CLARK HILL 

Claik Hill PLC 

1001 Pannsylvuiia Avanue 

Suto 1300 

waahlngton, DC 20004 

Jamas E. T 202.772.0909 

T 202.772.0915 F 202.772.0919 

F 202.772.0927 

Emal: jlynauectarkNILcam clarkhlll.com 

November 6,2017 

Thomas E. Hintermister 

Assistant Staff Director 

Audit Division 

Federal Election Commission 

999 E Street, NW 

Washington, DC 20463 

VIA EMAIL: SHThomas@fec.gov 

Dear Mr. Hintermister: 

On behalf of McSally for Congress ("Committee"), and Paul Kilgore, in his official capacity as 

Treasurer, we file this response to the Draft Final Audit Report ("DFAR") received on October 

18,2017, in connection with the Federal Election Commission's ("FEC" or "Commission") audit 

of the Committee. We also request an audit hearing, pursuant to the Commission's Procedural 

Rules for Audit Hearings, 74 Fed. Reg. 33140 (July 10,2009), primarily to voice our 

disagreement with the Audit Division's conclusions in Finding 1, specifically with regard to the 

aniount of the alleged misstatement and the categorization and reporting of certain transactions. 

Because the amount of the misstatement is a question of fact, and not one of law, we request that 

the hearing be held in a closed executive session. 

Before addressing the substance of the DFAR's findings, we once again remind the Commission 

of the Committee's extraordinary, and to our knowledge unprecedented, efforts to 

comprehensively evaluate all of its accounting and FEC reports beginning with the Committee's 

inception in 2012. As we have previously noted, during the 2012 and 2014 election cycles, the 

Committee raised and spent over $12.3 million, receiving more than 45,300 contributions from 

over 22,600 individual contributors, the majority of which came in the form of low dollar 

donations. For the time period covered by the Commission's Audit (January 1,2013 - December 

31,2014), the Committee received more than 33,000 contributions from over 19,000 donors. 

This amount and volume of activity was unparalleled for a non-incumbent. To illustrate her 

remarkable level of support, Congresswoman McSally was the third highest grossing fundraiser 

for all Republican Members of Congress in the 2016 cycle, despite Just being a freshman and 
November 6,2017 

Page 2 

having never previously served in elected office. In short, although the level of support was 

tremendous, it also created unique challenges for Committee staff in handling the overwhelming 

volume of activity. This is precisely why the Committee acted swiftly to not only demand a 

comprehensive intemal review of its finances, but to hire experienced FEC reporting 

professionals to perform the review. 

Unlike the Commission's Audit, the Committee's intemal review was not a sampling of the 

Committee's activity for the period of time being reviewed. Rather, the Committee started from 

the very beginning and completely rebuilt its database consisting of over $12.3 million of 

activity over the 2012 and 2014 election cycles. In other words, the Committee started from 

scratch and examined every single transaction, contribution, and expenditure through a 

microscope to ensure everting was recorded and reported correctly for the entire history of the 

Committee. This was a colossal effort on the part of the Committee, and the Committee has 

spent a substantial amount of funds on professional reporting services, accountants, and lawyers 

over the last two years addressing the Commission's purported concems. 

Nonetheless, as a result of its intemal review, every single report filed since the first report in 

2012 through the 2014 Year-End Report was refiled on January 31,2016. With respect to our 

position conceming Finding 1, it is critical to understand that the Committee's amended reports 

filed on January 31,2016 were not based on its originally-filed reports (i.e. the audited reports). 

Instead, they are based on financial activities that actually occurred, as reflected in bank 

statements. As a result, all of the Committee's reports and bank statements reconcile to the 

penny, which has been the case for over a year and a half. 

Finding 1 

We incorporate by reference our response to the Audit Division's Interim Audit Report ("lAR") 

regarding Finding 1. Specifically, the Committee continues to take issue with the Audit 

Division's conclusions with respect to the amount of the alleged misstatement. As described in 

our response to the lAR, at the Exit Conference, Audit staff provided a list of 122 transactions 

they believed made up the alleged overstatement of $94,528 in receipts. However, the 

Committee conducted its own review of this list, and of the 122 transactions, at least 33 

transactions totaling $27,115 do not appear on any of the amended reports. Likewise, Audit staff 

provided a list of transactions they believed made up the alleged overstatement of $85,472 in 

disbursements. But the Committee reviewed this list, as well, and at least 23 of the transactions 

totaling approximately $16,908 were not disclosed on the Committee's amended reports. 

Although many of these transactions appeared on the Committee's originally filed reports (i.e. 

the audited reports), they were not included in the amended reports filed on January 31,2016 

because they were either reported as duplicates on the audited reports or because the transaction 

did not actually occur in the first place. It is unclear why the Audit staff continues to insist on 

their version of the numbers when we have provided proof to the contrary. In short, the 

Committee believes its 2016 amended reports are an accurate reflection of what truly occurred at 

the time. 

CLARK MU. 
November 6,2017 

Page 3 

Furthermore, although the Committee acknowledges that the Commission's Campaign Guide 

provides some direction on when negative entries are appropriate in Schedules A and B, the 

Commission has simply not provided clear guidance regarding how a committee must report a 

so-called "chargeback." We therefore believe it is reasonable for a committee to choose to report 

a transaction in a different way if it appears to a committee that it is a more accurate reflection of 

what occurred at the time. After all, the Commission's Campaign Guide, although helpful at 

times, does not have the force of law. 

Finding 2 

The DFAR states that this matter is resolved. However, we take issue with the DFAR's inference 

that the Committee only demonstrated "best efforts" "during audit fieldwork" and disagree with 

the DFAR's conclusion that "since MFC's corrective action occurred after audit notification, the 

matter is included in this audit report." It is a complete mischaracterization to suggest that the 

Committee's demonstration of "best efforts" only occurred after the Commission's audit was 

initiated. The fact that the Committee's originally-filed reports did not contain the occupation 

and employer for some donors does not mean that the Committee did not demonstrate "best, 

efforts" to obtain that information in the first place. It simply means that the Committee was 

unable to obtain this information despite demonstrating "best efforts." 

As we previously stated in our response to the lAR, the Committee's solicitation materials have 

always included a clear request for the name, address, occupation and employer of individuals 

whose contributions aggregated $200 during the election cycle, and in instances where a 

contributor did not provide that information, the Committee would make at least one effort to 

obtain that information. Therefore, the DFAR's statement that "since MFC's corrective action 

occurred after audit notification, the matter is included in this audit report," cannot be true 

because "corrective action" in this context can only mean demonstrating "best efforts," which 

occurred from the beginning. "Corrective action" in this context does not mean that the 

Committee was ultimately able to obtain this information after multiple attempts. 

In light of the fact that the Committee has demonstrated "best efforts" from its inception, we 

believe that Finding 2 should be removed altogether from the Final Audit Report. 

Findings 

Finding 3 in the DFAR correctly notes that the Committee provided copies of negotiated refund 

checks totaling $6,500, which resolved four of the five remaining excessive contributions. In 

light of the signed redesignation letter from Larry Adamson that we provided to Sheraline 

Thomas on October 31,2017, we request that Finding 3 be revised to state that all excessive 

contributions have now been resolved. 

CLARK HILL 
November 6,2017 

Page 4 

Finding 4 

The Committee's response to the lAR pointed out the discrepancy between the number and 

amount of untimely filed 48-hour contribution reports presented to the Committee at the Exit 

Conference and the number and amount contained in the lAR. However, the DFAR does not 

address our concerns or provide any explanation for this discrepancy other than a general 

statement that "preliminary findings at the exit conference.. .may be subject to change or 

modification based on additional documentation; internal review; legal advice, etc." We 

respectfully request an explanation behind this discrepancy. 

Even if the Audit staff is correct in its determination of the number and amount of untimely filed 

48-hour contribution reports, the total amount in question is not material in contrast to the vast 

overall amount of financial activity the Committee had during the applicable period. 

Finding 5 

The Committee has no additional comments with respect to Finding S in the DFAR. 

Conclusion 

As we have already made clear, the Committee takes its reporting obligations very seriously, and 

it has taken extraordinary measures, both in time and money, to address these issues over the last 

two years. At the same time, we want the public record to reflect what actually happened during 

the applicable time period. For.that reason, we believe it is imperative that the Commission hear 

our foregoing concems in an audit hearing. 

We appreciate the Audit Division's time and attention to this matter. Please feel free to contact 

me directly with any questions. 

Respectfully submitted. 

James E. Tyrrell 111 

Counsel to McSally for Congress 

' Draft Final Audit Report, at 5 n. 8. 

CLARK HILL