Erik Paulsen 

ic -k FOR CONGRESS k 

September 10,2018 

Thomas Hintermister VIA E-MAIL 

Federal Election Commission 

Assistant Staff Director 

Audit Division 

1050 First Street NE 

Washington D.C., 20463 

Re: Response to Draft Final A udit Report 

Dear Mr. Hintermister: 

This responds to the Draft Final Audit Report of the Federal Election Commission's 

(the "Commission") Audit Division concerning the 2015-2016 election cycle activities of 

the Friends of Erik Paulsen Committee (the "Committee"). 

As an initial matter, the Committee is troubled by the Audit Division's refusal to 

provide additional time for the Committee to review and respond to the Draft Final Audit 

Report. The Committee requested an extension after a phone conference with the auditors 

on August 30, 2018, less than two weeks before this response was due. During that call, 

the Committee's treasurer raised several concerns about the audit's use of statistical 

projections—^namely, the sampling of 125 items that may have led to inaccurate findings. 

The Committee sought additional time so that it could closely review the auditors' 

projections and ensure that the audit has been carried out fairly. 

Nonetheless, the Committee believes this audit should be closed without any 

findings. The Draft Final Audit Report's sole finding resulted from statistical projections 

that do not account for information provided to the auditors. So, even if the auditors were 

justified in relying on projections, those projections depend on inaccurate assumptions and 

should have been recalculated to account for additional information produced by the 

Committee during the audit. These issues were raised in response to the Interim Audit 

Report, but the Draft Final Audit Report does not even take them into account. 

Accordingly, the Committee once again raises them here, and asks that the Commission 

close the audit with no findings. At the very least, the Commission must demand that the 

Audit Division revise its projections as required by 11 C.F.R. § 9038.1(f)(2). 

Paid for by Friends of Erik Paulsen 

I P.O. Box 44389. Eden Pialfie. MN 55344 itirir www.Pauls8nFofConofie8e.oom 
Mr. Thomas Hintermister 

September 10,2018 

Page 2 

A. The Final Audit Report wrongly calls certain contributions "excessive" 

even though the Committee has demonstrated that everv donor received 

a reattribution or redesignation letter when warranted during the 2016 

cycle. 

Throughout the audit, the Committee has been required to address (and correct) 

erroneous allegations that it failed to send timely reattribution and redesignation letters. On 

at least three occasions, the Committee corrected allegedly excessive contributions by 

pointing the Audit Division to timely letters already produced by the Committee. 

Following the audit exit conference, the Audit Division requested the Committee review a 

spreadsheet of additional allegedly excessive contributions, and other contributions of 

$1,000 or greater, and then "go through the committee's records and find items, similar to 

the ones we found during field work, that require a redesignation/reattribution letter to be 

sent to the contributor." The Audit Division indicated that if the Committee sent new 

reattribution or redesignation letters to donors "found during field" work and identified on 

the spreadsheet, "this should address the issue we presented at the exit conference." 

The Committee again pointed out that—contrary to the Audit Division's 

representations—^the Committee had produced reattribution and redesignation letters for 

nearly all the contributions on which the auditors intended to rely for their statistical 

projections. The Audit Division acknowledged that the Committee addressed and resolved 

each of the sample items in an e-mail to the Committee's treasurer on March 1, 2018 in 

which the auditor confirmed that "the Committee addressed and resolved the remaining 

100% review items ($31,800.00) with its submission of redesignation/reattribution letters." 

For the remaining allegedly excessive contributions, the Committee produced 

additional evidence showing that letters resolving excessive contributions were timelv sent 

to all donors identified by the Audit Division. That evidence includes (1) proof that every 

donor received a solicitation before the donor made the contribution explaining that the 

donor's contribution would be reallocated or redesignated and (2) a letter from the 

Committee's rq)resentative explaining that she specifically recalled sending timely 

reallocation or redesignation letters at the time the contribution was reallocated or 

redesignated to every person on the Audit Division's list of supposedly excessive 

contributions. It is true that the Committee's representative had saved over some letters, 

and so the Committee did not have copies of every letter it sent. But the explanation 

provided by the Committee's representative, and the fact that every contributor received 

notice of the Committee's reallocation/redesignation practices before making a 

contribution, should have been sufficient for the Conunission to conclude that all donors 

knew that their contributions had been appropriately redesignated or reallocated. 
Mr. Thomas Hintermister 

September 10,2018 

Page 3 

Finally, to eliminate any doubt about whether donors received reattribution or 

redesignation letters, the Committee sent a new round of redesignation and reattribution 

letters to every donor whose contribution was reallocated or redesignated during the 2015-

2016 election cycle. There can be no question that every allegedly excessive contribution 

from the 2015-2016 cycle was resolved by the Cormnittee. Therefore, to the extent the 

Final Audit Report Committee continues to claim there were any "excessive" 

contributions, it is incorrect. The Committee resolved every excessive contribution from 

the 2015-2016 cycle. 

l^e Commission should have accepted the Committee's evidence demonstrating 

that the Committee sent a reallocation or redesignation letter in every instance where a 

letter was warranted. This should resolve the audit—which at this point reflects, at most, a 

minor recordkeeping issue. Because no findings of "excessive contributions" are 

warranted, and the audit should be closed with no findings. 

B. Even if the Commission were justified in i^oring the Committee's 

evidence, the Commission is required to re-caiculate its projections 

according to 11 C.F.R. § 9038.1(f)(2) based on information provided by 

the Committee. 

When an audit relies on statistical sampling for its findings, the audited Committee 

may demonstrate that "any apparent errors found among the sample items were not errors." 

Upon such a showing, the Commission must revise its projection based on the reduced 

number of errors in the sample. 11 C.F.R. § 9038.1(f)(2). 

Here, the Committee presented evidence that every sample item relied on by the 

Audit Division was not, in fact, an error. As noted above, for every sample item identified 

as a potentially excessive contribution, the Committee resolved the Commission's 

concerns by producing either (1) evidence that the potentially excessive contribution was 

refunded or (2) a letter redesignating or reatrributing the donor's contribution. 

The Committee's evidence resolved the auditors' concerns regarding the alleged 

errors in the sample items. Because those concons were resolved, as a matter of regulation, 

the Audit Division carmot use those sample items as the basis for statistical projections. 

11 C.F.R.§ 9038.1(f)(2). 

The Committee previously raised this concem in response to the Interim Audit 

Report. Yet the Audit Division seems to have ignored them, and—despite the requirements 

in the regulations did not recalculate its projections. The Committee believes that, before 

accepting a final audit report, the Commission should require the Audit Division to 

recalculate its projections. 
Mr. Thomas Hintermister 

September 10,2018 

Page 4 

Sincerely, 

David 

Treasurer