FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

November 17,2008 

Stephen Bokser, Treasurer 

People for Carl Andrews 

P.O. Box 380-316 

Brooklyn, NY 11213 

Dear Mr. Bokser: 

Attached, please find the Report of the Audit Division on People for Carl 

Andrews. The Commission approved this report on November 5, 2008. 

The Commission approved Final Audit Report will be placed on the public record 

on November 24, 2008. Should you have any questions regarding the public release of 

this report, please contact the Commission's Press Office at (202) 694-1220. 

Any questions you may have related to matters covered during the audit or in the 

report should be directed to Sheraline Thomas or Martin Favin of the Audit Division at 

(202) 694-1200 or toll free at (800) 424-9530. 

Sincerely, 

~~,:I~

Wanda J. Thomas 

Acting Assistant Staff Director 

Audit Division 

Attachment as stated 

cc: Marco Carrion, Committee Representative 
Why the Audit 

Was Done 

Federal law pennits 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. 1 The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any ofthe 

matters discussed in this 

report. 

1 2 U.S.c. §438(b). 

Report of the 

Audit Division on 

People for Carl Andrews 

January 1, 2005 - December 31, 2006 

About the Campaign (p. 2)
 

People for Carl Andrews is the principal campaign committee for
 

Emmanuel Carl Andrews, Democratic candidate for the u.s.
 

House of Representatives from the state of New York, 11 th
 

District, and is headquartered in Brooklyn, New York. For more
 

information, see the chart on the Campaign Organization, p.2.
 

Financial Activity (p. 2) 

• Receipts 

o From Individuals $531,187 

o From Other Political Committees 77,927 

o Loans Made by Candidate 70,000 

o Other Receipts 2,284 

o Total Receipts $ 681,398 

• Disbursements 

o Operating Expenditures $ 625,450 

o Loan Repayments Made 55,000 

o Refunds to Individuals 4,900 

o Other Disbursements 1,297 

o Total Disbursements $ 686,647 

Findings and Recommendatfons (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

• Failure to Properly Disclose Loans (Finding 2) 
Table of Contents 

Part I. Background 

Authority for Audit 

Scope of Audit
 

History of Audit
 

Part II. Overview of Campaign 

Campaign Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Finding 2. Failure to Properly Disclose Loans 

Page 

2 

2 

3 

4 

6 
Part I 

Background 

Authority for Audit 

This report is based on an audit of People for Carl Andrews (PFCA), 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 V.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 V.S.c. §434. Prior to conducting any audit under this subsection, the 

Commission must perform an internal 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 V.S.c. §438(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, the scope of this audit was limited to the following: 

I. The consistency between reported figures and bank records; 

2. The disclosure of individual contributors' occupation and name of employer; and 

3. The receipt and permissibility of loans. 

History of Audit 

Beginning with the audit notification letter sent February 23, 2007, the Audit staff made 

numerous requests to PFCA for copies of bank statements in order to perform the 

reconciliation of bank records to reported figures and to verify the receipt and 

permissibility of loans. Since not all of the bank statements were provided, on July 26, 

2007, the Commission issued subpoenas to PFCA, the PFCA Treasurer, a PFCA 

representative, and to the relevant bank. On September 6, 2007, the missing statements 

were provided by both the bank and a PFCA representative. 
2 

Part II 

Overview of Campaign 

Campaign Organization 

Important Dates People for Carl Andrews 

• Date of Registration 

• Audit Coverage 

December 1, 2003 

January 1, 2005 - December 31, 2006 

Headquarters Brooklyn, New York 

Bank Information 

• Bank Depositories One 

• Bank Accounts Four checking, one savings account 

Treasurer 

• Treasurer When Audit Was Conducted Stephen Bokser 

• Treasurer During Period Covered by Audit Stephen Bokser 

Manaaernent Information 

• Attended FEC Campaign Finance Seminar No 

• Used Commonly Available Campaign 

Management Software Package 

Yes 

•	 Who Handled Accounting and Paid Staff 

Recordkeeping Tasks 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand em January 1, 2005 $ 40,048 

0 From Individuals 531,187 

0 From Other Political Committees 77,927 

0 Loans Made by Candidate 70,000 

0 Other Receipts 2,284 

Total Receipts $ 681,398 

0 Operating Expenditures 625,450 

0 Loan Repayments Made 55,000 

0 Refunds to Individuals 4,900 

0 Other Disbursements 1,297 

Total Disbursements $ 686,647 

Cash on hand @ December 31, 2006 $ 34,799 
3 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

A comparison of PFCA's reported figures to its bank records revealed that in 2006,
 

receipts and disbursements were understated by $73,208 and $131,351, respectively; and,
 

beginning and ending cash on hand balances were overstated by $12,152 and $70,295,
 

respectively. The Audit staff recommended that PFCA amend its disclosure reports to
 

correct the misstatements. In response, PFCA filed amended reports; however, these
 

reports did not materially correct the misstatements.
 

(For more detail, see p. 4)
 

Finding 2. Failure to Properly Disclose Loans 

PFCA received two loans from the Candidate totaling $70,000 but did not properly 

disclose these loans on Schedules C (Loans) and filed no Schedules C-l (Loans and Line 

of Credit). The funds for the loans were from a Home Equity Line of Credit. The Audit 

staff recommended PFCA amend its Schedules C to correctly disclose the loans and file 

Schedules C-I for these loans. In response, PFCA filed the requisite schedules. 

(For more detail, see p. 6) 
4 

Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

A comparison ofPFCA's reported figures to its bank records revealed that in 2006, 

receipts and disbursements were understated by $73,208 and $131,351, respectively; and, 

beginning and ending cash on hand balances were overstated by $12,152 and $70,295, 

respectively. The Audit staff recommended that PFCA amend its disclosure reports to 

correct the misstatements. In response, PFCA filed amended reports; however, these 

reports did not materially 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; and 

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

•	 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 

The Audit staffreconciled PFCA's reported financial activity to its bank records and 

determined that there was a misstatement of cash on hand, receipts, and disbursements in 

calendar year 2006. The following charts outline the discrepancies and succeeding 

paragraphs explain, to the extent possible, the reasons for the misstatements. 

The $12,152 overstatement of beginning cash on hand was due to prior period errors 

which resulted in an overstatement of $9,071; unreported disbursements in 2005 totaling 

$4,450; an unreported receipt in the amount of $1,000; and, an unexplained difference of 

$369. 

2006 Activity 

Reported Bank Records Discrepancy 

Opening Cash Balance 

@ January I, 2006 

$191,427 $179,275 $12,152 

Overstated 

Receipts $391,917 $465,125 $73,208 

Understated 

Disbursements $478,250 $609,601 $131,351 

Understated 

Ending Cash Balance 

@ December 31, 2006 

$105,094 $34,799 $70,295 

Overstated 
5 

The understatement of receipts resulted from the following: 

•	 Contributions from individuals and political + $72,323
 

committees not reported
 

•	 Unexplained difference + 885 

Understatement of Receipts	 $73,208 

The understatement of disbursements resulted from the following: 

•	 Disbursements not reported (80) + $136,002 

•	 Two $10,000 candidate loan repayments not + 20,000
 

reported
 

•	 Math Error ($1,681.24 disbursement reported + 1,513 

as $168.24) 

•	 Six reported disbursements could not be traced (21,218) 

to the bank records 

•	 Four disbursements reported twice (2,614) 

•	 Memo entries erroneously included in reported (2,128) 

disbursement totals 

•	 Unexplained difference (204) 

Net Understatement of Disbursements	 $131,351 

The overstatement of ending cash on hand in the amount of $70,295 resulted from the 

misstatements described above. 

In 2006, contributions totaling $72,323 were not reported. Approximately 69% of these 

contributions were related to software problems PFCA encountered with its 2006 October 

Quarterly (8/24/06 - 9/30/06) and 2006 Year-End reports (l 0/ 1/06 - 12/31/06). 

According to a PFCA representative, software issues resulted in incomplete information 

on these two reports. Most of these unreported contributions were from individuals; 

however, 6 totaling $3,500 were from political committees. Due to the same software 

issues, 80 disbursements totaling $136,002 were not reported on the same two reports. 

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

provided PFCA representatives with schedules detailing these discrepancies. In response, 

the PFCA representatives reiterated that they had experienced technical difficulties with 

their reporting software which resulted in the omission of some reportable activity from 

the disclosure reports. They agreed to file the appropriate amended reports. 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that PFCA: 

•	 amend its 2006 reports to correct the misstatements noted above, including the 

appropriate Schedules A (Itemized Receipts) and Schedules B (Itemized 

Disbursements); 
6 

•	 amend the cash balance on its most recently filed report in the amount of $70,295 

with an explanation that the change resulted from a prior period audit adjustment; 

and, 

•	 reconcile its reported figures to bank records for subsequent periods in order to 

assure the current reported cash is correct. 

In response, PFCA filed amended reports; however, these reports did not materially 

correct the misstatements. The amendments corrected cash on hand at January 1, 

2006. Receipts, which had been understated by $73,208, are now understated by 

$18,422; Disbursements, which had been understated by $131,351, are now 

overstated by $17,962. These misstatements result in a cash on hand understatement 

of $36,384 at December 31, 2006. 

No explanation was provided by PFCA officials in response to the interim audit report 

recommendation as to why the figures included on the amended reports differed from the 

figures provided by the Audit staff. Attempts to contact PFCA officials to discuss the 

amendments were unsuccessful. 

IFinding 2. Failure to Properly Disclose Loans 

Summary 

PFCA received two loans from the Candidate totaling $70,000 but did not properly 

disclose these loans on Schedules C (Loans) and filed no Schedules C-l (Loans and Line 

of Credit). The funds for the loans were from a Home Equity Line of Credit. The Audit 

staff recommended PFCA amend its Schedules C to correctly disclose the loans and file 

Schedules C-l for these loans. In response, PFCA filed the requisite schedules. 

Legal Standard 

A.	 Reporting Loans. All loans received by a committee must be itemized and 

continuously reported until repaid. All repayments made on a loan must also be 

itemized. 11 CFR §104.3(a)(4)(iv) and (b)(4)(iii). 11 CFR §104.11 

B. Schedule C. On a Schedule C, both the original loan and payments to reduce 

principal must be reported each reporting period until the loan is repaid. The 

committee need only list the candidate as the source of the loan. Also, the type of 

loan the candidate receives (i.e. 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 

C.	 Schedule C-l. When a candidate obtains a loan of money derived from a home 

equity line of credit for use in connection with the candidate's campaign, the 

candidate's principal campaign committee must disclose in the report covering the 

period when the loan was obtained, the following information on Schedule C-l: 

•	 The date, amount, and interest rate ofthe line of credit 
7 

•	 The name and address of the lending institution 

•	 The types and value of collateral or other sources of repayment that secure the 

line of credit, if any. 11 CFR §104.3(d)(4) 

Facts and Analysis 

The Candidate provided PFCA with two loans totaling $70,000, the source of which was 

his Home Equity Line of Credit (HELOC) account. PFCA disclosed the first loan of 

$50,000 on December 20,2005 2 

; the second loan of $20,000, also from the Candidate's 

HELOC, was made on June 29, 2006. 

PFCA filed Schedules C which showed the source of the loan as the Candidate's personal 

funds but did not disclose the type ofloan as being from his HELOC. PFCA's disclosure 

reports did not include the required Schedules C-l disclosing the original source of the 

loans. 

During 2006, PFCA made four payments to the Candidate between February and 

December totaling $55,000. However, two payments of $10,000 each, made in 

November and December, were not reported (see Finding 1). The Schedule C PFCA 

filed with its 2006 Year-End Report overstated the outstanding loan balance by $20,000, 

disclosing it as $35,000 instead of $15,000. 

The Audit staff presented this matter to PFCA representatives at the exit conference. The 

representatives contend that the reporting problems related to loan disclosure were due to 

software issues. 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that PFCA amend its Schedules C to correctly disclose the 

loan information and file all corresponding Schedules C-l. Inresponse, PFCA filed the 

requisite schedules. 

2 Although the Candidate's check was dated in December of2005, due to problems with the transfer of the 

funds, PFCA's account was not credited until late January 2006.