Draft Final Audit Report 

of the Audit Division on 

Randy Hultgren for Congress 

September 22. 2009 - December 31, 2010 

Why the Audit 

Was Done 

Federal lav/ 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 

(tiie Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance* 

with the Act.' Tlic aiidii 

determinj^vhetiicr the 

commillee complied u iih 

tiie liiiiiuiiions, 

prohibit ion^ and 

disclosure icc|uircinents 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to the matter 

discussed in this report. 

About the Campaign (\\% 

Randy Hultgren for Congress is lhe principal campaign committee 

for Randy Hultgren, Republican ciiiididate for the United States 

House of Representatives^^pm Illinois. 14^ District, and is 

headquartered in St. Illinois, l or more information, see the 

chart on the Camp^^<^^anization, p. 2. 

Financial^ilivity 

• Receipts 

o Contributions from Individuals 

o ^Contributions from'^Pany 

Commillees ^ 

o Loans from ihc Candidal 

o OtiilrRc 

$ 1,237,511 

393,942 

43,838 

19,146 

$ 1,694,437 

•Disbursements 

Expenditures 

o LomK.epayments to the Candidate 

ither Disbursements 

Pi^l Disbursements 

$ 1,590,720 

43,838 

4,625 

$ 1,639,183 

Finding and Recommendation (p. 3) 

• Misstatement of Financial Activity 

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

of the Audit Division on 

Randy Hultgren for Congress 

September 22, 2009 - December 31, 2010 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Campaign 

Campaign Organization ' . 2 

Overview of Financial Activity ^ 2 

Part III. Summary 

Finding and Recommendation 3 

Part IV. Finding and Recommi^ndatioh 

Misstatement of Financial Activity L \ ^ ^ 
Parti 

Background 

Authority for Audit 

This report is based on an audit of Randy Hultgren for Congress (RHC), undertaken by 

the Audit Division of the Federal Election Commission (the Commission) in accordance 

witii the Federal Election Campaign Act of 1971, as amended (the Act). The Audit 

Division conducted tiie 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 ul' reports filed by selected 

committees to determine whether the reports filed by a p^iculai cmnmittee meet the 

threshold requirements for substantial compliance wilh in^ct. 2 I '..S.C. §438(b). 

Scope of Audit J \ • 

Following Commission-approved proceduresf%c .Audit staff evaluated varioiilrisk 

factors and as a result, this audit examined: ^ ^ 

1. tiie disclosure of individual contributors' occupat ion and name of employer; 

2. the disclosure of candidate loans lu liie conimittee; 

3. tiie disclosure and recordkeeping (M &.^yi\\cements to ilie candidate; 

4. the consistency between reported fi^ i .unj bank records; and 

5. other committee operations necessary%? the^rcview. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration September 21. 2009 

• Audit Coverage September 22,2009 -pecember 31,2010 

Headquarters St. Charles, Illinu'is ^ 

Bank Information A 

• Bank Depositories One ^ 

• Bank Account One cMl^ing accouni 

Treasurer 

• Treasurer When Audit Was Conducted ^®fford A.'^Brown ^ 

• Treasurer During Period Covered by Audit Cil^oul A. 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

No 

• Who Handled Accounting and m 

Recordkeeping Tasks % 

P.fiil Staff 

Overview of Finuicial Activity 

CAudited i&Sunts) 

Cash-on-Handi tcmbcr 22,2009 $0 

Receipts . 

o pifiiributions from IrijIyiduaK 

o Contri^i^ons from P^SCommittees 

1.237.511 

393,942 

le Candidate 43,838 

o Other Receipis 

Total Receipts 

19.146 

$ 1,694,437 

Disbursements 

o Operating Expenditures 1.590.720 

o Loan Repayments to the Candidate 43.838 

o Other Disbursements 4.625 

Total Disbursements $ 1,639,183 

Cash-on-Hand @ December 31,2010 $ 55,254 
Part III 

Summary 

Finding and Recommendation 

Misstatement of Financial Activity 

During audit fieldwork. a comparison of RHC's reported nnancial activity with its bank 

records revealed a misstatement of receipts and disbursement|Jj[)r 2009 and 2010, as well 

as, ending cash-on-hand for 2010. For 2009, RHC understated receipts by $9,440 and 

disbursements by $7,911, respectively. In 2010. RHC u^ersiated receipts by $83,278. 

disbursements by $58,694. and ending cash-on-hand^^^^413. In response to the 

Interim Audit Report recommendation. RHC amended itst^disclosurc repuris and 

materially corrected the misstatements. (For more detail, see p. 4.) 

4 

\ r 
Part IV 

Finding and Recommendation 

Misstatement of Financial Activity 

Summary 

During audit fieldwork. a comparison of RHC's reported financialactivity with its bank 

records revealed a misstatement of receipts and disbursements j^^wP^ and 2010. as well 

as. ending cash-on-hand for 2010. For 2009, RHC understated receipts by $9,440 and 

disbursements by $7,911, respectively. In 2010, RHC unj^rsiaicd receipts by $83,278, 

disbursements by $58,694, and ending cash-on-hand by $^6,11.1. In response to the 

Interim Audit Report recommendation, RHC amen(led|ite disclosure re[)urts and 

materially corrected the misstatements. 

V 

Legal Standard ^ ^ 

A. Contents of Reports. Each report must disclose: ^ 

• The amount of cash-on-hand ^the beginning a^cnd of the reporting period; 

• The total amount of receipts fur the reporting period and for the calendar year (to 

include the total amount of loans made by ur guaranteed h^the Candidate); 

• The total amount of disbursementMor the repurtiiii: iieriud and for the calendar 

year; and ^ • 

• Certain transactions ihat require itemization on Sv.-!'.edule A (Itemized Receipts) or 

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

B. Itemizing Loans. liach pei -un \nak^d loan to the political committee during 

the reportiiii: jvl iud :::usi be (li^«.lu«ctl :^pie following infonnation: 

• J^^ii' >l >«- ••'• I"!! uny endu: -er or guarantor of the loan;' 

• Tlij date the Juai! u.is n:.icle: and 

i the amount of tii.- luim. 1UT R §104.3(a)(4)(iv). 

C. Scheduk' ('. On a Schedule C (Loans), both the original loan and payments to reduce 

principal must be^i^^rted each reporting period until the loan is repaid. The conimittee 

need only list tiie <^^M^e as tiie source of tiie loan. Also, tiie type of loan tiie 

Candidate receives bank loan, brokerage account, credit card, home equity line of 

credit) must be disclosed in either the first box for endorsers and guarantors with a 

notation for loan type or in the box for "Loan Source" after the Candidate's name. 

11 CFR §§ 104.3(d) and 104.11. 
Facts and Analysis 

A. Facts 

As part df audit fieldwork. the Audit staff reconciled RHC's reported activity with its 

bank records for 2009 and 2010. The following charts outline tiie discrepancies for cashon-hand, receipts, and disbursements. Succeeding paragraphs address the reasons for the 

misstatements. 

2009 Campaign Activity 

Reported Bank Recoi;4l||, Discrepancy 

Beginning Cash-on-Hand 

@ September 22,2009 

$0 $0 $0 

Receipts $167,171 #$176T6l 1 $9,440 

Understated 

Disbursements $130,946 ; ^ ^ $138,857 

^ile i stated 

Ending Cash-on-Hand 

@ December 31, 2009 

$36,225 5^,754 

1 

1 si,529^ 

Understated 

The understatement of receipts resulted from ihe following: 

• Loans from tiie Candidate not reporieil 

• Unexplained difference 

Net Understatement of Receipts % 

. r 

The understatement oMlisburNenients resultecbfrom tiie following: 

• Disbursements^! IUl reported = ^ 

• Reported disbursemeni^ nm suppuried by a^<lheck or debit 

• Unexpli ned d i iTerenv »• ^ 

Net Undersialement of Disbursements 

$ 10,085 

(645) 

$ 9.440 

$ 8,200 

(453) 

164 

$ 7.911 

2010 CampLaign Activil\ 

Reported Bank Records Discrepancy 

Beginning Cas'i un-Ka§B 

@ January 1,20I'J_ 

$36,225 $37,754 $1,529 

Understated 

Receipts ^ $1,434,548 $1,517,826 $83,278 

Understated 

Disbursements $1,441,632 $1,500,326 $58,694 

Understated 

Ending Cash-on-Hand 

@ December 31, 2010 

$29,141 $55,254 $26,113 

Understated 
The understatement of receipts resulted from the following: 

• Contributions from individuals & PACs not reported $ 74,597 

• Loans from the Candidate not reported 8,953 

• Unexplained difference (272) 

Net Understatement of Receipts $ 83.278 

The understatement of disbursements resulted from the following: 

• Operating expenditures not reported $ 70,289 

• Reported disbursements not supported by check or debit (29,942) 

• Candidate loan repayments not reported 16,500 

• PAC contribution not reported S 2,400 

• Unexplained difference ^ (553) 

Net Understatement of Disbursements i $ 58.694 

^ ^ \ 

The $26,113 understatement of the ending cash-on-nandVas the resuli ul' the 

misstatements described above. . 

During tiie audit period. RHC provided a deelaraiiun. signed by. the Candidate, 

attesting to loaning RHC $43,838. The loans consistecl of checks written from the 

Candidate's personal accounts to RHt! and payments tiie Caiuiidate made directly to 

vendors for campaign-related expenses. Kl IC! did not repuii xume of the loan activity 

(as noted above); nor did it correctly dislluse sunie iransactiuiis aN being in connection 

with the Candidate loans. The Audit sta^nutes that KMC I'lillf^repaid Candidate loans 

totaling $43,838. _ 

B. Interim AuditJ^port & .Audit Divisioi^ecommendation 

The Audit staff discussed the misstatements foM^09 and 2010 with RHC representatives 

during the exit conference ami provided copies^ relevant work papers detailing the 

errors. A repl^tntative said that Rl IC uuuld take corrective action based on the audit 

recom me^ation. 

The Interim .\udit Repori recommended tiiat RHC amend its disclosure reports to correct 

tiie misstaicnients for 2009 and 2010, to include the proper itemization and disclosure of 

Candidate loans and repayments, and to amend its most recentiy filed disclosure report to 

correct the casl.-ui^and^alance with an explanation that the change resulted from a 

prior-period audit^jiisiment. Further, RHC should have reconciled the cash-on-hand 

balance of its most recent disclosure report to identify any subsequent discrepancies that 

may have had an impact on the $26,113 adjustment recommended. 

C. Committee Response to Interim Audit Report 

In response to tiie Interim Audit Report recommendation, RHC filed amended disclosure 

reports that materially corrected the misstatements.