Final Audit Report of the 

Commission on the Illinois 

Republican Party 

(January 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 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 Illinois Republican Party is a state party committee 

headquartered in Chicago, Illinois. For more information, see 

the chart on the Committee Organization, p.2. 

Financial Activit]^^ (p. 2) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Transfers from Affiliated and Other 

Political Committees 

o Transfers from Non-federal Account 

o Other Receipts 

Total Receipts 

• Disbursements 

o Operating Expenditures 

o Federal Election Activity 

o Contributions to Federal Candidates 

o Other Disbursements 

Total Disbursements 

$ 1,129,720 

1,201,954 

1,576,813 

395,959 

272,048 

$ 4,576,494 

$ 1,295,631 

3,122,532 

5,500 

90,720 

$ 4,514383 

Commission Findings (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Communications (Finding 2) 

• Reporting of Debts and Obligations (Finding 3) 

• Recordkeeping for Employees (Finding 4) 

' 52 U.S.C. §30111(b). 

^ IRP had a Levin account that began the audit period with a balance of $0, made no expenditures for 

Levin activity, and an ending balance of $459. 
Final Audit Report of the 

Commission on the 

Illinois Republican Party 

(January 1, 2011 - December 31, 2012) 
Table of Contents 

Page 

Part i. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Audit Hearing 2 

Part II. Overview of Committee 

Committee Organization 3 

Overview of Financial Activity 3 

Part III. Summaries 

Commission Findings 4 

Part IV. Commission Findings 

Finding!. Misstatement of Financial Activity 6 

Finding 2. Recordkeeping for Communications 8 

Finding 3. Reporting of Debts and Obligations 11 

Finding 4. Recordkeeping for Employees 12 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Illinois Republican Party (IRP), 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 52 U.S.C. §30111 (b), which permits the Commission to 

conduct audits and field investigations of any political committee that is required to file a 

report under 52 U.S.C. §30104. Prior to conducting any audit under this subsection, the 

Commission must perform an internal 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. 52 U.S.C. §30111(b). 

Scope of Audit 

Following Commission-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; 

6. the disclosure of independent expenditures; and 

7. other cominittee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

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

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

unaffiliated with IRP requested early consideration of a legal question raised during 

audits covering the 2010 election cycle. 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 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 IRP 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 IRP employees 

paid with 100 percent federal funds and reported as such. 
Audit Hearing 

IRP requested a hearing before the Commission. The request was granted and the 

hearing was held on June 22,2017. At the hearing, IRP addressed three issues. Reporting 

of Apparent Independent Expenditures, Recordkeeping for Communications and Receipt 

of Apparent Prohibited In-Kind Contributions.^ 

^ At the Open Meeting of the Commission held August 17,2017, the Commission considered the Audit 

Division Recommendation Memorandum and decided by a vote of 4 tol to reject the following two 

findings: Reporting of Apparent Independent Expenditures and Receipt of Apparent Prohibited In-Kind 

Contributions. As a result, these two findings were removed irom the audit report. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

a Date of Registration July 10,1976 

e Audit Coverage January 1,2011 - December 31,2012 

Headquarters Chicago, Illinois 

Bank Information 

a Bank Depositories One 

e Bank Accounts Four Federal and Two Non-federal 

Treasurer 

e Treasurer When Audit Was Conducted Judy Diekelman - May 20,2014 - Present 

Dave Syverson - through May 19,2014 

e Treasurer During Period Covered by Audit Dave Syverson 

Management Information 

a Attended Commission Campaign Finance 

Seminar 

No 

a Who Handled Accounting and 

Recordkeeping Tasks 

Paid and Volunteer Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ® January 1,2011 $ 24,000 

Receipts 

o Contributions from Individuals 1,129,720 

o Contributions from Political Committees 1,201,954 

o Transfers from Affiliated and Other Political 

Committees 

1,576,813 

o Transfers from Non-federal Account 395,959 

o Other Receipts 272,048 

Total Receipts $ 4,576,494 

Disbursements 

o Operating Expenditures 1,295,631 

o Federal Election Activity 3,122,532 

o Contributions to Federal Candidates 5,500 

o Other Disbursements 90,720 

Total Disbursements $4,514383 

Cash-on-hand @ December 31,2012 $ 86,111 
Part III 

Summaries 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of IRP's reported financial activity with bank records 

revealed a misstatement of receipts, disbursements and ending cash for 2011 and a misstatement 

of receipts and disbursements for 2012. In 2011, IRP overstated its receipts by $36,327, its 

disbursements by $46,370 and understated its ending cash by $13,717. In 2012, IRP 

understated its receipts by $181,648 and its disbursements by $222,664. In response to the 

Interim Audit Report recommendation, IRP amended its disclosure reports to materially correct 

the misstatements for both 2011 and 2012. 

I 

The Commission approved a finding that IRP misstated its financial activity for calendar years 

2011 and 2012. (For more detail, see p. 6.) 

Finding 2. Recordkeeping for Communications 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of the 

information and proper classification of transactions disclosed on reports. IRP reported 19 

expenditures totaling $357,613,^ on Schedule B, Line 30(b) and Schedule H4 (Disbursements 

for Allocated Federal/Non-federal Activity) with the purposes of FEA Volunteer Mail, 

Advocacy calls for Federal candidates. Direct Mail Services, equipment and phone minutes for 

Federal candidates and Auto-Dialer for Federal candidates. Documentation that was provided 

by IRP was insufficient to make a determination pertaining to the purpose for these 

disbursements and verification as Federal Election Activity or Allocated Federal/Non-federal 

Activity. In response to the Interim Audit Report recommendation, IRP stated that it has 

searched its records and was unable to locate additional documents to substantiate these 

disclosures. Absent the provision of the records, the Audit staff considers the matter a violation 

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

The Commission approved a finding that IRP did not provide the necessary records pertaining 

to disbursements totaling $357,613. (For more detail, see p. 8.) 

Finding 3. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff noted that IRP failed to report debts and obligations to 

14 vendors totaling $294,117^ on Schedule D (Debts and Obligations). In response to the 

Interim Audit Report recommendation, IRP amended its disclosure reports to materially correct 

the disclosure of debts and obligations to these vendors. 

* Two disbursements totaling SS2,S04 were not reported, but are included in the S3S7,6I3. 

^ This amount will be updated to $2S7,396 based on additional information reviewed in response to IRP's response 

to the Interim Audit Report. 
The Commission approved a finding that IRP failed to itemize debts and obligations totaling 

$257,396. (For more detail, see p. 11.) 

Finding 4. Recordkeeping for Employees 

During audit fieldwork, the Audit staif determined that IRP did not maintain any monthly 

payroll logs, as required, to document the percentage of time each employee spent in connection 

with a federal election. For 2011 and 2012, the Audit staff identified payments to IRP 

employees totaling $558,089 for which IRP did not maintain monthly payroll logs. This 

consisted of $542,812 for which payroll was allocated with federal and non-federal funds, and 

$15,277 for which payroll was exclusively non-federal. In response to the Interim Audit Report 

recommendation, IRP acknowledged that it does not possess any monthly payroll logs for 

employees for the 2011 - 2012 time period. IRP stated that it did maintain these logs during the 

2014 election cycle and going forwa^, they will continue to maintain monthly payroll logs. As 

such, IRP has complied with the Interim Audit Report recommendation by providing details of 

its plan to maintain monthly payroll logs in the future. 

The Commission approved a finding that IRP failed to maintain monthly payroll logs totaling 

$558,089, as required to document the percentage of time each employee spent in connection 

with a federal election.' (For more detail, see p. 12.) 
Part IV 

Commission Findings 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of IRP's reported financial activity with bank records 

revealed a misstatement of receipts, disbursements and ending cash for 2011 and a misstatement 

of receipts and disbursements for 2012. In 2011, IRP overstated its receipts by $36,327, its 

disbursements by $46,370 and understated its ending cash by $13,717. In 2012, IRP 

understated its receipts by $181,648 and its disbursements by $222,664. In response to the 

Interim Audit Report recommendation, IRP amended its disclosure reports to materially correct 

the misstatements for both 2011 and 2012. 

The Commission approved a finding that IRP misstated its financial activity for calendar years 

2011 and 2012. 

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). 52 U.S.C. §30104(b)(l), (2), (3), (4) and (5). 

Facts and Analsrsis 

A. Facts 

As part of audit fieldwork, the Audit staff reconciled IRP's reported financial activity with its 

bank records for 2011 and 2012. The reconciliation determined that for 2011, IRP misstated 

receipts, disbursements and ending cash and for 2012, misstated receipts and disbursements. 

The following charts outline the discrepancies between IRP's disclosure reports and its bank 

records. 

20111 Reported Activity i to Bank Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1,2011 

$20,326 $24,000 $3,674 

Understated 

Receipts $776,115 $739,788 $36,327 

Overstated 

Disbursements $749,945 $703,575 $46,370 

Overstated 

Ending Cash Balance @ 

December 31,2011 

$46,496 $60,213 $13,717 

Understated 
The beginning cash balance was understated by $3,674 and is unexplained, but likely resulted 

from prior-period discrepancies. 

The overstatement of receipts resulted from the following: 

• Transfers from the non-federal account, reported in error 

• Unexplained differences 

Overstatement of Receipts 

The overstatement of disbursements resulted from the following: 

• The net over reporting of disbursements 

• Unexplained differences 

Net Overstatement of Disbursements 

- $32,070 

- 4,257 

- $36,327 

- $46,612 

+ 242 

- $46.370 

The Audit staff identified 29 disbursements totaling $52,262 that were reported in January 

2011, but not found on bank statements provided. IRP changed depositories prior to the audit 

cycle. The Audit staff requested the baiik statements of the prior depository for the month of 

January 2011. These statement(s) were not provided to the Audit staff. IRP stated they 

requested the bank statements but were not able to obtain them. The $13,717 understatement of 

the ending cash balance resulted from the misstatements described above. 

2012 Reported Activity ^ to Bank Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance 

@ January 1,2012 

$45,721® $60,213 $14,492 

Understated 

Receipts $3,655,057 $3,836,705 $181,648 

Understated 

Disbursements $3,588,143 $3,810,807 $222,664 

Understated 

Ending Cash Balance 

@ December 31,2012 

$113,410 $86,111 $27,299 

Overstated 

The understatement of receipts resulted from the following: 

• Transfers from Political Committees 

• In-kind contributions from Political Committees 

• Transfers from the non-federal account 

• Settlement Accounting Fees, not reported 

• Unexplained differences 

Understatement of Receipts 

The understatement of disbursements resulted from the following: 

• Under-reporting of disbursements 

• Underreporting of in-kinds from Political Committees 

+ $50,000 

+ 33,973 

+ 36,453 

+ 22,126 

+ 39.096 

+ $181.648 

+ $168,321 

+ 33,973 

' IRP filed an amended report that reduced its beginning cash by a total of $77S from the reported 2011 ending 

cash. 
• Settlement of Accounting Fees, not reported + 22,126 

• Unexplained differences - 1.756 

Net Understatement of Disbursements +$222.664 

The $27,299 overstatement of ending cash balance resulted from the misstatements described 

above. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff provided work papers and discussed the reporting errors 

that caused the misstatements with IRP representatives. They asked questions about several 

items and stated that they would file the amendments to ensure that the IRP reports were 

accurate. 

The Interim Audit recommended that IRP amend its disclosure reports to correct the 

misstatements for 2011 and 2012. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, IRP amended its disclosure reports to 

materially correct the misstatements for both 2011 and 2012 reports. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that IRP filed amended disclosure reports that 

materially corrected the misstatement of financial activity. 

E. Committee Response to the Draft Final Audit Report 

IRP's response to the Draft Final Audit Report provided no additional comments. 

F. Audit Hearing 

IRP did not address this finding during the Audit Hearing. 

Commission Conclusion 

On August 17,2017, the Commission considered the Audit Division Recommendation 

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

IRP misstated its financial activity for calendar years 2011 and 2012. 

The Commission approved the Audit staffs recommendation. 

Finding 2, Recordkeeping for Communications 

Summary 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of the 

information and proper classification of transactions disclosed on reports. IRP reported 19 

expenditures totaling $357,613,^ on Schedule B, Line 30(b) and Schedule H4 (Disbursements 

^ Two disbursements totaling $S2,S04 were not reported, but are included in the $357,613. 
for Allocated Federal/Non-federal Activity) with the purposes of FEA Volunteer Mail, 

Advocacy calls for Federal candidates, Direct Mail Services, equipment and phone minutes for 

Federal candidates and Auto-Dialer for Federal candidates. Documentation that was provided 

by IRP was insufficient to make a determination pertaining to the purpose for these 

disbursements and verification as Federal Election Activity or Allocated Federal/Non-federal 

Activity. In response to the Interim Audit Report recommendation, IRP stated that it has 

searched its records and was unable to locate additional documents to substantiate these 

disclosures. Absent the provision of the records, the Audit staff considers the matter a violation 

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

The Commission approved a finding that IRP did not provide the necessary records pertaining 

to disbursements totaling $357,613. 

Legal Standard 

A. Formal Requirements 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, explained, clarified, 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). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed disbursements to verify the accuracy of the 

information and proper classification of transactions disclosed on reports. IRP reported 19 

expenditures totting $357,613 for which documentation was insufficient to make a 

determination pertaining to whether these disbursements were correctly reported on Schedule B, 

Line 30(b) or Schedule H4. 

The Audit staffs analysis resulted in the following: 

i. Disbursements- No Invoices or Copies of Communications Provided ($280.2771 

Disbursements totaling $280,277 were paid to four mail vendors and three phone bank 

vendors, and were disclosed on Schedule B and Schedule H4, with purposes of FEA 

Volunteer Mail, Advocacy calls for Federal candidates. Direct Mail Services, equipment 

and phone minutes for Federal candidates and Auto-Dialer for Federal candidates. 

Without sufficient details, the Audit staff is unable to verify IRP's reporting of these 

amounts as Federal Election Activity or Allocated Federal/Non-federal Activity. The 

Audit staff requested copies of the invoices for the associated mail pieces and phone 

bank scripts for each phone disbursement. To date, these invoices or other information 

to associate the payments to a particular communication have not been provided. 
10 

ii. Disbursements- Invoices Provided - Not Able to Associate with Copies of 

Communications fS77 J361 

IRP reported paying disbursements totaling $77,336 to two mail vendors. IRP disclosed 

three disbursements on Schedule B, Line 30(b) with purposes of "FEA Volunteer Mail -

Walsh". For these disbursements, IRP provided invoices but did not provide 

information about the related mail communications. Without sufficient details, the 

Audit staff is unable to verify IRP's reporting of these amounts as FEA Volunteer Mail. 

The Audit staff requested information that would allow an association between the 

invoice and the communication, however, to date IRP has not provided this information. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff presented IRP schedules of the disbursements for which 

further records were necessary to verify the accuracy of reporting. At that time the Audit staff 

again requested that IRP provide invoices, copies of communications and scripts that would 

associate each invoice to the corresponding communication to the committee disclosure reports. 

The Interim Audit Report recommended that IRP provide the invoices, scripts and associated 

mail communications for the disbursements totaling $357,613. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, IRP stated that it searched its records 

and was not able to locate additional documents to substantiate these disclosures. Absent the 

provision of the records, the Audit staff considers the matter a violation of the recordkeeping 

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

D. Draft Final Audit Report 

The Draft Final Audit Report reiterated that IRP did not provide the necessary records 

pertaining to disbursements totaling $357,613. 

E. Committee Response to the Draft Final Audit Report 

IRP had no additional comments in response to the DFAR. 

F. Audit Hearing 

During the Audit hearing, IRP reiterated that it has performed a thorough search and no 

additional documents were located. 

Commission Conclusion 

On August 17,2017, the Commission considered the Audit Division Recommendation 

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

IRP did not provide the necessary records pertaining to disbursements totaling $357,613. 

The Commission approved the Audit Staffs recommendation. 
11 

Finding 3. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff noted that IRP failed to report debts and obligations to 

14 vendors totaling $294,117' on Schedule D (Debts and Obligations). In response to the 

Interim Audit Report recommendation, IRP amended its disclosure reports to materially correct 

the disclosure of debts and obligations to these vendors. 

The Commission approved a finding that IRP failed to itemize debts and obligations totaling 

$257,396. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount and 

nature of outstanding debts and obligations until those debts are extinguished. 52 U.S.C. 

§30104(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts owed by 

and to the committee with a statement explaining the circumstances and conditions under which 

each debt and obligation was incurred or extinguished. 11 CFR §104.11(a). 

C. Itemizing Debts and Obligations. 

• A debt of $500 or less must be reported as of the time payment is made or not later 60 days 

after such obligation is incurred, whichever comes first. 

• A debt exceeding $500 must be disclosed in the report that covers the date on which the 

debt was incurred. 11 CFR §104.11(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed IRP disbursement records and disclosure 

reports for proper reporting of debts and obligations.^ The review identified debts and 

obligations to 14 vendors totaling $294,117'*^ not reported on Schedule D (Debts and 

Obligations). Of these debts, $173,348" was incurred during the audit period and $120,769 

was incurred prior to the audit period and remained outstanding as of the beginning of the audit 

period. Based on the records, Aese vendors provided mainly legal services, accounting 

services, telemarketing and mail services. 

* Additional records were requested at the exit conference relating to possible debt amounts that IRP disclosed on 

a separate filing prior to fieldwork. Those records were not provided to the Audit staff. This amount is update to 

$257,396. 

' IRP provided the Audit staff with 177 invoices for 724 disbursements. 

Each debt in this amount was counted once even if it requires disclosure over multiple periods. This amount has 

been updated to $257,396. 

" This amount has been updated to $136,627. 
12 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the reporting of debts and obligations with IRP's representatives at 

the exit conference and provided work papers detailing the unreported debts. IRP 

representatives stated they would research this matter, provide additional documentation and 

amend their reports. 

The Interim Audit Report recommended that IRP amend its disclosure reports to disclose these 

debts. 

C. Committee Response to Interim Audit Response 

In response to the Interim Audit Report recommendation, IRP amended its disclosure reports to 

materially correct the disclosure of debts and obligations to these vendors. In addition, IRP 

acknowledged that the items identified in the Interim Audit Report "...arguably should have 

been reported as debt on Schedule D during the relevant reporting period." 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that IRP filed amended disclosure reports that 

materially corrected the debts and obligations. 

E. Committee Response to the Draft Final Audit Report 

IRP acknowledged that the items identified in the Interim Audit Report should have been 

reported as debt on Schedule D during the relevant reporting period. 

F. Audit Hearing 

IRP did not address this finding during the Audit Hearing. 

Commission Conclusion 

On August 17,2017, the Commission considered the Audit Division Recommendation 

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

IRP failed to disclose debts and obligations totaling $257,396. 

The Commission approved a finding that IRP failed to itemize debts and obligations totaling 

$257,396. 

Finding 4 Recordkeeping for Employees 

Summary 

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

payroll logs, as required, to document the percentage of time each employee spent in connection 

with a federal election. For 2011 and 2012, the Audit staff identified payments to IRP 

employees totaling $558,089'^ for which IRP did not maintain monthly payroll logs. This 

consisted of $542,812 for which payroll was allocated with federal and non-federal funds, and 

$15,277 for which payroll was exclusively non-federal. In response to the Interim Audit Report 

recommendation, IRP acknowledged that it does not possess any monthly payroll logs for 

" IRP did not have employees paid with a mixture of federal and non-fisderal funds and exclusively non-federal 

funds during the same month. 
13 

employees for the 2011 - 2012 time period. IRP stated that it did maintain these logs during the 

2014 election cycle and going forward, they will continue to maintain monthly payroll logs. As 

such, IRP has complied with the Interim Audit Report recommendation by providing details of 

its plan to maintain monthly payroll logs in the future. 

The Commission approved a finding that IRP failed to maintain monthly payroll logs totaling 

$558,089, as required to document the percentage of time each employee spent in connection 

with a federal election. 

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 be 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 with state law. 11 CFR 

§106.7(d)(l). 

Facts and Analysis 

A. Facts 

Prior to audit fieldwork, the Audit staff was informed by IRP that it did not maintain any 

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

connection with a federal election. These logs are required to document the proper allocation of 

federal and non-federal funds used to pay employee salaries and wages. For 2011 and 2012, 

IRP did not maintain monthly logs for $558,089'^ in payroll disbursements. This amount 

includes payroll paid as follows to IRP employees. 

• Employees reported on Schedule H4 and paid with federal and non-federal funds during 

the same month (totaling $542,812) and; 

• Employees paid exclusively with non-federal funds in a given month (totaling $15,277). 

B. Interim Audit Report & Audit Division Recommendation 

Prior to audit fieldwork and at the exit conference, the Audit staff discussed the payroll 

recordkeeping matter with IRP's representative and counsel. IRP counsel noted that IRP did 

not maintain payrolls during the 2011-2012 election cycle, however, currently does maintain the 

payroll logs. 

" This total does not include payroll for employees paid with 100 percent federal iiinds and reported as such (see 

Part I, Background, Commission Guidance, Request for Early Commission Consideration of a Legal Question, 

Page 1). Payroll amounts are stated net of taxes and fringe benefits. 
14 

The Interim Audit Report recommended that IRP provide evidence that it maintained monthly 

time logs to document the percentage of time an employee spent in connection with federal 

election; or implement a plan to maintain monthly payroll logs in the future. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, IRP acknowledged that it did not 

possess any monthly payroll logs for employees for the 2011 - 2012 time period. IRP stated 

that it maintained these logs during the 2014 election and going forward, IRP will require all of 

its employees who are paid by both federal and non-federal funds to maintain monthly logs of 

the time each spends on federal and non-federal activities. As such, IRP has complied with the 

Interim Audit ^port recommendation by providing details of its plan to maintain monthly 

payroll logs in the future. 

D. Draft Final Audit Report 

The Drafl Final Audit Report acknowledged that IRP did not possess any monthly payroll logs 

for employees for the 2011 - 2012 time period. IRP stated that it maintained these logs during 

the 2014 election and going forward, IRP will require all of its employees who are paid by both 

federal and non-federal funds to maintain monthly logs of the time each spends on federal and 

non-federal activities. 

E. Committee Response to the Draft Final Audit Report 

IRP had no additional comments in response to the DFAR. 

F. Audit Hearing 

IRP did not address this finding during the Audit Hearing. 

Commission Conclusion 

On August 17,2017, the Commission considered the Audit Division Recommendation 

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

IRP failed to maintain monthly payroll logs totaling $558,089 as required, to document the 

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

The Commission approved the Audit staffs recommendation.