2008 Lobbying Disclosure: Observations on Lobbyists' Compliance with Disclosure Requirements
Published: 2009-04-01T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Honest Leadership and Open Government Act (HLOGA) of 2007 amended the Lobbying Disclosure Act of 1995 by doubling the frequency of lobbyists' reporting and increasing criminal and civil penalties. This is GAO's second report in response to the Act's requirement for GAO to annually (1) determine the extent to which lobbyists can demonstrate compliance with the Act by providing support for information on their registrations and reports, (2) describe challenges identified by lobbyists to complying with the Act, and (3) describe the resources and authorities available to the U.S. Attorney's Office for the District of Columbia's efforts to enforce the Act. For this report, GAO placed increased emphasis on written documentation to support disclosure reports. GAO reviewed a random sample of 100 lobbyist disclosure reports filed during the first three quarters of calendar year 2008. GAO also selected a random sample of 100 reports of federal political contributions, filed for the first time, for mid-calendar-year 2008. This methodology allowed GAO to generalize the sample results to the populations of 40,169 lobbying activity disclosure reports and 6,048 reports with contributions filed. GAO met with lobbyists regarding their filings and with the U.S. Attorney's Office for the District of Columbia regarding resources, authorities, and efforts to focus resources on lobbyists who fail to comply with the Act.
section_title: What GAO Found
paragraphs: While there are no specific requirements for lobbyists to create or maintain documentation related to disclosure reports they file under HLOGA, GAO's review showed that lobbyists were generally able to provide documentation, although in varying degrees, to support items in their disclosure reports. For income and expenses, two key elements of the disclosure reports, lobbyists could provide written documentation for an estimated 99 percent of the reports. However, in approximately 14 percent of cases, the documentation provided either was incomplete or contradicted the reported amount of income or expense. In addition to income and expenses, GAO reviewed five other data elements in the disclosure reports, and lobbyists who were required to report on these elements could provide documented support for all items in an estimated 35 percent of the reports. As of March 18, 2009, lobbyists had amended 12 disclosure reports included in GAO's sample to make corrections on one or more data elements. For political contribution reports, filed for the first time in 2008, GAO estimates that 65 percent of the reports could be supported by FEC data or documentation provided by lobbyists. An estimated 16 percent of the reports contained erroneous entries or failed to disclose required contributions. The majority of lobbyists who newly registered with the Secretary of the Senate and Clerk of the House in the first three quarters of 2008 filed required disclosure reports for the period. However, for about 13 percent of the registrants, GAO could not identify a corresponding report on file for their lobbying activity, likely because either a report was not filed or reports that were filed contained information, such as client names, that did not match. Similar to GAO's findings in the first review of lobbying disclosure, most lobbyists felt that existing guidance for filing required registrations and reports was sufficient. However, GAO's review of documentation and lobbyists' statements indicates some opportunities to strengthen lobbyists' understanding of the requirements. Some small firms and sole proprietors indicated they did not understand the requirement for both firms and individual lobbyists to file reports on financial contributions. GAO continues to believe, as noted in its first report, that the lobbying community could benefit from creating an organization to focus on sharing best practices, providing training, and reporting on opportunities to minimize potential confusion. In response to an earlier GAO recommendation, in April 2009 the U.S. Attorney's Office for the District of Columbia (the Office) plans to put in place a system to better track, analyze, and report on its enforcement activities. The Office also has assigned an additional staff member to assist with lobbying compliance issues.

section_title: Letter
paragraphs: Questions regarding the influence of special interests in the formation of  Questions regarding the influence of special interests in the formation of  government policy have led to a move toward more transparency and  government policy have led to a move toward more transparency and  accountability with regard to the lobbying community. The Honest  accountability with regard to the lobbying community. The Honest  Leadership and Open Government Act of 2007 (HLOGA), signed into law  Leadership and Open Government Act of 2007 (HLOGA), signed into law  on September 14, 2007, amends the Lobbying Disclosure Act of 1995 (the  on September 14, 2007, amends the Lobbying Disclosure Act of 1995 (the  Act), by doubling the frequency of lobbyists’ reporting from semiannually  Act), by doubling the frequency of lobbyists’ reporting from semiannually  to quarterly, increasing civil penalties, and adding criminal penalties. The  to quarterly, increasing civil penalties, and adding criminal penalties. The  law also requires GAO to use a random sample to annually determine the  law also requires GAO to use a random sample to annually determine the  extent to which lobbyists are able to provide support for information  extent to which lobbyists are able to provide support for information  contained in their reports and registrations, provide recommendations  contained in their reports and registrations, provide recommendations  related to improving compliance by lobbyists with the Act, and report on  related to improving compliance by lobbyists with the Act, and report on  resources and authorities available to the Department of Justice (DOJ) for  resources and authorities available to the Department of Justice (DOJ) for  effective enforcement of the Act. GAO’s initial report covered registrations  effective enforcement of the Act. GAO’s initial report covered registrations  and reports filed during the first calendar quarter of 2008. Subsequent  and reports filed during the first calendar quarter of 2008. Subsequent  GAO reports, including this one, are to be submitted annually by the  GAO reports, including this one, are to be submitted annually by the  beginning of April and will include a review of registrations and reports  beginning of April and will include a review of registrations and reports  filed during the preceding calendar year.  filed during the preceding calendar year.
Protecting the integrity of governmental processes and procedures from  Protecting the integrity of governmental processes and procedures from  corruption and undue influence is vital to upholding the principles and  corruption and undue influence is vital to upholding the principles and  public trusts of the U.S. government. Lobbying regulations began with the  public trusts of the U.S. government. Lobbying regulations began with the  Federal Regulation of Lobbying Act of 1946, which required lobbyists to   Congress replaced this law with the  any proposed or pending legislation. The Act expanded the definition of  Lobbying Disclosure Act of 1995.
Pub. L. 79-601, tit. III, 60 Stat. 839 (1946).
See United States v. Harriss, 347 U.S. 612, 619 (1954).
Pub. L. 104-65, 109 Stat. 691 (1995). legislative and executive branch regarding legislation, regulations,  policies, or the nomination or confirmation of a person for a position  subject to confirmation by the Senate. The Act required lobbyists to file  registrations with the Secretary of the Senate and the Clerk of the House  and to report semiannually on their lobbying activities, which include both  lobbying contacts and work done in preparation for lobbying contacts. In  2007, HLOGA amended the Act by requiring more frequent filings and  lowering thresholds for disclosures, increasing penalties for  noncompliance, and requiring new semiannual reports detailing certain  political contributions. The sense of Congress as stated in HLOGA was  that the lobbying community should propose organizations to develop  standards for the profession and provide training. HLOGA became  effective in January 2008.
Consistent with the audit and report requirements of HLOGA, our  objectives were to:    determine the extent to which lobbyists can demonstrate compliance by  providing support for information on registrations and reports filed in  response to requirements of the amended Lobbying Disclosure Act;  identify the challenges lobbyists cite in complying with the Act and  suggestions for improving compliance; and    describe the resources and authorities available to effectively enforce the  Act including the efforts by the U.S. Attorney’s Office for the District of  Columbia to implement a structured approach to focus limited resources  on lobbyists who continually fail to comply with the Act as recommended  in GAO’s prior report.
To respond to the requirements of the Act, we:    Selected a random sample of 100 quarterly lobbying activity disclosure  reports (commonly referred to as the LD-2 report) filed by lobbyists during  the first, second, and third quarters of calendar year 2008. The randomly  sampled reports were selected from the publicly downloadable database  maintained by the Secretary of the Senate.
Contacted each lobbyist in our sample by sending a letter describing our  review and asking them to provide supporting documentation for key  elements of the disclosure report including the amount of money received  for lobbying activities, the houses of Congress or federal agencies lobbied,  prior covered positions held by lobbyists, and whether the lobbyists filed a  report of federal political contributions. Two lobbying firms in our sample,  Duetto Group, LLC and Snack Food Association, declined to meet with us  following our initial letter, sent in January 2009, and multiple follow-up  contacts in February and March 2009. In those follow-up contacts, we  pointed out to both firms that in light of their unwillingness to meet, we  would be identifying their firms’ names to Congress, as provided for in  HLOGA. Both acknowledged their understanding of this. Following the  March 13, 2009, completion of our audit work, we were contacted by a  representative from each firm indicating they had reconsidered and would  be available to meet. We advised each firm that because our audit had  been completed and in light of our mandated April 1 reporting date, the  results of any such meeting could not be reflected in our analysis.
Selected a random sample of 100 semiannual reports of federal political  contributions (commonly referred to as the LD-203 report) filed for the  mid-year of calendar year 2008, January through June. The randomly  sampled reports were selected from the publicly downloadable  contributions database maintained by the Secretary of the Senate.
Compared the lobbying reports selected from the Secretary of the Senate’s  database to the information on contributions filed with the Federal  Election Commission and maintained in its publicly accessible database.  In instances where an entry in the lobbying report could not be confirmed  by the FEC database, either because the data did not match or the  contribution would not be disclosed to the FEC, we contacted lobbyists  and asked them to provide documentation and, if necessary, information  to clarify differences we observed.
Compared registrations newly filed in the first, second, and third quarters  of calendar year 2008 to corresponding first, second, and third quarter  disclosure activity reports on file with the Clerk of the House of  Representatives (for quarter 1) and the Secretary of the Senate (for  quarters 2 and 3) to determine if the requirement for registrants to report  was met.
To identify challenges and potential improvements to compliance, we  obtained views from lobbyists included in our sample of reports on any  challenges to compliance and how the challenges might be addressed.
To determine the status of U.S. Attorney’s Office for the District of  Columbia’s efforts to implement a structured approach to focus limited  resources on lobbyists who continually fail to comply with the Act as  recommended in GAO’s prior report, we interviewed U.S. Attorney’s office  officials and obtained information on the systems used to collect and  maintain data needed to assist in enforcing compliance with the Act.
Importantly, in keeping with the statute, our objectives did not include  identifying lobbyist organizations that failed to register and report in  accordance with HLOGA requirements, or whether, for those lobbyists  that did register and report, the lobbying activity disclosed represented the  full extent of lobbying activities that took place.
We conducted this performance audit from December 2008 through March  2009 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, please see appendix I.
subsections: section_title: Background
paragraphs: Lobbying registrations and reports are required under the Lobbying  Disclosure Act of 1995 (the Act) as amended by the Honest Leadership and  Open Government Act of 2007 (HLOGA) to disclose the identities of  people attempting to influence the government, the subject matters of  their attempts, and the amounts of money they spend to accomplish their  goals. The Act requires that lobbyists register with the Secretary of the  Senate and the Clerk of the House and file periodic reports disclosing their  activities. The Act was amended by HLOGA to make those reports due  quarterly (they had previously been due semiannually). HLOGA requires  lobbyists to disclose whether they held an official covered position in the  past 20 years (rather than the 2 years the Act had previously required),  whether the client is a state or local government, and whether any  members of a coalition or association actively participated in the lobbying  activities. Under HLOGA, lobbyists are required to file these registrations  and reports electronically with the Secretary of the Senate and the Clerk  of the House through a single entry point (as opposed to separately with  the Secretary of the Senate and the Clerk of the House as was done prior  to HLOGA). The Act, as amended by HLOGA, also provides that  registrations and reports must be available in downloadable searchable  databases from the Secretary of the Senate and the Clerk of the House.
The Act defines “lobbyists” and “lobbying activities” and imposes  requirements on the reporting of those activities. Under the Act, a lobbyist  can be an individual, a lobbying firm, or an organization that has  employees lobbying on its own behalf, depending on the circumstances.  Lobbyists are required to file a registration with the Secretary of the  Senate and the Clerk of the House for each client on whose behalf a  lobbying contact is made if a minimum dollar threshold is passed. The  registration must list the name of the organization, lobbying firm, or self- employed individual who is lobbying on that client’s behalf. In addition,  the registration and subsequent reports must list the individuals who acted  as lobbyists on behalf of the client during the reporting period. For  reporting purposes, a lobbyist is defined as a person who has made two or  more lobbying contacts and whose lobbying activities represent at least  20 percent of the time that he or she spends on behalf of the client during  any quarter. Registrations and reports must also state whether any  lobbyist served as a covered executive branch or legislative branch official  in the previous 20 years. The Act defines a covered executive branch  official as the President, Vice President, an officer or employee, or any  other individual functioning in the capacity of such an officer or employee,  of the Executive Office of the President, an employee serving in levels I-V  of the Executive Schedule, members of the uniformed services whose pay  grade is at or above O-7, and any officer or employee serving in a position  of a confidential, policy-determining, policy-making, or policy-advocating  character. The Act defines a covered legislative branch official as a  Member of Congress, an elected officer of either house of Congress, or any  employee of a Member, a committee of either House of Congress, the  leadership staff of either House of Congress, a joint committee of  Congress, or a working group or caucus organized to provide legislative  services or other assistance to Members.
The registration and subsequent quarterly reports must also disclose the  name of and further information about the client including a general  description of its business or activities. The lobbyist is also required to  disclose any foreign entities with interest in the client. The lobbyist must  report if the client is a state or local government. When the client is a  coalition or association, the lobbyist must identify any constituent  organization that contributes more than $5,000 for lobbying in a quarter  and actively participates in the planning, supervision, or control of  lobbying activities. The registration and subsequent reports may either  list each organization or make the list available on the coalition or  association’s Web site and disclose the Web address in the report.
Lobbying registrations and reports must include lobbying activity details  such as the general issue area and the specific lobbying issues. The  lobbyist must also disclose which federal agencies and house(s) of  Congress the lobbyist contacted on behalf of the client during the  reporting period.
Finally, the registrant must report the amount of money that was spent on  lobbying for the client during the reporting period. The lobbying income or  expenses disclosed on the reports are to be rounded to the nearest  $10,000. A lobbying firm, or any other organization that is hired to lobby  on behalf of an entity other than itself, must report the amount of income  related to lobbying activities received from the client during the quarter.  An organization that has employees who lobby on its behalf must report  the expenses incurred in relation to lobbying activities during the quarter.  Organizations may use one of three accounting methods to determine their  expenses: the Act’s definitions of lobbying expenses; the Internal Revenue  Code definitions for non-deductible business expenses; or, if they are a  501(c) non-profit organization, the definitions under the relevant sections  of the Internal Revenue Code.
HLOGA also added a new reporting requirement for lobbyists, a  semiannual report on “certain contributions”, which is commonly known  as the contributions report or by its form name, the LD-203 report. These  reports are required to be filed 30 days after the end of a semiannual  period by each organization registered to lobby and by each individual  listed as a lobbyist on an organization’s lobbying reports. These reports  were due for the first time on July 30, 2008. The lobbyist or organization  that files a contributions report must list the name of each federal  candidate or officeholder, leadership PAC, or political party committee to  which the filer made contributions equal to or exceeding $200 in the  aggregate during the semiannual period. The filer must also report  contributions made to Presidential library foundations and Presidential  inaugural committees. In addition, the filer must 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. Finally, the contributions report requires a filer to certify that the  filer has read and is familiar with the gift and travel rules of the Senate and  House and that the filer has not provided, requested, or directed a gift or  travel to a Member or an officer or employee of Congress that would  violate those rules. All individual lobbyists and organizations must file a  contributions report each period and certify compliance with the gift and  travel rules, even if they have no contributions to report.
section_title: Supporting Documentation Varied Based on Reporting Requirements
paragraphs: While no specific requirements exist for lobbyists to create or maintain  documentation, GAO’s review showed that lobbyists could provide  documentation to varying degrees for the reporting elements in their  disclosure reports. For example, documentation was more readily  available for two key reporting elements, lobbyists’ income or expenses,  than for other elements such as the entities they reported lobbying. We  estimate that lobbyists could provide some form of written documentation  for income or expenses for approximately 99 percent of disclosure reports  for the first three quarters of 2008. All of the lobbyists we contacted from  our sample of reports that reported income and all except one lobbyist  who reported lobbying expenses showed us some type of documentation  for the dollar amount reported. The most common form of documentation  provided was invoices (64 percent), followed by contracts (25 percent).
The lobbyist who did not provide documentation for his reported  expenses told us that because staff in his organization are involved in both  lobbying and non-lobbying activities, his organization’s reported lobbying  expenses were based on estimates of staff salaries attributable to lobbying  activity and documentation to support these estimates did not exist.
Although documentation for lobbyists’ income or expenses existed, some  reports contained information that differed from documentation provided  or statements lobbyists made about their lobbying activity. In  approximately 14 percent of reports for which documentation was  provided (14 of 97 reports), lobbyists reported income or expense  amounts that were different from the amounts supported by the  documentation they provided. The documentation showed a higher  amount of income or expenses than was reported for about half of these  reports and a lower amount for the other half. Documentation showed that  6 of the 14 reports contained errors with respect to reports of income or  expenses, while the remaining 8 reports contained differences that could  be explained verbally by lobbyists but not documented—primarily  because the lobbyists could not provide documentation for their estimates  (6 of the 8). Based on these data, we estimate that approximately 6 percent  of all disclosure reports erroneously report the amount of income or  expenses for lobbying activity.
Income or expenses are among several reporting elements lobbyists are  required to list in their disclosure reports. Overall, lobbyists could provide  documentation for all seven reporting elements we reviewed on about 35  percent of the disclosure reports (34 of 98) in GAO’s sample. Although the  Act does not specifically require lobbyists to maintain records or  documentation to support information disclosed in their reports, guidance  from both the Secretary of the Senate and Clerk of the House recommends  that lobbyists retain copies of their filings and supporting documentation  for at least 6 years after reports are filed. We estimate that lobbyists were  unable to provide documentation for one or more elements on about 65  percent of the lobbying activity disclosure reports (64 of 98) we  reviewed.
As of March 18, 2009, lobbyists had amended 12 disclosure reports  included in our sample to correct income or expenses, information on the  entities lobbied, lobbyists listed, or other information. Eight of these  reports were amended either after we notified the lobbyists that their  reports were selected for our review or after the lobbyists participated in  our review. Also, during our review lobbyists told us they planned to  amend an additional 8 reports. The most common reason given for  amending disclosure reports was to correct income or expense  information (8 of 20 reports).
Lobbyists were unable to provide documentation for all of the entities they  reported lobbying for more than half of the disclosure reports in our  sample. Lobbyists are required to disclose if they lobbied the House of  Representatives, the Senate, one or more executive branch agencies, or a  combination of these entities. However, lobbyists could not provide  documentation to support any of the entities lobbied for 26 percent of  disclosure reports (25 of 98) in our sample. Additionally, lobbyists were  able to provide documentation for some, but not all of the entities lobbied  for an additional 36 percent of reports (35 of 98). For the remaining 39  percent of reports (38 of 98), lobbyists were able to provide written  support for all of the entities they reported lobbying. Based on these  figures, we project that lobbyists could provide full support for the entities  they reported lobbying in fewer than half of all disclosure reports, or  approximately 39 percent of reports. Reasons for lack of documentation  included no record keeping for phone conversations and informal face-to- face contacts and the inability to retrieve emails that were not archived.
For 12 of the 98 reports we examined, lobbyists said that they could not  support some or all of the entities they reported lobbying because the  lobbying activity had not actually occurred. Because some lobbyists did  not specify the reasons they could not support the entities they reported  lobbying, we estimate that a minimum of 7 percent of all disclosure  reports list lobbying activity that did not actually happen. Some lobbyists  who acknowledged having over-reported the number of entities lobbied  told us that they did so to ensure that they did not fail to fully report. Some  lobbyists said they did not want to edit their reports each quarter to reflect  what they perceived to be minor changes—such as changes in the names  of individuals acting as lobbyists on specific issues or in lists of federal  agencies lobbied. Rather, they chose to carry this kind of information over  in their reports in case it should become applicable again for a future  reporting period.
For 38 percent of the reports (37 of 98) we reviewed, lobbyists reported  having a system in place to track who should be listed as a lobbyist. For  about half of these reports (20 of 37) lobbyists used tracking systems that  were integrated with their timekeeping or billing systems. A few of these  lobbyists told us that they had augmented their billing codes to better  track lobbying activity to report under HLOGA or were concerned that  their disclosure reports could be selected for review by GAO. For 52  percent of disclosure reports we reviewed (51 of 98), lobbyists reported  not having a system to determine who should be listed as a lobbyist— mostly because the lobbyists were either sole proprietors or worked in  very small firms (34 of 51) that did not require a tracking system to identify  who should be reported as lobbyists. For about 10 percent of the  disclosure reports, we were unable to determine if the lobbyists had  systems to track who should be listed as a lobbyist.
We found that lobbying firms failed to appropriately disclose “official  covered positions” previously held by individual lobbyists’ on at least 6 of  the reports we reviewed. Based on this information, we can estimate that  a minimum of 3 percent of all disclosure reports fail to fully disclose  whether the individual lobbyists for a specific client held an official  covered position. Covered positions include members of Congress and  their staff, Executive Level and Schedule C employees in the executive  branch, members of the uniformed services serving at grade 07 or above,  and others. Lobbyists who registered on January 1, 2008, or later, must  disclose previously held official covered positions for the past 20 years.  Lobbyists who registered prior to January 1, 2008, were required to  disclose official covered positions held in the past 2 years. We identified  six lobbying reports where the lobbyists previously held an official  position covered by the act that was not disclosed on the report. For four  of these cases the lobbyists indicated they misunderstood either the  definition of covered positions or the time frames for reporting on them. In  the 2 other cases, the lobbyists said they realized that they had failed to  report covered positions and plan to amend their disclosure reports. One  lobbyist in our sample reported holding a covered position, but later  realized that the position should not have been reported because it did not  meet the definition of a covered position.
subsections: section_title: Most Contributions Reports Could Be Supported by FEC Data or Documentation
paragraphs: Reports of federal campaign and other political contributions are required  to be reported under the Act. The reports are to be filed by both individual  lobbyists and lobbyists organizations. We estimate that for approximately  65 percent of the contributions reports, or 65 from our sample of 100  reports, lobbyists or lobbying firms could support all entries with  documentation. Documentation includes data from the FEC disclosure  database, cancelled checks, invoices, or letters. In addition, we estimate  that 16 percent of the reports had errors or omissions, or failed to disclose  required contributions. For example, eight filers said they did not report  the information we found in the FEC database because of an oversight.
From these data, we estimate a minimum of 4 percent of all lobbyist  contributions reports omit donations that should have been reported.
We estimated that the remaining 19 percent of contributions reports had  contributions that were not required to have been listed on the document,  or could not be corroborated with supporting documentation. For  example, contributions under $200, contributions to non-federal  campaigns, and refunded contributions were not required to be included  on the report. We also found contributions listed on the reports that did  not appear in the FEC database. Filers were able to provide  documentation for the majority of these contributions, including honorary  and meeting expenses and FEC contributions that were refunded or had  not yet been disclosed by the recipient. This documentation came in  various forms, including receipts, acknowledgment letters, credit card  statements, and cancelled checks.
section_title: Newly Registered Lobbyists Generally Met Reporting Requirements
paragraphs: New registrations filed in the first three quarters of 2008 were largely  followed by disclosure reports for the filing period as required. To  determine whether new registrants were meeting the requirement to file,  we matched newly filed registrations in the first, second and third quarters  of 2008 from the House and Senate Lobbyist Disclosure Databases to their  corresponding quarter disclosure reports using an electronic matching  algorithm that allowed for misspelling and other minor inconsistencies  between the registrations and reports. Our analysis showed that of 4,134  new registrations we identified from the first three quarters, the majority  (3,616) had a clearly corresponding disclosure report on file, indicating  that the requirement for these lobbyists to file reports for specific clients  was generally met. However, we could not identify corresponding reports  of lobbying activity for 518 (approximately 13 percent) of the 4,134 new  registrations.
We were able to identify corresponding disclosure reports for each  quarterly filing period. Specifically, for the first quarter of 2008, House  disclosure data showed that approximately 93 percent of lobbyists newly  registered filed a corresponding report. For the second and third quarters  of 2008, we used Senate data to match registrations and reports. We were  able to match approximately 88 percent of newly registered lobbyists to  disclosure reports filed during the second quarter. We found  corresponding quarterly disclosure reports for approximately 79 percent  of newly registered lobbyists for the third quarter.
The difference in the match rates between the second and third quarters  may result partly from the Senate’s processing procedures and the timing  of our data download. Compared to the House, the Senate sets aside a  greater proportion of cases for manual review prior to entry into its  database, resulting in some delay in data entry. Also, the third quarter  reports were downloaded closer to the filing deadline than were the  second quarter reports. The additional time following the first and second  quarter deadlines may have allowed the House and Senate to process a  greater number of reports before our download.
We could not identify corresponding quarter reports of lobbying activity  for 102 (approximately 7 percent) of the 1,460 new registrations in the first  quarter, 185 (approximately 12 percent) of the 1,592 new registrations in  the second quarter, and 231 (approximately 21 percent) of the 1,082 new  registrations filed in the third quarter and available as of the date we  downloaded the disclosure information. Staff of the Secretary of the  Senate and Clerk of the House told us that while the newly registered  lobbyists for whom we could not identify corresponding reports may not  have filed a report, it is possible that they filed reports with information  that did not fully match their registrations. For example, if a client’s name  did not precisely match the name listed on the registration for that client,  it would be difficult to match the registrants to their corresponding  reports.
section_title: Some Lobbyists May Not Have Fully Understood the Reporting Requirements
paragraphs: Many lobbyists said that they felt the reporting requirements under the Act  were clear. In cases where the lobbyists had questions or felt the  requirements were not clear, lobbyists said the Secretary of the Senate and  Clerk of the House staff were helpful in providing clarifications. However,  statements by some lobbyists and our review of lobbyists’ documentation  to support both disclosure and contributions reports highlights areas  where lobbyists may not clearly understand the law and therefore did not  properly disclose required information. For example, some lobbyists told  us:    They were uncertain about what is considered lobbying under the Act. For  example, lobbyists said they were not sure whether they should include  telephone contacts with congressional or executive branch staff that were  social in nature, but may lead to future lobbying contact. Also, they were  uncertain whether they should include researching issues that may lead to  information sharing.
They had questions about how to determine which activities are lobbying  activities under the Act. The Act requires identifying as a lobbyist any  individual whose lobbying activities constitute 20 percent of their time in  services for a client during the quarterly period.
In addition, our review of contributions reports identified some small  firms and sole proprietors that did not understand the requirement for  both firms and individual lobbyists to file contributions reports. Some of  the lobbyists, 11 out of 98, either reported only individual contributions or  their organization’s contributions. The requirement is for both an  individual and the organization to file a contributions report.
Some lobbyists told us that small differences between lobbying disclosure  rules and Federal Campaign Finance laws could cause some contributions  reports to be inaccurate. HLOGA requires lobbyists to disclose certain  political contributions in amounts “equal to or exceeding $200.”  Federal  Campaign Finance laws administered by the Federal Elections  Commission (FEC) require candidates and political action committees  (PAC) to disclose contributions exceeding $200.  There is a possibility  that the differing thresholds might lead a lobbyist to omit a contribution of  exactly $200 from the report. Lobbyists and registrants who set up a  system appropriate to their business to track the political contributions  made do not need to rely on the information present in the FEC database.
The electronic filing system for lobbying reports reduces the amount of  time filers must spend on data entry, so that a filer does not need to retype  names, addresses, or some other information. While this offers a great  convenience to filers, our review showed that it also introduces a risk that  firms may carry information over from old reports to new reports without  properly updating the information to reflect changes to their lobbying  activity.
Some lobbyists also told us:    The deadline under HLOGA for filing disclosure reports 20 days after each  reporting period was difficult to meet because of limitations of their own  internal billing or record-keeping systems. Prior to HLOGA, the deadline  for filing disclosure reports was 45 days after the end of each reporting  period.
The increased frequency of reporting presented an administrative burden,  especially in the fourth quarter because of other filing requirements, such  as for the IRS.
The lobbying activity does not generally change significantly from quarter  to quarter and therefore the benefits of quarterly reporting are small.
Some lobbyists told us they took added steps to help ensure their  compliance with the requirements of HLOGA, including:    Attending training seminars and workshops offered by other lobbying  organizations, law firms, and membership organizations in the lobbying  community to enhance understanding of the lobbying disclosure  requirements;    conducting internal training sessions for staff and hiring outside counsel  to assist with understanding the requirements; and    developing new or augmented existing record keeping systems to track  the amount of time spent lobbying.
Although some lobbyists took added steps to help ensure compliance with  the requirements of HLOGA, some still may not have fully understood the  reporting requirements. In our last report on lobbying disclosure, we  stated that we believe 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 and 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 Act; 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.
Given the fact that some lobbyists again indicated to us that they did not  fully understand some of the reporting requirements, we continue to  believe that the lobbying community could benefit from creating an  organization to focus on sharing best practices, providing training, and  reporting on opportunities to minimize potential confusion.
section_title: U.S. Attorney’s Office for the District of Columbia Is Making Progress on Its Approach to Focusing Resources on Lobbyists Who Fail to Comply
paragraphs: The U.S. Attorney’s Office for the District of Columbia (the Office) is  responsible for the enforcement of the Act. The Office fulfills its  responsibilities, administratively, by researching and responding to  referrals made from the Secretary of the Senate and Clerk of the House of  non-complying lobbyists by sending additional non-compliance notices to  the lobbyists, requesting that the lobbyists file reports or correct reported  information. The Office also has the authority to pursue a civil or criminal  case for non-compliance.
In response to our earlier recommendation, officials from the Office are  developing a system that they plan to put in place in April 2009 to address  issues we raised in our prior report regarding the tracking, analysis, and  reporting of enforcement activities for lobbyists who the Secretary of the  Senate and the Clerk of the House refer to them for failure to comply. Our  prior report recommended that the Office complete efforts to develop a  structured approach that would require the Office to track referrals when  they are made, record reasons for referrals, record the actions taken to  resolve them, and assess the results of actions taken.
Officials told us that because the number of referrals is expected to  increase as a result of the enactment of HLOGA, the new system will be an  important tool to assist them in tracking and analyzing individual referrals,  enforcement actions, and letters that have been sent. The system the  Office currently uses was not designed to capture the data necessary for  tracking and analysis of Lobbying Disclosure Act referrals. The current  system provides general tracking of federal civil and criminal litigation  cases and requires the Office to supplement the system with manual  record keeping for lobbying compliance matters. The Office considered  this approach to be a temporary measure to address the large increase in  the number of lobbying disclosure referrals from the Secretary of the  Senate and Clerk of the House in 2006 when these offices began  transmitting referrals electronically.
The new system is intended to track and record enforcement activities,  record the status and disposition of lobbyists’ cases, provide automated  alerts to ensure timely follow-up and monitoring, provide the ability to  track those who continually fail to comply with the Act, and use data and  statistical reporting of trends and effectiveness of enforcement activities.  Officials from the Office said the system is designed to respond to  recommendations made in our prior report to provide a more structured  approach for assigning resources and providing a better focus of lobbying  disclosure compliance enforcement efforts.
The Office, along with its Information Technology Applications Division,  has completed development and testing of the system and is currently  modifying the system to address issues raised during testing. Most of the  staff who will use the system have received training, were involved in  system testing, and have provided input on the small changes needed to  ensure the system will meet the Office’s requirements. Office officials  stated that they plan to complete the modifications, re-test the system, and  make the system available to users in April 2009—in time for the next  group of referrals that officials expect to receive from the Secretary of the  Senate and Clerk of the House. The Office plans to continue the process of  cleaning up information in the current system and begin loading data on  past referrals into the new system after it becomes operational.
Although the new system is not yet operational, the Office is still making  progress through other efforts in focusing on lobbyists who continually  fail to comply. For example, officials were able to manually identify six  lobbyists whose names appeared frequently in the referrals, and the  officials sent them letters that were more targeted toward repeat non- filers. In addition, the Office has recently met with the Secretary of the  Senate and Clerk of the House to increase compatibility with the Office’s  system by identifying a preferred format for referrals. The Secretary of the  Senate and Clerk of the House send referrals separately and format  differences can make downloading the information into the Office’s  system more difficult. The Office plans to continue formatting discussions  with the Secretary of the Senate and Clerk of the House after the system  becomes operational.
The Office has received referrals from both the Secretary of the Senate  and Clerk of the House for the 2006 reporting period. In addition, the  Office has received referrals for the mid-year reporting period from the  Secretary of the Senate, while the Clerk of the House’s mid-year 2007  referrals have not been sent. Extended periods of time occur between the  filing period and the date referrals are made because the Secretary of the  Senate and Clerk of the House send referrals after they have reviewed  their respective database for missing or erroneous reports, twice  contacted lobbyists by letter to inform them of the need to remedy an  error or file a missing report, and allowed 60 days for lobbyists to respond  to each letter.
Tables 1 and 2 show the number of referrals received from the Secretary  of the Senate and the Clerk of the House as well as the number of letters  the Office sent to lobbyists as a result of these referrals. According to the  Office, the number of referrals from the Secretary of the Senate is larger  than from the Clerk of the House because of differences in their referral  procedures.
Because there is a time lapse between when the Secretary of the Senate  and the Clerk of the House send the first contact letter and when they  make referrals to the U.S. Attorney’s Office, lobbyists have often  responded to the contact letter from the Secretary of the Senate and Clerk  of the House after referrals have been received by the Office. As a result,  the Office reviews the Secretary of the Senate and Clerk of the House  databases to determine if that lobbyist has already resolved the  compliance issue before sending out its own letters. In addition, the Office  attempts to verify the lobbyist’s address where letters were returned or no  response was received.
Resources are assigned to lobbying compliance issues based on competing  priorities within the Office. Since September 2008, the Office has assigned  an additional staff member to assist with lobbying compliance issues.  Currently, a total of six staff, including a deputy chief, civil enforcement  investigator, paralegal, support staff manager, and two docket information  input clerks are dedicated on a part-time basis to lobbying disclosure  compliance enforcement activities. In addition to the six staff dedicated to  lobbying compliance enforcement, three attorneys from the affirmative  civil enforcement division may become involved in enforcement efforts, as  needed.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft statement of the facts contained in this report to the  Department of Justice (DOJ) for review and comment. We met with the  Assistant U.S. Attorney for the District of Columbia, who on behalf of the  DOJ, provided us with technical comments, which we incorporated as  appropriate, but did not otherwise comment on the report.
We are sending copies of this report to the Attorney General, Secretary of  the U.S. Senate, Clerk of the U.S. House of Representatives, and other  interested congressional committees and members. Copies of this report  will be made available to others upon request. In addition, this report is  available at no charge on the GAO Web site at http://www.gao.gov.
Please contact George Stalcup at (202) 512-6806 or stalcupg@gao.gov if  you or your staffs have any questions about this report. 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 requirements of the Honest Leadership and Open  Government Act (HLOGA), our objectives were to:    determine the extent to which lobbyists can demonstrate compliance by  providing support for information on registrations and reports filed in  response to requirements of the amended Lobbying Disclosure Act (the  Act);  identify the challenges lobbyists cite in complying with the Act and  suggestions for improving compliance; and    describe the resources and authorities available to effectively enforce the  Act including the U.S. Attorney’s Office for the District of Columbia’s  efforts to focus resources on lobbyists who continually fail to comply with  the Act.
To respond to the requirements of HLOGA, we used information in  disclosure databases maintained by the Secretary of the Senate and the  Clerk of the House of Representatives. 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 that result from chamber differences in data processing.  For example, Senate staff told us that it sets aside a greater proportion of  registration and report submissions than the House for manual review  before entering the information into the database, and as a result, the  Senate database would be slightly less current than the House database on  any given day pending review and clearance. Nevertheless, we do not have  reason to believe that the content of the two systems would vary  substantially. While we determined that the both the House and Senate  disclosure data were sufficiently reliable for identifying a sample of LD-2  disclosure reports and for assessing whether newly filed registrants also  filed required reports, we chose to use data from the Secretary of the  Senate for sampling LD-2 reports from the first three quarters of 2008 and  mid-year LD-203 contributions reports, and for matching second and third  quarter registrations with reports. Our analysis of the proportion of first  quarter registrations that filed corresponding reports used data from the  Clerk of the House of Representatives and is described in detail in our  previous report. 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—although we met 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 systematic  random sample of 100 LD-2 reports. We excluded “no activity” reports and  drew our sample from 40,169 activity reports filed for the first three  quarters available in the public Senate database, as of our final download  date of October 28, 2008. Our sample is based on a systematic random  selection, and it is only one of a large number of samples that we might  have drawn. We sorted firms by the number of LD-2 reports they filed and  then drew a systematic sample of LD-2 reports to ensure that our sample  contained reports from all sizes of firms. 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  is the interval that would contain the actual population value for 95  percent of the samples that we could have drawn. All percentage estimates  in this report have 95 percent confidence intervals of within plus or minus  10.4 percentage points of the estimate itself, unless otherwise noted. When  estimating compliance with certain of the elements we examined, we base  our estimate on a one-sided 95 percent confidence interval to generate a  conservative estimate of either the minimum or maximum percentage of  reports in the population exhibiting the characteristic.
We contacted each lobbyist in our sample and asked them to provide  support for key elements in their reports, including:  the amount of income reported for lobbying activities;  the amount of expenses reported on lobbying activities;  the names of lobbyists who had held covered official positions;  the houses of Congress and federal agencies that they lobbied;  the names of foreign entities with interest in the client;  the names of individuals no longer acting as a lobbyist for the client; and  the names of any member organizations of a coalition or association that  actively participated in lobbying activities on behalf of the client.
In addition, we determined if each individual lobbyist listed on the LD-2  report had filed a semiannual LD-203 contribution disclosure report.
Our work to examine lobbyists’ compliance was limited to reviewing  documentation provided by the lobbyists and, where available,  information from publicly available databases. In instances where  documentation or information from databases was not available, we asked  lobbyists to provide oral explanations and have identified those instances  in our report. Neither the law nor guidance currently specifies any  documentation requirements in relation to information reported under the  Act.
Prior to interviewing lobbyists about each LD-2 report in our sample, we  conducted an open-source search to determine whether each lobbyist  listed on the report appeared to have held a covered position required to  be disclosed. For lobbyists registered prior to January 1, 2008, covered  positions held within 2 years of the date of the report must be disclosed;  this period was extended to 20 years for lobbyists who registered on or  after January 1, 2008. Lobbyists are only required to disclose covered  positions on their first LD-2 report for a specific client, and consequently  those who held a reportable covered position may have disclosed the  information on an LD-2 report filed prior to the report we examined as  part of our random sample. To identify likely covered positions, we  examined lobbying firms’ Web sites and conducted an extensive open- source search of Leadership Directories, Who’s Who in American Politics,  Carroll’s, US Newspapers through Nexis, and Google, for lobbyists’ names  and variations on their names. We then asked lobbying entities about each  lobbyist we had identified, to determine whether the LD-2 report  appropriately disclosed covered positions or whether there was some  other acceptable reason for the omission (such as having disclosed the  position on an earlier LD-2 report). Despite our rigorous search protocol, it  is possible that our search failed to identify omitted reports of covered  positions. Thus, our estimate of the proportion of reports with lobbyists  who failed to appropriately disclose a covered position is a lower bound  estimate of the minimum proportion of reports that failed to report such  positions.
In addition to examining the content of LD-2 disclosure reports, we  confirmed whether mid-year LD-203 contribution 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 contribution reports were appropriately filed for the  population of firms or lobbyists listed on LD-2 reports.
In our previous report, we used data filed with the Clerk of the House of  Representatives to match newly filed registrations with corresponding  disclosure reports for the first quarter of 2008. Using direct matching and  text and pattern matching procedures, we were able to identify matching  disclosure reports for 1,358 of the 1,460, or 93 percent, of the newly filed  registrations. To determine if the Act’s requirement for registrants to file a  report in the quarter of registration was met during the second and third  quarters of 2008, we matched registrations in the Senate’s lobbying  disclosure databases as of our download date to second and third quarter  report filings using data and text matching procedures. We first matched  reports and registrations using both the registrant and client identification  numbers. For reports we could not match by identification numbers, 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. We identified corresponding quarterly reports for  1,407 of 1,592 (88 percent) of registrations filed during the second quarter,  and for 851 of 1,082 (79 percent) of new third quarter registrations. We  could not readily identify matches in the report database for the remaining  registrations using electronic means. The difference in the match rate  between the second and third quarters may result partly from Senate  processing procedures and the timing of our data download. The Senate  sets aside a greater proportion of cases for manual review prior to entry  into its database, resulting in some delay in data entry, which might result  in a greater proportion of second quarter than third quarter registrations  and reports having been processed as of the date we downloaded the data.
To assess the accuracy of the LD-203 semiannual contribution reports, we  first excluded reports that did not list any contributions and sorted  remaining reports according to the number of contributions listed on each  report. We then selected a systematic random sample of 100 LD-203  reports from the approximately 6,048 LD-203 reports that contain  contributions. The sample allows the team to generalize to the population  of LD-203 reports with contributions within a 95 percent confidence  interval of plus or minus 10.2 percentage points or less.
To assess the accuracy of contributions listed on the LD-203 semiannual  contributions reports, we used information in the Federal Election  Commission’s (FEC) contribution disclosure database. GAO interviewed  staff at the FEC responsible for administering the database and  determined that the data reliability is suitable for the purpose of  confirming whether a FEC-reportable disclosure listed on an LD-203 had,  in fact, been reported to the FEC. Since approximately 97 percent of  reported contributions are identified as Federal Election Campaign Act  (FECA) contributions, which should be reported to the FEC, the team was  able to readily verify 93 percent of entries using the FEC database. The  verification process required text and pattern matching procedures, and  the team used professional judgment when assessing whether an  individual listed is the same individual filing an LD-203. Given the lag time  between when a lobbyist or organization might make a contribution and  when a political action committee (PAC) or campaign might cash or report  the contribution, some flexibility had to be built into the analysis when  examining the dates of entries. Our methodology considered a pair of  entries to be a “match” if the date of the FEC entry was no more than 2  weeks earlier or 1 month later than the date entered on the LD-203 report.
For FEC-reportable contributions that could not be readily matched in the  FEC data (perhaps as a result of a delays in a PAC or campaign’s filing of  the contribution or discrepancies between the name on the LD-203 and the  name on the FEC filing), we contacted each lobbyist to ask for  documentation of the contribution. In several cases, the contribution  reported had not been processed by the campaign or had been refunded to  the donor and therefore did not appear in a campaign’s FEC filing.  Additionally, we also asked lobbyists to document reports of honorary and  meeting expenses that were not reported to the FEC. Lobbyists were able  to provide supplementary documentation for most honorary and meeting  expenses, as well as the majority of other contributions we asked about, in  the form of invoices, acknowledgment letters, and cancelled checks or  other financial records.
We obtained views from lobbyists included in our sample of reports on  any challenges to compliance and how the challenges might be addressed.  To describe the process used in referring cases to the U.S. Attorney’s  Office for the District of Columbia and to provide information on the  resources and authorities used by the Office in its role in enforcing  compliance with HLOGA, we interviewed officials from the Office,  obtained information from those involved in the referral process, and  obtained data on the number of cases referred, pending, and resolved.
Our objectives did not include identifying lobbyists who failed to register  and report in accordance with HLOGA requirements, or whether for those  lobbyists that did register and report, all lobbying activity was disclosed.  We conducted this performance audit from December 2008 through March  2009 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: We used each report’s filing identification number to select our random  sample of lobbying disclosure reports. Each identification number is  linked to a unique pair of registrant and client names.
section_title: Appendix III: Full List of Sampled Lobbying Contribution Reports
paragraphs: Appendix III: Full List of Sampled Lobbying  Contribution Reports Lobbyist Name / Lobbying Firm Name  American Association of Port Authorities  American College of Physician Services, Inc.
Associated General Contractors Of America  Berry Thompson, Marilyn Ann  Boisclair, Jon L.
Bridgestone Americas Holding, Inc.
CARE Action Now, Inc.
Carlson, Donald G.
Caterpillar Inc.
CONSOL Energy Inc.
Dixson, Herbert Lee Jr.
Green, Kaylene  Lobbyist Name / Lobbying Firm Name  H&R Block, Inc.
Haywood, Julian A.
Hecht Spencer & Associates, Inc.
Hilbert, John W. III  Howard, Paul A. II  Hunter, Justin R.
Johnson Controls, Inc.
Kentz, Andrew W.
Lasoff, Laurence ‘Larry’  Lehman, Kathryn H.
Lehman, Trent R.
MacAndrews South Corporation (Formerly MacAndrews & Forbes Holdings, Inc.)
Mattel, Inc.
Metz, Patrick T.
Miller/Wenhold Capitol Strategies, LLC  Moler, Elizabeth A.
Nicely, Matthew R.
O’Hanlon, G John  OSI Restaurant Partners, LLC  Petrich, Jeffrey Paul  Lobbyist Name / Lobbying Firm Name  Raffaniello & Associates, LLC  Romans, Lawrence J.
Smith, Patricia P.
Stirling Strategic Services, LLC  The Cook Group, Inc.
The Mike Waite Company, Inc.
Thibau, Janelle C.
Unilever United States, Inc.
Lobbyist is deceased.
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contacts named above, Robert J. Cramer, Associate  General Counsel; William M. Reinsberg, Assistant Director; Shirley A.  Jones, Assistant General Counsel; Katrina D. Taylor, Analyst-in-Charge;  Colleen M. Candrl; Ellen T. Grady; Dean P. Gudicello; Anna Maria Ortiz;  Melanie H. Papasian; Sabrina C. Streagle; and Gregory H. Wilmoth made  key contributions to this report.
Assisting with lobbyist’s file reviews and interviews were Bion N. Bliss,  Jessica Bryant-Bertail, Laura M. Choi, Lauren S. Fassler, Amy C.  Friedlander, Eric D. Gorman, Jacquelyn N. Hamilton, Pamela N. Harris,  Jenny Hwang, Crisitian V. Ion, Lawrence M. Korb, Edward C. Leslie,  Jeffrey McDermott, Jeffrey M. Niblack, Anthony R. Patterson, Cheryl M.  Peterson, Valerie Pfeiffer, Margaret E. Phelps Ranen, Crystal Robinson,  and Andrew J. Stephens.