Final Audit Report of the 

Commission on the Vermont 

Democratic 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 

(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.' TThe 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 matter 

discussed in this report. 

About the Committee (p. 2) 

The Vermont Democratic Party^ is a state party committee 

headquartered in Montpelier, Vermont. For more information, 

see the chart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

• Contributions from Individuals 

• Transfers from Affiliated 

Committees 

• Transfers from Other Political 

Committees 

• All Other Receipts 

• Total Receipts 

• Disbursements 

• Operating Expenditures 

• Federal Election Activity 

• All Other Disbursements 

Total Disbursements 

Commission Finding (p. 3) 

• Recordkeeping for Employees 

$ 544,077 

332,494 

219,000 

89,791 

$ 1,185,362 

$ 762,858 

238,300 

175,576 

$ 1,176,734 

' 2 U.S.C. §438(b). 

^ The Vermont Democratic Party changed its name to the Vermont State Democratic Federal Campaign 

Committee. 
Audit Report of the 

Commission on the 

Vermont Democratic Party 

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

s 

Parti. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Audit Hearing 

Overview of Financial Activity 2 

Partm. Summary ^ 

Commission Finding 

Recordkeeping for Employees *^ 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Vermont Democratic Party (VDP), undertaken by the 

Audit Division ofthe 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 whether 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 evEiluated 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 disclosure of independent expenditures; 

6. the completeness of records; and 

7. other committee 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," VDP requested early consideration of a 

legal question raised during the audit. VDP questioned whether the monthly time logs required 

under 11 C.F.R. § 106.7(d)(1) applied to employees paid with 100 percent federal fimds. 

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

committees to keep a monthly log for employees paid exclusively with federal fonds. 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 fimds and reported as such. The Audit staff informed VDP 

Counsel of the Commission's decision on VDP's request. The finding presented in this audit 

report does not include VDP employees paid with 100 percent federal fonds and reported as 

such. 

Audit Hearing 

VDP declined the opportunity for a hearing before the Commission on the matter presented in 

this report. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration October 20,1976 

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

Headquarters Montpelier, Vermont 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Five federal and two non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Linda Weiss (2/2011 - Present) 

• Treasurer During Period Covered by Audit Michael Inners (7/2006 - 4/2009) 

Edward Frey (4/2009 - 6/2009) 

Lloyd Touchette (6/2009 - 8/2009) 

Edward Clark (8/2009 - 2/2011) 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and Recordkeeping 

Tasks 

Paid staff and volunteers 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand January 1,2009 $37,901 

Receipts 

o Contributions from Individuals 544,077 

o Transfers from Affiliated Committees 332,494 

o Transfers from Other Political Committees 219,000 

o All Other Receipts 89,791 

Total Receipts $ 1,185,362 

Disbursements 

o Operating Expenditures 762,858 

o Federal Election Activity 238,300 

o All Other Disbursements 175,576 

Total Disbursements $ 1,176,734 

Cash-on-hand @ December 31,2010 S 46,529 
Part III 

Summary 

Commission Finding 

Recordkeeping for Employees 

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

monthly 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 VDP 

employees totaling $203,472, for which monthly payroll logs were not maintained. All 

of tiie VDP employees were originally disclosed as having been paid with an allocation 

of federal and non-federal fimds. After the exit conference, VDP amended its reports to 

disclose payments to employees as federal election activity. 

In response to the Interim Audit Report recommendation, VDP submitted a plan to pay 

all employees with 100 percent federal fonds. Further, VDP said it would maintain 

monthly timesheets for all employees paid with federal/non-federal allocated fimds, in 

order to track the percentage of time each employee spends on federal election activity. 

The Audit staff considered this matter resolved. 

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

time employees spent on federal election activity totaling $203,472. (For more details, 

see p. 4.) 
Part IV 

Commission Finding 

Recordkeeping for Employees 

Summary 

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

monthly 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 VDP 

employees totaling $203,472, for which monthly payroll logs were not maintained. All 

of the VDP employees were originally disclosed as having been paid with an allocation 

of federal and non-federal fiinds. After the exit conference, VDP amended its reports to 

disclose payments to employees as federal election activity. 

In response to the Interim Audit Report recommendation, VDP submitted a plan to pay 

all employees with 100 percent federal funds. Further, VDP said it would maintain 

monthly timesheets for all employees paid with federal/non-federal allocated fimds, in 

order to track the percentage of time each employee spends on federal election activity. 

The Audit staff considered this matter resolved. 

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

time employees spent on federal election activity totaling $203,472. 

Legal Standard 

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

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

Allocations of salaries, wages, and fringe benefits are to be determined 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 accoimt 

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 fimds that comply with state law. 11 

CFR§106.7(d)(l). 

Facts and Analysis 

A. Facts 

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

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

employee spent in connection with federal election activity. For 2009 and 2010, the 
Audit staff identified payments to VDP employees totaling $203,472^ for which payroll 

logs were not maintained. All of these individuals were originally disclosed as having 

been paid with an allocation of federal and non-federal fimds. VDP had no employees 

paid with exclusively non-federal funds. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the payroll recordkeeping matter with VDP representatives 

during audit fieldwork and at the exit conference. VDP representatives stated that they 

were imable to locate the documentation requested and explained that these payroll 

expenditures were reported erroneously as shared federal/non-federal activity, instead of 

solely federal. Further, they stated plans to correct this error by comprehensively 

amending their reports and disclosing these expenditures as strictly federal activity. The 

Audit staff verified that the VDP had sufficient federal fimds to cover both the federal 

and non-federal share of payroll costs. After the exit conference, VDP filed amended 

reports to disclose the payroll as federal election activity paid entirely with federal fimds. 

The Interim Audit Report recommended that VDP 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, VDP submitted a plan to pay all its employees 

with 100 percent federal fonds and to report all its employees' salaries and benefits on 

Schedule B, line 30b (Itemized Disbursements- Federal Election Activity Paid Entirely 

with Federal Fimds). The plan includes a contingency, in the event VDP ever has to pay 

employees with an allocation of federal and non-federal fonds or solely with non-federal 

fonds. VDP provided a sample payroll log to be used if such payment to employees were 

to occur. The contingency plan also requires the Executive Director to ensure that VDP 

keeps payroll logs, makes proper reports, maintains a reference file for continuity, and 

consults with VDP Counsel to ensure payment with the appropriate fimds. Such action is 

consistent with Commission guidance with respect to payroll logs. The Audit staff 

considered this matter resolved. 

D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that VDP plans to pay all its employees with 

100 percent federal fimds. VDP will maintain logs to track federal election activity for 

those employees who are paid all or in-part with non-federal funds. 

£. Committee Response to the Draft Final Audit Report 

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

Commission Conclusion 

On January 16, 2014, the Commission considered the Audit Division Recommendation 

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

^ Payroll is stated net of taxes and benefits. Payments to VDP employees paid with 100 percent federal 

funds and reported as such are not included in this finding. (See Part I, Background, Commission 

Guidance, Request for Early Commission Consideration of a Legal Question, p. 1.) 
finding that VDP failed to maintain logs to document the time employees spent on federal 

election activity totaling $203,472. 

The Commission approved the Audit staff's recommendation.