Draft Final Audit Report of the 

Audit Division on the American 

Financial Services Association 

PAC 

(J^uary 1,. 2013 - December 31, 2014) 

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 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have 

the threshold 

requirements for .• 

substantial complianc 

with the Ai ' " "it 

determii 

cbtn: 

the 

prohibitii 

disclosure 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committjei 

The American Financial Sen^S Association PAC is a qualified, 

non-party political action^^^^e headquartered in 

Washington, D.C. For inipl^ a, see the chart on the 

Committee Organizi^ 

Financial Aci ii it] 

• Receipts 

©^Contribution 

o '^etrjbiitibns ffqE 

t, , iittees. 

o ~ 

Total 

Dis.burs^ents 

I o Trans^b'to Affiliated/Other 

Party C^^ittees 

^ns to Federal 

Committees 

Other Disbursements 

:• ursements 

$ 820,603 

10,000 

24,380 

$ 854,983 

$ 22,000 

735,850 

25,304 

$ 783,154 

Findings and Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding 1) 

•' Excessive Contributions Made to Federal Candidates 

(Finding 2) 

52 U.S.C. §301 n(b). 
Draft Pinal Audit Report of the 

Audit Division on the 

American Financial Sexvices 

Association PAC 

(January 1, 2013 - Deo 31, 2014) 

"s. 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Part II. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Recommei 

Finding 1. Misstatement of Financial Activity 

Finding 2. Excessive Contribution ' deto 

2 

2 

4 

7 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the American Financial Services Association PAC 

(AFSAPAC), 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 52 U.S.C. 

§301II (b), which permits the Commission to conduct audits and investigations of 

any political committee that is required to file a report under 52^..S.O'- §30104. Prior to 

conducting any audit under this subsection, the Eonimissii^^^ perforrA an internal 

review of reports filed by selected committees to delefmWir.tl^^0.rt5. filed by a 

particular committee meet the threshold requiremen;ts:.|pr ^bsi^'ci^qrnpli^ce with the 

Act. 52 U.S.C. §30111(b). 

Scope of Audit •''^4 

Following Commission-approved procedures, the. 

factors and as a result, this audit examined: 

1. the disclosure of individual cqntri^it^' occupation! 

2. the disclosure of disbursements, de^^^j^bligations; 

3. contributions to candidate Cjqmjnit 

4. the consistency between reported figui^ andil 

5. other committee tupBra^^jstnecessary review, y 

^Valiiate^yiEK^Xis risk 

iame= of employer; 

• ......... 

• •••r '.J:.' .«• . . <• 

.V' 

•». 
Part II 

Overview of Committee 

Committee Organization 

Important Dates . 

• DateofRejjIstration March 17,1976 

• Audit Coverage January 1,20rffiecember 31,2014 

Headquarters Wgshingtpm^S^x 

Bank Information 

. • Bank Deppsitones Two \ 

0 Bank Accounts 

Treasurer 

• Treasurer When Audit Was Conducted 

• Treasurer During Period Covered by Audit Bill ^{^|er 

Management Information 

• Attended FEC Campaign Finance-Sen^M^.% Yes 

• Who Handled Accounting and % 

Recordkeeping Tasks % 

riel ncial Activity 

unts) 

Cash-on-h^d ^ Janiia'^i^, 201^^:^. . S 246^207 

Receipts=^%i!, 

o Contribjlt^jig from Indiyie^la 820,603 

o ContributiolS^om Other f^llticai 

Committees 

10,000 

o Other Receipts 24^380 

Total Receipts S 854,983 

Disbursements 

o Transfers to Afifiliated/Qther Party 

Committees 

22,000 

o Contributions to Federal Candidates/Other 735,850 

Committees 

o Other Disbursements 25,304 

Total Disbursements $ 783.154 

Cash-on-hand @ December 31,2014 S 318,036 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of AFSAPAC's reported fj^^cial activity with its 

bank records revealed a misstatement of receipts, disbursemej^^an^; the beginning and 

ending cash balances for 2013, and the beginning and endio^^^ balances for 2014. For 

2013, AFSAPAC understated the beginning cash b£d.ane|^runderstated 

receipts by $10,081, understated disbursements by $dgi^..and ut^staited the ending 

cash balance by $55,712. For 2014, AFSAPAC i^p^ted the'be^^^^cash balance 

by $55,712, and the ending cash balance by $5^^. Muljtiple.'t^mendm^^^^ filed 

after the beginning of the audit for both 2013;d^^ l4, .ba^ey did not fw^^rect the 

misstated amounts. W 

In response to the Interim Audit Repor^JgAR) reconu 

filed amended reports on January 13,2i^^^ich signific 

amounts. However, these amendments VKet^^d^Jfid in dL 

misstatements identified by the audit. AI 

the misstatements, AFSAJ^C. has not comi 

AFSAPAC stated that it 

h^ged the misstated 

Ipdnse to the 

i0rts to materially correct 

s recommendation. 

In addition, AFSAPji^^'s ongir^repoits for 1-^ and 2 materially understated 

receipts by $310,583. ^^^APA^. attempted to sbu^eet these misstatements and filed 

amended reports for the two year election cycle. In response 

to the IAR^^i^^'j^^dation^^!^.^APAC^d^ provide any additional comments 

regardig^its unders^^^^nt o^i^ipts on its original reports. (For more detail, see p. 4.) 

ntributions Made to Federal 

AFSAPAC made l%^p.mbutibns to seven federal candidate committees that, when 

aggregated with 22 p^^ous contributions, appear to have exceeded the contribution limit 

by $18,000. In respmise to the exit conference, AFSAPAC redesignated contributions of 

$17,000 related to the finding, and was seeking or had obtained refunds for the remaining 

amount. In response to the lAR recommendation, AFSAPAC stated that it had filed 

amended reports to properly reflect these redesignations; however, no amended reports 

have been received and the refunds were not discussed. AFSAPAC has clarified it did 

not make excessive contributions of $17,000. Absent further evidence of contribution 

refunds obtained by AFSAPAC, the remaining $1,000 is considered an excessive 

contribution made by AFSAPAC. (For more detail, see p. 8.) 
Part IV 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fleidwork, a comparison of AFSAPAC's reported financial activity with its 

bank records revealed a misstatement of receipts, disbursements, and the beginning and 

ending cash balances for 2013, and the beginning and ending ca^^Mcts for 2014. For 

2013, AFSAPAC understated the beginning cash balance by^^,531;, understated 

receipts by $10,081, understated disbursements by $67,90^^^^derstiated the ending 

cash balance by $55,712. For 2014, AFSAPAC understa^the'^^mii^ cash balance 

by $55,712, and the ending cash balance by $53,39^^uliHple.ani^^ents were filed 

after the beginning of the audit for both 2013 and^2i^, &tit they ddif^l&i orrect the 

misstated amounts. 

.1 

In response to the Interim Audit Report (lAR) 

filed amended reports on January 13,2016, which si 

amounts. However, these amendmen^pre not filed in 

misstatements identified by the audit. 

the misstatements, AFSAPAC has not cq^p 

In addition, AFSAPAC 

receipts by $310,683 < 

amended reports 

to the lAR recomrfiehc 

regarding its .und^statemS 

"hi AFSAPA ited that it 

^tly-changed the misstated 

response to the 

:s. to materially correct 

vR'P^bmrhenddtidii, 

al reports fmaterially understated 

I attemptisd^. correct fiiese misstatements and filed 

period dui^|^the two year election cycle. In response 

AC did.nib^^vide. any additional comments 

reports. 

Eandard ^ ^ 

)f Reports. irepo^P^ disclose; 

iQunt of ' &rhan€^t.the beginning and end of the reporting period; 

the ^^'^ount of ^eipts.for the reporting period and for the calendar year; 

• the total^, t o^'plsbucseraents for the reporting period and for the calendar 

year; and 

• certain tran bns that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (fierhized.Disbursements). 52 U.S.C. §30104 (b) (1), (2), (3), (4) 

and (5). 

Facts and Analysis 

A. Misstatement of Financial Activity- Most Recent Reports Filed Prior to the 

Audit 

1. Facts 
As part of this audit, the Audit staff reconciled AFSAPAC's reported financial 

activity with its bank records for calendar years 2013 and 2014. The following charts 

outline the discrepancies between AFSAPAC's disclosure reports and its bank 

records. Succeeding paragraphs explain why the discrepancies occurred. 

2013 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash Balance @ 

January 1,2013 

$132,671 $246,207 $113,536 

Understated 

Receipts $380,743 $390,824^ 

j;' 

$10,081 

Understated 

Disbursements $293,006 $67,905 

Understated 

Ending Cash Balance 

@ December 31, 2013 

$220,408 , $^6,12? ?%., $55,712 

Understated 

The beginning cash balance was understated 3,536'^d the discrepi 

unexplained, but it likely resulted from prior periC:' * 

The understatement of receipts 

• Contributions from individi 

• Unreported other receipts 

• Unexplained difference 

Net Understate'mcii:! Keceipts 

Jted firom the fo' 

it not 

Contribution refw^ 

sburseiner 

sxplained di 

rstatement I 

The understatemg^ of • . sments resif^d from the following: 

Contributibn&'t^^Ql itic^ornmittees n^@]ported 

3n: 

ice 

hsburl^ments 

iccount not reported 

S^,5()0 

10',77S 

f6.194^ 

mm 

$48,100 

5,000 

2,485 

10,775 

1J45 

Mim 

2014 Commr^^ctivit^ 

Reported Bank Records Discrepancy 

Beginning Cash Bm^^e @ 

January 1,2014 

$220,408 $276,120 $55,712 

Understated 

Receipts $462,985 $464,159 $1,174 

Understated 

Disbursements $418,751 $422,243 ; $3,492 

Understated 

Ending Cash Balance 

® December 31,2014 

$264,642 $318,036 $53,394 

Understated 

The $53,394 understatement of the 2014 ending cash balance resulted mostly from 

reporting discrepancies noted above from the prior year. 
AFSAPAC filed amended reports on January 13,2016, subsequent to the audit 

notification letter, dated November 18,2015. These reports disclosed a cash increase 

of $42,915 for 2013. However, the amendments only minimally corrected the 

reporting discrepancies for 2013, and the beginning and ending cash balances for 

2014 remained materially misstated. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the misstatements for 2013 and 2014 with AFSAPAC's 

representatives during the exit conference and provided copies^jof relevant work 

papers detailing the misstatements. In response, an AFSAPAf^e^resentative stated 

that it filed amended reports to correct the misstatementsuj^revef, the amendments 

were filed after AFSAPAC was notified of the audit ag,5^^^i(ipunts were still 

misstated as described in the preceding paragraph. 

The lAR recommended that AFSAPAC ame 

misstatements for both 2013 and 2014. In, 

AFSAPAC amend its most recently filed fep 

repp.^^^epn:ect the 

j,tiori> the^IAR recomitte 

" "le cash-on-hl^' balance 

with an explanation that the change resulted peKod audit adjustment. 

Further, that AFSAPAC should reconcile the cashili^ee of its most recent report to 

identify any subsequent discrepanl;>{g^;.^at may- a^ect'^vadjustment recommended 

by the Audit staff. „ "1%^ 

3. Committee Response to Interim Aud. 

In response to the 

reports on Jam 

that the reduc 

AFSAPAC also stai 

limitat 

mendatii 

^hichsigni 

-Sited., amouni 

temei 

S APAC^fated that it filed amended 

itly changed the misstated amounts and 

AFSAPAC's corrective action, 

all timing related, due to staff 

filed by AFSAPAC prior to the issuance of the 

2013 and 2014 misstatements. The following 

le aMended reports. For 2013, the beginning cash balance, 

id ending cash balance were understated by $70,621, 

97, respectively. For 2014, AFSAPAC understated its 

beginning casW6^1a^p%by $12,697, and its ending cash balance by $10,379. The 

Audit staff was to verify certain problems in filing reports mentioned by . 

AFSAPAC, but -they were resolved quickly. Absent the filing of amended reports to 

correct the misstatements above, AFSAPAC has not complied with the lAR 

recommendation. 

lited in the 

_ i not sufficiehl 

missta^ents remain 

receipts, 

$9,981, 67': 

B. Misstatement of Financial Activity - Original Reports Filed 

1. Facts 

In addition to reconciling AFSAPAC's most recent reports (filed prior to audit 

notification) with its bank statements, the Audit staff also compared its originally 

filed reports with its bank statements. The purpose of this additional reconciliation 
was to identify the degree to which AFSAPAC had misstated its original filings. 

From this review, the Audit staff determined that AFSAPAC understated its receipts 

by $310,683, for the two-year period that ended December 31,2014. However, as 

shown in the charts above, under discrepancies for receipts, AFSAPAC filed 

amendments that corrected all but $11,2SS ($10,081 + $1,174) of this receipt 

understatement. 

The Audit Staff also noted that AFSAPAC filed multiple amended reports for every 

filing period for 2013 and 2014, filing a total of IS 1 amendments. For example, for 

the August 2013 monthly report AFSAPAC filed amended cfcpjgrts three times in 

2014, two times in 2015, and one time in 2016. 

2. Interim Audit Report & Audit Division Recommem 

The Audit staff discussed AFSAPAC's understatemciij^'of reiS^J^contained in the 

original reports it filed at the exit conference. Imcjisgp'f^e, an A'^^JPAC 

representative made a rebuttal to the potential ^erstktement findml^y providing 

information about the corrections made in.^amended''jrilings. The 

explained to the representative that amen^m^i^^ave x^i^pact on the ^^ing since 

the finding is based upon the original reports fil 

The lAR recommended that AFS 

necessary with respect to this mi 

3. Committee Response to Interim Aud 

AFSAPAC did not provsi^M^omments 

Finding 2. E^c 

idnal comments it deemed 

Made to Federal 

AFSAPT^I^ade 11 contractions ^"seven federal candidate committees that, when 

aggregate(f^^h 22 previoug^ontributions, appear to have exceeded the contribution limit 

by $18,000. fm^ponse ta|'he exit conference, AFSAPAC redesignated contributions of 

$ 17,000 related fini^hg, and was seeking or had obtained refunds for the remaining 

amount. In respons^^lie lAR recommendation, AFSAPAC stated that it had filed 

amended reports to p^erly reflect these redesignations; however, no amended reports 

have been received and the refunds were not discussed. AFSAPAC has clarified it did 

not make excessive contributions of $17,000. Absent further evidence of contribution 

refunds obteuned by AFSAPAC, the remaining $1,000 is considered an excessive 

contribution made by AFSAPAC. 

Legal Standard 

A. Contribution Defined. A gift, subscription, loan (except when made in accordance 

with 11 CFR §§100.82 and 100.83), advance, or deposit of money or anything of value 
made by any person for the purpose of influencing any election for Federal office is a 

contribution. 11 CFR§100.S2(a). 

B. Contribution Limits. No multicandidate political committee shall make contributions 

to any candidate and his authorized political committees with respect to any election for 

Federal office which, in the aggregate, exceed $5,000. 52 U.S.C. §30116 (a}(l)(2)(A). 

C. Definition of Multicandidate Committee. 

• A multicandidate committee is a political committee (other thi 

candidate committee) that has satisfied the following 3. 

" It has been registered under the federal election .! 

months. 

' It h^ received contributions from more than 

•' It has made contributions to at least 5 

requirement does not apply to state 

§30116(a)(4). 

• A political committee affiliated with anotlit 

qualified as a multicandidate committee autbi 

committee by virtue of that affiliation. But it .si 

affiliated committee. 52 U.S.C. §'yfeWlj5(a)(5). 

Facts and Analysis 

A. Facts 

The Audit staff revie: 

committees total! 

candidate committees 

contribution Uji^t.by $18j 

an authorized 

|w for at least 6 

a-last 

iittees.) 52 

ittee thai (titeady 

ea a multi^didate 

contributions limits with its 

B. In^im. Audit 

At ;dst?'S|^i.cs>nlEifdnce; 

AFSAPACfc^resentativi 

contributiorii^^e. Audit 

aggregation w^^her co: 

The Audit staff asj 

documentation for 

Cs repoi^ CQiitributions made to federal candidate 

this amoun^^M^ontributions to seven federal 

with 22^er contributions appear to exceed the 

v&.Au^^DiyiSion Recommendation 

^udit s^^resented the excessive contribution matter to 

provided a schedule of potentially excessive 

f explained that the excessive contributions resulted from 

bufions made to the same committees for the same election. 

^PAC's representatives to provide an explanation and 

. on the schedule-that they believed to be incorrect. The 

representatives stated'that they would review the items and provide an appropriate 

response. 

In response to the exit conference, AFSAPAC's representative did not mention any 

corrections to the schedule of excessive contributions, but did provide the Audit staff 

redesignation letters that were sent out to six of the excessive recipient committees for 
17,000 of the excessive $18,000 amount.^ For the remaining excessive contributions, it 

was said that a refund had been received and another refund was being sought. 

The lAR recommended AFSAPAC amend its reports to properly report the elections for 

which the contributions totaling $17,000 were redesignated and provide evidence for the 

$ 1,000 in contribution refund checks and their deposit, or provide evidence (or make 

other comments) that any of the excessive contribution amounts were not excessive. 

C. Committee Response to Interim Audit Report 

In response to the lAR recommendation, AFSAPAC stated it had r^dosi^atbd and 

amended their reports for excessive contributions totaling $18,'Q^^]i%i,t the schedule only 

addressed $ 17,000 of the finding amount.^ In addition, no a^ptl'ed' reports were 

received to reflect the redesignation for any of the amount^^^d. AFSAPAC mention 

or provide copies of any refund checks for the $1,000 in ^nainj^^^Qessi^e: 

contributions. AFSAPAC has clarified it did not m^^^^ssive doff^atibns of 

$17,000. Absent further evidence of contr.ibution>>ECTunds "obtained by^^^AC, the 

remaining $1,000 is considered an excessive cj^^biitidn rp^dSe by AFS> 

^ The committee provided redesignation letters for S18,000 but one of the letters redesignated a 

contribution for SI,000 to a different election that was not found to be excessive by the Audit staff, leaving 

$ 1,000 that was not redesignated or for which refunds were not received.