Draft Final Audit Report of the 

Audit Division on the Committee 

for Charlotte/Charlotte DNC 

Host Committee 

(April 1, 2011 - December 31, 2012) 

Why the Andit 

Was Done 

The Commission audits 

each host committee or 

municipal fund that 

represents a city where a 

publidy financed 

nominating convention 

was held. The audit 

seeks to detennine 

whether the committee 

has materially complied 

with the pioUbitions and 

disclosure lequiremcnts 

ofthe election law.' 

Future Action 

The Commission may 

initiate an epte^m 

action, at a Iw tinne^^: 

with to any of^^ 

tnnifciffJ fliimTffffffd in this 

lepoit. 

About the Committee 

The Committee for Charlotte/CbUDtt^NC Host Committee (CFC), 

headquartered in Charlotte, lolina, is a committee responsible 

fbrhostingthe2012Dem^raticNiBlionalConvention. Formore 

mfonnatian, see the ^Illl^Jhe Ct^si « Organization, p. 2. 

Financial .^kctlvity ^ 2) 

• Recdpti 

o ContributionH -:slr -Ry Convention 

^Expenses 

o Lditflteceived 

o sKic R( r'ttm Deposits 

o • r . ns' 

Total 

r 

pendituies 

Affiliated Committees 

lyxnentsMade 

o umer Lnsbursements 

r

Diihofiemaiti 

FlndliigB and Recommendations (p. 3) 

• Recordkeeping for In-Kind Contributions (Finding 1) 

• Disclosure ofDirinnsements (Finding 2) 

$24,428,337 

13,000,000 

31 

(2,709) 

$37^425,659 

$32,532,958 

8,783 

4,000,000 

93,592 

$36,635,333 

' liCFRS9008.54. 

' This amount wu a roHilt from Ion on rnvHtmenti. 
Draft Final Audit Report of the 

Audit Division on the 

Committee for Charlotte/ 

Charlotte DNC Host Committee 

(April 1, 2011 - Dece^p^^ 31, 2012) 

.-Ss. • 

W 

* 
Table of Contents 

Pace 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Inventory of Committee Records 1 

Paitn. overview of Committee 

Committee Organization ^ 2 

Overview of Financial Activity 2 

Part m. Summariee . 

Findings and Recommendations 3 

fiy. , • < 

Part IV. Findings and Recommenfattlons 

Finding 1. Recordkeeping for in-Kind Contribud^'^ 4 

Finding 2. Disclosure of Disbursements 6 

s'* 

/v. • • V JI.. 

d.'• 
Parti 

Background 

Authority for Audit 

This rqxnt is based on an audit of the Committee for Charlotte/Charlotte DNC Host 

Committee (CFG), undertaken by the Audit Division of the Federal Election Commission 

(the Conunission) as mandated by Section 9008.54 of Title 11 oftlie Code of Federal 

Regulations. That section states the Commission dull conduct an examination and audit 

of each host committee fegistcred under 11 CFR §9008.51. , 

Scope of Audit 

This Audit examined; 

1. the receipt of contributions from prohibited sourpeK 

I 2. the disclosure ofcontributions and other reci I,as; 

3. the disclosure and nature 

4. the disclosure of debts and obligations; " 

5. the conqilcteness of records; 

6. the consistency between repoited^gures and bank'^mi-rds; and 

7. other committee operations necessHi} !•-the review. 

ft. 

Inventory of Committee RoMrds 

Ihe Audit staff routinely conducts an mv^^:of coi^^iee records before it begins the 

audit fieldwoik. CFC rae^n&hpere materii^complete!^ die fieldwoik began 

immediately. V <•: 

"ft-

.ft- • 

•«••• "V'' 'A' 

OP. 
Part II 

Overview of Committee 

Committee Organisation 

Important Dates 

e DateofReflistiation Febuaiy I6.2M1 

e AiiHit PftvfTpg^ 

He«f|f|iieitrr« 

Bana Infbnnanon 

Anril 1.201 2012 

1 nHriniiR nNfirrn • nmnfiM 

jfT •• • 

e Bank Depositories TV£P ^ 

e Bank Accounts Tfatei^Accounts 

Treasurer 

e Treasurer When Audit Was Conducted Harvey GsHtt .. 

m 

Manaaemcat Infonnation 

e Attended Commission Campaign Fii&.. 

Seminar 

No • 

. 

Tasks r 

clal Activity 

oonts) 

Cash-on-lriind® April i«2Q 11 ' . S 0 

Rcceiirta-'-^s^. : 

o Contribud^ DefiaSf t lafirentian Expenses 24,428J37 

o Loans Rece | 13,000.000 

o Refunds, RcbatdSt^Ki- 'i.. urDeposits 31 

o Other Income (2.709) 

Total Receipts j- S 37^425^ 

Dbbuncfflcnti 

o Convention Expenditures 32J32.9S8 

o Transfers to Affiliated Committees 8,783 

o Loan Repayments Made 4.000.000 

o Other Disbursements 93.592 

Total Disbnnemcnti S3M35333 

Cash-on-hand @ December 31,2012 S 790326 
Partm 

Summaries 

Findings and Recommendations 

Finding 1. Recordkeeping for In-Kind Contrfbutione 

The Audit staff identified 23 in-kind contributians provided by corporBtions, commercial 

vendors, and individual contributors totaling $2,878,882 that lackmH(w lequiied 

supporting documentation. In lespoiise to the Pxeliiiiinary A^t'Repm lecommeiidatioii. 

CFC provided some internally developed siqiporting 

in-kind contributions, but the reported amounts still 

unresolved. (For more detail, see p. 4.) .A 

for a portion of its 

and the finding 

FtndlngS. Disclosure of Dlslnui^meiitf 

The Audit staff identified 43 disbursements $12,51 

or did not adequately provide lequiied disclosure ii 

Preliminary Audit Report lecommen^tion, CFC filed 8dftnded disclosure reports that 

materially corrected the disbursemenraiclqsure errors. O^Fune detail, see p. 6.) 

IS that were ddier missing 

In reqxmse to the 

..ss 

• ' s 

H • , 
Part IV 

Findings and Recommendations 

I Finding 1. Recordkeeping for In-Kind Contributlom 

Smninuy 

The Audit staff identified 23 in-kind contributions provided by coiporations, commercial 

vendors, and individual contributors totaling $2,878,882 that lacM the requiied 

supporting documentation. In reqxnise to the Preliminary Aud^^Qrt recommendation, 

Crc provided some internally developed siqiporting documtfpon for a portion of its 

in-kU contributions, but the reported amounts still lemai^M^f^cd and the finding 

unresolved. 

SjflT 

Legal Standard 

A. Receipts and disbunemcnts of mnnMp^ fbnds. Municipal accept 

goods or services from commercial veoiam^ convention uses underlbe same 

terms and conditions (including reporting i^^[peiiient^ set forth at 1*1 CFR 

9008.9 for convention committees. Businessea .uding bariksX labor 

organizations, and other organin^ns and indi\ ' • da may donate funds or make 

in-kind donations to a munici^S^to pay for e3qieaBB8jisted in 11 CFR 

9008.52(b). 11 CFR §9008.53. > ... f 

ji" . 

B. Recordkeeping Ibpie^s and scrvtea^ fhnn commercial vendors for 

promotional msideimn. Comm^cial vendors may sell, lease, rent or provide 

their goods m^ces ^^le national .niiiiiiittee with req)ect to a presidential 

nominating coms^ii- ji'ieduced or ili ^ oii ited rates, or at no charge. The 

con' - . comiidiiM 4 -aSfltsinai. . -£umentation showing: 

• „:i _-idsarsei«i.v»^vided;" 

« ' the date(s) h. :• f\»gp^ or services were provided; 

:= • ^,theteniisaiMwndition£mtheaiTaiigemerit;and 

• promotioW consideration was provided. 11 CFR §9008.9(bX4). 

C. Valnatn^^In-Kkid Contributions. The amount of an in-ldnd contribution 

shall be ^^to-tfib usual and normal value on the date received. 11 CFR 

§104.13(aXlJ.> 

D. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be 

reported which riiall provide in sufficient detail the necessary information and 

data, fiom which the filed reports may be verified, explained, clarified, and 

checked for accuracy and completeness. 11 CFR§104.14(bXl)> 

E. Recordkeeping Requirements for Receipts. The treasurer of a political 

committee riiall keep an account of: 
+• •• 

• All contributions received by or on behalf of Ifae committee; 

• The name and address of any person vriio makes a contribution in excess of 

$50, together with the date and amount of the contribution; and 

• The occupation and name of employer of any individual vriiose contributions 

aggregate more than $200 during a calendar year, together with the date and 

amount of any such contributions. 11 CFR §102.9(a). 

F. Preserving Documents. Committees must preserve these records for 3 years 

after a report is filed. 11 CFR § 102.9(c). 

Faetn and Annlynia 

A. Facts .Hjy 

The Audit staff identified 23 inrkind contributions tota|iii8yK2,878j(ii4 ih it lacked the 

reqiiired supporting docunicntation. The in-kind c^itribttti^ cons •'icit pf goods and 

services provided by conunercial vendors, coipanitions, and indivic .i iiA^iproximately 

half of the in-kind contributions totaling $1,557^3 originated fiom one cbtj^jpration. 

Documentation supporting the amount of in-kind conftH^ons reported were receipt and 

disbursement databases and a few intei^ tracking forms-tiiat staled the amount of the 

contribution, the line item to be utilize^ to recording, and^ one case, a contract 

reference.^ However, no intertial coiigHitiiud^^uioiksheets o^dbtmieiitation fiom 

contributors was provided that would all^ for'verifi^on of tto amounts reported. 

Also, in-kind contributit ig some pi^mptional ictinsideration were not q)ecifically 

identified or valued. Du- • r.;..lwork, thel^t staff adced CFC representatives fi>r 

•AtirimiMi in-kiikd dtfdunentati^ CFC stated it was available and would be provided, 

but no additional docu^qplltotion^vas sent. 

. V X-.., 

B, Freitoin^-A^lt Riqptirt A AtimnWiliion Recommendation 

At the exit conference the Audit staff discussed and provided a list of in-kind 

contributions fin vriiidi f s - had no^xbvided supporting documentatiorL CFC 

lepresiBntdtives acknowl '•»: 1 the support for in-kirxi contributions arxl stated 

th^ wiH.I.! Ii« .11- and p ..'e the required documentation. 

The Preliminary iMriit Rqxnt recommended that CFC obtain and provide documentation 

C. 

to support 

Committee 

the in-l^yMDtributions. 

Response 

>• 

to Preliminary Audit Report 

In response to the Preliminary Audit Report recommendation, CFC provided in-kind 

contribution documentation. The in-kind documentation consisted of fimr internally 

generated **tracking fimns,*^ totaling $1,264,477, and an internal draft schedule that 

' The Goolractiialintbniiition did not provide the type infbnnition needed to verity the amoiDiti reported. 

^ This tndungfbnn provided mostly infinmation that waiuniilar ID the infbinuuionfiMiDd in CFC'i 

Tho fofbriiiatlon coosisted of the fellowing: donor mfiarmatloii, a description ofthe Hem or 

service provided, the proposed vahie, a budget line item, and a place for Afferent oommHtee signatures. 

Ail tracking ftmns were unsigned. 
totaled $2,121,206. la additioii, a CFCicpresentBtive stated that he was trying to woik 

with fbmier staff to provide additional in-ldnd documentation, but idtixnately be said 

additional documentation could not be located. 

The schedules and fimns CFC provided did not include any documentation from the 

contributors, worksheet calculations, or any other details ttot would allow for veriflcation 

of the in-kind contributions reported. In addition, $757,676, still remains without 

supporting documentation. Because the documentation CFC provided did not allow for 

the verification of the in-kind contributions rqxnied, along with the absence of 

documentation for the remaining in-kind contributions reported, uiding renudns 

unresolved. 

I Finding 2, PtocloBure of Di»bm»emo^» 

Bammaiy 

The Audit staff identified 43 disbursements tofm^$12,S89i " 

or did not adequately provide required disclosure i&finlnatibn^ In response tS the 

Preliminary Audit Report recommendation, CFC fil^ aineiided disclosure rqxirts that 

materially corrected the disbursementdiwlosure errors. 

Legal Standard • 

A. Reporting Expenditures, When'^pen^iUa^tqj^sariie person exceed $200 in 

a calendar year, the-eonimittee muafipport the;' 

* Amount;^'' •:>, ^ 

• Date whAfrte expenditures were 

• Name and 3i:»-s el llienayee; __ 

• Purpose (a br.-:d». I disbursement was made-see below). 

UAi^ S301(^h- (A)^TcFR§104.3(bX3Xi). 

lortingCredlttCanl rt|UsMtions. A committee must itemize a payment to 

i^t card coirqNd^ if th^ayment exceeds the $200 aggregate threshold for 

itemi^i^pn. The ccimitteeiinist also itemize, as a iiienio entry, ariy specific 

transadiili charged on a credit card if the payment to the actual vendor exceeds 

the $200 tfi^hold. The memo entry must include the name and address of the 

vetKlor,the^ra^»eofthe disbursement, and the amount of the disbursement. 11 

CFR §102.9^) and 104.9. 

C. Reporting Retmbniicmcnts to Individnab. When an individual who is not 

acting as a vendor advances his or her personal funds (or uses a personal credit 

card) to pay for goods or services on behalf of a politi^ committee, the 

reimbursement must be reported as follows: 

• Nontravei Advances. Report the individual as payee, and reportthc payments 

aggregating over $200 to any one vendor as memo entries on Schedule B; and 

• Travel and Subsistence Advances. Iftiie total amount reimbursed is $500 or 

less, the committee tiiould report the individual as pi^ee. Ifthe total amount 
exceeds SSOO and payments to any one vendor used for the expenses total 

over $200 for the calendar year, report the individual as payee, and report the 

payments aggregating over $200 to any one vendor as memo entries on 

Schedule B. Each memo entry must include the name and address of the 

vendor, as well as the date, amount and purpose of the payment 11 CFR 

§i04.3(bX3)(i) and 104.9. 

Facto and Analysis 

A. Facts 

The Audit staff identified 43 disbursements totalipg S12,580,f 

not adequately provide required disclosure information, 

errors, totaling $12,319,532, involved inadequate puiposa' 

single vendor. Additional information is provided in dieHnble belBU 

: were missing or did 

[ority of disclosure 

fin* payments to a 

ix—j-41 Number of 

TnuMtlou ^loilar Value 

Pqanents to corpoTBtioiis or Other entities with inadcio^ ' 3^ 

or with no stated purpose disclosed. . 

$1^490,987 

Payment with on incomplete address disclosed. 1 S48J6S 

Ciedh card payment with no memo entrtStdisclosing ^. | 

payments made to the ultimate vendor. 1 • 

$28,487 

Staffieimbursenients with inadequate piii-i»j-'.indno ^ 

memo entries disclosing p^ments made to $e ultolav , 3 

vendor. .-V;.. 

$13,156 

\ Totrf $12,580,995 

B. Prelimlnaiy Andlt1l^mifto',^dil Recommcndatlon 

At the exit .n, the'^^t the missing or inadequate disclosure 

items with f ' = •_**. -ientativei aqd provided a schedule detailing thew items. CFC 

rqnescataii ves stated they ^woultK^^nd their reports in reqxmse to the Preliminaiy 

ThePreli 

disclose these 

recommended that CFC amend its reports to correctly 

on Schedule B (Itemized Disbursements). 

C. Committee Rcspense to Preliminary Audit Report 

In response to the Pfdiminaiy Audit Report recommendation, CFC filed amended 

disclosure reports that materially corrected the disbursement disclosure errors.