Draft Final Audit Report of the 

Audit Division on the Republican 

Party of Minnesota 

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 

(die Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for j 

substantial compl^co 

with die Act.^ TTie audii 

deu'iiiiiiij^ xvliciTicr IIKcommittetrcompiiedi \\ iih 

the limiiaiions, 

prohibit io^>^d 

disclosure^tairements 

of the Act. 

Future Action 

The Commission m%y 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committee (page 2) 

The Republican Party of Minn^la is 'a, state party committee 

headquartered in St. Paul, Minnesota. For more information, see 

chart on Committee OrganM<iii()il< p«ige 2. 

Financial Ac^^l ^ (page 3; 

• Receipts 

ipntributions 

Political C liini i ttee^nti'ibutions 

Transfers from Affiliates 

^ans Received 

Ofl'scis 10 Operating'^^penditures 

1'ransicrs from Nonfe^i;ipi$ccounts 

Ot^r Receipts- 4r 

Total Receipts , 

Disbursemnts 

o Operatin!! L:penditures 

•o I'ederal Mlcciion Activity 

o 'I^^^rs to Affiliates 

o Contributions to Federal Candidates 

o hidependent Expenditures 

o (Coordinated Expenditures 

^ Loan Repayments 

o Contribution Refunds 

o Other Disbursements 

Total Disbursements 

$ 7,089,954 

132,390 

6,297,089 

511,101 

164,596 

1,235,414 

356,761 

$ 15,787,305 

$4,319,592 

8,551,821 

1,262,473 

3,850 

335,266 

80,000 

417,994 

19,810 

419,223 

$ 15,410,029 

Finding and Recommendation (page 5) 

• Misstatement of Financial Activity 

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

Audit Division on the 

Republican Party of Minnesota 

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

Page 

Part I. Backgroimd 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Committee Organization ^ 2 

Overview of Financial Activity ^ 3 

Part III. Sunrniary 

Finding and Recommendation 

4 

Part IV. Finding and Recommendationi 

Misstatement of Financial Activity 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Republican Party of Minnesota (RPM), undertaken 

by the Audit Division of die Federal Election Commission (the Commission) in 

accordance with die 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 pdM||J committee that is 

required to file a report under 2 U.S.C. §434. Prior to conducti^a^audit under this 

subsection, the Commission must perform an intemal revi^^^^orts filed by selected 

conmiittees to determine if the reports filed by a particul^psnmift^ meet the threshold 

requirements for substantial compliance with the Act. 2 U^.C. §4?^ 

Scope of Audit 

Following Commission approved procedures^ic Audit stsif^valuated variy risk 

factors and, as a result, this audit examined: ^ ^ 

1. The disclosure of individual contributors' occup.ii ion i^d name of employer; 

2. The disclosure of disbursements, llcbis und oblig:i( ions: 

3. The disclosure of expenses allocated between federal and nonfederal accounts; 

4. The consistency between reported fibres iintrbiink records: 

5. The completeness of records; and, % 

6. Other committee ojvi iii ic»n* p.ocessary ^#:e review 
Part II 

Overview of Conunittee 

Committee Organization 

Important Dates Republican Party pf Minnesota 

• Date of Registration August 8,1975^ 

• Audit Coverage January 1,2QG^^ December 31,2008 

...^ 

Headquarters St. Paul, Minncsoiu ^ 

\ • 

Banlc Information 

• Bank Depositories 

• Bank Accounts 

Treasurer 

• Treasurer When Audit Was Conducted Andiony Si»i^^9/0 7 - 7/9/09) 

;%md E. Stur^^7/10/09 - Present) 

• Treasurer During Period Covered by -^^^^^^ ^iKTjiilKJrtBerger (1/1/07- 3/18/07) 

^diony^J^Viiion (3/19/07 - 7/9/09) 

4- i r 

Management Informg0b. %^ 

• Attended FEC Campaign Finance Seminar 

• Used Commonly.^vailable (iiiniii.iiun 

Manageirj^Hi Soft\>:a^^ackaac 

^es 

• Who ^^^led Accouffing und > 

Recordkeeping Tasks 

Paid Staff 
Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1,2007 $65 

0 Individual Contributions 7,089,954 

o Political Committee Contributions 132,390 

o Transfers from Affiliates 6,297,089 

o Loans Received ^11.101 

o Offsets to Operating Expenditures . m,596 

o Transfers from Nonfederal Accounts J 1.235,414 

o Other Receipts i56,761 

Total Receipts ^ X.. $15»^ 5 

o Operating Expenditures ' 4,3im2 

o Federal Election Activity 8.551,g!2l 

o Transfers to Affiliates ,1^ l,262,47i ^ 

o Contributions to Federal Candidates ' ^ ^ 3,850^ 

o Independent Expenditures 335,266 

o Coordinated Expenditures 80,000 

o Loan Repayments ^417,994 

o Contribution Refunds % " ^ M ... F ' 19,810 

o Other Disbursements ^ ^ ' 419,223 

Total Disbursements ^ ^ $ 15,410,029 

Cash on hand @ DecemHer 31,200K 1 

4 

^ $377,341 
Part III 

Summary 

Finding and Recommendation 

Misstatement of Financial Activity 

A comparison of RPM's reported financial activity to its bank records revealed an 

understatement of receipts in 2007 by $75,267, an understatem^Sf^isbursements in 

2007 by $71,446 and an understatement of ending cash on h.uul at December 31,2008 of 

$174,238. Most of die reporting errors resulted from unr^n led transfers between 

RPM's federal and nonfederal accounts. Prior to die issii^:e ofi^^terim audit report, 

RPM fded amended reports correcting most of die mis^ements ^^^bove. The 

Audit staff recommended that RPM file amendedjisclosure reports t^^^c t die 

remainder of die misstatements. As a result of alfumende^reports filed, RPM materially 

corrected the misstatements. (For more detail ^cc page 5) 
Part IV 

Finding and Recommendation 

Misstatement of Financial Activity 

Summary 

A comparison of RPM's reported financial activity to its bank records revealed an 

understatement of receipts in 2007 by $75,267, an understatemei^f disbursements in 

2007 by $71,446 and an understatement of ending cash on ha^^^^cember 31,2008 of 

$174,238. Most of the reporting errors resulted from unrepj^^^ansfers between 

RPM's federal and nonfederal accounts. Prior to the issuaSce^phe interim audit report, 

RPM filed amended reports correcting most of the misstat^entsn^^above. The Audit 

staff recommended that RPM file amended disclos^^lpprts to coirc^^e remainder of 

the misstatements. As a result of all amended reports filed, RPM mat^^ty corrected the 

misstatements. d 

Liegal Standard 

Contents of Reports. Each report must disclose: 

• The amount of cash on hand at the'^^^inning and end F@ie reporting period; 

• The total amount of receipts for the r^OFdj^|eriod and lOr tiie calendar year; and 

• The total amount of disbursements fc^ie r^^^^^^rlqd^d for the calendar year; 

• Certain transactions that require itemizatip^n Sche^les A (Itemized Receipts), 

Schedules B (Ite^zod Di>bursements),^iedules H J (Transfers from Nonfederal 

Accounts for Allocated Fcdcral/Nonfeder^^ctivity), or Schedules H4 (Disbursements 

for Allocated Federal/Nonlcdcral Activity)%rtJ.S.C. §434(b)(l), (2), (3), (4), and (5). 

Facts and Analysis 

The A^i t staff reconciled Rl'M''^ reported financial activity to its bank records for 2007 

andJi^^- Below are charts that ouUpi^the discrepancies in both years followed by 

explanations of the misstatcments,^if known. 

2007Acti\ily 

h^-' 1 Reported Bank Records Discrepancy 

Begiiming Cash Bllance 

@ January 1,20^7 

($28,325) $65 $28,390 

Understated 

Receipts $3,556,121 $3,631,388 $75,267 

Understated 

Disbursements $3,185,395 $3,256,841 $71,446 

Understated 

Ending Cash Balance 

@ December 31,2007 

$342,401 $374,612 $32,211 

Understated 
The understatement of receipts resulted from the following: 

• Three unreported transfers from nonfederal accounts 

• Unexplained difference 

Understatement of Receipts 

The understatement of disbursements resulted from die following: 

• Unreported transfer to nonfederal account 

• Unreported Bank Fees 

• Unexplained difference 

Understatement of Disbursements 

$50,853 

24,414 

$75,267 

$50,000 

1,115 

20,331 

$71,446 

RPM transferred $50,000 from a federal accoimt to a nonfe^iul account on October 18, 

2007. On October 24, 2007, RPM transferred $50,000 b^^to the same federal account. 

These transfers were not reported. RPM officials pr^^i^ o exphination for these 

transfers but the Audit staff determined that no noi^i^^ l overfundinf^of federal activity 

resulted. 

/ ... ^ 

2008 Activity 

Reported £tt,Records Discrepancy 

Opening Cash Balance 

@ January 1,2008 

%342.4()1 ^3-4,612 $32,211 

Understated 

Receipts $12,0l^9(r S12.1SB;917 

» •

$152,010 

Understated 

Disbursements $12,149:^ #12,153,188 $3,983 

Understated 

Ending Cash !E(ll:in^^ | 

@ December 31,2008 

f $203,103^^ $377,341 $174,238 

Understated 

On Decei^r 31,2(^ e cash IK.U.MCC was understated mostly as a result of a 2008 

beginning cash imder^^nicnt and unreported receipts. 

The matter w presented to the RPM counsel during the exit conference. The RPM 

counsel acknou ledged the discrepancies in the reports and indicated that the corrections 

would be made as reconmicnded by the auditors. 

Interim Audit Report Recommendation and Committee Response 

The Audit staff recommended that RPM amend its reports to correct the misstatements; 

amend its most recently filed report to correct the cash on hand balance with an 

explanation that the change resulted from a prior period audit adjustment; and reconcile 

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

may impact the $174,238 adjustment recommended by the Audit staff. 

^ RPM's beginning cash on its September Monthly 2008 report was $6,000 greater than its reported ending 

cash on the previous report. As a result of this discrepancy, the amounts in the "Reported" column do not 

total correctly. 
In its response, RPM correctly noted that five transfers from a nonfederal account,^ 

treated as unreported in the interim audit report, were actually reported on amended 

reports prior to the audit. Appropriate adjustments to this finding have been made for 

these items. 

RPM pointed out in its response that amended reports correcting the misstatements were 

filed prior to its receipt of the interim audit report. The Audit staff notes that RPM also 

filed additional amended reports in response to die interim audit report and diat, as a 

result of all amended reports filed, RPM materially corrected the misstatements. These 

amended reports also corrected reported cash on hand. 

^ These transfers totaled $176,527 and all occurred in March 2008.