Final Audit Report of the 

Commission on the Dallas 

County Republican Party 

(January 1, 2009 - December 31, 2010) 

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 

(tiie 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. 

About the Committee (p. 2) 

The Dallas County Republican Party^ is a local party committee 

headquartered in Dallas, Texas. For more information, see the 

chart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

Receipts 

o Contributions from Individuals $ 350,116 

o Transfers from Non-federal 

Account 196,000 

o Other Federal Receipts 1,009 

Total Receipts $ 547,125 

Disbursements 

o Operating Expenditures $ 480,625 

o Federal Election Activity 36,372 

o Other Disbursements 31,000 

Total Disbursements $ 547,997 

Commission Findings (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

• 2 U.S.C. §438(b). 

^ On August 16,2011, the Dallas County Republican Party changed its name to Dallas County Republican 

Party - Primary. 
Final Audit Report of the 

Commission on the Dallas 

County Republican Party 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Audit Hearing 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Commission Findings 3 

Part IV. Commission Findings 

Finding 1. Misstatement of Financial Activity 4 

Finding 2. Recordkeeping for Employees 6 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Dallas County Republican Party (DCRP), 

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 vnih the Act. 2 U.S.C. §438(b). 

Scope of Audit 

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

factors 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 between federal and non-federal accounts; 

4. the consistency between reported figures and bank records; 

5. the completeness of records; and 

6. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission "Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission," several state party committees 

unaffiliated with DCRP requested early consideration of a legal question raised during an 

audit. Specifically, the Commission addressed whether monthly time logs under 11 CFR 

§ 106.7(d)(1) were required for employees paid with 100 percent federal funds. 

The Commission concluded, by a vote of 5-1, that 11 CFR § 106.7(d)(1) does require 

committees to keep a monthly log for employees paid exclusively vnih federal fUnds. 

Exercising its prosecutorial discretion, however, tlie Commission decided not to 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. 

Audit staff informed DCRP's representative 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 correctiy reported as 100 percent federal, excluding amended 

filings. Finding 2 of this audit report (Recordkeeping for Employees) does not include 

any DCRP employees paid with 100 percent federal funds and reported as such. 

Audit Hearing 

DCRP declined the opportunity for a hearing before the Commission on matters 

presented in this report. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration February 5, 1999 

• Audit Coverage January 1,2009 - December 31,2010 

Headquarters Dallas, Texas 

Bank Information 

• Bank Depositories One 

• Bank Accounts One federal, three non-federal, one 

Levin 

Treasurer 

• Treasurer When Audit Was Conducted Honorable Wade Emmert 

• Treasurer During Period Covered by Audit Jonathan Neerman 

Management Information 

• Attended Commission Campaign Finance Yes 

Seminar 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1,2009 $ 1,374 

Receipts 

o Contributions fiom Individuals 350,116 

o Transfers from Non-federal Account 196,000 

o Other Federal Receipts 1,009 

Total Receipts $547,125 

Disbursements 

o Operating Disbursements 480.625 

o Federal Election Activity 36,372 

o Other Disbursements 31,000 

Total Disbursements $ 547,997 

Cash-on-hand @ December 31,2010 $ 502 
Part III 

Summaries 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of DCRP's reported financial activity v^th its bank 

records revealed that, for 2010, DCRP understated its reported receipts and 

disbursements by $31,817 and $32,201, respectively. In response to the Interim Audit 

Report recommendation, DCRP amended its reports and materially corrected its 

misstatements. 

The Commission approved a finding that DCRP misstated its financial activity for 

calendar year 2010. (For more detail, see p. 4.) 

Finding 2. Recordkeeping for Employees 

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

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

spent on federal election activity. For 2009 and 2010, the Audit staff identified payments 

to DCRP employees totaling $85,520 for which monthly payroll logs were not 

maintained. This consisted of $70,520, for which DCRP reported payroll disbursements 

allocated between federal and non-federal funds, and $15,000 that was paid fi-om an 

exclusively non-federal account during periods in which the same employee was also 

paid fiom a federal account. 

In response to the Interim Audit Report recommendation. DCRP agreed to maintain 

monthly payroll logs to track federal election activity for non-federal payroll and payroll 

allocated between federal and non-federal activity. The Audit staff considered the matter 

resolved. 

The Commission approved a finding that DCRP failed to maintain logs to document the 

time employees spent on federal election activity totaling $85,520. (For more detail, see 

p. 6.) 
Part IV 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of DCRP's reported financial activity with its bank 

records revealed that, for 2010, DCRP understated its reported receipts and 

disbursements by $31,817 and $32,201, respectively. In response to the Interim Audit 

Report recommendation, DCRP amended its reports and materially corrected its 

misstatements. 

The Commission approved a finding that DCRP misstated its financial activity for 

calendar year 2010. 

Legal Standard 

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 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), (4) and (5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled reported financial activity vnih bank 

records for calendar years 2009 and 2010 and identified a misstatement of receipts and 

disbursements for 2010. The following chart outlines the discrepancies. 

2010 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January 1,2010 $1,178 $2,045 $867 

Understated 

Receipts $287,185 $319,002 $31,817 

Understated 

Disbursements $288,344 $320,545 $32,201 

Understated 

Ending Cash Balance 

@ December 31,2010 $19 $502 $483 Understated 

The understatement of receipts resulted from the following. 
• Credit card deposit not reported $ 24,277 

• March 2010 deposits not reported 5,995 

• On-line deposit not reported 1,720 

• Miscellaneous identified amounts (175) 

Net Understatement of Receipts $ 31.817 

The understatement of disbursements resulted from the following. 

• Transfers to non-federal account not reported $ 31,000 

• Miscellaneous disbursements not reported 1,341 

• Unidentified difference (140) 

Net Understatement of Disbursements $ 32.201 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff explained the misstatements and provided 

schedules to DCRP representatives. The representatives offered no comments during or 

subsequent to the exit conference. 

The Interim Audit Report recommended that DCRP amend its reports to correct the 

misstatements noted above. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, DCRP filed amended reports 

for 2010 that materially corrected its misstatements. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that DCRP amended its reports and 

materially corrected its misstatements. 

E. Committee Response to the Draft Final Audit Report 

DCRP responded to the Draft Final Audit Report and stated that they had no additional 

comments. 

Commission Conclusion 

On January 30,2014, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a 

finding that DCRP misstated its financial activity for calendar year 2010. 

The Commission approved the Audit staffs recommendation. 
Finding 2. Recordkeeping for Employees 

Summary 

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

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

spent on federal election activity. For 2009 and 2010, the Audit staff identified payments 

to DCRP employees totaling $85,520 for which monthly payroll logs were not 

maintained. This consisted of $70,520, for which DCRP reported payroll disbursements 

allocated between federal and non-federal funds, and $15,000 that was paid fiom an 

exclusively non-federal account during periods in which the same employee was also 

paid fiom a federal account. 

In response to the Interim Audit Report recommendation, DCRP agreed to maintain 

monthly payroll logs to track federal election activity for non-federal payroll and payroll 

allocated between federal and non-federal activity. The Audit staff considered the matter 

resolved. 

The Commission approved a finding that DCRP failed to maintain logs to document the 

time employees spent on federal election activity totaling $85,520. 

Legal Standard 

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

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows: 

• employees who spend 25 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or have their pay allocated as administrative costs; 

• employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and, 

• employees who spend none of their compensated time in a given month on federal 

election activities may be paid entirely with funds that comply vnih state law. 

11 CFR§106.7(d)(l). 

Facts and Analysis 

A. Facts 

During fieldwork. the Audit staff reviewed disbursements for payroll. DCRP did not 

maintain any monthly logs or equivalent records to document the percentage of time each 

employee spent in connection with federal election activity. These logs are required to 

document the proper sillocation of federal and non-federal funds used to pay employee 

salaries and wages. For 2009 and 2010, logs were not maintained for $85,520^ in payroll 

disbursements. The $85,520 consisted of $70,520 for which payroll disbursements were 

allocated between federal and non-federal funds, and $15,000 that was paid from an 

^ Amounts are net of payroll taxes and benefits totaling $22,896. 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 on Page 1). 
exclusively non-federal account during periods in which the same employee was also 

paid from a federal account. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference and during audit fieldwork, the Audit staff discussed the payroll 

recordkeeping issue with DCRP representatives. The representatives offered no 

additional comments or documentation to support the expenses. 

For DCRP employees that were paid vnih exclusively non-federal funds or an allocation 

of federal and non-federal funds, the Interim Audit Report recommended that DCRP 

provide the following: 

• evidence that DCRP had maintained monthly time logs to document how much 

time the employee had spent on federal election activity; 

or 

• provide and implement a plan to maintain monthly payroll logs to track the 

percentage of time each employee spends on federal election activity. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, DCRP agreed to maintain 

monthly payroll logs to track federal election activity for non-federal payroll and payroll 

allocated between federal and non-federal activity. Such action is consistent with 

Commission guidance with respect to payroll logs. The Audit staff considered the matter 

resolved. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that DCRP agreed to maintain logs to track 

federal election activity for non-federal payroll and payroll allocated between federal and 

non-federal activity. 

E. Committee Response to the Draft Final Audit Report 

DCRP responded to the Draft Final Audit Report and stated that they had no additional 

comments. 

Commission Conclusion 

On January 30, 2014, the Commission considered the Audit Division Reconunendation 

Memorandum in which the Audit staff recommended that the Commission adopt a 

finding that DCRP failed to maintain logs to document the time employees spent on 

federal election activity totaling $85,520. 

The Commission approved the Audit staffs reconmiendation.