2011 Lobbying Disclosure: Observations on Lobbyists' Compliance with Disclosure Requirements
Published: 2012-03-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: HLOGA requires lobbyists to file quarterly lobbying disclosure reports and semiannual reports on certain political contributions. HLOGA also requires that GAO annually (1) determine the extent to which lobbyists can demonstrate compliance with disclosure requirements, (2) identify any challenges to compliance that lobbyists report, and (3) describe the resources and authorities available to the Office and the efforts the Office has made to improve its enforcement of the LDA. This is GAOs fifth report under the mandate. GAO reviewed a stratified random sample of 100 quarterly LD-2 reports filed for the third and fourth quarters of calendar year 2010 and the first and second quarters of calendar year 2011. GAO also reviewed two random samples totaling 160 LD-203 reports from year-end 2010 and midyear 2011. This methodology allowed GAO to generalize to the population of 51,792 disclosure reports with $5,000 or more in lobbying activity and 32,301 reports of federal political campaign contributions. GAO also met with officials from the Office regarding 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. 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 on the draft of this report.
section_title: What GAO Found
paragraphs: Most lobbyists were able to provide documentation to demonstrate compliance with disclosure requirements. This finding is similar to GAOs results from prior reviews. There are no specific requirements for lobbyists to create or maintain documentation related to disclosure reports they file under the Lobbying Disclosure Act of 1995 as amended (LDA). Nonetheless, and similar to last years results, for two key elements of the reports (income and expenses), GAO estimates that lobbyists could provide documentation to support approximately 93 percent of the disclosure reports for the third and fourth quarters of 2010 and the first and second quarters of 2011. According to documentation lobbyists provided for income and expenses, GAO estimates that the amounts disclosed were properly reported and supported for 63 percent of the quarterly lobbying disclosure (LD-2) reports. For lobbyists and lobbying firms listed on the LD-2 report, an estimated 86 percent filed year-end 2010 or midyear 2011 reports of federal political campaign contributions (LD-203) reports as required. For LD-203 political contributions reports, GAO estimates that a minimum of 4 percent of all LD-203 reports omitted one or more reportable political contributions that were documented in the Federal Election Commission database. Fewer lobbyists17 this year versus 21 in the prior yearstated that they planned to amend their LD-2 report following GAOs reviews to make correction on one or more data elements. As of March 2012, 9 of 17 amended their disclosure reports.
Lobbyists are required to file LD-2 reports for the quarter in which they first register. The majority of lobbyists who newly registered with the Secretary of the Senate and Clerk of the House of Representatives in the third and fourth quarters of 2010 and first and second quarters of 2011 filed required disclosure reports for that period. GAO could identify corresponding reports on file for lobbying activity for 88 percent of registrants.
The majority of lobbyists felt that the terms associated with disclosure reporting were clear and understandable and the requirements were easy to meet. However, a few lobbyists reported challenges in complying with the LDA.
The U.S. Attorneys Office for the District of Columbia (the Office) stated that it has resources and authorities to pursue civil or criminal cases for noncompliance with LDA requirements. To enhance enforcement efforts and support the 17 staff who have been working on compliance issues on a part-time basis, the Office hired one contract staff member in September 2010 who works full-time on lobbying compliance issues. The Office has primarily focused on contacting lobbyists who have potentially violated the LDA by not filing disclosure reports. In November 2011, the Office settled its first enforcement case since the enactment of the Honest Leadership and Open Government Act of 2007 (HLOGA), and reached a $45,000 settlement with a lobbying firm that had been referred to the Office repeatedly for failure to file disclosure reports. More than half of the 561 lobbyists who were contacted for noncompliance with LD-2 requirements for calendar years 2009 and 2010 are now compliant. Approximately 1,081 lobbyists were referred by the Secretary of the Senate for noncompliance with LD-203 requirements for calendar year 2009.

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 (LDA) to require lobbyists to file  quarterly lobbying disclosure reports and semiannual reports on certain  political contributions. HLOGA also increased civil penalties and added  criminal penalties for failure to comply with LDA requirements. The  mandate requires GAO to audit the extent of lobbyists’ compliance with  the requirements of the 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  fifth 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 LDA, as  amended, by providing documentation to support information contained in  reports filed under the LDA, (2) identify any challenges that lobbyists  report to compliance and potential improvements, and (3) describe the  resources and authorities available to the Office in its role in enforcing  compliance with the LDA and the efforts the Office has made to improve  its enforcement of the LDA.
To fulfill our audit requirement in HLOGA, we took the following steps:  To determine the extent to which lobbyists can demonstrate compliance,  we selected a stratified random sample of 100 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 2010 and the  first and second quarters of calendar year 2011. 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)  who we randomly selected for our review of LD-2 reports. This  methodology allows us to generalize to the population of these LD-2  reports. We then contacted each lobbyist or lobbying firm in our sample  and asked them to provide supporting 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. All  lobbyists in our sample responded to our requests for supporting  documentation.
To determine whether lobbyists’ reported their federal political  contributions as required by the LDA, we analyzed stratified random  samples of year-end 2010 and midyear 2011 semiannual federal political  contributions (LD-203) reports. The samples contain 80 LD-203 reports  that have contributions listed and 80 LD-203 reports that list no  contributions. 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 the contributions identified in our sample to determine  whether all contributions reported in the FEC database were also  reported on the LD-203s, 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 (commonly referred to as LD-1s) filed in the third and fourth  quarters of 2010 and the first and second quarters of 2011 to the  corresponding LD-2 reports on file with the Clerk of the House.
To identify challenges and potential improvements to compliance, we  used structured interviews to obtain views from lobbyists included in our  sample of reports.
To describe the resources and authorities available to the Office and  efforts the Office has made to improve its enforcement of the LDA, we  interviewed officials from the Office and obtained information on the level  of staffing and resources dedicated to the enforcement of the LDA, and  the practices they have established to enforce the LDA. The Office  provided us with information on the processes used to enforce  compliance with the LDA and reports from the tracking system on the  number and status of referrals.
The mandate does not require GAO 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 contributions represented the full extent of lobbying activities  that took place.
We conducted this performance audit from June 2011 to March 2012 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 (as opposed to  separately with the Secretary of the Senate and the Clerk of the House as  was done prior to HLOGA). 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 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 the registration and reporting  requirements of the LDA and develop common standards, rules, and  procedures for compliance with the LDA. The Secretary and the Clerk  review the guidance semiannually. The guidance was last revised and  published in December 2011. The guidance provides definitions of terms  in the LDA, elaborates on the registration and reporting requirements,  includes specific examples of different scenarios, and provides  explanations of why certain scenarios prompt or do not prompt disclosure  under the LDA. In meetings with the Secretary of the Senate and Clerk of  the House, they stated that they consider information we report on  lobbying disclosure compliance when they periodically update the  guidance.
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 $11,500. Amounts are adjusted for inflation and published in the LDA guidance. information on which federal agencies and House(s) of Congress the  lobbyist contacted on behalf of the client during the reporting period;  the amount of income related to lobbying activities received from the  client (or expenses for organizations with in-house lobbyists) during  the quarter rounded to the nearest $10,000; and a list of constituent organizations that contribute more than $5,000 for  lobbying in a quarter and actively participate in planning, supervising,  or controlling lobbying activities, if the client is a coalition or  association.
The LDA, as amended, also requires lobbyists to report certain  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 reports. 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 the Senate and House 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 and the Clerk of the House, along with 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, requesting that the lobbyists file reports or correct reported  information. 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: Documentation to Support Some LD-2 Report Elements Varied, but Most Newly Registered Lobbyists Met Disclosure Reporting Requirements
subsections: section_title: Most Lobbyists Provided Documentation for LD-2 Reports, but Documentation for Some Report Elements Did Not Match Their Disclosure Reports
paragraphs: As in our prior reviews, most lobbyists reporting $5,000 or more in income  or expenses were able to provide documentation to varying degrees for  the reporting elements in their disclosure reports. Lobbyists for an  estimated 93 percent of LD-2 reports were able to provide documentation  to support the income and expenses reported for the third and fourth  quarters of 2010 and the first and second quarters of 2011. Last year,  we reported that lobbyists for an estimated 97 percent of LD-2 reports  were able to provide documentation for income and expenses for the  quarters under review. The most common forms of documentation  provided included invoices for income and payroll records for expenses.  According to the documentation lobbyists provided for income and  expenses, we estimate that the amount disclosed was properly rounded  to the nearest $10,000 and supported for 63 percent (59 of 93) of the LD- 2 reports; differed by at least $10,000 from the reported amount in 16  percent (15 of 93) of LD-2 reports; and had rounding errors in 21 percent  (19 of 93) of LD-2 reports.
Figure 1 illustrates the extent to which lobbyists were able to provide  documentation to support selected elements on the LD-2 reports.
Of the 100 LD-2 reports in our sample, 47 disclosed lobbying activities at  executive branch agencies, with lobbyists for 19 of these reports  providing documentation to support lobbying activities at all agencies  listed.
Table 1 lists the common reasons why lobbyists we interviewed said they  did not have documentation for some of the elements of their LD-2  reports.
The LDA requires a lobbyist to disclose previously held covered positions  when first registering as a lobbyist for a new client, either on the LD-1 or  on the LD-2 quarterly filing when added as a new lobbyist. Based on our  analysis, we estimate that a minimum of 11 percent of all LD-2 reports did  not properly disclose one or more previously held covered positions.  This finding is consistent with last year’s report. Lobbyists for an  estimated 86 percent of LD-2 reports filed year-end 2010 or midyear 2011  LD-203 contribution reports for all of the lobbyists and lobbying firms  listed on the report as required. All individual lobbyists and lobbying  firms reporting specific 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: Fewer Lobbying Firms Indicated That They Planned to Amend Their LD-2 Reports as a Result of GAO’s Review
paragraphs: Compared to our last review, fewer lobbying firms indicated that they plan  to amend their LD-2 reports as a result of our review. This year, lobbying  firms for 17 of the LD-2 reports in our sample indicated that they planned  to amend their LD-2 reports as a result of our review. Last year, 21  lobbying firms indicated they planned to amend their LD-2 reports. As of  March 2012, 9 lobbying firms have amended their LD-2 reports  (compared to 12 lobbying firms last year).
Specific reasons for filing amendments included the following:
Decreasing reported income from $60,000 to $30,000
Increasing the reported income from $20,000 to $30,000
Changing the client’s name on the LD-2 report
Adding additional information about the specific issues lobbied
Adding contact with the House
Removing reported contact with the Senate
Adding a federal agency
Adding covered positions
Adding a lobbyist  In addition, lobbying firms filed amendments for 3 (compared to 8 reports  last year) of the LD-2 reports in our sample after being notified that their  LD-2 reports were selected as part of our random sample but prior to our  review.
section_title: Some LD-203 Contribution Reports Omitted Political Contributions Listed in the FEC Database
paragraphs: We estimate that overall, a minimum of 4 percent of reports failed to  disclose one or more contributions.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-2 reports in our  sample. The sample of LD-203 reports we reviewed contained 80 reports  with political contributions and 80 reports without political contributions. Of  the 80 LD-203 reports sampled with contributions reported, 12 reports  omitted one or more contributions. Of the 80 LD-203 reports sampled with  no contributions reported, 2 reports failed to disclose contributions listed  in the FEC database.
section_title: Most Newly Registered Lobbyists Filed Disclosure Reports as Required
paragraphs: Of the 3,802 new registrations we identified from fiscal year 2011, we  were able to match 3,357 reports filed in the first quarter in which they  were registered. This is a match rate of 88 percent of registrations, which  is consistent with our 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 2010 and the first and  second quarters of 2011 from the House Lobbyist Disclosure Database to  their corresponding quarterly disclosure reports using an electronic  matching algorithm that allows for misspelling and other minor  inconsistencies between the registrations and reports.
section_title: While Most Lobbying Firms Reported That the Disclosure Requirements Were Easy or Somewhat Easy to Meet, a Few Lobbyists Reported Challenges in Complying with the Act
subsections: section_title: Disclosure Requirements Were Easy or Somewhat Easy to Meet for Most Lobbying Firms
paragraphs: As part of our review, 90 different lobbying firms were included in our  sample. Of the 90 lobbying firms, 86 reported that the disclosure  requirements were “easy” or “somewhat easy” to meet. Of the 86  lobbying firms in our sample of LD-2 reports that said the requirements  were “easy” or “somewhat easy” to meet, 61 lobbyists indicated that the  requirements were “easy” and 25 indicated that the requirements were  “somewhat easy” to meet. Compared to last year, fewer lobbyists told us  that they found the quarterly reporting requirement difficult to meet. This  year, 5 lobbyists we interviewed (compared to 10 lobbyists last year)  said that it was difficult to file reports quarterly or difficult to meet the 20  day filing deadline. The deadline for filing disclosure reports is 20 days  after each reporting period, or the first business day after the 20th day if  the 20th day is not a business day.
section_title: A Few Lobbyists Cited Challenges in Complying with the Act
paragraphs: While most lobbyists we interviewed told us they thought that the terms  associated with LD-2 reporting requirements were clear, a few lobbyists  highlighted areas of confusion in applying some aspects of LDA reporting  requirements. This is consistent with our prior report. We asked the  lobbyists we interviewed to rate various terms associated with LD-2  reporting as being “clear and understandable,” “somewhat clear and  understandable,” or, “not clear and understandable.” Figure 2 shows the  terms associated with LD-2 reporting that the lobbyists were asked to rate  and how they responded to each term. Table 2 summarizes the feedback  we obtained from the lobbying firms in our sample of reports that rated  the lobbying terms as either “not clear and understandable” or “somewhat  clear and understandable.”
section_title: U.S. Attorney’s Office Actions to Enforce the LDA
subsections: section_title: The Office’s Authorities, Processes, and Resources to Enforce LDA Compliance
paragraphs: The Office stated that it has sufficient resources and authority to enforce  compliance with LDA requirements, including imposing civil or criminal  penalties for noncompliance. In a prior report, we recommended that the  Office develop a structured approach for the tracking and recording of  enforcement activities for lobbyists whom the Secretary of the Senate and  the Clerk of the House identify as failing to comply with LDA  requirements.to track when referrals are received, record reasons for referrals, record  actions taken to resolve them, and assess the results of actions taken.  The system has allowed the Office to take actions to achieve compliance  with the LDA. The Office uses the summary reports to track progress and  quickly identify lobbyists that continuously fail to comply. In addition, the  Office hired one contract staff member in September 2010 to work on  lobbying compliance issues on a full-time basis. This has enhanced the  Office’s ability to pursue enforcement actions by centralizing the process  of checking and resolving referrals. The Office has 17 staff to assist with  lobbying compliance issues on a part-time basis.
As a result, the Office developed a system that allowed it  To enforce LDA 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 that lobbyists comply  with the law by promptly filing the appropriate disclosure documents. Not  all referred lobbyists receive noncompliance letters because some of the  lobbyists have terminated their registrations, or lobbyists may have  complied by filing the report before the Office sent noncompliance letters.  In addition to sending letters, the contractor sends e-mails and calls  lobbyists to inform them of their need to comply with the LDA  requirements. Figure 3 describes the process and time frames of the  Office’s enforcement efforts.
Typically, 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.  Office officials said that they could not set strict time frames or deadlines  for closing out pending cases because of these varying circumstances. In  addition, they stated that setting strict deadlines might encourage  noncompliance if a lobbyist believes that a referral will close out on a  certain date if he or she never responds. Although the Office is concerned  with all noncompliance, it places a greater emphasis on pursuing  lobbyists and registrants who continue to lobby and avoid filing required  disclosure reports. A similar approach to the LD-2 enforcement process is  being developed for tracking and reporting noncompliance with LD-203  reporting.
section_title: Update on Enforcement for the 2009 and 2010 Reporting Periods
paragraphs: Since the enactment of HLOGA, both the Secretary of the Senate and the  Clerk of the House have made quarterly referrals for noncompliance with  the LD-2 requirements. Table 3 shows the number of referrals the Office  received from both the Secretary and the Clerk for noncompliance with  reports filed for the 2009 and 2010 reporting periods and the actions  taken by the Office.
As of January 25, 2012, the Office has received 118 referrals from the  Clerk of the House for the first and second quarter for the 2011 LD-2  reporting period, but has not yet received any referrals from the Secretary  of the Senate for the 2011 reporting period.
As shown in figure 4, about 56 percent (312 of 561) of the lobbyists who  received letters, phone calls, or e-mails from the Office for noncompliance  for 2009 and 2010 LD-2 referrals have either filed reports or have  terminated their registrations and are now considered compliant.  Additionally, about 43 percent (243 of 561) are pending action because  the Office did not receive a response from the lobbyist and plans to  conduct additional research to determine if it can locate the lobbyist. The  remaining 1 percent of (6 of 561) referrals did not require action because  the lobbyist or client was no longer in business or the lobbyist was  deceased. In addition, lobbyists were found to be compliant when the  Office received the referral. This may occur when lobbyists have  responded to the contact letters from the Secretary of the Senate and  Clerk of the House after the Office has received the referrals.
The Office has also received referrals from the Secretary of the Senate  and the Clerk of the House for noncompliance with LD-203 reports. The  Office sends noncompliance letters to the registered organizations and  includes the names of the lobbyists who did not comply with the  requirement to report federal campaign and political contributions and  certify that they understand the gift rules. For noncompliance in the 2009  filing period, as of January 25, 2012, the Office has received LD-203  referrals from the Secretary of the Senate for 1,081 lobbyists. As of   March 23, 2012, the Office received LD-203 referrals from the Secretary  of the Senate for noncompliance in the 2010 filing period and from the  Clerk of the House for the 2009 and 2010 filing periods; however, the  Office is still processing the referrals. As of February 22, 2012, the Office  has mailed 68 noncompliance letters to the registered organizations.  The registered organizations may receive a noncompliance letter listing  the name of more than one lobbyist. As a result, the number of letters  sent will not match the number of referrals now compliant, pending, and  with no action taken. However, 7 percent of (73 of 1,081) referrals did not  require action because the lobbyist was no longer in business, deceased,  or found to be compliant when the Office received the referral. This may  occur when lobbyists have responded to the contact letters from the  Secretary of the Senate and Clerk of the House after the Office has  received the referrals. Table 4 shows the status of enforcement actions  for LD-203 reporting after noncompliance letters were sent to registrant  organizations for 2009.
According to officials from the Office, many of the LD-2 pending cases  represent lobbyists who are no longer lobbying or have never filed a  disclosure report. Officials from the Office stated that they have been  working more closely with the Senate and the House to remove these  referrals before they are forwarded to the Office.
The Office has mailed noncompliance letters to the registered  organizations and included the names of the lobbyists who did not comply  with the LD-203 requirement. However, Office officials said that there  have been complaints within the lobbying community regarding  responsibility for responding to letters of noncompliance with LD-203  requirements. They also said that many lobbyists who were not in  compliance no longer lobby for the organizations affiliated with the  referrals, even though these organizations may be listed on their original  lobbyist registration. Organizations are not responsible for an individual  lobbyist’s failure to comply with the LD-203 disclosure requirement, nor  are they required to provide contact information for the noncompliant  lobbyist. Because of these limitations, officials told us that the Office has  very little leverage to bring individual lobbyists into compliance. Officials  stated that many of  the LD-203 pending cases remain open in an attempt  to locate the individual lobbyists, and as a result, these referrals may take  years to resolve.
section_title: Enforcement Settlement Actions
paragraphs: Since the enactment of the LDA in 1995, but before the 2008  implementation of HLOGA, the Office had settled with three lobbyists who  failed to file and collected civil penalties totaling about $47,000. In  November 2011, the Office settled its first enforcement case since the  enactment of HLOGA in 2007 and reached a $45,000 settlement with a  lobbying firm that had been referred to the Office repeatedly for failure to  file disclosure reports. HLOGA increased the penalties for offenses  committed after January 1, 2008. As stated earlier, a civil case could lead  to penalties up to $200,000, while a criminal case—usually pursued if  lobbyists’ noncompliance is found to be knowing and corrupt—could lead  to a maximum of 5 years in prison.
We previously reported that the Office planned to identify additional cases  of repeat LDA noncompliance for civil enforcement review in the spring  and summer of 2011. The Office conducted research and used the  system it developed to identify and track lobbyists and firms that have a  history of chronic noncompliance. As a result, the Office has developed a  “top 10 list” of noncompliant lobbyists whom it may potentially pursue for  enforcement actions using five civil enforcement attorneys who have  been assigned to review the cases.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Attorney General for review and  comment. We met with the Assistant U.S. Attorney for the District of  Columbia, who on behalf of the Attorney General responded that  Department of Justice had no comments of the draft of this report.
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) 512-6806 or mihmj@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 audit mandates 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 any challenges to compliance and potential improvements;  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, including  identifying trends in past lobbying disclosure compliance.
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 have 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, and 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 also told us during previous  reviews that they rely heavily on automated processing, and that while  they manually review reports that do not perfectly match in formation 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 calendar year 2010 and the first and second quarters of  calendar year 2011, as well as for sampling year-end 2010 and midyear  2011 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, although we consulted  with officials from each office, and they provided us with general  background information at our request and detailed information on data  processing procedures.
To assess the extent to which lobbyists could provide evidence of their  compliance with reporting requirements, we examined a stratified random  sample of 100 LD-2 reports from the third and fourth quarters of 2010 and  the first and second quarters of 2011. The third quarter 2010 LD-2 reports  were from our prior review and were included in the current review to  redistribute the LD-2 reports evenly across the calendar year for future  lobbying reviews. We excluded reports with no lobbying activity or with  income less than $5,000 from our sampling frame. The third quarter   2010 sample was drawn from 13,489 activity reports and we drew our  remaining sample from 38,303 activity reports filed for the fourth quarter  of 2010 and first and second quarters of 2011 available in the public  House database, as of our final download date for each quarter. This  allowed us to generalize to a population of 51,792 activity reports.  Our  sample is based on a stratified random selection, and it 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. All percentage  estimates in this report have 95 percent confidence intervals of within plus  or minus 10.0 percentage points or less 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 the maximum percentage of reports in the population  exhibiting the characteristic. 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.
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, Who’s Who in American  Politics, Legistorm, and U.S. newspapers through Nexis. 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, we conducted an additional review of the publicly available  Secretary of the Senate or Clerk of the House database to determine  whether the lobbyist properly disclosed the covered official position.  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. Despite our rigorous  search, it is possible that we failed to identify all previously held covered  official positions for all lobbyists listed. Thus, our estimate of the  proportion of reports with lobbyists who failed to properly disclose  covered official positions is a lower-bound estimate of the minimum  proportion of reports that failed to report such positions.
In addition to examining the content of the LD-2 reports, we confirmed  whether year-end 2010 or midyear 2011 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 2010  and the first and second quarters of 2011, we used data filed with the  Clerk of the House to match newly filed registrations with corresponding  disclosure reports. Using direct matching and text and pattern matching  procedures, we were able to identify matching disclosure reports for  3,357, or 88 percent, of the 3,802 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 32,301 total LD-203 reports.  The first sample contains 80 reports of the 10,646 reports with political  contributions and the second contains 80 reports of the 21,655 reports  listing no contributions. Each sample contains 40 reports from the year- end 2010 filing period and 40 reports from the midyear 2011 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  8.2 percentage points or less, and to within 4.2 percentage points of  estimate when analyzing both samples together. 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. For our fiscal year 2009 report, we  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 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 provide an explanation of why the contribution was 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 (such as honoraria or gifts to presidential  libraries).
To identify challenges to compliance, we used structured interviews and  obtained views from lobbyists included in our sample of LD-2 reports on  any challenges to compliance. In addition, we asked lobbyists to rate  various terms associated with disclosure requirements.
To describe the resources and authorities available to the Office, we  interviewed officials from the Office and obtained information on the level  of staffing and resources dedicated to the enforcement of the LDA. The  Office provided us with information on the processes used to enforce  compliance with the LDA, and reports from the tracking system on their  number and status of referrals.
To describe the efforts the Office has made to improve its enforcement of  the LDA, we interviewed officials from the Office and obtained information  on the processes used by the Office in following up on referrals from the  Secretary of the Senate and the Clerk of the House. The Office provided  us with reports from the tracking system on the number and status of the  referred cases.
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 all lobbying activity or contributions  were disclosed.
We conducted this performance audit from June 2011 through March  2012 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 5).
section_title: Appendix III: List of Sampled Lobbying Contribution Reports with Contributions and No Contributions Listed
paragraphs: See table 6 for a list of lobbyists and lobbying firms from our random  sample of lobbying contribution reports with contributions. See table 7 for  a list of 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, Robert Cramer, Associate  General Counsel; Bill Reinsberg, Assistant Director; Shirley Jones,  Assistant General Counsel; Crystal Bernard; Amy Bowser; Colleen  Candrl; Jill Lacey; Natalie Maddox; Donna Miller; Anna Maria Ortiz;  Melanie Papasian; and Katrina Taylor made key contributions to this  report.
Assisting with lobbyist file reviews were Vida Awumey, Alexandra  Edwards, Emily Gruenwald, Lois Hanshaw, Jeff McDermott, Stacey Ann  Spence, Megan Taylor and Daniel Webb.