Interim Audit Report of the 

Audit Division on the Dallas 

County Republican 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.' The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

About the Committee (p. 2) 

The Dallas County Republican Party^ is a local party committee 

headquartered in Dallas, Texas. For more information, see the 

chart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

Receipts 

o Contributions from Individuals $350,116 

o Transfers from Non-federal 

Account 196,000 

o Other Federal Receipts 1,009 

Total Receipts $ 547,125 

Disbursements 

o Operating Expenditures $480,625 

o Federal Election Activity 36,372 

o Other Disbursements 31,000 

Total Disbursements $ 547,997 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Recordkeeping for Employees (Finding 2) 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

' 2 U.S.C. §438(b). 

^ On August 16,2011, the Dallas County Republican Party changed its name to Dallas County Republican 

Party - Primary. 
Interim Audit Report of the Audit 

Division on the 

Dallas County Republican Party 

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

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatementof Financial Activity 4 

Finding 2. Recordkeeping for Employees 5 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Dallas County Republican Party (DCRP), 

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 intemal 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 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 completeness of records; and 

6. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission "Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission," several state party committees 

unaffiliated with DCRP requested early consideration of a legal question raised during an 

audit. Specifically, the Commission addressed whether monthly time logs under 11 CFR. 

§ 106.7(d)(1) were required for employees paid with 100 percent federal funds. 

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

committees to keep a monthly log for employees paid exclusively with federal funds. 

Exercising its prosecutorial discretion, however, the Commission decided not to pursue 

recordkeeping violations for the failure to keep time logs or to provide affidavits to 

account for employee salaries paid with 100 percent federal funds and reported as such. 

DCRP's representative was informed of the payroll log requirement and of the 

Commission's decision not to pursue recordkeeping violations for failure to keep payroll 

logs for salaries paid and correctly reported as 100 percent federal, excluding amended 

filings. This audit report does not include any finding or recommendation with respect to 

DCRP employees paid with 100 percent federal funds and reported as such. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration February 5,1999 

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

Headquarters Dallas, Texas 

Bank Information 

• Bank Depositories One 

• Bank Accounts One federal, three non-federal, one 

Levin 

Treasurer 

• Treasurer When Audit Was Conducted Honorable Wade Emmert 

• Treasurer During Period Covered by Audit Jonathan Neerman 

Management Information 

• Attended Commission Campaign Finance Yes 

Seminar 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand @ January 1,2009 $ 1,374 

Receipts 

o Contributions from Individuals 350,116 

o Transfers from Non-federal Account 196,000 

o Other Federal Receipts 1,009 

Total Receipts $ 547,125 

Disbursements 

o Operating Disbursements 480,625 

o Federal Election Activity 36,372 

o Other Disbursements 31,000 

Total Disbursements $ 547,997 

Cash-on-hand @ December 31,2010 $ 502 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of DCRP's reported financial activity with its bank 

records revealed that, for 2010, DCRP understated its reported receipts and 

disbursements by $31,817 and $32,201, respectively. The Audit staff recommends that 

DCRP amend its reports to correct the misstatements. (For more detail, see p. 5.) 

Finding 2. Recordkeeping for Employees 

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

monthly payroll logs, as required, to track the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the amount of payroll for which logs were 

required was $85,520. This consisted of $70,520, for which payroll was allocated 

between federal and non federal funds, and $15,000 that was paid exclusively with nonfederal funds. For DCRP employees paid with an allocation of federal and non-federal 

funds and/or non-federal funds, the Audit staff recommends that DCRP implement a plan 

to maintain monthly payroll logs to track the percentage of time each employee spends on 

federal election activity. (For more detail, see p. 6.) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity J 

Summary 

During audit fieldwork, a comparison of DCRP's reported financial activity with its bank 

records revealed that, for 2010, DCRP understated its reported receipts and 

disbursements by $31,817 and $32,201, respectively. The Audit staff recommends that 

DCRP amend its reports to correct the misstatements. 

Legal Standard 

Contents of Reports. Each report must disclose: 

• the amount of cash-on-hand at the beginning and end of the reporting period; 

• the total amount of receipts for the reporting period and for the calendar year; 

• the total amount of disbursements for the reporting period and for the calendar year; 

and 

• certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 2 U.S.C. §434(b)(l), (2), (3), (4) and (5). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reconciled reported financial activity with bank 

records for calendar years 2009 and 2010 and identified a misstatement of receipts and 

disbursements for 2010. The following chart outlines the discrepancies. 

2010 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

^January 1,2010 $1,178 $2,045 $867 

Understated 

Receipts $287,185 $319,002 $31,817 

Understated 

Disbursements $288,344 $320,545 $32,201 

Understated 

Ending Cash Balance 

@ December 31, 2010 $19 $502 $483 

Understated 
The understatement of receipts resulted from the following. 

• Credit card deposit not reported $ 24,277 

• March 2010 deposits not reported 5,995 

• On-line deposit not reported 1,720 

• Miscellaneous identified amounts (175) 

Net Understatement of Receipts $ 31.817 

The understatement of disbursements resulted from the following. 

• Transfers to non-federal account not reported $ 31,000 

• Miscellaneous identified disbursements not reported 1,341 

• Unidentified difference (140^^ 

Net Understatement of Disbursements $ 32.201 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference, the Audit staff explained the misstatements and provided 

schedules to DCRP representatives. The representatives offered no comments during or 

subsequent to the exit conference. 

The Audit staff recommends that, within 30 calendar days of service of this report, DCRP 

amend its reports to correct the misstatements noted above. 

Finding 2. Recordkeeping for Employees 

Summary 

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

monthly payroll logs, as required, to track the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the amount of payroll for which logs were 

required was $85,520. This consisted of $70,520, for which payroll was allocated 

between federal and non federal funds, and $15,000 that was paid exclusively with nonfederal funds. For DCRP employees paid with an allocation of federal and non-federal 

funds and/or non-federal funds, the Audit staff recommends that DCRP implement a plan 

to maintain monthly payroll logs to track the percentage of time each employee spends on 

federal election activity. 

Legal Standard 

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

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

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows: 

• Employees who spend 25% or less of their compensated time in a given month on 

federal election activities must be paid either from the federal account or have 

their pay allocated as administrative costs; 

• Employees who spend more than 25% 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 funds that comply with State 

law. 11 CFR§106.7(d)(l). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements made to employees totaling 

$85,520^''* for which monthly payroll logs were not provided to document the percentage 

of time the employee spent in connection with federal election activity. These logs are 

required to document the proper allocation of federal and non-federal funds used to pay 

these workers. The total of $85,520 consisted of $70,520, for which payroll was allocated 

between federal and non-federal funds, and $15,000 that was paid exclusively with nonfederal funds. 

B. Interim Audit Report & Audit Division Recommendation 

At the exit conference and during audit fieldwork, the Audit staff discussed the payroll 

recordkeeping issue with DCRP representatives. The representatives offered no 

additional comments or documentation to support the expenses. 

For DCRP employees that were paid with exclusively non-federal funds or an allocation 

of federal and non-federal funds, the Audit staff recommends that, within 30 calendar 

days of receipt of this report, DCRP provide the following: 

• evidence that monthly time logs were maintained to document how much time the 

employee spent on federal election activity; 

or 

• provide and implement a plan to maintain monthly payroll logs to track the 

percentage of time each employee spends on federal election activity. 

^ Amounts are net of payroll taxes and benefits totaling $22,896. 

^ Payments to DCRP employees paid with 100 percent federal funds and reported as such are not included 

in this fmding. (See Background Section- Request fof Early Consideration of Legal Question.)