2013 Lobbying Disclosure: Observations on Lobbyists' Compliance with Disclosure Requirements
Published: 2014-05-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The LDA requires lobbyists to file quarterly lobbying disclosure reports and semiannual reports on certain political contributions. The LDA also requires that GAO annually (1) audit the extent to which lobbyists can demonstrate compliance with disclosure requirements, (2) identify challenges to compliance that lobbyists report, and (3) describe the resources and authorities available to the Office in its role in enforcing LDA compliance and the efforts the Office has made to improve enforcement. This is GAO's seventh report under the mandate.
GAO reviewed a stratified random sample of 104 quarterly disclosure LD-2 reports filed for the third and fourth quarters of 2012 and the first and second quarters of calendar year 2013. GAO also reviewed two random samples totaling 160 LD-203 reports from year-end 2012 and midyear 2013. This methodology allowed GAO to generalize to the population of 65,489 disclosure reports with $5,000 or more in lobbying activity and 31,482 reports of federal political campaign contributions. GAO also met with officials from the Office to obtain updated statuses on the Office's efforts to focus resources on lobbyists who fail to comply.
GAO provided a draft of this report to the Attorney General for review and comment. On behalf of the Attorney General, the Assistant U.S. Attorney for the District of Columbia responded that the Department of Justice had no comments.
section_title: What GAO Found
paragraphs: Most lobbyists provided documentation for key elements of their disclosure reports to demonstrate compliance with the Lobbying Disclosure Act of 1995, as amended (LDA). For lobbying disclosure (LD-2) reports and political contribution (LD-203) reports GAO estimated the following:
Ninety-six percent of newly registered lobbyists filed LD-2 reports as required. Lobbyists are required to file LD-2 reports for the quarter in which they first register.
Ninety-six percent could provide documentation for income and expenses. However, 33 percent of these LD-2 reports were not properly rounded to the nearest $10,000.
Ninety-two percent filed year-end 2012 or midyear 2013 LD-203 reports as required.
Seventeen percent of all LD-2 reports did not properly disclose one or more previously held covered position as required.
Four percent of all LD-203 reports omitted one or more reportable political contributions that were documented in the Federal Election Commission database.
These findings are generally consistent with GAO's reviews from 2010 through 2012 and can be generalized to the population of disclosure reports.
Most lobbyists in GAO's sample rated the terms associated with LD-2 reporting as “very easy” or “somewhat easy” to understand with regard to meeting reporting requirements. However, some disclosure reports demonstrate compliance difficulties, such as failure to disclose covered positions or misreporting of income or expenses. In addition, lobbyists amended 18 of 104 original disclosure reports in GAO's sample to change previously reported information.
The U.S. Attorney's Office for the District of Columbia (the Office) stated it has sufficient authority and resources to enforce LD-2 and LD-203 compliance with the LDA for lobbying firms and certain individual lobbyists. It has one contract paralegal working full time and six attorneys working part time on LDA enforcement issues. The Office continues its efforts to follow up on referrals for noncompliance with lobbying disclosure requirements by contacting lobbyists by e-mail, telephone, and letter. In March 2014, the Office filed a civil complaint against a lobbyist for failure to comply with LDA reporting requirements.
GAO's first report on lobbying disclosure under the LDA concluded that the lobbying community could benefit from creating an entity to share examples of best practices, provide training, and report annually on opportunities to clarify guidance and minimize sources of potential confusion for the lobbying community. Given the ongoing difficulties with compliance, GAO continues to believe that such an entity could be useful to the lobbying community.

section_title: Letter
paragraphs: Questions regarding the influence of special interests in the formation of  government policy have led to a move toward more transparency and  accountability with regard to the lobbying community. The Honest  Leadership and Open Government Act of 2007 (HLOGA) amended the  Lobbying Disclosure Act of 1995 to require lobbyists to file quarterly  lobbying disclosure reports and semiannual reports on certain political  contributions and increased civil and criminal penalties for failure to  comply with lobbying disclosure requirements. The mandate requires us  to audit the extent of lobbyists’ compliance with the Lobbying Disclosure  Act of 1995, as amended (LDA) by reviewing publicly available lobbying  registrations and a random sampling of reports filed during each calendar  year. Our report shall include any recommendations related to improving  lobbyists’ compliance with the LDA and information on resources and  authorities available to the U.S. Attorney’s Office for the District of  Columbia (the Office) for effective enforcement of the LDA. This is our  seventh mandated review of lobbyists’ disclosure reports filed under the  LDA.
Consistent with our mandate, our objectives were to: (1) determine the  extent to which lobbyists can demonstrate compliance with the  requirements for registrations and reports filed under the LDA; (2) identify  challenges and potential improvements to compliance by lobbyists,  lobbying firms, and registrants, if any; and (3) describe the resources and  authorities available to the Office in its role in enforcing LDA compliance  and the efforts the Office has made to improve enforcement.
To fulfill our audit requirement in HLOGA, we took the following steps:
To determine the extent to which lobbyists can demonstrate  compliance, we examined a stratified random sample of 102 quarterly  lobbying disclosure (LD-2) reports with income and expenses of  $5,000 or more filed during the third and fourth quarters of calendar  year 2012 and the first and second quarters of calendar year 2013.  We selected the randomly sampled reports from the publicly  downloadable database maintained by the Clerk of the House of  Representatives (Clerk of the House). Appendix II contains a list of  lobbyists (registrants and clients) whose LD-2 reports we selected.  This methodology allows us to generalize to the population of LD-2  reports. We then contacted each lobbyist or lobbying firm in our  sample and asked them to provide written documentation for key  elements of their LD-2 reports, including the amount of money  received for lobbying activities, the houses of Congress or executive  branch agencies lobbied, lobbying issue areas, and lobbyists reported  as having worked on the issues. We also reviewed whether lobbyists  listed on the LD-2 reports properly disclosed prior covered official  positions and whether the lobbyists filed the semiannual report of  federal political contributions. Of the lobbyists contacted, all in-scope  lobbyists in our sample responded to our requests to meet with us to  review documentation.
To determine whether lobbyists reported their federal political  contributions as required by the LDA, we analyzed stratified random  samples of year-end 2012 and midyear 2013 semiannual political  contributions (LD-203) reports. The samples contain 80 LD-203  reports that list contributions and 80 LD-203 reports that do not. We  selected the randomly sampled reports from the publicly  downloadable contributions database maintained by the Clerk of the  House. See appendix III for a list of lobbyists and lobbying firms  randomly selected for our review of LD-203 reports. We then checked  the contributions reported in the Federal Election Commission’s (FEC)  database against those identified in our sample to determine whether  all contributions reported in the FEC database also appeared on the  LD-203 reports, as required. We contacted lobbyists and asked them  to provide documentation to clarify differences we observed. All  lobbyists complied with our request to provide documentation. This  methodology allows us to generalize to the population of LD-203  reports both with and without contributions.
To determine whether registrants were meeting the requirement to file  an LD-2 report for the quarter in which they registered, we compared  new registrations (LD-1) filed in the third and fourth quarters of 2012  and the first and second quarters of 2013 to the corresponding LD-2  reports on file with the Clerk of the House.
To identify challenges and potential improvements to compliance, we  used a structured online survey to obtain views from lobbyists  included in our sample of reports. In addition, we considered reporting  difficulties that became apparent during our reviews of lobbyists’  documentation.
To describe the resources and authorities available to the Office and  its efforts to improve LDA enforcement, we interviewed Office officials  and obtained updated information about the capabilities of the Office’s  systems to track enforcement and compliance trends and referral data  that it receives from the Secretary of the Senate and Clerk of the  House.
The mandate does not require us to identify lobbyist organizations that  failed to register and report in accordance with LDA requirements. The  mandate also does not require us to determine whether reported lobbying  activity or political contributions represented the full extent of lobbying  activities that took place.
We conducted this performance audit from June 2013 to May 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. For more details on our  methodology, see appendix I.
subsections: section_title: Background
paragraphs: The LDA, as amended by HLOGA, requires lobbyists to register with the  Secretary of the Senate and the Clerk of the House and file quarterly  reports disclosing their lobbying activity. Lobbyists are required to file their  registrations and reports electronically with the Secretary of the Senate  and the Clerk of the House through a single entry point. Registrations and  reports must be publicly available in downloadable, searchable databases  from the Secretary of the Senate and the Clerk of the House. No specific  statutory requirements exist for lobbyists to generate or maintain  documentation in support of the information disclosed in the reports they  file. However, guidance issued by the Secretary of the Senate and the  Clerk of the House recommends that lobbyists retain copies of their filings  and supporting documentation for at least 6 years after they file their  reports.
The LDA requires that the Secretary of the Senate and the Clerk of the  House provide guidance and assistance on registration and reporting  requirements and develop common standards, rules, and procedures for  LDA compliance. The Secretary and the Clerk of the House review the  guidance semiannually. It was last reviewed December 12, 2013, and  revised February 15, 2013. The guidance provides definitions of LDA  terms, elaborates on the registration and reporting requirements, includes  specific examples of different scenarios, and explains why certain  scenarios prompt or do not prompt disclosure under the LDA. The  Secretary of the Senate and Clerk of the House told us they continue to  consider information we report on lobbying disclosure compliance when  they periodically update the guidance. In addition, they told us they send  quarterly e-mails to registered lobbyists that address common compliance  issues as well as reminders to file reports by the due dates.
The LDA defines a lobbyist as an individual who is employed or retained  by a client for compensation, who has made more than one lobbying  contact (written or oral communication to a covered executive or  legislative branch official made on behalf of a client), and whose lobbying  activities represent at least 20 percent of the time that he or she spends  on behalf of the client during the quarter. Lobbying firms are persons or  entities that have one or more employees who lobby on behalf of a client  other than that person or entity.
Organizations employing in-house lobbyists file only one registration. An organization is  exempt from filing if total expenses in connection with lobbying activities are not expected  to exceed $12,500. Amounts are adjusted for inflation and published in LDA guidance. reported income (or expenses for organizations with in-house  lobbyists) related to lobbying activities during the quarter (rounded to  the nearest $10,000).
The LDA also requires lobbyists to report certain political contributions  semiannually in the LD-203 report. These reports must be filed 30 days  after the end of a semiannual period by each lobbying firm registered to  lobby and by each individual listed as a lobbyist on a firm’s lobbying  report. The lobbyists or lobbying firms must:  list the name of each federal candidate or officeholder, leadership  political action committee, or political party committee to which they  made contributions equal to or exceeding $200 in the aggregate  during the semiannual period;  report contributions made to presidential library foundations and  presidential inaugural committees;  report funds contributed to pay the cost of an event to honor or  recognize a covered official, funds paid to an entity named for or  controlled by a covered official, and contributions to a person or entity  in recognition of an official or to pay the costs of a meeting or other  event held by or in the name of a covered official; and  certify that they have read and are familiar with the gift and travel  rules of Congress and that they have not provided, requested, or  directed a gift or travel to a member, officer, or employee of Congress  that would violate those rules.
The Secretary of the Senate, the Clerk of the House, and the Office are  responsible for ensuring compliance with the LDA. The Secretary of the  Senate and the Clerk of the House notify lobbyists or lobbying firms in  writing that they are not complying with reporting requirements in the LDA  and subsequently refer those lobbyists who fail to provide an appropriate  response to the Office. The Office researches these referrals and sends  additional noncompliance notices to the lobbyists or lobbying firms,  requesting that they file reports or terminate their registration. If the Office  does not receive a response after 60 days, it decides whether to pursue a  civil or criminal case against each noncompliant lobbyist. A civil case  could lead to penalties up to $200,000, while a criminal case—usually  pursued if a lobbyist’s noncompliance is found to be knowing and  corrupt—could lead to a maximum of 5 years in prison.
section_title: Most Newly Registered Lobbyists Filed Disclosure Reports as Required
paragraphs: Of the 3,034 new registrants we identified for the time periods  corresponding to our review, we matched 2,925 reports (96 percent) of  registrations filed in the first quarter in which they were first registered.  These results are consistent with prior reviews. To determine whether  new registrants were meeting the requirement to file, we matched newly  filed registrations in the third and fourth quarters of 2012 and the first and  second quarters of 2013 from the House Lobbyists Disclosure Database  to their corresponding quarterly disclosure reports. We did this using an  electronic matching algorithm that allows for misspellings and other minor  inconsistencies between the registrations and reports. Figure 1 shows  that most newly registered lobbyists filed their disclosure reports as  required from 2010 through 2013.
subsections: section_title: For Most LD-2 Reports Lobbyists Provided Documentation for Key Elements, but for Some LD-2 Reports Lobbyists Rounded Their Income or Expenses Incorrectly
paragraphs: For selected elements of lobbyists’ LD-2 reports that can be generalized  to the population of lobbying reports, unless otherwise noted, our findings  were consistent from year to year. We used tests that adjusted for  multiple comparisons to assess the statistical significance of changes  over time.
Most lobbyists reporting $5,000 or more in income or expenses provided  written documentation to varying degrees for the reporting elements in  their disclosure reports. For this year’s review, lobbyists for an estimated  96 percent of LD-2 reports (98 out of 102) provided written documentation  for the income and expenses reported for the third and fourth quarters of  2012 and the first and second quarters of 2013. The most common forms  of documentation provided included invoices for income and internal  expense reports for expenses. Figure 2 shows that for most LD-2 reports,  lobbyists provided documentation for income and expenses for sampled  reports from 2010 through 2013.
Figure 3 shows that for some LD-2 reports, lobbyists rounded their  income or expenses incorrectly. We identified 33 percent of reports as  having rounding errors. On 13 percent of those reports, lobbyists reported  the exact amount of lobbying income or expenses instead of rounding to  the nearest $10,000 as required. Rounding difficulties has been a  recurring issue from 2010 through 2013.
The LDA requires lobbyists to disclose lobbying contacts made to  executive branch agencies on behalf of the client for the reporting period.  This year, of the 102 LD-2 reports in our sample, 42 LD-2 reports  disclosed lobbying activities at executive branch agencies. Of those,  lobbyists provided documentation for all lobbying activities at executive  branch agencies for 30 LD-2 reports.
Figures 4 through 7 show that lobbyists for most LD-2 reports were able  to provide documentation for selected elements of their LD-2 reports from  2010 through 2013.
section_title: For Most LD-2 Reports, Lobbyists Filed LD-203 Reports for All Listed Lobbyists
paragraphs: Lobbyists for an estimated 92 percent of LD-2 reports filed year-end 2012  or midyear 2013 LD-203 reports for all lobbyists and lobbying firms listed  on the report as required. Figure 8 shows that lobbyists for most lobbying  firms filed contribution reports for lobbyists and lobbying firms as required  for LD-2 reports from 2010 through 2013. All individual lobbyists and  lobbying firms reporting lobbying activity are required to file LD-203  reports semiannually, even if they have no contributions to report,  because they must certify compliance with the gift and travel rules.
section_title: For Some LD-2 Reports, Lobbyists Failed to Disclose Covered Positions
paragraphs: The LDA requires a lobbyist to disclose previously held covered positions  when first registering as a lobbyist for a new client. This can be done  either on the LD-1 or on the LD-2 quarterly filing when added as a new  lobbyist. This year, we estimate that 17 percent of all LD-2 reports did not  properly disclose one or more previously held covered positions as  required. Figure 9 shows the extent to which lobbyists failed to properly  disclose one or more covered positions as required from 2010 through  2013.
section_title: Some Lobbyists Amended Their Disclosure Reports After We Contacted Them
paragraphs: As of April 10, 2014, lobbyists amended 18 of the 104 disclosure reports  in our original sample to make changes to previously reported  information. One of the 18 reports was amended twice—once after we  notified the lobbyists of our review and again after we met with them. An  additional 7 of the 18 reports were amended after we notified the  lobbyists of our review, but before we met with them. Finally, an additional  10 of the 18 reports were amended after we met with the lobbyists to  review their documentation. We cannot be certain how lobbyists not in our  sample would have behaved had they not been contacted by us.  However, the notable number of amended LD-2 reports in our sample  each year following notification of our review suggests that sometimes our  contact spurs lobbyists to more closely scrutinize their reports than they  would have without our review.
Table 1 lists reasons lobbying firms in our sample amended their LD-1 or  LD-2 reports.
section_title: Most LD-203 Contribution Reports Disclosed Political Contributions Listed in the FEC Database
paragraphs: As part of our review, we compared contributions listed on lobbyists’ and  lobbying firms’ LD-203 reports against those political contributions  reported in the FEC database to identify whether political contributions  were omitted on LD-203 reports in our sample. The sample of LD-203  reports we reviewed originally contained 80 reports with contributions and  80 reports without contributions. We estimate that overall, for 2013,  lobbyists failed to disclose one or more reportable contributions on 4  percent of reports. Table 2 illustrates that most lobbyists disclosed FEC  reportable contributions on their LD-203 reports as required from 2010  through 2013.
section_title: Most Lobbying Firms Found It Easy to Comply with Disclosure Requirements and Understood Lobbying Terms
paragraphs: As part of our review, 92 different lobbying firms were included in our  2013 sample. Consistent with prior reviews, most lobbying firms  reported that they found it very easy or somewhat easy to comply with  reporting requirements. Of the 92 different lobbying firms in our sample,  20 reported that the disclosure requirements were “very easy,” 59  reported them “somewhat easy,” and 9 reported them “somewhat difficult”  or “very difficult” (see figure 10).
Most lobbyists we interviewed rated the terms associated with LD-2  reporting requirements as “very easy” or “somewhat easy” to understand  with regard to meeting their reporting requirements. This is consistent  with prior reviews. Figures 11 through 15 show how lobbyists reported  ease of understanding the terms associated with LD-2 reporting  requirements from 2010 through 2013.
section_title: U.S. Attorney’s Office Actions to Enforce LDA
subsections: section_title: The Office’s Authorities, Processes, and Resources to Enforce LDA Compliance
paragraphs: The Office stated it continues to have sufficient personnel resources and  authority under the LDA to enforce LD-2 reporting requirements, including  imposing civil or criminal penalties for noncompliance of LD-2 reporting.  Noncompliance refers to a lobbyist’s or lobbying firm’s failure to comply  with LDA requirements. According to the Office, it has one contract  paralegal specialist assigned full time, as well as five civil attorneys and  one criminal attorney assigned part time for LDA compliance work. In  addition, the Office stated that it participates in a government-wide  program that provides temporary access to attorneys to assist with LDA  compliance. The temporarily assigned attorneys work with the contract  paralegal specialist to contact referred lobbyists or lobbying firms who do  not comply with the LDA.
According to the Office, it has sufficient authority to enforce LD-203  compliance with the LDA for lobbying firms and certain individual  lobbyists. However, it has difficulty pursuing hundreds of LD-203 referrals  that arise when a lobbying firm does not maintain or a lobbyist does not  leave forwarding contact information upon leaving the firm. The LD-203  report does not provide contact information. It only provides the name of  the lobbyist and lobbying firm. As a result, the Office does not have  contact information to find the referred lobbyist to bring him or her into  compliance. Office officials reported that many firms have assisted them  by providing contact information for lobbyists, and only a few firms have  not been willing to provide contact information for noncompliant lobbyists.  Additionally, the Office stated that because the current structure of the  LDA requires registered lobbyists to file their LD-203 reports and does not  require lobbying firms to ensure that their registered lobbyists have  complied with LD-203 filing requirements, the Office has no authority to  hold lobbying firms responsible for a registered lobbyist who fails to  comply with LD-203 requirements. Accordingly, when the Office does not  have contact information to find a lobbyist who left the firm and it cannot  hold the lobbying firm responsible for the lobbyist’s noncompliance with  lobbying disclosure requirements, the Office has no recourse to pursue  enforcement action.
In a prior report, we recommended that the Office develop a structured  approach for tracking and recording its enforcement actions. The Office  developed the LDA database to track the status of referrals and  enforcement actions it takes to bring lobbyists and lobbying firms into  compliance with the LDA. To enforce compliance, the Office has primarily  focused on sending letters to lobbyists who have potentially violated the  LDA by not filing disclosure reports as required. The letters request  lobbyists to comply with the law by promptly filing the appropriate  disclosure reports and inform lobbyists of potential civil and criminal  penalties for not complying. In addition to sending letters, a contractor  sends e-mails and calls lobbyists to inform them of their need to comply  with LDA reporting requirements. Not all referred lobbyists receive  noncompliance letters, e-mails, or phone calls because some of the  lobbyists have terminated their registrations or filed the required financial  disclosure reports before the Office received the referral.
Office officials stated that lobbyists resolve their noncompliance issues by  filing the reports or terminating their registration. Resolving referrals can  take anywhere from a few days to years depending on the circumstances.  During this time, the Office monitors and reviews all outstanding referrals  and uses summary reports from the database to track the overall number  of referrals that become compliant as a result of receiving an e-mail,  phone call, or noncompliance letter. In addition, more referred lobbyists  are being contacted by e-mail and phone calls, which has decreased the  number of noncompliance letters the Office sends to lobbyists. Officials  from the Office stated that the majority of these e-mails and calls result in  the registrant becoming compliant without sending a letter. In our last  report, the Office told us that its system collects information on contacts  made by e-mail and phone calls in the notes section of its database, but  the database does not automatically tabulate the number of e-mails and  phone calls to lobbyists, as it does for letters sent. In March 2013 as a  part of closing discussions with the Office about the findings of our last  lobbying disclosure report, as part of its enforcement efforts we urged the  Office to develop a mechanism to track e-mails and telephone contacts to  individual lobbyists. Since then, the Office has started tracking the  number of e-mails and telephone contacts that are associated with its  enforcement efforts to bring lobbyists and lobbying firms into compliance.  These actions are now included in the number of enforcement actions  taken to bring lobbyists and lobbying firms into compliance.
section_title: Status of LD-2 Enforcement Efforts from 2009 through 2013 Reporting Periods
paragraphs: As of January 16, 2014, the Office has received 2,722 referrals from both  the Secretary of the Senate and the Clerk of the House for failure to  comply with LD-2 reporting requirements cumulatively for calendar years  2009 through 2013. Figure 16 shows the number and status of the  referrals received and the number of enforcement actions taken by the  Office in its effort to bring lobbying firms into compliance. Enforcement  actions include the number of letters, e-mails, and calls made by the  Office. About 66 percent (1,787 of 2,722) of the total referrals received  are now compliant because lobbying firms either filed their reports or  terminated their registrations. In addition, some of the referrals were  found to be compliant when the Office received the referral, and therefore  no action was taken. This may occur when lobbying firms respond to the  contact letters from the Secretary of the Senate and Clerk of the House  after the Office has received the referrals. About 34 percent (922 of  2,722) of referrals are pending action because the Office was unable to  locate the lobbying firm, did not receive a response from the firm, or plans  to conduct additional research to determine if it can locate the lobbying  firm. According to the Office, resolving referrals can take anywhere from a  few days to years depending on the circumstances. Referrals may remain  in pending status and may be monitored by the Office until it determines  whether to pursue legal action against the registrant or dismiss certain  referrals or until the registrant files the disclosure report or terminates his  or her registration. The remaining 13 referrals did not require action or  were suspended because the lobbyist or client was no longer in business  or the lobbyist was deceased. The Office suspends enforcement actions  against lobbyists or lobbying firms that are repeatedly referred for not  filing disclosure reports but that do not have any current lobbying activity.  The suspended lobbying firms are periodically monitored to determine  whether they actively lobby in the future. As a part of this monitoring, the  Office checks the lobbying disclosure databases maintained by the  Secretary of the Senate and the Clerk of the House.
section_title: Status of LD-203 Enforcement Actions from 2009 through 2013 Reporting Periods
paragraphs: LD-203 referrals consist of two types: LD-203(R) referrals represent  lobbying firms that have failed to file LD-203 reports for the firm, and LD- 203 referrals represent the lobbyists at the lobbying firm who have failed  to file their individual LD-203 reports as required. As of January 16, 2014,  the Office had received 1,350 LD-203(R) referrals and 3,042 LD-203  referrals from the Secretary of the Senate and Clerk of the House  cumulatively for calendar years 2009 through 2013. For LD-203 referrals,  the Office sends noncompliance letters for the lobbyists to the registered  lobbying firms listed on the LD-203 report because the lobbyist’s personal  contact information is not listed on the LD-203 report.
Figure 17 shows the status of LD-203(R) referrals received and the  number of enforcement actions taken by the Office in its effort to bring  lobbying firms into compliance. About 43 percent (581 of 1,350) of the  lobbyists who were referred by the Secretary of the Senate and Clerk of  the House for noncompliance during the 2009 through 2013 reporting  periods are now considered compliant because lobbying firms either have  filed their reports or have terminated their registrations. About 57 percent  (768 of 1,350) of the referrals are pending action because the Office was  unable to locate the lobbyist, did not receive a response from the lobbyist,  or plans to conduct additional research to determine if it can locate the  lobbying firm.
Figure 18 shows that as of January 16, 2014, the Office had received  3,042 LD-203 referrals from the Secretary and Clerk for lobbyists who  failed to comply with LD-203 reporting requirements for calendar years  2009 through 2012. Figure 18 shows the status of the referrals received  and the number of enforcement actions taken by the Office in its effort to  bring lobbyists into compliance. Figure 18 shows that 55 percent (1,676 of  3,042) of the lobbyists either have come into compliance by filing their  reports or are no longer registered as a lobbyist. About 44 percent (1,352  of 3,042) of the referrals are pending action because the Office was  unable to locate the lobbyists, did not receive a response from the  lobbyists, or plans to conduct additional research to determine if it can  locate the lobbyists.
The Office said that many of the pending LD-203 referrals represent  lobbyists who no longer lobby for the lobbying firms affiliated with the  referrals, even though these lobbying firms may be listed on the lobbyist’s  LD-203 report. In addition, Office officials stated that they continue to  experience challenges with increasing LD-203 compliance because the  Office has little leverage to bring certain individual lobbyists into  compliance. Many of the LD-203 referrals remain open in an attempt to  locate lobbyists who are no longer employed by the lobbying firm and do  not leave a forwarding address. As a result, it may take years to resolve  the referrals and bring the lobbyists into compliance.
section_title: Status of Enforcement Settlement Actions
paragraphs: Since the 2012 reporting period, the Office has identified nine registrants  on its chronic offenders list for failure to comply with reporting  requirements. Of the nine registrants, five filed the outstanding reports or  terminated their registration after being contacted by an Assistant U.S.  Attorney. The Office reached settlement agreements with two of the  registrants for $50,000 and $30,000, respectively, in civil penalties for  repeatedly failing to file disclosure reports. In December 2013, the Office  filed a default judgment for $200,000 against a registrant for repeated  failure to file his LDA reports as required. In March 2014, the Office filed a  civil complaint in the U.S. District Court for the District of Columbia for a  registrant’s failure to comply with LDA reporting requirements.
The Office continues to monitor and review chronic offenders to  determine appropriate enforcement actions, which may include  considering legal actions or dismissing certain cases.
section_title: Concluding Observations
paragraphs: Over the past several years of reporting on lobbying disclosure, we have  found that lobbyists reported understanding terms and requirements, but  their disclosure filings demonstrated some compliance difficulties. For  example, a number of lobbyists had rounding errors in their reports, failed  to disclose covered positions, and did not accurately disclose their  lobbying activity with the House, the Senate, or executive agencies. As a  result, after being contacted by us, lobbyists amended their reports to  address these types of compliance difficulties. In our first lobbying  disclosure report in September 2008, we concluded that the lobbying  community could benefit from creating an organization to  share examples of best practices of the types of records maintained to  support filings; use this information gathered over an initial period to formulate  minimum standards for recordkeeping; provide training for the lobbying community on reporting and  disclosure requirements intended to help the community comply with  the LDA; and  report annually to the Secretary of the Senate and the Clerk of the  House on opportunities to clarify existing guidance and ways to  minimize sources of potential confusion for the lobbying community.
The continuing difficulties that some lobbyists have demonstrated in their  disclosure reports, coupled with the sustained public and congressional  attention on lobbyists and their interactions with government officials,  underscores the importance of accurate and public disclosure of such  activities. In that regard, we continue to believe that creating the type of  organization we described in our first report could still be beneficial to the  lobbying community and the public interest. The activities of such an  organization could help enhance the enforcement and compliance with  the LDA as amended by HLOGA and improve the accuracy and value of  the information reported to Congress.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Attorney General for review and  comment. The Assistant U.S. Attorney for the District of Columbia  responded on behalf of the Attorney General that the Department of  Justice had no comments.
We are sending copies of this report to the Attorney General, Secretary of  the Senate, Clerk of the House of Representatives, and interested  congressional committees and members. In addition, this report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4749 or bagdoyans@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Consistent with the mandate in the Honest Leadership and Open  Government Act (HLOGA), our objectives were to determine the extent to which lobbyists are able to demonstrate  compliance with the Lobbying Disclosure Act of 1995, as amended  (LDA) by providing documentation to support information contained on  registrations and reports filed under the LDA;  identify challenges and potential improvements to compliance, if any;  and describe the resources and authorities available to the U.S. Attorney’s  Office for the District of Columbia (the Office) and the efforts the  Office has made to improve enforcement of the LDA.
To respond to our mandate, we used information in the lobbying  disclosure database maintained by the Clerk of the House of  Representatives (Clerk of the House). To assess whether these  disclosure data were sufficiently reliable for the purposes of this report,  we reviewed relevant documentation and spoke to officials responsible for  maintaining the data. Although registrations and reports are filed through  a single web portal, each chamber subsequently receives copies of the  data and follows different data cleaning, processing, and editing  procedures before storing the data in either individual files (in the House)  or databases (in the Senate). Currently, there is no means of reconciling  discrepancies between the two databases caused by the differences in  data processing. For example, Senate staff told us during previous  reviews that they set aside a greater proportion of registration and report  submissions than the House for manual review before entering the  information into the database. As a result, the Senate database would be  slightly less current than the House database on any given day pending  review and clearance. House staff told us during previous reviews that  they rely heavily on automated processing. They added that while they  manually review reports that do not perfectly match information on file for  a given registrant or client, they will approve and upload such reports as  originally filed by each lobbyist, even if the reports contain errors or  discrepancies (such as a variant on how a name is spelled).  Nevertheless, we do not have reasons to believe that the content of the  Senate and House systems would vary substantially. For this review, we  determined that House disclosure data were sufficiently reliable for  identifying a sample of quarterly disclosure (LD-2) reports and for  assessing whether newly filed registrants also filed required reports. We  used the House database for sampling LD-2 reports from the third and  fourth quarters of 2012 and the first and second quarters of 2013, as well  as for sampling year-end 2012 and midyear 2013 political contributions  (LD-203) reports and finally for matching quarterly registrations with filed  reports. We did not evaluate the Offices of the Secretary of the Senate or  the Clerk of the House, both of which have key roles in the lobbying  disclosure process. However, we did consult with officials from each  office and they provided us with general background information at our  request.
To assess the extent to which lobbyists could provide evidence of their  compliance with reporting requirements, we examined a stratified random  sample of 104 LD-2 reports from the third and fourth quarters of 2012 and  the first and second quarters of 2013. We excluded reports with no  lobbying activity or with income less than $5,000 from our sampling  frame. We drew our sample from 65,489 activity reports filed for the third  and fourth quarters of 2012 and the first and second quarters of 2013  available in the public House database, as of our final download date for  each quarter. One LD-2 report was removed from the sample because we  could not contact the firm and it appears the firm has gone out of  business. We treated this report as a nonrespondent for the purposes of  analysis and adjusted our sampling weights accordingly for analysis.  Another LD-2 report was excluded because the lobbyist amended the LD- 2 to reflect no lobbying activity after being notified of the review. This  report was treated as out of scope.
We adjusted for three comparisons to account for the three pairwise tests for each item  examined. may also be related to the nature of our sample, which was relatively  small and was designed only for cross-sectional analysis.
Our sample is based on a stratified random selection and is only one of a  large number of samples that we may have drawn. Because each sample  could have provided different estimates, we express our confidence in the  precision of our particular sample’s results as a 95 percent confidence  interval. This interval would contain the actual population value for 95  percent of the samples that we could have drawn. The percentage  estimates for 2013 have a 95 percent confidence interval of within plus- or-minus 10.1 percentage points or less of the estimate itself, unless  otherwise noted. For 2010 through 2012, the percentage estimates have  a 95 percent confidence interval with a maximum of 11 percentage points. the amount of income reported for lobbying activities,  the amount of expenses reported on lobbying activities,  the names of those lobbyists listed in the report,  the houses of Congress and federal agencies that they lobbied, and  the issue codes listed to describe their lobbying activity.
After reviewing the survey results for completeness, we conducted  interviews with the lobbyists and lobbying firms to review documentation  they reported as having on their online survey for selected elements of  their LD-2 reports.
Prior to each interview, we conducted an open source search to identify  lobbyists on each report who may have held a covered official position.  We reviewed the lobbyists’ previous work histories by searching lobbying  firms’ websites, LinkedIn, Leadership Directories, Legistorm, and Google.  Prior to 2008, lobbyists were only required to disclose covered official  positions held within 2 years of registering as a lobbyist for the client.  HLOGA amended that time frame to require disclosure of positions held  20 years before the date the lobbyists first lobbied on behalf of the client.  Lobbyist are required to disclose previously held covered official positions  either on the client registration (LD-1) or on the first LD-2 report when the  lobbyist is added as “new.” Consequently, those who held covered official  positions may have disclosed the information on the LD-1 or a LD-2  report filed prior to the report we examined as part of our random sample.
Therefore, where we found evidence that a lobbyist previously held a  covered official position and it was not disclosed on the LD-2 report under  review, we then conducted an additional reviewed the publicly available  Secretary of the Senate or Clerk of the House database. This was done  to determine whether the lobbyist properly disclosed the covered official  position on a prior report or LD-1. Finally, if a lobbyist appeared to hold a  covered position that was not disclosed, we asked for an explanation at  the interview with the lobbying firm to ensure that our research was  accurate. In previous reports, we reported the lower bound of a 90- percent confidence interval to provide a minimum estimate of omitted  covered positions and omitted contributions with a 95 percent confidence  level. We did so to account for the possibility that our searches may have  failed to identify all possible omitted covered positions and contributions.  As we have developed our methodology over time, we are more confident  in the comprehensiveness of our searches for these items. Accordingly,  this report presents the estimated percentages for omitted contributions  and omitted covered positions rather than the minimum estimates. As a  result, percentage estimates for these items will differ slightly from the  minimum percentage estimates presented in prior reports  In addition to examining the content of the LD-2 reports, we confirmed  whether year-end 2012 or midyear 2013 LD-203 reports had been filed  for each firm and lobbyist listed on the LD-2 reports in our random  sample. Although this review represents a random selection of lobbyists  and firms, it is not a direct probability sample of firms filing LD-2 reports or  lobbyists listed on LD-2 reports. As such, we did not estimate the  likelihood that LD-203 reports were appropriately filed for the population  of firms or lobbyists listed on LD-2 reports.
To determine if the LDA’s requirement for registrants to file a report in the  quarter of registration was met for the third and fourth quarters of 2012  and the first and second quarters of 2013, we used data filed with the  Clerk of the House to match newly filed registrations with corresponding  disclosure reports. Using an electronic matching algorithm that includes  strict and loose text matching procedures, we identified matching  disclosure reports for 2,925, or 96 percent, of the 3,034 newly filed  registrations. We began by standardizing client and registrant names in  both the report and registration files (including removing punctuation and  standardizing words and abbreviations, such as “company” and “CO”).  We then matched reports and registrations using the House identification  number (which is linked to a unique registrant-client pair), as well as the  names of the registrant and client. For reports we could not match by  identification number and standardized name, we also attempted to  match reports and registrations by client and registrant name, allowing for  variations in the names to accommodate minor misspellings or typos. For  these cases, we used professional judgment to determine whether cases  with typos were sufficiently similar to consider as matches. We could not  readily identify matches in the report database for the remaining  registrations using electronic means.
To assess the accuracy of the LD-203 reports, we analyzed stratified  random samples of LD-203 reports from the 31,482 total LD-203 reports.  The first sample contains 80 of the 10,227 reports with political  contributions. The second contains 80 of the 21,255 reports listing no  contributions. Each sample contains 40 reports from the year-end 2012  filing period and 40 reports from the midyear 2013 filing period. The  samples allow us to generalize estimates in this report to either the  population of LD-203 reports with contributions or the reports without  contributions to within a 95 percent confidence interval of plus or minus  9.5 percentage points or less. Although our sample of LD-203 reports was  not designed to detect differences over time, we conducted tests of  significance for changes from 2010 to 2013 and found no statistically  significant differences after adjusting for multiple comparisons. While the  results provide some confidence that apparent fluctuations in our results  across years are likely attributable to sampling error, the inability to detect  significant differences may also be related to the nature of our sample,  which was relatively small and designed only for cross-sectional analysis.  We analyzed the contents of the LD-203 reports and compared them to  contribution data found in the publicly available Federal Elections  Commission’s (FEC) political contribution database. We interviewed FEC  staff responsible for administering the database and determined that the  data reliability is suitable for confirming whether a FEC-reportable  disclosure listed in the FEC database had been reported on an LD-203  report.
We compared the FEC-reportable contributions reporting on the LD-203  reports with information in the FEC database. The verification process  required text and pattern matching procedures, and we used professional  judgment when assessing whether an individual listed is the same  individual filing an LD-203. For contributions reported in the FEC  database and not on the LD-203 report, we asked the lobbyists or  organizations to explain why the contributions were not listed on the LD- 203 report or to provide documentation of those contributions. As with  covered positions on LD-2 disclosure reports, we cannot be certain that  our review identified all cases of FEC-reportable contributions that were  inappropriately omitted from a lobbyist’s LD-203 report. We did not  estimate the percentage of other non-FEC political contributions that were  omitted because they tend to constitute a small minority of all listed  contributions and cannot be verified against an external source.
To identify challenges to compliance, we used a web-based survey and  obtained the views from 92 different lobbying firms included in our sample  on any challenges to compliance. The number of different lobbying firms  total 92 and is less than our sample of 102 reports because some  lobbying firms had more than 1 LD-2 report included in our sample. We  calculated our responses based on the number of different lobbying firms  that we contacted rather than the number of interviews. Prior to our  calculations, we removed the duplicate lobbying firms based on the most  recent date of their responses. For those cases with the same response  date, we kept the cases with the smallest assigned case identification  number. To obtain their views, we asked them to rate their ease with  complying with the LD-2 disclosure requirements using a scale of “very  easy,” “somewhat easy,” “somewhat difficult,” or “very difficult.” In  addition, using the same scale we asked them to rate the ease of  understanding the terms associated with LD-2 reporting requirements.
To describe the resources and authorities available to the Office and its  efforts to improve its LDA enforcement, we interviewed officials from the  Office and obtained updated information on the capabilities of the system  they established to track and report compliance trends and referrals, and  other practices established to focus resources on enforcement of the  LDA. The Office provided us with updated reports from the tracking  system on the number and status of referrals and chronically  noncompliant lobbyists and lobbying firms.
The mandate does not include identifying lobbyists who failed to register  and report in accordance with LDA requirements, or whether for those  lobbyists who did register and report, that all lobbying activity or  contributions were disclosed.
We conducted this performance audit from June 2013 through May 2014  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: List of Registrants and Clients for Sampled Lobbying Disclosure Reports
paragraphs: The random sample of lobbying disclosure reports we selected was  based on unique combinations of registrant lobbyists and client names  (see table 3).
section_title: Appendix III: List of Sampled Lobbying Contribution Reports with and without Contributions Listed
paragraphs: See table 4 for a list of the lobbyists and lobbying firms from our random  sample of lobbying contribution reports with contributions. See table 5 for  a list of the lobbyists and lobbying firms from our random sample of  lobbying contribution reports without contributions.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Bill Reinsberg, Assistant Director;  Shirley Jones, Assistant General Counsel; Crystal Bernard; Stuart  Kaufman; Lois Hanshaw; Sharon Miller; Anna Maria Ortiz; Anthony  Patterson; Robert Robinson; Stewart Small; and Katherine Wulff made  key contributions to this report.
Assisting with lobbyist file reviews were Vida Awumey and Patricia Norris.