Draft Final Audit Report 

of the Audit Division on 

Rossi for Senate 

(May 24, 2010 - 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 ActJ^Hi&audit 

determim 

commwe complied^ 

the JlfflBh^ns, 

prohibiti^^uid 

disclosure r^lkements 

ofthe Act. 

Future Actioi 

The Commission m ^ 

initiate an enforcement 

action, at a later time, 

with respect to the matter 

discussed in this report. 

About the Campaign 

Rossi for Senate is the princinifTampiEign committee for Dino 

Rossi. Republican candiday^Bhe United States Senate from the 

state of Washington, hea^ffartenBin Everett, Washington. For 

more information, se^jfee q^art onH^^mpaign Organization, p. 

2. , 

Financial'l^ivity^2) 

• Receipts 

o _ From Individual 

o ii^@m Political Coli^^ees 

o l!|Z^^S^g|S^from Aflilu 

o (^etm^bjeaiating 

Ex'^dirfl-- , • ^ 

Total R^Jpts ^ 

• Disbursenl^nte 

^ Operatii^Bxpenditures 

mon Refunds 

o 1 ran'sfers to Authorized 

|)ommittees 

E^l Disbursements 

$ 8,348,360 

641,248 

665,484 

19,298 

$ 9,674,390 

$ 9,553,965 

20,360 

1,500 

$ 9,575,825 

Finding and Recommendation (p. 3) 

• Misstatement of Financial Activity 

2 U.S.C. §438(b). 
Draft Final Audit Report 

of the Audit Division on 

Rossi for Senate 

(May 24, 2010 - December 31, 2010) 

r 
Table of Contents 

/KSL. ^^^^ 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Campaign 

Campaign Organization ^. 2 

Overview of Financial Activity Jtr ^ 2 

4 

Part III. Summary 

Finding and Recommendation 

Part IV. Finding and Recom 

Misstatement of Financial Activity 
Part I 

Background 

Authority for Audit 

This report is based on an audit of Rossi for Senate (RFS), 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 committe^p^t is required to file a 

report under 2 U.S.C. §434. Prior to conducting any audit und^uiissubsection, the 

Commission must perform an intemal review of reports filep^|selected committees to 

determine whether the reports filed by a particular comn^pe r^^^e threshold 

requirements for substantial compliance with the AcL-^ o^.C. S^^ia^ 

Scope of Audit 

Following Commission-approved procedures^ *'. 

factors and as a result, this audit examined: 

1. the receipt of excessive contribute - • d loans; 

2. the receipt of contributions from p -^^.lEbd sources; 

3. the disclosure of contributions recei^d; ^ <^ 

4. the disclosure of individual contribut^' oa •:-

5. the consistency betv^g^pported figur^^m bank 

6. the completeness^neco^^nd ^ 

7. other committgj^PiiBrations^cessary to tnkreview. 

risk 

ame of employer; 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration June 8,2010 J0K 

• Audit Coverage May 24,2010.,f|Pecem!)er 31,2010 

Headquarters Everett, W^jll^^jEoi 

Bank Information 

• Bank Depositories 

• Bank Accounts Q^?t)hec£ing ^ 

Treasurer 

• Treasurer When Audit Was Conducted PfiilQ^r^^ , 2010 - Jan ^ 30,2012); 

Dinon^PXJanuary 31,2012 - present) 

• Treasurer During Period Covered by^^udit Phil Dy,- . 

Management Information ^ 

• Attended Commission Campaign Finauv*^ -

Seminar % r. ^ r 

• Who Handled Account'y " 

Recordkeeping Taskj^ 

Hid 2sta: 

pvervieii^ Fin^cial Activity 

^(Audited Amounts) 

Cash-on-hl!^ a May 24,21^^ $ 0 

Receipts ' H 

o From Individual^ Jf 8,348,360 

o From Political Ci^^^ ^ 641,248 

o Transfers from Aflil^ ^ 665.484 

o Offsets to Operating^xpenditures 19,298 

Total Receipts $9,674,390 

Disbursements 

o Operating Expenditures 9,553,965 

o Contribution Refunds 20,360 

o Transfers to Authorized Committees 1,500 

Total Disbursements $ 9,575,825 

Cash-on-hand @ December 31,2010 $ 98,565 
Part III 

Summary 

Finding and Recommendation 

Misstatement of Financial Activity 

During audit fieldwork, a comparison of RFS*s reported financial activity with its bank 

records revealed a misstatement of disbursements. In response^Pj^nterim Audit 

Report recommendation, RFS amended its disclosure reportsijmatenally correct the 

misstatement. (For more detail, see p. 4.) ^ ^ 

V 

4 

4 
Part IV 

Finding and Recommendation 

I Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of RFS's reported financiaLactivity with its bank 

records revealed a misstatement of disbursements. In response^^^^terim Audit 

Report recommendation, RFS amended its disclosure reportgg^naterially correct the 

misstatement. 

Legal Standard 

Contents of Reports. Each report must disclos| 

• the amount of cash-on-hand at the begi^^g and eMof the repomni^l^od; 

• the total amount of receipts for the reporti^^^o^ffiy^or the electl^ cycle; 

• the total amount of disbursements for the repl^SS^ period and for the election 

cycle; and ^ 

• certain transactions that requir.- .'g^^on on Sch€!^||^Itemized 

Disbursements). 2 U.S.C. §434!^r^f^^n^ (4) an( 

Facts and Analysis J 

A. Facts 

The Audit staff recon^ll^JlFS 

misstatement of disburs 

the succeed^^^^^^phs 

orted acti^^ith its bank records and identified a 

PYl 0 Tik- lollowing chart details the discrepancy and 

: til.- k- iM«>i« for the misstatement. 

— ^ 

201(ni^\sity ^ w 

i Reported Bank Records Discrepancy 

Beginning C^I-IMI Hand 1 

@ May 24, 20l()' ^ M 

f $0 $0 $0 

Receipts ^ ^ $9,645,437 $9,674,390 $28,953 

Understated 

Disbursements $9,421,114 $9,575,825 $154,711 

Understated 

Ending Cash-on-Hand 

@ December 31.2010 

$150,678^ 98,565 $52,113 

Overstated 

^ RFS's reported ending cash balance does not equal the difference of receipts and disbursements because 

RFS decreased its beginning cash-on-hand balance by $73,645 on its October 2010 Quarterly report. 

Absent that error, the reported ending cash balance as of December 31,2010 would have been $224,323. 
As noted above, RFS understated disbursements by $154,711 in 2010. This misstatement 

of disbursements resulted from the following reporting discrepancies: 

In-kind contributions reported as memo entries 

In-kind contributions reported on Schedule A, not on Schedule B 

Disbursements reported but not supported by check or debit 

Payroll Disbursements not reported 

Operating Disbursements not reported 

Unexplained Difference 

Net Understatement of Disbursements J F ^ 

+ 

+ 

+ 

+ 

$ 3,010 

4,847 

178,492 

40,958 

289,986 

5.598 

$ 154,711 

RFS made payroll disbursements totaling $40,958 that c^^ ncfj^j^aced to its reports. 

The payroll disbursements consisted of payroll dated^Uw^ 1,20l^^22,422), and on 

July 15,2010 ($18,536). In addition, there were on^TOg disbursei^mJotaling 

$289,986 that could not be traced to its reports^i^se disbursements ci^^^dof a 

media vendor payment ($231,047), two paynj^^^r cons^ng services ^^@o0), and 

other disbursements ($25,589). y^^^ 

B. Interim Audit Report & Audit IpKision Recomm' 

The Audit staff and RFS representativ.-^ ''J^^'^ ^ 

conference, and the Audit staff also pro^M^^lgdules supp 

adjustments. RFS representatives acknov^dge 

indicated that RFS would'&le.corrective a^n^ents. 

it at the exit 

\ the disbursement 

in its reports and 

The Interim Audit^^rt recniiiiiiended that ^ S amend its disclosure reports to correct 

the misstatement of d^Mseme]8| for 2010 ani^imend its most recently filed report to 

correct the cash-on-hana^^^^TO^: : •. v: ^tion that the change resulted from a 

prior penoj^BWi^iiUstmd^ 

ittee Respo 

the Interi: 

ally CO 

Intgmp^udit Report 

dit RpPort recommendation, RFS filed amended disclosure 

ed the misstatement of disbursements for 2010.