^4 for which sufficient records were not provided. Without a copy 

of tte invoices and the-associat^^Cbmrnunicatioiis, the Audit staff is unable to determine 

how ¥(^YR should have imported the'K disbursements. NVR did not address this finding in 

its response to the Interiiri iAudit Report. 

Legal Standard 

A. Formal Reqiii^inents Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which the 

filed reports may be verified, and checked for accuracy and completeness. 11 CFR 

§104.14(b)(l). 

B. Preserving Records and Copies of Reports. The treasurer of a political committee 

must preserve all records and copies of reports for 3 years after the report is filed. 52 

U.S.C. §30102(d). 
18 

Facts and Analysis 

A. Facts 

During the fieldwork, the Audit stafTreviewed disbursements to verify the accuracy of 

the information and proper classification of transactions disclosed on reports. NYR made 

seven expenditures totaling $77,354 for which documentation was insufficient to make a 

determination pertaining to whether these disbursements were correctly reported on 

Schedule B, Line 30(b). 

The Audit staffs analysis resulted in the following: / 

1. Disbursement- Invoice Provided -No CODY of the Communication Provided 

A disbursement totaling $11,747 was paid to a ven^wd was disposed on Schedule 

B, Line 30(b) with purpose FEA - Mail ProductionWh a candidate^iSmtification 

number, but no mailer associated with the disbursement was provided. I^^udit staff 

requested copies of the associated mailers for tfiis disbursement. To date,lhe hiailer or 

other documentation to associate the payment to a p^iculaf mail production has not 

been provided. 

2. Disbursements- No Conies of Communications or liivoices Provided ($65.6071 

Disbursements totaling $65,607 were'paid to three vendors md reported on Schedule 

B, Line 30(b) with purposes FEA - Exempt M^P^stage - candidate name, FEA -

Postage - candidate name/district, reA^Mail Postagj^^mididate identification 

number, FEA -100^ Mailing and FEi^Mail Production - candidate 

name. However, docurri^fStion was not provided by NY^ Without sufficient 

details, the Audi^j^toff is uiiaj|le to verify NVR'S reporting of these amounts as Federal 

Election Activity, "^jhe Audif^taff requested'documentation for each of these 

disbursements. To date,.thi$^jeumentation ifu not been provided. 

B. Interim Audit;Rep.ort & Audit Division Recommendation 

At t^ exit conference; the Audit .i^|f presented NYR with schedules of the invoices and 

assi^^d mail pieces fqr^which r^ofds were necessary to verify the accuracy of 

reportii^.;. The Interim Aiidit Report recommended that, NYR provide the invoices and 

the associate mail pieces,fdr disbursements totaling $77,354. 

C. Committee Response to Interim Audit Report 

NYR did not addre^,diis finding nor did it provide any additional documentation in its 

response to the Interim Audit Report. The Audit staff considers the matter a violation of 

the recordkeeping requirements at 11 CFR §104.14(b)(1).