Part II

Overview of Committee

Committee Organization

Important Dates

National Right to Life Political Action
Committee

e Date of Registration

July 12, 1979

e Audit Coverage

January 1, 2001 —- December 31, 2002

Headquarters

Washington, DC

Bank Information

e Bank Depositories

2

e Bank Accounts

5 Federal Accounts

Treasurer

e Treasurer When Audit Was Conducted

Amarie Natividad

e Treasurer During Period Covered by Audit

Amarie Natividad

Management Information

e Attended FEC Campaign Finance Seminar Yes

e Used Commonly Available Campaign Yes
Management Software Package

¢ Who Handled Accounting and Paid Staff

Recordkeeping Tasks

Overview of Financial Activity
(Audited Amounts)

Cash on hand @ January 1, 2001 $ 444,647
© Contributions 1,747,628
o Other Receipts 6,897
Total Receipts $ 1,754,525
o Operating Expenditures 234,556
o Contributions to Federal Candidates 50,910
o Independent Expenditures 1,864,716
o Other Expenditures 61,021
Total Disbursements $ 2,211,203
Cash on hand @ December 31, 2002 $ (12,031)


B. Election Cycle. The election cycle begins on the first day following the date of the
previous general election and ends on the date of the next general election. 11 CFR
§100.3(b).

C. Required Information for Contributions from Individuals. For each itemized

contribution from an individual, the committee must provide the following information:
e The contributor’s full name and address (including zip code);

The contributor’s occupation and the name of his or her employer;

The date of receipt (the date the committee received the contribution);

The amount of the contribution; and

The calendar year-to-date total of all contributions from the same individual. 11

CFR §§100.12 and 104.3(a)(4) and 2 U.S.C. §434(b)(3)(A).

Facts and Analysis

The Audit staff reviewed receipts on a 100% basis and determined that NRL did not
itemize 273 contributions from individuals totaling $95,877. This amount represents
46% of the dollar value of individual contributions that required itemization on Schedules
A? in 2002.

At the exit conference, the Audit staff presented this matter to NRL representatives and
subsequently, in an electronic format, provided a list of contributions that required
itemization in 2002. The representatives agreed to use the list to amend the 2002
Schedules A.

Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that the NRL file amended Schedules A, by reporting
period, to correct the public record by properly disclosing contributions received in 2002.

In response to the interim audit report, NRL filed corrective amendments.

Finding 3. Disclosure of Occupation/Name of Employer

Summary
A 100% review of contributions from individuals indicated that, of the contributions that

both required itemization on NRL’s disclosure reports and were itemized, NRL failed to
disclose the contributor’s occupation and/or name of employer for contributions
representing 69% of the dollar value of all such contributions. In response to the interim
audit report, NRL sent letters to individuals whose contributions required itemization on
NRL’s amended disclosure reports.° The individuals were contacted so that NRL could
obtain the complete and updated information relating to the occupation/name of

5 In its 2002 year-end report, NRL reported $223,648 in itemized contributions. Included in this total,
however, were numerous individual contributions that aggregated to $200 or less for the election cycle and
were not required to be itemized on Schedules A. By disclosing such contributions, the dollar amount of
itemized contributions substantially agreed with the correct itemizable total of $206,594.

° See Finding 2.


Part IV

Findings and Recommendations

| Finding 1. Misstatement of Financial Activity

Summary

A comparison of NRL’s reported figures to its bank records revealed that NRL had
misstated receipts, disbursements, and cash-on-hand balances on its FEC reports for
calendar years 2001 and 2002. In response to the interim audit report, NRL amended its

reports to materially correct the misstatement noted above.

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;

2 U.S.C. §434(b)(1), (2), (3), and (4).

Facts and Analysis

The Audit staff reconciled NRL’s reported activity to its bank records and determined
that there was a misstatement of cash on hand, receipts, and disbursements in calendar
years 2001 and 2002. The following chart details the discrepancies between the totals on
NRL’s disclosure reports and the bank records. Succeeding paragraphs explain, to the
extent possible, why the discrepancies occurred.

Comparison of Disclosure Reports and Bank Records

2001 Activity

Reported Bank Records’ | Discrepancy

Opening Cash Balance 445,944 444,647 (1,297)
Overstated

Receipts 58,710 267,669 208,959
Understated

Disbursements 146,967 241,794 94,827
Understated

Ending Cash Balance 357,687 470,522 112,835
Understated

> Net of interaccount transfers.



Part III
Summaries

Findings and Recommendations

Finding 1. Misstatement of Financial Activity

A comparison of NRL’s reported figures to its bank records revealed that NRL had
misstated receipts, disbursements, and cash-on-hand balances on its FEC reports for
calendar years 2001 and 2002. In response to the interim audit report, NRL amended its
Teports to materially correct the misstatement noted above. (For more detail, see p. 4.)

Finding 2. Itemization of Receipts

A 100% review of receipts revealed that NRL did not itemize 46% of the dollar value of
contributions from individuals that were required to be itemized on Schedules A
(Itemized Receipts). In response to the interim audit report, NRL filed corrective
amendments. (For more detail, see p. 6.)

Finding 3. Disclosure of Occupation/Name of Employer

A 100% review of contributions from individuals indicated that, of the contributions that
both required itemization on NRL’s disclosure reports and were itemized, NRL failed to
disclose the contributor’s occupation and/or name of employer for contributions
representing 69% of the dollar value of all such contributions. In response to the interim
audit report, NRL sent letters to individuals whose contributions required itemization on
NRL’s amended disclosure reports. The individuals were contacted so that NRL could
obtain the complete and updated information relating to the occupation/name of
employer. The NRL officials indicated that they would amend the disclosure reports
upon receipt of the information. (For more detail, see p. 7.)


Disbursements — 2002
The understatement of receipts was the result of the following:

© Unreported disbursements + 47,487
¢ Unexplained difference : 1,553

¢ Understatement $ 45,934

Ending Cash Balance - 2002
The understatement of ending cash on hand in the amount of ($47,021) was the result
of the misstatements described above.

At the exit conference, the Audit staff provided NRL representatives with schedules
explaining the misstatements. The misstatements were the result of NRL’s failure to
report receipts and disbursements that did not require itemization. The NRL’s
representatives agreed to amend the disclosure reports.

Interim Audit Report Recommendations and Committee Response
The Audit staff recommended that NRL file amended reports, by reporting period, for
calendar years 2001 and 2002.* The amended reports were to include:
¢ Corrected Summary and Detailed Summary Pages for each period to accurately
disclose NRL’s financial activity; and
¢ Amended Schedules A (Itemized Receipts) and B (Itemized Disbursements), by
reporting period, to support the corrected Summary and Detailed Summary pages.

In response to the interim audit report, NRL amended its reports to materially correct the
misstatements noted above.

| Finding 2. Itemization of Receipts

Summary

A 100% review of receipts revealed that NRL did not itemize 46% of the dollar value of
contributions from individuals that were required to be itemized on Schedules A
(Itemized Receipts). In response to the interim audit report, NRL filed corrective
amendments.

Legal Standard

A. Itemization Required for Contributions from Individuals. A political committee
other than an authorized committee must itemize any contribution from an individual if it
exceeds $200 per calendar year, either by itself or when combined with other
contributions from the same contributor. 2 U.S.C. §434(b)(3)(A).

* See Findings 2 and 3.


FEDERAL ELECTION COMMISSION

WASHINGTON, D.C 20463

September 7, 2004

MEMORANDUM

TO: ROBERT W. BIERSACK
PRESS OFFICER
PRESS OFFICE

A
FROM: JOSEPH F. STOLTZ Jj LG
ASSISTANT STAFF PIRECTOR
AUDIT DIVISION

SUBJECT: | PUBLIC ISSUANCE OF THE NATIONAL RIGHT TO LIFE POLITICAL
ACTION COMMITTEE

Attached please find a copy of the final audit report and related documents on the
National Right to Life Political Action Committee, which was approved by the
Commission on August 27, 2004.

Informational copies of the report have been received by all parties involved and
the report may be released to the public on September 7, 2004.

Attachment as stated

ce: Office of General Counsel
Office of Public Disclosure
Reports Analysis Division
FEC Library
Web Manager


Interim Audit Report Recommendation and Committee Response
The Audit staff recommended that the NRL file amended electronic reports to disclose
the missing information.

In response to the interim audit report, NRL officials explained that in order to complete
corrective amendments, they chose to send letters to the appropriate contributors to
obtain occupation/name of employer information as opposed to utilizing the information
already maintained in their records. It should be noted that since a majority of the
information is already maintained, the “best efforts” rules would not be applicable to
these items. The officials documented to the Audit staff that these letters were sent out to
the contributors and stated that once this information was received, amendments would
be filed.


employer. The NRL officials indicated that they would amend the disclosure reports
upon receipt of the information.

Legal Standard
A. Required Information for Contributions from Individuals. For each itemized
contribution from an individual, the committee must include the following information:
¢ The contributor’s occupation and the name of his or her employer. 11 CFR
§100.12 and 2 U.S.C. §431(13)(A).

B. Best Efforts Ensures Compliance When the treasurer of a political committee
shows that the committee used best efforts (see below) to obtain, maintain, and
submit the information required by the Act, the committee’s reports and records will
be considered in compliance with the Act. 2 U.S.C. §432(h)(2)(i).

C. Definition of Best Efforts The treasurer and the committee will be considered to
have used “best efforts” if the committee satisfied all of the following criteria:
¢ All written solicitations for contributions included:
o Acclear request for the contributor's full name, mailing address,
occupation, and name of employer; and
o The statement that such reporting is required by Federal law.
¢ Within 30 days after the receipt of the contribution, the treasurer made at least one
effort to obtain the missing information, in either a written request or a
documented oral request.
¢ The treasurer reported any contributor information that, although not initially
provided by the contributor, was obtained in a follow-up communication or was
contained in the committee’s records or in prior reports that the committee filed
during the same two-year election cycle. 11 CFR §104.7(b).

Facts and Analysis

A 100% review of contributions from individuals indicated that NRL failed to disclose
the contributor’s occupation and/or name of employer for 69% of the dollar value of the
itemized contributions that required the disclosure of that information.

The NRL provided solicitation devices that were sent to and returned from contributors.
All of the written solicitations included a request for the contributor’s full name, mailing
address, occupation, and the name of employer as well as the statement that such
reporting was required by Federal law. The Audit staff reviewed contributors’ response
devices and determined that the majority of contributors provided the information as
requested. However, it does not appear that NRL recorded the information in its
electronic records and, consequently, failed to disclose it.

At the exit conference, the NRL representatives explained that in August 2002, NRL
purchased a new software system and, upon the conversion of data, the new system
apparently failed to include information relating to occupation and name of employer.
The representatives agreed to disclose this information by amending the reports.


Explanation of Discrepancies

Opening Cash Balance - 2001

The understatement of beginning cash on hand was the result of unexplained errors

prior to the audit period in the net amount of $1,297.

Receipts — 2001

The understatement of receipts was the result of the following:

¢ Unreported receipts from individuals
¢ Unreported interest income

¢ Unreported vendor refund

¢ Unexplained difference

¢ Understatement

Disbursements — 2001

The understatement of disbursements was the result of the following:

¢ Unreported disbursements
© Unexplained difference
¢ Understatement

Ending Cash Balance - 2001

+ = 193,815
+ 12,450
+ 4,410
>__1L716
$__208,959
+ 97,943

: 3,116

$ 94.827

The understatement of cash on hand in the amount of $112,835 was the result of the

misstatements described above.

2002 Activity

Reported Bank Records* Discrepancy
Opening Cash Balance 357,687 470,522 112,835
Understated
Receipts 1,506,736 1,486,856 (19,880)
Overstated
Disbursements 1,923,475 1,969,409 45,934
Understated
Ending Cash Balance (59,052) (12,031) (47,021)
Understated
Explanation of Discrepancies
Receipts — 2002
The overstatement of receipts was the result of the following:
 Miscalculated total receipts from individuals - 15,634
¢ Unreported in-kind contribution + 4,000
© Unreported interest income + 5,174

e Unexplained difference
© Overstatement

> Net of interaccount transfers.

: 13,420

80,



Part I
Background

Authority for Audit

This report is based on an audit of the National Right to Life Political Action Committee
(NRL), 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 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 U.S.C. §438(b).

Scope of Audit

Following Commission approved procedures, the Audit staff evaluated various factors
and as a result, this audit examined:

The receipt of excessive contributions and loans.

The receipt of contributions from prohibited sources.

The disclosure of contributions received.

The disclosure of disbursements, debts and obligations.

The disclosure of expenses allocated between federal and non-federal accounts.
The consistency between reported figures and bank records.

The completeness of records.

Other committee operations necessary to the review.

PAIDAARWN

Changes to the Law

On March 27, 2002, President Bush signed into law the Bipartisan Campaign Reform Act
of 2002 (BCRA). The BCRA contains many substantial and technical changes to the
federal campaign finance law. Most of the changes became effective November 6, 2002.
Except for the period November 7, 2002, through December 31, 2002, the period covered
by this audit pre-dates these changes. Therefore, the statutory and regulatory
requirements cited in this report are those that were in effect prior to November 7, 2002.


Table of Contents

Part I. Background
Authority for Audit
Scope of Audit
Changes to the Law

Part II. Overview of NRL
Committee Organization
Overview of Financial Activity

Part III. Summaries
Findings and Recommendations

Part IV. Findings and Recommendations
Finding 1. Misstatement of Financial Activity
Finding 2. Itemization of Receipts
Finding 3. Disclosure of Occupation/Name of Employer

Page

NAA


Report of the
Audit Division on the
National Right to Life Political

Action Committee
January 1, 2001 - December 31, 2002

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 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 any of the
matters discussed in this
report.

' 2 U.S.C. §438(b).

About the Committee (p. 2)

The National Right to Life Political Action Committee (NRL) is
a separate segregated fund of National Right to Life, Inc. NRL
qualified for multi-candidate status on July 12, 1979 and is
headquartered in Washington, DC. For more information, see
chart on the Committee Organization, p. 2.

Financial Activity (p. 2)
¢ Receipts

o Contributions

o Other Receipts

o Total Receipts

$ 1,747,628
6,897
$ 1,754,525

¢ Disbursements

o Operating Expenditures $ 234,556
o Contributions to Fed. Candidates 50,910
o Independent Expenditures 1,864,716
o Other Expenditures 61,021
o Total Disbursements $ 2,211,203

Findings and Recommendations (p. 3)

¢ Misstatement of Financial Activity (Finding 1)

¢ Itemization of Receipts (Finding 2)

¢ Disclosure of Occupation/Name of Employer (Finding 3)