FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

July 12,2010 

MEMORANDUM 

To:	 Judith Ingram 

Press Officer 

From: Joseph F. StOlt~zft-;2 Assistant Staff 
 Audit Division
 

Subject:	 Public Issuance of the Audit Report on Keystone Alliance PAC 

Attached please find a copy of the audit report on Keystone Alliance PAC, which 

was approved by the Commission on July 2,2010. 

All parties involved have received informational copies of the report and the report 

may be released to the public July 12, 2010. 

Attachment as stated 

cc:	 Office of General Counsel 

Office of Public Disclosure 

Reports Analysis Division 

FEC Library 

lTD Web 
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. I 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. 

Report of the 

Audit Division on the 

Keystone Alliance PAC 

January 1, 2007 - December 31, 2008 

About the Committee (p. 2) 

Keystone Alliance PAC (KAP) is a non-connected, non-qualified, 

multi-candidate Political Action Committee and is headquartered in 

Harleysville, Pennsylvania. For more information, see chart on 

Committee Organization, p 2. 

Financial Activity (p. 3) 

•	 Receipts 

o	 Contributions from Individuals $ 327,080 

o	 Contributions from Other 

Political Committees 36,068 

o	 Transfers from Affiliated and 

Other Party Committees 32,762 

o	 Other Receipts 11,036 

o	 Total Receipts $ 406,946 

•	 Disbursements 

o	 Operating Expenditures $ 144,881 

o	 Contributions to Federal 

Candidates 109,160 

o	 Other Disbursements 9,674 

o	 Total Disbursements $ 263,715 

Finding and Recommendation (p. 5) 

•	 Receipt of Contributions in Excess of the Limit 

I 2 U.S.c. §438(b). 
Report of the 

Audit Division on 

Keystone Alliance PAC 

January 1, 2007 - December 31,2008
 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1
 

Scope of Audit 1
 

Part II. Overview of Committee 

Committee Organization 2
 

Overview of Financial Activity 3
 

Part III. Swnmary 

Finding and Recommendation 4
 

Part IV. Finding and Recommendation 

Receipt of Contributions in Excess of the Limit 5
 
1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the Keystone Alliance PAC (KAP), 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 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. 2 U.S.C. §438(b). 

Scope of Audit 

Following Commission approved procedures, the Audit staff evaluated various risk 

factors and, as a result, this audit examined: 

1. The receipt of excessive or prohibited contributions from other political committees; 

2. The disclosure of contributions received from other political committees; 

3. The disclosure of individual contributors' occupation and name of employer; 

4. The consistency between reported figures and bank records; 

5. The completeness of records; 

6. Other committee operations necessary to the review. 
2 

Part II 

Overview of Committee 

Committee Organization 

Important Dates Keystone Alliance PAC 

• Date of Registration February 8, 2007 

• Audit Coverage January 1, 2007 - December 31, 2008 

Head quarters Harleysville, Pennsylvania 

Bank Information 

• Bank Depositories One 

• Bank Accounts One Checking 

Treasurer 

• Treasurer When Audit Was Conducted Robert Asher 

• Treasurer During Period Covered by Audit Robert Asher 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Used Commonly Available Campaign 

Management Software Package 

Yes 

• Who Handled Accounting and Paid Staff 

Recordkeeping Tasks 
3 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1,2007 $0 

Receipts 

0 Contributions from Individuals 327,080 

0 Contributions from Political Committees 36,068 

0 Transfers from Affiliated and Other Party 

Committees 32,762 

0 Other Receipts 11,036 

Total Receipts $ 406,946 

Disbursements 

0 Operating Expenditures 144,881 

0 Contributions to Federal Candidates 109,160 

0 Other Disbursements 9,674 

Total Disbursements $ 263,715 

Cash on hand @ December 31, 2008 $143,231 
4
 

Part III 

Summary 

Finding and Recommendation 

Receipt of Contributions in Excess of the Limit 

The Audit staff identified contributions from four individuals that exceeded the limitation by 

$10,800. KAP representatives issued untimely refunds of the excessive portions of the 

contributions and provided documentation showing that all refund checks have cleared the bank. 

The Audit staff recommended that KAP submit any written comments it considered relevant. In 

response, KAP stated it now has a better understanding of the contribution limits and timeframes 

associated with contribution refunds and reattributions. 

(For more detail, see p. 5) 
5 

Part IV
 

Finding and Recommendation
 

IFinding. Receipt of Contributions in Excess of the Limit 

Summary 

The Audit staff identified contributions from four individuals that exceeded the limitation by 

$10,800. KAP representatives issued untimely refunds of the excessive portions of the 

contributions and provided documentation showing that all refund checks have cleared the bank. 

The Audit staff recommended that KAP submit any written comments it considered relevant. In 

response, KAP stated it now has a better understanding of the contribution limits and timeframes 

associated with contribution refunds and reattributions. 

Legal Standard 

A. Party Committee Limits. A party committee may not receive more than a total of $5,000 

per year from anyone contributor. 2 U.S.c. §441a(a)(l)(C), (2)(C) and (f); 11 CFR §§110.1(d) 

and 110.9. 

B. Handling Contributions That Appear Excessive. If a committee receives a contribution
 

that appears to be excessive, the committee must either:
 

•	 Return the questionable check to the donor; or 

•	 Deposit the check into its federal account and: 

o	 Keep enough money in the account to cover all potential refunds; 

o	 Keep a written record explaining why the contribution may be illegal; 

o	 Include this explanation on Schedule A if the contribution has to be itemized 

before its legality is established; and 

o	 Seek a reattribution, following the instructions provided in the Commission 

regulations (see below for explanations of reattribution); and 

If the committee does not receive a proper reattribution within 60 days after receiving the 

excessive contribution, the committee must refund the excessive portion to the donor. 11 CFR 

§§103.3(b)(3), (4) and (5) and 110.1(k)(3)(ii)(B). 

C. Joint Contributions. Any contribution made by more than one person (except for a 

contribution made by a partnership) must include the signature of each contributor on the check 

or in a separate writing. A joint contribution is attributed equally to each donor unless a 

statement indicates that the funds should be divided differently. 11 CFR §110.1(k)(l) and (2). 

D. Reattribution of Excessive Contributions. The Commission regulations permit committees 

to ask donors of excessive contributions (or contributions that exceed the committee's net debts 

outstanding) whether they had intended their contribution to be a joint contribution from more 

than one person and whether they would like to reattribute the excess amount to the other 

contributor. The committee must inform the contributor that: 
6
 

1.	 The reattribution must be signed by both contributors; 

2.	 The reattribution must be received by the committee within 60 days after the committee 

received the original contribution; and 

3.	 The contributor may instead request a refund of the excessive amount. 11 CFR 

§llO.l(k)(3). 

Within 60 days after receiving the excessive contribution, the committee must either receive the 

proper reattribution or refund the excessive portion to the donor. 11 CFR §§103.3(b)(3) and 

1l0.1(k)(3)(ii)(B). Further, a political committee must retain written records concerning the 

reattribution in order for it to be effective. 11 CFR §110.1(1)(5). 

Notwithstanding the above, any excessive contribution that was made on a written instrument 

that is imprinted with the names of more than one individual may be attributed among the 

individuals listed unless instructed otherwise by the contributor(s). The committee must inform 

each contributor: 

1.	 How the contribution was attributed; and 

2.	 The contributor may instead request a refund of the excessive amount. 11 CFR
 

§11 0.1(k)(3)(B).
 

Facts and Analysis 

The Audit staff identified contributions from four individuals that exceeded the limitation by 

$10,800. The contributions from two of the contributors were excessive by $400 each and two 

other contributors exceeded the contribution limit by $5,000 each all in 2008. Although KAP 

did not maintain a separate bank account for questionable contributions, throughout 2008 it had a 

sufficient balance in its bank account to refund the excessive portion of the contributions. 

The Audit staff presented this matter and provided a schedule of the apparent excessive 

contributions at the exit conference. In response, KAP issued refund checks to the contributors 

and has demonstrated that all refund checks ($10,800) have cleared the bank. 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that KAP submit any written comments it considered relevant. 

In response to interim audit report, KAP stated that through the audit and attendance at an 

official FEC Conference it can assure the FEC that better records of contributions from donors 

will be maintained and it now has a better understanding of the limits and timelines for any 

refunds and reattributions.