Interim Audit Report of the 

Audit Division on the Vermont 

Democratic Party 

(January 1, 2009 - December 31, 2010) 

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 matter 

discussed in this report. 

About the Committee (p. 2) 

The Vermont Democratic Party is a state party committee 

headquartered in Montpelier, Vermont. For more information, 

see the chart on the Committee Organization, p. 2. 

Financial Activity (p. 2) 

• Receipts 

• Contributions from Individuals 

• Transfers from Affiliated 

Committees 

• Transfers from Other Political 

Committees 

• Other Receipts 

• Total Receipts 

• Disbursements 

Operating Expenditures 

• Federal Election Activity 

• All Other Disbursements 

Total Disbursements 

$ 544,077 

332,494 

219,000 

89,791 

$ 1,185,362 

$ 762,858 

238,300 

175,576 

$ 1,176,734 

Finding and Recommendation (p. 3) 

• Recordkeeping for Employees 

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

Division on the 

Vermont Democratic Party 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summary 

Finding and Recommendation 3 

Part IV. Finding and Recommendation 

Recordkeeping for Employees 4 
Part I 

Background 

Authority for Audit 

This report is based on an audit of the Vermont Democratic Party (VDP), 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 whether 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 risk factors and 

as a result, this audit examined: 

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

2. the disclosure of disbursements, debts and obligations; 

3. the disclosure of expenses allocated between federal and non-federal accounts; 

4. the consistency between reported figures and bank records; 

5. the completeness of records; 

6. the disclosure of independent expenditures; and 

7. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the "Policy Statement Establishing a Program for Requesting Consideration of Legal 

Questions by the Commission," VDP requested early consideration of a legal question raised 

during the audit. VDP questioned whether the monthly time logs required under 11 C.F.R. 

§ 106.7(d)(1) applied to employees paid with 100 percent federal funds. 

The Commission concluded, by a vote of 5-1, that 11 C.F.R. §106.7(d)(l) does require 

committees to keep a monthly log for employees paid exclusively with federal funds. Exercising 

its prosecutorial discretion, however, the Commission decided it will not pursue recordkeeping 

violations for the failure to keep time logs or to provide affidavits to account for employee 

salaries paid with 100 percent federal funds and reported as such. The Audit staff informed VDP 

Counsel of the Commission's decision on VDP's request. This audit report does not include any 

finding or recommendation with respect to VDP's employees paid with 100 percent federal 

funds and reported as such, excluding amended filings. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration October 20, 1976 

• Audit Coverage January 1,2009 - December 31, 2010 

Headquarters Montpelier, Vermont 

Bank Information 

• Bank Depositories Two 

• Bank Accounts Five federal and two non-federal 

Treasurer 

• Treasurer When Audit Was Conducted Linda Weiss (2/2011 - Present) 

• Treasurer During Period Covered by Audit Michael Inners (7/2006 - 4/2009) 

Edward Frey (4/2009 - 6/2009) 

Lloyd Touchette (6/2009 - 8/2009) 

Edward Clark (8/2009 - 2/2011) 

Management Information 

• Attended Commission Campaign Finance 

Seminar 

Yes 

• Who Handled Accounting and Recordkeeping 

Tasks 

Paid staff and volunteers 

Overview of Financial Activity 

(Audited Amounts) 

Cash-on-hand ® January 1,2009 $ 37,901 

Receipts 

o Contributions from Individuals 544,077 

o Affiliated Committees 332,494 

o Other Political Committees 219,000 

o All Other Receipts 89,791 

Total Receipts $ 1,185,362 

Disbursements 

o Operating Expenditures 762,858 

o Federal Election Activity 238,300 

o All Other Disbursements 175,576 

Total Disbursements $ 1,176,734 

Cash-on-hand @ December 31,2010 $ 46,529 
Part III 

Summary 

Finding and Recommendation 

Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that VDP did not maintain any 

monthly logs, as required, to document the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the Audit staff identified payments to VDP 

employees totaling $203,472, for whom VDP was required to maintain monthly payroll 

logs. All of the VDP employees were originally disclosed as having been paid with an 

allocation of federal and non-federal funds. After the exit conference, VDP amended its 

reports to disclose payments to employees as federal election activity. For VDP 

employees paid with an allocation of federal and non-federal funds, and/or non-federal 

funds, the Audit staff recommends that VDP implement a plan to maintain monthly 

payroll logs to track the percentage of time each employee spends on federal election 

activity. (For more details, see p. 4) 
Part IV 

Finding and Recommendation 

I Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that VDP did not maintain any 

monthly logs, as required, to document the percentage of time each employee spent on 

federal election activity. For 2009 and 2010, the Audit staff identified payments to VDP 

employees totaling $203,472, for whom VDP was required to maintain monthly payroll 

logs. All of the VDP employees were originally disclosed as having been paid with an 

allocation of federal and non-federal funds. Afier the exit conference, VDP amended its 

reports to disclose payments to employees as federal election activity. For VDP 

employees paid with an allocation of federal and non-federal funds, and/or non-federal 

funds, the Audit staff recommends that VDP implement a plan to maintain monthly 

payroll logs to track the percentage of time each employee spends on federal election 

activity. 

Legal Standard 

Maintenance of Monthly Logs. Party committees must keep a monthly log of the 

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be determined as follows: 

• employees who spend 25 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or be allocated as administrative costs; 

• employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and 

• employees who spend none of their compensated time in a given month on federal 

election activities may be paid entirely with funds that comply with state law. 11 

CFR§106.7(d)(l). 

Facts and Analysis 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements for payroll. VDP did not 

maintain any monthly logs or equivalent records to document the percentage of time each 

employee spent in connection with federal election activity. These logs are required to 

document the proper allocation of federal and non-federal funds used to pay employees. 

For 2009 and 2010, logs were required for $203,472 in payroll.^ All of these individuals 

were originally disclosed as having been paid with an allocation of federal and nonfederal funds. VDP had no employees paid with exclusively non-federal funds. 

Payroll is stated net of taxes and benefits. 
B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the payroll recordkeeping matter with VDP representatives 

during audit fieldwork and at the exit conference. VDP representatives stated that they 

were unable to locate the documentation requested and explained that these payroll 

expenditures were reported erroneously as shared federal/non-federal activity, instead of 

solely federal. Further, they stated plans to correct this error by comprehensively 

amending their reports and disclosing these expenditures as strictly federal activity. The 

Audit staff verified that the VDP had sufficient federal funds to cover both the federal 

and non-federal share of payroll costs. Afier the exit conference, VDP filed amended 

reports to disclose the payroll as federal election activity paid entirely with federal funds. 

For VDP employees paid with an allocation of federal and non-federal funds, and/or nonfederal funds, the Audit staff recommends that, within 30 calendar days of service of this 

report, VDP provide and implement a plan to maintain monthly payroll logs to track the 

percentage of time each employee spends on federal election activity.