Draft Final Audit Report of the 

Audit Division on 

Brian Higgins for Congress 

(Januaiy 1, 2015 - December 31, 2016) 

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 

sutetantial 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 ah enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Campaign (p. 2) 

Brian Higgins for Congress is the principal campaign committee 

for Brian Higgins, Democratic candidate for the United States 

House of Representatives from the state of New York, 26th 

Congressional District, and is headquartered in Buffalo, New 

York. For more information, see the Campaign Organization 

chart, p. 2. 

Financial Activity (p. 2) 

• Receipts 

o Contributions from Individuals 

o Contributions from Political 

Committees 

o Other Receipts 

Total Receipts 

• Disbunements 

o Operating Expenditures 

o Transfers to Other Authorized 

Committees 

o Other Disbursements 

Total Disbursements 

$455,744 

338,581 

1,167 

S 795^92 

$390,111 

118,500 

111,386 

$619,997 

Findings aiid Recommendations (p. 3) 

• Misstatement of Financial Activity (Finding I) 

• Receipt of Contributions in Excess of the Limit (Finding 2) 

52U.S.C.§30in(b). 
Draft final Audit Report of the 

i Audit Division on 

Brian Higgins for Congress 

(January 1, 2015 - December 31, 2016) 

A 
Table of Contents 

Page 

Parti. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 2 

Part III. Summaries 

Findings and Recommendations 3 

Part IV. Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 4 

Finding 2. Receipt of Contributions in Excess of the Limit S 
Part I 

Background 

Authority for Audit 

This report is based on an audit of Brian Higgins for Congress (BHFC), 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. §30111(b), which permits the 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report under 52 U.S.C. §30104. 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. 52 U.S.C. §30111(b). 

Scope of Audit 

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

factors and as a result, this audit examined: 

1. the receipt of excessive contributions; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

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

5. the consistency between reported figures and bank records; 

6. the completeness of records; and 

7. other committee operations necessary to the review. 
Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Dateof Reeistration May 17,2004 

• Audit Coverage January 1,201S - December 31,2016 

HeadquartCFS BufTalo. New York 

Bank Information 

• Bank Depositories One 

• Bank Accounts Two federal checking, one savingsTreasurer 

• Treasurer When Audit Was Conducted Gary Kanaley (June 3,200S - August 23, 

2017) 

Holly Giarraputo (August 24,2017 -

Present) 

• Treasurer During Period Covered by Audit Gary Kanaley (June 3,200S - August 23, 

2017) 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff and Volunteer 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ^ January 1,2015 $ 584.769 

Receipts 

o Contributions from Individuals 455,744 

o Contributions from Political Committees 338,581 

o Other Receipts 1.167 

Total Receipts S 795,492 

Disbursements 

o Operating Expenditures 390.111 

o Transfers to Other Authorized Committees 118.500 

o Other Disbursements 111.386 

Total Disbursements $ 619.997 

Cash-on-hand @ December 31,2016 S 760,264 
paitni 

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity 

During audit fieldwork, a comparison of BHFC's reported financial activity with its bank 

records revealed a misstatement of the beginning and ending cash balances for calendar 

years 2015 and 2016. In 2015, BHFC overstated its beginning and ending cash balances 

by $36,151 and $38,560, respectively. In 2016, BHFC overstated its beginning and 

ending cash balances by $38,560 and $36,242, respectively. In response to the Interim 

Audit Report recorrunendation, BHFC amended its most recently filed disclosure report 

to correct the cash balance. (For more detail, see p. 4.) . 

Finding 2. Receipt of Contributions in Excess of the Limit 

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit This review indicated that BHFC 

received apparent excessive contributions totaling $41,424. These errors occurred as a 

result of BHFC not resolving the excessive portions of contributions by forwarding 

presumptive redesignation or reattribution letters to its contributors, obtaining signed 

redesignation or reattribution letters from its contributors, or issuing refunds of the 

excessive portions of contributions in a timely manner. In response to the exit 

conference, BHFC untimely resolved excessive contributions from individuals totaling 

$36,024. In response to^the Interim Audit Report recommendation, BHFC provided a 

completed reattribution letter from the contributors which untimely resolved the 

remaining excessive contributions. (For more detail, see p. 5.) 
Part IV 

Findings and Recommendations 

I Finding 1. Misstatement of Financial Activity 

Suminuy 

During audit fieldwotk, a comparison of BHFC's reported financial activity with its bank 

records revealed a misstatement of the beginning and ending cash balances for calendar 

years 201S and 2016. In 201S, BHFC overstated its beginning and ending cash balances 

by $36,151 and $38,560, respectively. In 2016, BHFC overstated its beginning and 

ending cash balances by $38,560 and $36,242, respectively. In response to the Interim 

Audit Report recommendation, BHFC amended its most recently filed disclosure report 

to correct the cash balance. 

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 election cycle; and 

• The total amount of disbursements for the reporting period and for the election cycle; 

52 U.S.C. §30104(b)(l). (2), and (4). 

Facta and Anal3rBls 

A. Facts 

During audit fieldwork, the Audit staff reconciled BHFC's reported financial activity 

with its bank records for calendar years 2015 and 2016. This review indicated that, in 

2015, the beginning and ending cash balances were overstated by $36,151 and $38,560, 

respectively. Further, the review indicated that, in 2016, the beginning and ending cash 

balances were overstated by $38,560 and $36,242, respectively. The cash balance 

discrepancies for 2015 and 2016 resulted primarily from prior period adjustments, as well 

as, minor misstatements of both receipts and disbursements during the audit period. 

B. Interim Audit Report A Audit Division Recommendation 

The Audit staff discussed the misstatements for 2015 and 2016 with BHFC 

representatives during the exit conference and provided copies of relevant workpapers 

detailing the misstatements. In response, BHFC representatives stated that it intended to 

file amendments. 

The Interim Audit Report recommended that BHFC amend its most recently filed 

disclosure report to correct the cash balance with an explanation that the change resulted 

from prior period adjustments. It was further recommended that BHFC reconcile the 

ending cash balance of its most recent report to identify any subsequent discrepancies 

that would affect the adjustment recommended by the Audit staff. 
C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, BHFC amended its most 

recently filed disclosure report to correct the cash balance. 

I Finding 2. Receipt of Contributions in EKCCSS of the Limit | 

Summary 

During audit fieldwork, the Audit stafT reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review indicated that BHFC 

received apparent excessive contributions totaling $41,424. These errors occurred as a 

result of BHFC not resolving the excessive portions of contributions by forwarding 

presumptive redesignation or reattribution letters to its contributors, obtaining signed 

redesignation or reattribution letters from its contributors, or issuing refunds of the 

excessive portions of contributions in a timely manner. In response to the exit 

conference, BHFC untinriely resolved excessive contributions from individuals totaling 

$36,024. In response to ithe Interim Audit Report recommendation, BHFC provided a 

completed reattribution letter from the contributors which untimely resolved the 

remaining excessive contributions. 

Legal Standard 

A. Authorized Committee Limits. An authorized committee may not receive more 

than a total of $2,700 per election from any one person or $5,000 per election from a 

multicandidate political committee. 52 U.S.C §30II6; 11 CFR §§110.1(a) and (b) 

and 110.9(a). 

B. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either: 

• Return the questionable check to the donor; or 

• Deposit the check into its federal account and: 

• Keep enough money in the account to cover all potential refunds or 

establish a separate account in a campaign depository for such 

contributions; 

• Keep a written record explaining why the contribution may be illegal; 

• Include this explanation on Schedule A if the contribution has to be 

itemized before its legality is established; 

• Seek a reattribution or a r^esignation of the excessive portion, following 

the instructions provided in the Commission regulations (see below for 

explanations of reattribution and redesignation); and 

• If the committee does not receive a proper reattribution or redesignation 

within 60 days after receiving the excessive contribution, refund the 

excessive portion to the donor. 11 CFR §§103.3(b)(3), (4) and (5) and 

110.1(kX3)(ii)(B). 

C. Joint Contributions. Any contribution iruule by more than one person, except for a 

contribution made by a partnership, must include the signature of each contributor on 

the check, money order, or other negotiable instrument or in a separate writing. A 
6 

joint contribution is attributed equally to each donor unless a statement indicates that 

the funds should be divided differently. 11 CFR §110.1(kX1) and (2). 

D. Reattribution of Excessive Contributions. The Commission regulations permit 

committees to ask donors of excessive contributions (or contributions that exceed the 

committee's net debts outstanding) whether they had intended their contribution to be 

a joint contribution from more than one person and whether they would like to 

reattribute the excess amount to the other contributor. The committee must Inform 

the contributor that: 

• The reattribution must be signed by both contributors; 

• The reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and 

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

§110.1(k)(3). 

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

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

§§103.3(b)(3) and 110.1(k)(3)(ii)(B). Further, a political committee must retain 

written records concerning the reattribution in order for it to be effective. 11 CFR 

§110.1(1)(5). 

Notwithstanding the above, uiy excessive contribution that was made on a written 

instrument that is imprinted with the names of more than one individual may be 

presumptively attributed among the individuals listed unless instructed otherwise by 

the contributor(s). The committee must inform each contributor: 

• How the contribution was attributed; and 

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

§110.1(k)(3)(B). 

E. 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: 

• The redesignation must be signed by the contributor; 

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

committee received the original contribution; and 

• 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(bX3) and 110. l(b)(S)(ii)(A). Further, a political committee must retain 

written records concerning the r^esignation in order for it to be effective. 11 CFR 

§110.1(l)(5). 
When an individual makes an excessive contribution to a candidate's authorized 

I committee, the campaign may presumptively redesignate the excessive portion to the 

j general election if the contribution: 

• Is made before that candidate's primary election; 

• Is not designated in writing for a particular election; 

• Would be excessive if treated as a primary election contribution; and 

• As redesignated, does not cause the contributor to exceed any other contribution 

limit. 11 CFR §110.1(b)(5)(ii)(B)(lH4). 

The committee is required to notify the contributor of the redesignation within 60 

days of the treasurer's receipt of the contribution, and must offer the contributor the 

option to receive a refund instead. 

Facts and Analirsis 

A. Facts 

During audit fieldwork, the Audit staff utilized sample testing and a review of other 

contributions not included in the sample population to identify apparent excessive 

contributions from individuals. These reviews revealed that BHFC received apparent 

excessive contributions from individuals totaling $41,424. This included contributions 

that could still be resolved, albeit untimely, via written presumptive reattribution or 

redesignation notifications to the contributors ($35,964^). The remaining excessive 

contributions ($5,460^) could only be timely resolved tlrough demonstration that timely 

redesignation and/or reattribution letters were sent and signed by the contributors. If sent 

in response to the audit, these excessive contributions would be untimely resolved by 

BHFC. 

The excessive contributions that could still be resolved by BHFC ($35,964) were the 

result of BHFC not resolving the excessive portion of contributions by timely forwarding 

a presumptive letter to its contributors informing them how their contribution had been 

redesignated and/or reattributed, or refunding the excessive portion of contributions. 

For the remaining excessive contributions ($5,460), these errors were the result of BHFC 

reattributing the excessive portion of contributions written on checks imprinted with a 

single account holder to another individual without authorization from its contributors. 

BHFC did not maintain a separate account for questionable contributions. However, 

based on its cash-on-hand at the end of the audit period ($760,264), it appears that BHFC 

did maintain sufficient funds to make refunds of the apparent excessive contributions. 

' The sample error amount ($13,864) was projected using a Monetary Unit Sample with a 95 percent 

confidence level. A review of high dollar contributions not includ^ in the sample error population 

identified excessive contributions totaling $22,100. The sample estimate could be as low as $7,638 or as 

high as $23,955. 

^ In addition to the $22,100 that could be resolved with a prraumptive letter, the review of high dollar 

contributions identified excessive contributions totaling $5,460 that could be resolved via a 

redesignation, reattribution, and/or refund to the contributor. 
8 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with BHFC representatives at the exit conference 

and provided schedules of the apparent excessive contributions. BHFC representatives 

asked questions regarding the presumptive reattribution and/or redesignation letters that 

could be issued. The Audit staff explained that the presumptive letters sent in response to 

the exit conference would untimely resolve the excessive contributions of $35,964. 

In response to the exit conference, BHFC representatives submitted presumptive 

reattribution and redesignation letters that were sent to all the contributors identified by 

the Audit staff as having given apparent excessive contributions. In addition, BHFC 

reviewed its contribution records and identified an additional 9 contributions. BHFC sent 

letters to these contributors as well and submitted them to the Audit staff for review. As 

such, the Audit staff concludes that BHFC has untimely resolved all excessive 

contributions which could have been remedied with a presumptive reattribution and/or 

redesignation letter. 

For the excessive amount of $5,460, BHFC representatives provided documentation 

demonstrating that some of the excessive portion ($60) has been refunded, albeit 

untimely. However, the remaining $5,400 had not been reattributed and remained 

unresolved. 

The Interim Audit Report recommended that BHFC provide documentation which 

demonstrated that the unresolved excessive contributions in question, totaling $5,400, 

were resolved through the receipt of authorization from its contributors or refunded. 

Absent such demonstration, it was further recommended that BHFC refund the 

contributions and provide evidence of such refunds or disgorge the funds. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, BHFC untimely resolved the 

remaining excessive contributions ($5,400) by providing a completed reattribution letter 

from its contributors. As such, all ±e excessive contributions have been resolved by 

BHFC, albeit untimely.