FEDERAL ELECTION COMMISSION 

WASHINGTON. O.C. 20463 

March 29, 2017 

MEMORANDUM 

TO: 

FROM: 

SUBJECT: 

Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. Hintermister 

Assistant Staff Director 

Audit Division 

Adav Noti 

Associate General Counsel 

Policy Division 

Lorenzo Holloway 

Assistant General Counsel 

Compliance Advice 

Margaret J. Forman J'f 

Attorney 

Draft Final Audit Report on the American Financial Services Association PAC 

(LRA 1034) 

I. INTRODUCTION 

The Office of the General Counsel has reviewed the proposed Draft Final Audit Report 

("proposed DFAR") on the American Financial Services Association PAC (APSAPAC). The 

proposed DFAR contains two findings: Misstatement of Financial Activity (Finding 1), and 

Excessive Contributions Made to Federal Candidates (Finding 2). We concur with the findings 

and comment on them below, if you have any questions, please contact Margaret J. Forman, the 

attorney assigned to this audit. 
LRA 1034 - American Financial Services Association PAC 

DEAR Legal Comments 

Page 2 of3 

II. AUDIT DIVISION SHOULD CLARIFY AND ADDRESS ISSUES IN ANALYSIS 

In Finding 1 of the proposed DFAR, the Audit Division concludes that AFSAPAC 

misreported its financial activity when compared to its bank records for receipts, disbursements 

and ending cash balances for 2013 and for beginning and ending cash balances for 2014. 

AFSAPAC asserted, in response to the Interim Audit Report ("1AR")> that its misstatements 

were all timing related and they blamed, in part, "staff limitations & the difficulty in working 

with the FEC file software." AFSAPAC Response to lAR. The Audit Division has no further 

information on this assertion and only references the assertion in the proposed DFAR. 

The proposed DFAR does not make clear whether AFSAPAC is asserting that its staff 

merely had difficulty using the FEC's software, or that the software actually malfunctioned in 

some way. If AFSAPAC is making the latter assertion, additional discussion might be warranted 

in the proposed DFAR. The Commission may consider reasonably unforeseen or mitigating 

factors in certain enforcement matters, which may include computer-related problems pertaining 

to the Commission's computers and Commission-provided software. Cf., 11 C.F.R. § 111.3S(c); 

Administrative Fines, 65 Fed. Reg. 31,787,31,789-31,790 (May 19,2000) (Failure of 

Commission computers or Commission-provided software despite committee seeking technical 

assistance from Commission personnel and resources is reasonably unforeseen circumstances 

beyond control of committee using best efforts to timely file reports). Therefore, if AFSAPAC is 

claiming that the Commission's software failed, we recommend that the Audit Division revise 

the proposed DFAR to address the merits of AFSAPAC's assertion of software problems and ask 

AFSAPAC for more information and details regarding the problems with the Commission's 

software. If necessary, such details might include whether the Commission's IT department, the 

Reports Analysis Division, or any other Commission personnel who handle Commission 

disclosure software issues have any record of AFSAPAC contacting them with problems 

regarding the Commission's software system. 

In Finding 2 of the proposed DFAR, the Audit Division addresses apparent excessive 

contributions made to federal candidates, but makes no conclusions or recommendations at this 

stage of the audit. We recommend that the Audit Division revise the proposed DFAR to clarify 

the discussion and include a conclusion regarding this finding. 

The proposed DFAR states that 11 contributions made to seven federal candidate 

committees, when aggregated with 22 other contributions, appear to exceed the contribution 

limitation by $18,000. The proposed DFAR also notes AFSAPAC's responses. In response to 

the exit conference, the Committee contends that it redesignated the contributions for all $18,000 

of the excessive contributions. AFSAPAC, however, only produced redesignation letters 

apparently sent out to the recipient committees, for $17,000 of the $18,000 amount. 

The Audit Division does not make any conclusions in the proposed DFAR regarding the 

underlying issue of whether the excessive contributions were redesignated. We recommend that 

the Audit Division revise the proposed DFAR to indicate whether the documentation that 

AFSAPAC provided to the Audit Division is sufficient to verify these redesignations or whether 
LRA 1034 - American Financial Services Association PAC 

DFAR Legal Comments 

Page 3 of3 

additional verification is needed.' If the documentation is insufficient, the Audit Division should 

state the deficiencies. And whichever result the Audit Division reaches — i.e., that the 

documentation is or is not sufficient — we recommend that the proposed DFAR include an 

explicit conclusion regarding this finding. 

' The contributor's intent to redesignate is apparent in a signed letter submitted by the contributor to the 

recipient committee. See Contribution and Expenditure Limitations and Prohibitions; Contributions by Persons and 

Multicandidate Political Committees, 52 Fed. Reg. 760,763 (Jan. 9, 1987) (written redesignations signed by the 

contributor ensure donor intent).