Final Audit Report of the 

Commission on the State 

Democratic Executive 

Committee of Alabama 

(January 1, 2009 - December 31, 2010) 

Why the Audit 

Was Done 

Federal law 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 

(die Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.' 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 the matter 

discussed in this report. 

Ahout the Committee (p. 2) 

The State Democratic Executive Committee of Alabama is a state 

party committee headquartered in Montgomery, Alabama. For 

more information, see the chart on the Committee Organization, 

p. 2. 

Financial Activity (p. 2) 

Receipts 

o Contributions from Individuals $ 342,232 

o Transfers from Affiliated 

Committees 413,892 

o Contributions from Other 

Political Committees 225,377 

o Transfers from Non-federal 

Accoimts 316,171 

o All Other Receipts 173,243 

Total Receipts $ 1,470,915 

Disbursements 

o Operating Disbursements $ 950,626 

o Federal Election Activity 456,345 

o All Other Disbursements 72,274 

Total Disbursements $ 1,479,245 

Commission Finding (p. 3) 

• Recordkeeping for Employees 

Additional Issue (p. 3) 

• Recordkeeping for Employees 

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

Commission on the State 

Democratic Executive 

Committee of Alabama 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Audit Hearing 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Commission Finding 3 

Additional Issue 3 

Part IV. Commission Finding 

Recordkeeping for Employees 5 

Part V. Additional Issue 

Recordkeeping for Employees 7 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the State Democratic Executive Committee of Alabama 

(SDA), 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 U.S.C. §438(b), which permits the Conunission 

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 of reports filed by selected committees to determine whether the 

reports filed by a particular committee meet the threshold requirements for substantial 

compliance with tiie Act. 2 U.S.C. §438(b). 

Scope of Audit 

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

as a result, this audit examined: 

1. the disclosure of individual contributors' occupation and name of employer; 

2. the disclosure of disbursements, debts and obligations; 

3. the disclosure of expenses allocated between federal and non-federal accounts; 

4. the consistency between reported figures and bank records; 

5. the disclosure of independent expenditures; 

6. the completeness of records; and 

7. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Conunission's "Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission," SDA requested early consideration of a 

legal question raised during the audit. SDA questioned whether the monthly time logs required 

under 11 C.F.R. § 106.7(d)(1) applied to employees paid with 100 percent federal fimds. (See 

Finding, page 5.) 

The Commission concluded, by a vote of 5-1, that 11 C.F.R. § 106.7(d)(1) does require 

committees to keep a monthly log for employees paid exclusively with federal funds. Exercising 

its prosecutorial discretion, however, the Commission decided it will not pursue recordkeeping 

violations for the failure to keep time logs or to provide affidavits to account for employee 

salaries paid with 100 percent federal funds and reported as such. The Audit staff informed SDA 

Counsel of the Commission's decision on SDA's request. The finding presented in this audit 

report, Recordkeeping for Employees, does not include SDA employees paid with 100 percent 

federal fimds and reported as such. 

Audit Hearing 

SDA declined the opportunity for a hearing before the Commission on the matter presented in 

this report. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration July 10,1976 

• Audit Coverage January 1,2009 - December 31,2010 

Headquarters Montgomery, Alabama 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Three Federal, Two Non-federal, One Levin 

Treasurer 

• Treasurer When Audit Was Conducted Mr. Edgar C. Gentle, III (1/31/11 - 7/18/12) 

Mr. James B. Davidson (7/19/12 - 12/5/12) 

Mr. James D. Tumer (12/6/12 - 6/19/13) 

Mr. Edgar C. Gentie, III (6/20/13 - Present) 

• Treasurer During Period Covered by 

Audit 

Mr. Brannon Walden (5/22/08 - 1/30/11) 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

Cash-on-hand @ January 1,2009 $ 13,139 

Receipts 

o Contributions from Individuals 342,232 

o Transfers fi:om Affiliated Committees 413,892 

o Contributions from Other Political 

Committees 225,377 

o Transfers fi:om Non-federal Accounts 316,171 

o All Other Receipts 173,243 

Total Receipts $ 1,470,915 

Disbursements 

o Operating Disbursements $ 950,626 

o Federal Election Activity 456,345 

o All Other Disbursements 72,274 

Total Disbursements $ 1,479,245 

Cash-on-hand @ December 31,2010 $ 4,809 
Part III 

Summaries 

Commission Finding 

Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that SDA did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent on federal election activity. For 2009 and 2010, the Audit staff identified payments 

to SDA employees totaling $279,429, for whom SDA did not maintain monthly payroll 

logs. This consisted of $248,930, for which payroll was allocated between federal and 

non-federal fimds, and $30,499, for which payroll was exclusively non-federal. Prior and 

subsequent to the exit conference, SDA representatives provided the Audit staff with 

affidavits for most of the employees attesting to the percentage of time spent on federal 

election activity. 

In response to the Interim Audit Report recommendation, SDA stated it will implement 

procedures to make sure all employees, paid all or in part with federal and/or non-federal 

fimds, are documented by the use of monthly time sheets. The Audit staff considers this 

matter resolved. 

The Commission approved a finding that SDA failed to keep monthly time-logs for the 

$248,930 in payroll allocated between federal and non-federal fimds. The Conunission 

did not approve a finding for the payroll paid exclusively with non-federal fimds and, as 

such, these expenses are presented as an "Additional Issue." (For more detail, see p. 5.) 

Additional Issue 

Recordkeeping for Employees 

As detailed in the Finding above, SDA did not maintain monthly payroll logs, as 

required, to track the percentage of time each employee spent on federal election activity. 

For 2009 and 2010, the Audit staff identified payments to SDA employees totaling 

$279,429, for whom SDA did not maintain monthly payroll logs. This consisted of 

$248,930, for which payroll was allocated between federal and non-federal fimds, and 

$30,499, for which payroll was exclusively non-federal during certain months. 

In response to the Interim Audit Report recommendation, SDA stated it will implement 

procedures to make sure all employees, paid all or in part with federal and/or non-federal 

fimds, are documented by the use of monthly time sheets. 
The Commission did not approve by the required four votes the Audit staffs 

recommended finding that SDA failed to keep monthly time logs for the $30,499 in 

payroll paid from an exclusively non-federal account during certain months. 

Pursuant to Commission Directive 70^, this matter is discussed in the "Additional Issue" 

section and the payroll expenditures of $30,499 are not included in the Finding. (For 

more detail, see p. 7.) 

Available at http://www.fec.gov/directives/directive_70.pdf 
Part IV 

Commission Finding 

Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that SDA did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent on federal election activity. For 2009 and 2010, the Audit staff identified payments 

to SDA employees totaling $279,429, for whom SDA did not maintain monthly payroll 

logs. This consisted of $248,930, for which payroll was allocated between federal and 

non-federal fimds, and $30,499, for which payroll was exclusively non-federal. Prior and 

subsequent to the exit conference, SDA representatives provided the Audit staff with 

affidavits for most of the employees attesting to the percentage of time spent on federal 

election activity. 

In response to the Interim Audit Report recommendation, SDA stated it will implement 

procedures to make sure all employees, paid all or in part with federal and/or non-federal 

funds, are documented by the use of monthly time sheets. The Audit staff considers this 

matter resolved. 

The Commission approved a finding that SDA failed to keep monthly time-logs for the 

$248,930 in payroll allocated between federal and non-federal funds. The Commission 

did not approve a finding for the payroll paid exclusively with non-federal fimds and, as 

such, these expenses are presented as an "Additional Issue." 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a monthly log of the 

percentage of time each employee spends in connection with a federsd election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows: 

• employees who spend 25 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or be allocated as administrative costs; 

• employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and 

• employees who spend none of their compensated time in a given month on federal 

election activities may be paid entirely with fimds that comply with State law. 

11 C.F.R. §106.7(d)(l). 
Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements for payroll. SDA did not 

maintain any monthly payroll logs or equivalent records to document the percentage of 

time its employees spent in connection with federal election activity. These logs are 

required to document the proper allocation of federal and non-federal fimds used to pay 

employees. For 2009 and 2010, logs were not maintained for $279,429 in payroll.^ All 

of these individuals were disclosed as having been paid with an allocation of federal and 

non-federal fimds ($248,930) or exclusively non-federal fimds ($30,499). 

The Audit staff requested that SDA provide documentation to verify the time employees 

spent on federal election activity. In response, SDA provided signed affidavits for five of 

the 11 employees noted above. The affidavits stated the employee name, job titie and 

responsibilities, the time period covered by the affidavit and the funding used. They also 

included a brief statement conceming the time spent on federal election activity. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter again with SDA representatives at the exit 

conference. SDA did not provide the requested monthly time logs during the response 

period; SDA did, however, submit additional affidavits fi:om three employees and another 

after the response period. Each of these affidavits stated the employee name, job title and 

responsibilities, the time period covered by the affidavit and the funding used, and 

included a brief statement regarding the time spent on federal election activity. The 

affidavits provided by SDA, prior to and subsequent to the exit conference, did not 

preclude this matter from the audit report because SDA did not create and maintain these 

documents prior to the audit notification letter. Instead, the affidavits were prepared 

during fieldwork after requests from the Audit staff for verification documentation. 

The Interim Audit Report recommended that SDA provide evidence that it maintained 

monthly time logs to document how much time each employee spent on federal election 

activity or a plan to maintain monthly payroll logs to track the percentage of time each 

employee spends on federal election activity. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, SDA stated it will implement 

procedures to make sure all employees, paid entirely or in part with federal and/or nonfederal fiinds, are documented by the use of monthly time sheets. Such action is 

consistent with Commission guidance with respect to payroll logs. The Audit staff 

considers this matter resolved. 

3 This total does not include payroll for employees paid with 100 percent federal fiihds and reported as 

such (see Part I, Background, Commission Guidance, Request for Early Commission Consideration of a 

Legal Question, Page 1). Payroll is stated net of taxes and benefits. 
D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that SDA plans to implement procedures to 

make sure all employees, paid entirely or in part with federal and/or non-federal funds, 

are documented by the use of monthly time sheets. 

£. Committee Response to the Draft Final Audit Report 

SDA's response to the Draft Final Audit Report provided no additional conunents. 

Commission Conclusion 

On March 18,2014, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a 

finding that SDA failed to maintain logs to document the time employees spent on federal 

election activity for employees totaling $279,429. 

The Commission approved a finding that SDA failed to keep monthly time-logs for the 

$248,930 in payroll allocated between federal and non-federal fimds. The Commission 

did not approve a finding for the payroll totaling $30,499 and paid exclusively with nonfederal funds during a given month and, as such, the matter is presented as an "Additional 

Issue." 

Partv 

Additional Issue 

Recordkeeping for Employees 

Summary 

As detailed in the Finding above, SDA did not maintain monthly payroll logs, as 

required, to track the percentage of time each employee spent on federal election activity. 

For 2009 and 2010, the Audit staff identified payments to SDA employees totaling 

$279,429, for whom SDA did not maintain monthly payroll logs. This consisted of 

$248,930, for which payroll was allocated between federal and non-federal fiinds, and 

$30,499, for which payroll was exclusively non-federal during certain months. 

In response to the Interim Audit Report recommendation, SDA stated it will implement 

procedures to make sure all employees, paid all or in part with federal and/or non-federal 

fimds, are documented by the use of monthly time sheets. 

The Commission did not approve by the required four votes the Audit staffs 

recommended finding that SDA failed to keep monthly time logs for the $30,499 in 

payroll paid from an exclusively non-federal account during certain months. 

Pursuant to Commission Directive 70, this matter is discussed in the "Additional Issue" 

section and the payroll expenditures of $30,499 are not included in the Finding. 
Legal Standard 

The legal standard in the Finding above is incorporated herein. 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements for payroll. SDA did not 

maintain any monthly payroll logs or equivalent records to document the percentage of 

time its employees spent in connection with federal election activity. These logs are 

required to document the proper allocation of federal and non-federal funds used to pay 

employees. For 2009 and 2010, logs were not maintained for $279,429 in payroll.^ All 

of these individuals were disclosed as having been paid with an allocation of federal and 

non-federal fimds ($248,930) or exclusively non-federal fimds ($30,499). 

The Audit staff requested that SDA provide documentation to verify the time employees 

spent on federal election activity. In response, SDA provided signed affidavits for five of 

the 11 employees noted above. The affidavits stated the employee name, job title and 

responsibilities, the time period covered by the affidavit and the funding used. They also 

included a brief statement conceming the time spent on federal election activity. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter again with SDA representatives at the exit 

conference. SDA did not provide the requested monthly time logs during the response 

period; SDA did, however, submit additional affidavits fi-om three employees and another 

afier the response period. Each of these affidavits stated the employee name, job title and 

responsibilities, the time period covered by the affidavit and the funding used, and 

included a brief statement regarding the time spent on federal election activity. The 

affidavits provided by SDA, prior to and subsequent to the exit conference, did not 

preclude this matter from the audit report because SDA did not create and maintain these 

documents prior to the audit notification letter. Instead, the affidavits were prepared 

during fieldwork after requests fi-om the Audit staff for verification documentation. 

The Interim Audit Report recommended that SDA provide evidence that it maintained 

monthly time logs to document how much time each employee spent on federal election 

activity or a plan to maintain monthly payroll logs to track the percentage of time each 

employee spends on federal election activity. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, SDA stated it will implement 

procedures to make sure all employees, paid entirely or in part with federal and/or nonfederal fimds, are documented by die use of monthly time sheets. Such action is 

consistent with Commission guidance with respect to payroll logs. The Audit staff 

considers this matter resolved. 

* This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such (see Part I, Background, Commission Guidance, Request for Early Commission Consideration of a 

Legal Question, Page 1). Payroll is stated net of taxes and benefits. 
D. Draft Final Audit Report 

The Draft Final Audit Report acknowledged that SDA plans to implement procedures to 

make sure all employees, paid entirely or in part with federal and/or non-federal funds, 

are documented by the use of monthly time sheets. 

E. Committee Response to the Draft Final Audit Report 

SDA's response to the Draft Final Audit Report provided no additional comments. 

Commission Conclusion 

On March 18,2014, the Commission considered the Audit Division Recommendation 

Memorandum in which the Audit staff recommended that the Commission adopt a 

finding that SDA failed to maintain logs to document the time employees spent on federal 

election activity for employees totaling $279,429. 

The Commission did not approve by the required four votes the Audit staffs 

recommended finding that SDA failed to keep monthly time-logs for the $30,499 in 

payroll paid exclusively from the non-federal fimds. Some Commissioners voted to 

approve the Audit Division's recommendation. Others did not, citing the position of 

three Commissioners in prior audits, including the Final Audit Report of the Commission 

on the Georgia Federal Elections Committee and the Final Audit Report of the 

Commission on the Republican Party of Iowa, in support of the proposition that the 

Commission lacks jurisdiction to impose recordkeeping and documentation requirements 

on exclusively non-federal activity. 

This matter is discussed in this "Additional Issue" section pursuant to Commission 

Directive 70.