~ttachment as statcc

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February 1, 1980

PUgLIC ISSUlUCE OF AtTDl? !'.T::PO~TI~A~ISAS ~r;PUDr...IC;':1 ST1'.~E CO~\:'~I?'I'E::

l'.:m KA:ISAS RB?UBLICl'.!1 FTmE!t1\.L CA!lP1UG:J

Cm.1:.'1ITTEE

FRED EILAND

PRESS OFFICE 1

BOg COSTA ~.r.--.­ \. /1 v

JUDY IIA~'1KnJs)c1\2<; t- 1IU 1I W.

Wt\""IINe IO~. () Co 204fd

FEDERAL ELECTION COMMISSION

Infornational cOi1ies of the re~")ort ~ave been received

by all ?arties involved and this report nay be released to

t:le public.

cc: FEC Li~rary

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Pu~lic Recore:

Attached !?lease finll .1 copy of t~€' final audit re~'>ort

of the Kansas P.ej1ublican ~~t.:lte CCII'.r.\ittec and !~ansa3

Re?ublican Federal Carn?aisn Co~~ittee whic~ was a?~roved

by the COr:U':lission on Janu.:1r:/ 17, 1')80 •

SUBJ:LCT:

FROM:

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A. Overview

FEDERAL ELECTION COMMISSION

On 6/30/78 the Kansas Republican Federal Campaign

Co~~ittee terminated and transferred the residual

funds, $498.00, to the Kansas Republican State

Committee.

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The audit covered the period January 1, 1976, through

March 31, 1978, the final coverage date of the current report

filed b:z' the Committees at the time of the audit. During the

pedod the Kansas Republican State Conunittee reported a beginning

c;J.sh bulance of $28,504.02, total receipts of $69,911.87, total

e:-:pl~nl1itures of $97,217.14, antI a closing cash balance of

$1,198.75. The Kansas Republican Federal Campaign Committee

rep()J"tcd a beginning cash balance of $-0-, total receipts of

$501.00, total expenditures of $3.00, and a closing cash balance

o f ~~ -198. 00. !./

The Kansas Republican State Committee register~d with

the Office of the Clerk of the United States House of R~presentatives on April 17, 1972, as a Federal campaign commi~tee for

the Kansas Republican Party. 'l'he Kansas Republican Federal

Campaign Committee registered with the Federal Election Commission

on October 25, 1977, as a Federal campaign committee for the

Kansas Republican Party, specifically for fundraising. The

Conunittees maintain their headquarters in Topeka, Kansas.

I. Background

REPORT OF THE AUDIT DIVISION

ON THE

KANSAS REPUBLICAN STATE COMMITTEE

AND THE

KANSAS REPUBLICAN FEDERAL· CAMPAIGN COMMITTEE

This report is based on an audit of the Kansas

Republican State Committee and the Kansas Republican Federal

l:'~lrnpaign Coaai.i ttc.:~ (" tht.: ComIlli t I:ee~ II) unlil;:rtaken by che Audi t

Division of the Federal Election Commission in accordance with

the Commission's audit policy to determine whether there has

been compliance with the provisions of the Federal Election

. Campaign Act of 1971, as amended· ("the Act"). The audit was

conducted pursuant to Section 438(a) (8) of Title 2, of the

United States Code, which di:~ects the Commission to make from

time: to time audits and field investigations with respect to

reports and stat~ments filed under the provisions of the Act.

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Section 434(b) (2) and (8) of Title 2, united States Code

states, in part, that each report shall disclose the full name

.:tnd maj 1 inq address (occupation and principal place of business)

of eilch person who has m.:1de one or more contrihutions to such

(...... :.::.~.: ~:>...:: .. \.:: tl1i 11 3 c~l~:r~d.:1l"" ,:~ear in :In. a~10rCsrL;.te tlmO:.lr:t or ··lalll·:~

in excess of $100, together with the amount and date of such

C("'11 ITibutj 011S ':l.11d the tot.:11 sum of all receipts for such

committee.

A. Reportinq of Receipts ilnd Rxpenditures

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C'. Scope

Based upon examination of the reports and statements filed

and the records presented, the Kansas Republican Federal Campaign

Committc0 was not il politic;,l committee for the period audited as

defined by Section 43l(d) of Title 2 of the United States Code

and therefore not subject to the reporting requirements of the Ace.

Findinq and Recommendation

R. Key Personnel

ITI. Kans.:1s Republican St.:1 h~ Committee

The audit included such tests as verification of total

rcpn l-I."c! receipts and expenditures and individual transactions;

r<~vi.(~\01 of required ~:;upporting documentation; ,analysis of

Committee debts and obligations; and, such other audit procedures

as deemed necessary under the circumstances.

'1'he principal officers of the Committp.e~ were Jack

Ramil III, Chilirman ilnd Damon Neber, Treasurer durinq the period

COVC'l-' -1\ by the aud 1. t.

This audit report is based on documents and working

papers which support each of the factual statements. ~hey form

part of the record upon which the Commission based its decisions

on th0 matters in the report and were available to rommissioners

'llld appropriate staff for review.

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Sections 434(b) (9) and (11) of Title 2, united States Code

ljLatcl;, in part, that each report shall disclose the

idcmtification of each person to whom expenditures have been

made by such committee or on behalf of such committee within

a calendar year in an aggregate amount or value in excess of

$100, the amount, clate, and purpose of each such expenditure

und the total sum 0 f expenditures made by such COIlUlI ittee.

'1'he Committee's report!; indicated that the COlllmittee received

contributions totaling $2'),000 on September 10, 1()"'b, and $20,000

on October 12, 1976, resp(~<.:tively. According to lll.' Committell

offie i ,d5 these contributi on:; were originally due~j 1.0 the Kansas

Lei.ldl~r:jhip Club (KLC), which is a club of the Kansas Republican

Par.ty to which members pay annual dues of $2,500. 1\11 dues received

arL~ deposited into a separate savings account which, Committee

ofl'icia1s stated, contained funds only permissible under the Act.

'1'IlL' KLC account had activi ty totaling $211,545.50 in receipts and

$137,350.00 in expenditures for the period March 25, 1976*, through

March 31, 1978, however, the Committee only reported the

aforementioned $45,000 as individuul contributions in its

reports filed with the Commission. Accordi:1g to a Committee

official, prior approval \l1as granted by KLC members before

their dues were transferred from the KLC savings account to

th(~ Commit tee's check inq accoun t .

'rhe comnd, t tee provid(~d for Olll~ review the KLC savings account

records for the period Mal'cll 25, 1976 through March 31, 1978.

Tn addition, we reviewed copies of the KLC members' checks, whose

1976 dues were transferred to the Committee's checkinq account

and il was determined that lhase funcls were pel'nissible under the

l\ct.

DlIrinr; OtH' conver.sat.ions with COlT'.r.1i,t.:'e,:~ offir=ials subsnqul~nt

to till' audit, the officials stated that the Committee had used

lhl~ ~;~llnc procl..!llures (converting KLC dues to Federul contributions)

for. the post audi t pc t-iod.

Based on the Audit staff's recommendation, the Committee

f i.l t.~d amended reports for the years 1976, 1977 and 1978 on

May 29, 1979, disclosinl! the activity of tho KLC s~vinys account.

'l'hl~ KLC savings account \I1~S closed in August, 1979.

I\t~commendation

The Audit st3ff recon~ands no further action on this matter.

* Opening cl~te of the account.
The st.:lte of Kansas allows corporations to make contributions

01- (~:';plmditures in connection with s ta te .:lnd local elections.

Section 104.3(a) of Title 11, Code of Federal R0qulations

states, in part, that each in-kind contribution shall be valued

at the usual and normal charge on the date received und reported

if in excess of $100 on the appropriate schedule of receipts and

expenllitures, identified as to its nature and listed as an

"in-k i nu contribu tion" ..

Section 434(b) (2) of Title 2, United Stutes Code states,

in part, that each report shall disclose the full name and

mailing address of each person who has made one or more

contributions to or for such committee within the calendar

year in an aggregate amount or value in excess of $100,

together with the umount and date of such contributions.

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Allocation of Administrative Expenses

Based on the Audit Division's recommendation, the Committees

dl "!I') oped a basis of allocn ting the administrat i ve costs between

til"' 1-'1 ~der.:ll commi t tee and the non-Federul commi t tee and subrni tted

!.lId!. lkH,:is to the lmdit staff on Hay 29, 1979. In addition, the

C, );lIlll i L l".<~e filed amendl..~d reuorts disc losinq the allocable costs.

!'..t;;I·d on the review of the' information submitted, it is the

(l!,irlion of the Audit stuff that the Committee's basis for allocatill'; their administrative c:,;penses is not adequate.

DUl-in9 our review of the Committees' report.s and records,

we determined that the administrative expenses were not allocated

bl.~tW(~I~n the Federal and non-Federal commi ttces. The State party

co~njttee (non-Feu~ral) paid all of the administrative expenses,

('xcept for the sa).arics 0 [ four (4) individuals and the related

paYl'oll taxes ryf two (2) of these individuals, which were paid

\>':' t Ill~ Kansas ~epublican S tute Commi ttee (Federal).

S(~ction 106.1 (e) 0 f Ti tIc 11, COUQ of Federal Regulations

stat{·::, in part, that p.:lrty committees which have established

Fede 1''11 campaign committees pursuant to Section 102.6 shall

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theil' "'l~dcral and non-Federal accounts in proportion to the

amount of funds expended on Federal and non-Federal ele6tions,

or on another reasonable basis.

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RccoJ1unencla tion

Although this method has not been deemed acceptable a

review of activity in the savings account adopted by the Federal

commi t tee (see Finding A) discloses $ 30,000 in· 1976 and $49,475

in 1977, respectively, in transfers from the savings account to

the non-Federal account.

Section 44lb(<l) of Title 2, United States Code states,

in P"'l\~t, th<lt it is un13\... ful for any corporation whatever, to

m~k0 <l contribution or expenditure in connection with any

F. ·d.~ral election, or for <lny politic<ll conuni t tee, or other

j"'!':;on to knm\'inqly ncccpt or. receive any contribution

plfJhibited by this section.

LO<ln Rcp<lymen t J1IaLh~ from .1 Non-Feder<ll

to a Feder<ll Account

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trative expenses actually paid by the Federal account exceed the

amount calculated using the method proposed in Section 106.1(e)

L) f thG Commission's l<egulations, based on total e:-:pp.nditures.

'1'llCrefore, the Audit staff recommC'nds no additionul action on

this m<ltter. for the period covl}rcd by the audit. However, we do

recommend that the Committee fonnul<lte an alloc<ltjon method for

the future which encomp<lsses ils tot<ll allocable costs, including

bi1:~ic, non-election y{;~ar rcco nlkeepinq and Commi t tee maintenance.

Section 102. G (b) or '1'1 1·1·.~ 11, Code of Federal Requlntions

:'l..tl.l2S, in p<lrt, th'lt each St...lte committee which makes

cllnl '"ibutions or expenditures for, or on behalf of, any

C'dnclid<ltes in Feder'll elections m<l\' not receive transfers from

<In nccount or committee, except fr~r.1 an account or committee

wId ch is est3blisheL1 ei thet-, (l) as a separate Federal campaign

committee \...hich is registered ns a political committee and

mnintains <l segregated Peder'll account, or (2) as a single

comr.li t tee \"i th a single accoun t \.,;hich makes contributions to

Fedl'rnl and non-Fedcr<ll candidates, but onIv if all contributions

t"e'ce i.\"l~d i11~e permissible under the Act.

'l'hc COlllmittee's formula W.I~~ based on lh~termining the

diffcn!nce in administrative l~xpenses between a base year (in

this (:,,:.;(! 1977), und the calend"1r year being calculated. This

di f fere~nc(~ W<lS then multiplied by the ratio of contributions to

Federal <lull Stale candidates to determine the amount of

adminislrative expenses allocable to the Federal account. This

method did not takl' into account the fixed administrative expenses

that do not vary rl~)m an election to a non-election year, nor

did it include pos:>ible expenditures made on behalf of Federal

candidates and yel-out-the-vote and voter registration expenses.

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~~The l\u

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itStaH recommcndS nO fur tho r action on these matt·, f" .

hmendment to the statement of organizati~ section 43

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(b) (9) of Tit~e 2. united stateS Code states

that a statement of organization shall inclu~e a listing of

all banks. safety deposit boxes. or other repositories used.

section 433(C) of Tit~e 2. united states Co~e requireS

that any change in information previouslY submitted in , statement of organization sha~l be reporte~ to the comm,ss,on

~ithin a 10 day period fo~~o~ing the change.

our e~amination revea~ed that the KansaS Republican state

committee had not filed an amendment to its stateme~t of

organizatiOn disclosing ~r. Damon weber_as the co~,ttee , Treasurer. I\o~evor. on "ovember 6. 197

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d,d

notifY the secretary of State of KansaS'

on ~aY 29. 1979. the CommittCC file~ an amendment to itS

statement of or'lanizatiOn disclosing }\r. "am

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weber as "omm,tte

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'freasurer. The amendment alsO aisclosed the dcpos,torY ,n ~h,ch the KLC account is maintained (!'inding 1') •

~!.:3~ Based on the fact that the committee adopted ,the ac~ount upon

o"r recommendation (>'in~ing h) and since the com"n

ttee

~,d not ".."sider the savings account a l'edera~ account at the t,me of the

transaction. the l\udi

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DiviSion recommendS that no act,on be taken

on this matter.

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E.· Other Matters

l'rescnlod below is another matter noted (hlring tho audit

for which the Audit staff feels no action is warranted. The

Committee has boen advised of the matter. and. informed of the

related requirements of the Act •.····

Tho Kansas Republican State Committee madea"-$6,500 deposit

on March 9, llJ76,directly into the Committee's savings account·

_at the Fir~t National Bank of Topeka. Upon our request thi- . . Corlunitb~l.:! provided for our review copies of the contribution

comprisinq the deposit. The Committee was made aware that

Section ltU.3(a) of the Commission's Regulations requires all .. contribuLiolls received by a .political committee shall be deposited

in a checkill9 account in the appropriate campa:ign depository.