Draft Final Audit Report of the 

Audit Division on the 

United Association Political 

Education Committee 

January 1, 2007 - December 31, 2008 

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 haV.e; met 

the threshold! 

requirements for 

substantiai compliance 

with the Act.' The audit 

determined whether the 

committee coniplied with 

the limitations, t; 

prohibitions and • 

disclosure requirements 

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 Committee (p. 2) 

The United AssociationiPqlitical Education Committee is a separate 

segregated fund ofthje, Unfitdd. Association of Journeymen and 

Apprentices of thi^^0umbing ^liil^^^^ Industry of the United 

States and Canada^ji^headquartered in Annapolis, MD. For more 

information, see theiglGmml^ chart, p. 2. 

Financial Actiyij ^ (p. 2) 

• Receipts 

o Contributions from Individuals 

o Transfers frbrri Affiliates ^' i'-. • • •• •<• • , 'I 

o Refunds from Federal Candidates 

.o OtherReceiptsi-'/ "^ ^ ''^^[y 

Totiai'Receipts O^v-'' 'v-;^.... 

• 'Disbursementis'J' '^--"'^Q-^' 

o. Contributiohs.to Federal Candidates 

6 .Independent "Expendit 

o Operating Expendittires 

: o Otfier Disbursements 

Total Disbursements 

$ 3,130,530 

313,467 

33,500 

230.574 

$ 3,708,071 

$2,103,850 

510,314 

72,655 

1.392.617 

$ 4,079,436 

Findings and Recommendations (p. 3) 

• Excessive Contributions to Candidates and Other Political 

Committees (Finding 1) 

• Failure to File Notices and Properly Disclose Independent 

: Expenditures (Finding 2) 

• Failure to Properly Disclose Transfers from Affiliated 

Committees (Finding 3) 

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

Audit Division on the 

United Association Political 

Education Committee 

January 1, 2007 - December 31, 2008 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Excessive Contributions to Candidates and Other Political 

Committees 4 

Finding 2. Failure to File Notices and Properly Disclose Independent 

Expenditures 5 

Finding 3. Failure to Properly Disclose Transfers from Affiliated 

Committees • , v Vj 7 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the United Association Political Education Committee^ 

(UAPEC), 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 Commission 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 Conrtmission.must perform an internal 

review of reports filed by selected committees to determihe'if the reports filed by a 

particular committee meet the threshold requirements for substantial compliance with the 

Act. 2 U.S.C. §438(b). ' 

Scope of Audit % 

Following Commission approved procedures, the Audit staff evaluated vai;iotis'fa^:^ors 

and as a result, this audit examined: 

1. The disclosure of disbursements, debts and obligatioiis. 

2. The disclosure of expenses allocated between federal and non-fedVral, accounts. 

3. The review of contributions made to federal candidates. * ' 

4. The disclosure of individual contributor's occupation and nariie pf employer. 

5. The consistency between reported figures and bank records. 

6. The completeness of records. 

7. Other cprtfnlittee operations necessary to the review. 

^ On June 10,2010, UAPEC amended its Statement of Organization and changed its name to the United 

Association Poiiticai Education Committee (United Association of Journeymen and Apprentice's of the 

Plumbing and Pipefitting industry of the United States and Canada). UAPEC also added its connected 

organization's name to its Statement of Organization in this amendment. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates UAPEC 

• Date of Registration September 23,1976 

• Audit Coverage January 1,2007 - December 31,2008 

Headquarters Annapolis, MD 

Bank Information 

• Bank Depositories two; T^^' 

• Bank Accounts 

Treasurer 

• Treasurer When Audit Was Conducted William P! 14%. '^^gK^ • 

• Treasurer During Period Covered by Audit ; WiHiam P. HiteAX "'U^-::'^' 

Management Information 

• Attended FEC Campaign Finance Seminar YesA'V ••^uf:^, 

• Used Commonly Available Campaign 

Management Software Package 

Yes-'--^M^-... 

• Who Handled Accounting and 

Recordkeeping Tasks 

Volunteer staff and consultant 

• . .:>!• Overview of Fin 

(Audited^ 

ancial Activity 

Lmounts) 

Cash on hand @ January 1,2007 $ 1,121,310 

o Contributions from Individuals 3,130,530 

o Transfers from Affiliates 313,467 

o Refunds from Federal Candidates 33,500 

o Other Receipts' 230,574 

Total Receipts $ 3,708,071 

o Contributions to Federal Candidates 2,103,850 

o Independent Expenditures 510,314 

o Operating Expenditures 72,655 

o Other Disbursements 1,392,617 

Total Disbursements $ 4,079,436 

Cash on hand @ December 31,2008 $ 749,945 
Part III 

Summaries 

Findings and Recommendations 

Finding 1. Excessive Contributions to Candidates and 

Other Political Committees 

The Audit staff identified 12 contributions made by UAPEC to 9 candidate committees 

and 2 other political committees that, when aggregated with contributions made by its 

affiliates, appeared to have exceeded the limitation by $42,225. The excessive 

contributions were not eligible for redesignation. The Audit staff recommended that 

UAPEC provide evidence demonstrating that the contributions were not excessive or 

provide evidence that refunds were received from the recipient committees. In response, 

UAPEC provided evidence that two of the excessive contributions, totaling $10,000, 

were timely resolved and that it received refunds totaling $6,725 from four recipient 

committees. UAPEC also provided copies of letters mailed to the remaining five 

committees requesting refunds of $25,500. (For more detail, see p.4) 

Finding 2. Failure to File Notices and Properly Disclose 

Independent Expenditures 

UAPEC disclosed independent expenditures, totaling $510,314, on Schedule E (Itemized 

Independent Expenditures). Most of the independent expenditures were reported when 

paid, which in most cases was after the date of the election. UAPEC should have disclosed 

these independent expenditures as memo entries on Schedule E and a corresponding debt 

on Schedule D. Finally, UAPEC failed to file any corresponding 24 or 48-hour notices. 

UAPEC agreed with the Audit staff's conclusion and, as recommended, provided a written 

copy of its new procedures. (For more detail, see p. 5) 

Finding 3. jPailure to Properly Disclose Transfers From 

Affiliated Coinmittees 

UAPEC incorrectly disclosed transfers from affiiiated political committees totaling 

$313,467, as either unitemized contributions from individuals or as contributions from 

other political committees. These transfers should have been reported and itemized as 

Transfers from Affiliated/Other Party Committees. UAPEC complied with the Audit 

StafTs recommendation and filed amended reports properly disclosing all ofthe transfers. 

(For more detail, see p. 7) 
Part IV 

Findings and Recommendations 

Finding 1. Excessive Contributions to Candidates and 

Other Political Committees 

Summary 

The Audit staff identified 12 contributions made by UAPEC to 9 candidate committees 

and 2 other political committees that, when aggregated with contributions made by its 

affiliates, appeared to have exceeded the limitation by $4^,225. The excessive 

contributions were not eligible for redesignation.^€iie A^aSiJ staff recommended that 

UAPEC provide evidence demonstrating that thejcoiSfributicJrt^^ not excessive or 

provide evidence that refunds were received from; the recipj^nt.tbmmittees. In response, 

UAPEC provided evidence that two of the excess ive|contJi!|u&^^^^ $10,000, 

were timely resolved and that it received refunds totaji|l|v^i5,725 froriribur recipient 

committees. UAPEC also provided copies of letters^meiiiepiito the reniaining five 

committees requesting refunds of $25,500. ,, '^^'^^J^^:- '" ' -

Legal standard / ^ ";: 

A. Authorized Committee Limits. No multicandidate pjdlitical cornmittee shall make 

contributions to an authorized committee thiit.aggregaW ill $5,O0O per election or 

to any other political committee in any Calendar year'^which,'*ih'the,^ exceeds 

$5,000. 2 U.S.C. §441a(a)(2)(A)^ndi(C); 11 CPfei 110.2(b);;^d®. 

B. Contribution Limitatioiis for Affiliated Committe|s^ JFo the purposes of the 

contribution limitations of I T CFR §110.2, all contributions made by more than one 

affiliated committee, regardless if they are political committees under 11 CFR §100.5, 

shall be considered to be made by a single politica.! committee. 11 CFR §110.3(a)(1). 

C. Redesignation of Excessive Contributions. When an authorized candidate 

committee receives an excessive contribution, (or a contribution that exceeds the 

committee's net debts outstanding), the committee may ask the contributor to redesignate 

the excess portion of the contribution for use in another election. The committee must 

inform the contributor that: 

1. The redesignation must be signed by the contributor; 

2. The redesignation must be received by the committee within 60 days after the 

committee received the original contribution; and 

3. The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(b)(5). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper redesignation or refund the excessive portion to the donor. 11 CFR 

§§ 103.3(b)(3) and 110.1 (b)(5)(ii)(A). Further, a political committee must retain written 

records concerning the redesignation in order for it to be effective. 11 CFR §110.1(l)(5). 
Facts and Analysis 

The Audit staff identified contributions made by UAPEC that appeared to exceed the 

limitations by $42,225. These excessive contributions consisted of 10 contributions to 9 

candidate committees totaling $32,225 and 2 contributions to other political committees 

totaling $10,000. A majority of the excessive contributions were the result of UAPEC 

not tracking contributions made by its affiiiated committees. UAPEC and its affiliates 

share a contribution limitation. At this time, the excessive contributions are not eligible 

for redesignation and UAPEC can only request a refund from the recipient committees. 

At the exit conference, the Audit staff provided UAPEC representatives with a schedule 

of the excessive contributions. In response, UAPEC's counsel (Counsel) provided copies 

of letters sent to each recipient committee requesting re^nds of the excessive 

contributions. Counsel also related that well befocClthe^aUdit UAPEC underwent a 100% 

turnover in staff. The new director instituted prg);|;r^rifis and. procedures designed to 

monitor the contributions made by affiliates and* CQ'irnply more fully with the requirements 

of the Act. ^<^j^. •• * : •. 

Interim Audit Report Recommendation'aiid'dommittee; Response 

The Audit staff recommended that UAPEC proyide evidertc^f-demonstrating the' • 

contributions were not excessive or conti nuel'to;^^^^^^^^ evidence of any 

refunds received. ^^€3rV:!^..: 

In response to the recommendationi^^APEpdemonst^^^ 

• Two excessive, contribUtU)ns3P wfere; resolved jiri'a timely manner. For 

one exCess'ive^iGitf^^^ provided..docum*entation that it received a 

$5,000 refund iiH"2O09.\/orfl^ sie exces|iye contribution, UAPEC provided 

Copies of letters to ahclifr^m the'T^Cipient committee; agreeing that the excessive 

portion ($5,000) should b^e;deposited into the committee's non-federal account. 

The documentation discussed above was hot available during the audit fieldwork. 

• It received refunds from four of the recipient committees totaling $6,725. 

• Second letters were sent to. the. remain ing committees requesting refunds totaling 

$25,500. ,>^fFinding 2. Failure tb File Notices and Properly Disclose 

Independent Expenditures 

Summary 

UAPEC disclosed independent expenditures, totaling $510,314, on Schedule E (Itemized 

Independent Expenditures). Most of the independent expenditures were reported when 

paid, which in most cases was after the date of the election. UAPEC should have 

disclosed these independent expenditures as memo entries on Schedule E and a 

corresponding debt on Schedule D. Finally, UAPEC failed to file any corresponding 24 

or 48-hour notices. UAPEC agreed with the Audit staffs conclusion and, as 

recommended, provided a written copy of its new procedures. 
6 

Legal Standard 

A. Definition of Independent Expenditures. The term "independent expenditure" 

means an expenditure by a person for a communication expressly advocating the election 

or defeat of a clearly identified candidate that is not made in coordination with any 

candidate or authorized committee or agent of a candidate. 11 CFR § 100.16(a) 

B. Disclosure requirements - general guidelines. An independent expenditure shall be 

reported on Schedule E if, when added to other independent expenditures made to the 

same payee during the same calendar year, it exceeds $200. Independent expenditures 

made (i.e., publicly disseminated) prior to payment should be disclosed as "memo" 

entries on Schedule E and as a reportable debt on Schedule D. Independent expenditures 

of $200 or less do not need to be itemized, though the committee must report the total of 

those expenditures on line (b) on Schedule E. 11 GFJl §§104.3(b)(3)(vii), 104.4(a) and 

104.11 - • - ' 

C. Last-Minute Independent Expenditure Reports (24-Hour Notices). Any 

independent expenditures aggregating $1,000 or more, with respect to any given election, 

and made after the 20^^ day but more than 24 hours before the day of an election must be 

reported and the report must be received by the Commission vyithin 24 hours after, the 

expenditure is made. A 24-hour notice is required for each additional $1,000 that 

aggregates. The 24-hour notice must be filed oh a Schedule E. The date that a 

communication is publicly disseminated serves as the date that the Committee must use 

to determine whether the total amount of independent expenditures has, in the aggregate, 

reached or exceeded the threshold reporting amount of $ 1,000. 11 CFR §§ 104.4(f) and 

104.5(g)(2). ^^^^^ ' / ; 

D. Last-Minutelndepend^ Expenjditure Reports (48-Hour Notices). Any 

independent expenditure aggregating $10,000 or more with respect to any given election, 

at any'tinie during a calendar year, up to and including the 20th day before an election, 

must disclose this activity within 48 hours each time that the expenditures aggregate 

$10,000 or nriibre. The notices must be filed with the Commission within 48-hours after 

the expenditure IS-made. 11 CFR §§ 104.4(f) and 104.5(g)(1). 

Facts and Analysis 

Between August 27,200^ and December 3,2008, UAPEC made 8 disbursements totaling 

$510,314 for the purchase of materials such as mini billboards, yard signs, posters, shirts, 

hats, etc. Most of these disbursements were itemized on Schedules E, in support of 

Barack Obama, filed with the report covering the period in which the payments were 

made. A majority of the independent expenditures were related to one invoice, in the 

amount of $324,209. That invoice was paid after the 2008 General election."^ UAPEC 

should have disclosed these independent expenditures as memo entries on Schedules E, 

filed with reports covering the dates when the materials were disseminated, and included 

a corresponding debt on Schedule D (Debts and Obligations). 

Further, UAPEC did not timely file any 24 or 48-hour notices of its independent 

expenditures and did not maintain documentation of the dissemination date for any of the 

UAPEC received a refund of $30,710 relative to this payment. 
7 

materials. However, the invoices were dated either October 31,2008 or November 18, 

2008. Therefore, it appears likely that the materials were disseminated within a notice 

period. 

This matter was discussed with the UAPEC representatives during the exit conference. 

In response. Counsel stated that as a result of the audit, UAPEC's staff now understands 

the reporting requirements for independent expenditures, including 24 and 48-hour 

notices, and, the need to document dissemination dates. However, they were unsure how 

the dissemination date would be determined since UAPEC generally distributes materials 

directly to local union members or ships the materials to local unions for distribution. 

Counsel suggested that in the future, UAPEC will change its method of recording, 

aggregating and filing the required notices based on the date that materials are first 

received at UAPEC headquarters. This date would'-jbe UAPEC'^s. dissemination date for 

24 and 48-notices. •^-v'^-

Interim Audit Report Recommendation'andlobmmitte Response 

The Audit staff recommended that UAPEC implement revised prob'^diires in order to 

properly disclose independent expenditures on Schedule'^s E and/or D^arVd to track 

aggregation and dissemination for both the 24 and.,48-hour iibtice requirements.;; > ^ 

In response, UAPEC agreed with the Audit staff s conclusion ari^vias recommended, 

provided a written copy of its new independent expenditure tracking'pjfocedures. 

Finding 3. Failure to Properiy Disclose Tf^n^^ from 

Affiliated Committees ./ • 

Summairy!; 

UAPEC^ incorrectly disclosed transfers from affiliated political committees totaling 

$313,467,4is;jeither unitemized contributions ff&m individuals or as contributions from 

other political;committees. These transfers should have been reported and itemized as 

Transfers from Affiliated/Other Party Committees. UAPEC complied with the Audit 

staffs recommendation and filed amended reports properly disclosing all of the transfers. 

Legal Standard 

Disclosure Required for Transfers from AfTiliated Committees. A political 

committee must disclose the total amount of transfers from affiliated committees, and the 

identification of each affiliated committee which makes a transfer to the reporting 

committee during the reporting period, together with the date and amount of each 

transfer. 2 U.S.C. §434(b)(2)(F) and (3)(D). 

Facts and Analysis 

UAPEC incorrectly disclosed transfers, totaling $313,467, from affiliated political 

committees. Transfers from four affiiiated committees, totaling $27,867 were included in 

the unitemized contributions from individuals total. The remaining transfers from 21 

affiliated committees, totaling $285,600, were itemized as contributions from Other 

Political Committees. All of these transfers should have been reported and itemized as 
8 

Transfers from Affiliated/Other Party Committees. UAPEC representatives were advised 

of these disclosure errors at the exit conference. 

In response, UAPEC's Legal Counsel related there had initially been some uncertainty 

among UAPEC staff concerning whether the affiliates (local unions) were acting as 

collecting agents. Counsel stated after further investigation, UAPEC staff concluded the 

receipts were in fact transfers from affiliates and agreed to amend the reports as 

recommended. 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that UAPEC amend its reports to properly disclose the 

transfers from the affiliated committees totaling $313,46^7 ($285,600 + 27,867) on 

Schedule A, Line 12, Transfers from Affiliated/Other P&y- Concimittees. In response, 

UAPEC filed amended reports properly disclosin^^air of ihfefraiisTers.