2012 Lobbying Disclosure: Observations on Lobbyists' Compliance with Disclosure Requirements
Released: 2013-04-01T00:00:00


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) audit the extent to which lobbyists can demonstrate compliance with disclosure requirements, (2) identify challenges to compliance that lobbyists report, and (3) describe the resources and authorities available to the U.S. Attorney's Office for the District of Columbia and the efforts the Office has made to improve its enforcement of the LDA, as amended. This is GAO's sixth report under the mandate.

GAO reviewed a stratified random sample of 100 quarterly disclosure LD-2 reports filed for the third and fourth quarters of calendar year 2011 and the first and second quarters of calendar year 2012. GAO also reviewed two random samples totaling 160 LD-203 reports from year-end 2011 and midyear 2012. This methodology allowed GAO to generalize to the population of 49,286 disclosure reports with $5,000 or more in lobbying activity and 31,894 reports of federal political campaign contributions. GAO also met with officials from the Office to obtain updated statuses on the Office's efforts to focus resources on lobbyists who fail to comply.

GAO provided a draft of this report to the Attorney General for review and comment. 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 the disclosure requirements of the Lobbying Disclosure Act of 1995 (LDA), as amended by the Honest Leadership and Open Government Act of 2007 (HLOGA). For lobbying disclosure reports (LD-2), GAO estimates that

97 percent could provide documentation to support reported income and expenses;

74 percent of the reported income and expenses were properly rounded to the nearest $10,000;

85 percent filed year-end 2011 or midyear 2012 federal political campaign (LD-203) reports as required; and

a minimum of 15 percent of all LD-2 reports did not properly disclose formerly held covered positions as required. The LDA defines several types of covered positions, including members of Congress and their staff and certain executive branch officials.

These findings are consistent with reviews from prior years.

For LD-203 reports, GAO estimates that a minimum of 6 percent of all LD-203 reports omitted one or more reportable political contributions that were documented in the Federal Election Commission (FEC) database. Twenty-eight lobbyists in GAO's sample, compared to17 last year, stated that they planned to amend their lobbying registration (LD-1) or LD-2 report following GAO's review to correct one or more data elements. Of these, 19 lobbyists had filed an amended report as of March 2013.

The majority of newly registered lobbyists filed LD-2 reports as required. Lobbyists are required to file LD-2 reports for the quarter in which they first register. GAO could identify corresponding reports on file for lobbying activity for 90 percent of registrants, which is similar to last year's findings.

Most lobbyists in our sample rated the terms associated with LD-2 reporting as "very easy" or "somewhat easy" to understand with regard to meeting their reporting requirements. However, a few cited challenges to complying with the LDA, as amended, such as differentiating between lobbying and non-lobbying activities.

The U.S. Attorney's Office for the District of Columbia (the Office) stated that it has sufficient authority and resources to enforce compliance with LDA requirements, including imposing civil or criminal penalties for noncompliance. Officials reported that during the 2012 reporting period, the Office took steps to pursue legal action, made phone contacts, or sent emails to eight registrants that had been repeatedly referred for failure to file required disclosure reports. Four of the registrants filed the outstanding reports or terminated their registration after being contacted by an Assistant U.S. Attorney. Additionally, in September 2012, the Office reached settlement agreements with two of the registrants for $50,000 and $30,000 in civil penalties. As of March 2013, both firms have paid their fines in full and complied with their ongoing reporting requirements. In February 2013, the Office sent demand letters to the two other registrants who, as of March 2013, have not responded.

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 us 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  sixth 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 are able to demonstrate compliance with the  requirements of the LDA, as amended, for registrations and reports; (2)  identify challenges and potential improvements to compliance by  lobbyists, lobbying firms, and registrants, if any; and (3) describe the  resources and authorities available to the Office for the District of  Columbia 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 2011 and the  first and second quarters of calendar year 2012. 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, as amended, we analyzed stratified  random samples of year-end 2011 and midyear 2012 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 2011 and the first and second quarters of 2012 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 its  efforts to improve its enforcement of the LDA, we interviewed officials  from the Office and obtained updated information on the capabilities of  the system they established to track and report compliance trends and  referrals, and other practices established to focus resources on  enforcement of the Act. The Office provided us with updated reports from  the tracking system on the number and status of referrals and chronically  noncompliant offenders.

The mandate does not require us to identify lobbyist organizations that  failed to register and report in accordance with LDA requirements. The  mandate also does not require us to determine whether reported lobbying  activity or contributions represented the full extent of lobbying activities  that took place.

We conducted this performance audit from June 2012 to April 2013 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 of the Senate  and the Clerk of the House review the guidance semiannually. The  guidance was last reviewed and revised in February 2013. 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. The Secretary of the Senate and  Clerk of the House previously told us 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.

Lobbying firms are required to file a registration with the Secretary of the  Senate and the Clerk of the House for each client if the firms receive or  expect to receive over $3,000 in income or $12,500 in incurred expenses  from that client for lobbying activities. Lobbyists are also required to  submit a quarterly report, also known as an LD-2 report, for each  registration filed. The registration and subsequent LD-2 reports contain  the following elements, if applicable:  the name of the organization, lobbying firm, or self-employed  individual that is lobbying on that client’s behalf; a list of individuals who acted as lobbyists on behalf of the client  during the reporting period; whether any lobbyists served as covered executive branch or  legislative branch covered officials in the previous 20 years;  the name of and further information about the client, including a  general description of its business or activities;  information on the specific lobbying issue areas and corresponding  general issue codes used to describe lobbying activities; any foreign entities that have an interest in the client; whether the client is a state or local government; information on which federal agencies and houses 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  U.S. Attorney’s Office for the District of Columbia 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: Lobbyists Provided Documentation for Most 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 97 percent of LD-2 reports (97 out of 100) were able to provide  documentation to support the income and expenses reported for the third  and fourth quarters of 2011 and the first and second quarters of 2012.  Lobbyists most commonly provided documentation in the form of invoices  and contracts. Last year, lobbyists were able to provide documentation for  income and expenses for an estimated 93 percent of LD-2 reports for the  quarters under review. Table 1 compares the number of LD-2 reports  with differences in the amount of income and expenses reported by at  least $10,000 and those with rounding errors in documentation for income  and expenses provided for LD-2 reports from 2010 through 2012.

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, 51 disclosed lobbying activities at  executive branch agencies with lobbyists for 30 of these reports providing  documentation to support lobbying activities at all agencies listed.

Table 2 lists common reasons why some 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 15 percent of all LD-2 reports did  not properly disclose one or more previously held covered positions  compared to 11 percent for 2011 and 9 percent for 2010. These results  are generally consistent from 2010 through 2012. Of those that failed to  disclose properly, 11 LD-2 amendments and 2 LD-1 amendments were  filed to properly disclose covered positions and two lobbying firms  addressed the omitted covered positions on subsequent LD-2 filings.

Two lobbyists said they were confused as to whether intern positions are  covered positions. One of those lobbyists amended the LD-2 report to  disclose an unpaid internship. However, officials from the Office of the  Secretary of the Senate and the Clerk of the House clarified that unpaid  internships are not considered covered official positions, and are not  required to be disclosed. Two other lobbyists in our sample said they  were unaware of the HLOGA requirement to disclose covered positions  held within the last 20 years of first acting as a lobbyist for a client.

Lobbyists for an estimated 85 percent (85 of 100) of LD-2 reports filed  year-end 2011 or midyear 2012 LD-203 contribution reports for all  lobbyists and lobbying firms listed on the report as required. This finding  is consistent with previous reports. 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: More 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, more lobbying firms indicated that they  planned to amend their LD-2 reports as a result of our review. This year,  for 28 of the LD-2 reports in our sample, lobbyists indicated they planned  to amend their LD-1 or LD-2 reports as a result of our review. As of March  2013, 16 of those 28 lobbying firms had filed an amended LD-2 report  and 3 lobbying firms amended their LD-1 report to make changes to  information that was previously reported. Last year, for 17 of the LD-2  reports in our sample, lobbyists indicated they planned to amend their LD- 2 reports, and as of March 2012, 9 had done so.

Table 3 lists reasons lobbying firms in our sample cited for planning to  amend their LD-1 or LD-2 reports and the number of amendments filed.

In addition, 2 lobbying firms did not indicate plans to file an amendment at  the time of our review, but later filed amended reports after meeting with  us to add an issue area code and remove a lobbyist. Similar to our 2012  report, lobbying firms filed amendments for 3 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: As part of our review, we compared contributions listed on lobbyists and  lobbying firms’ LD-203 reports against political contributions reported in  the FEC database to identify whether political contributions were omitted  on LD-203 reports in our sample. The sample of LD-203 reports we  reviewed contained 80 reports with contributions and 80 reports without  contributions. We estimate that overall, a minimum of 6 percent of reports  failed to disclose one or more contributions. Table 4 compares the  number of LD-203 reports that omitted political contributions for 2010  through 2012.

Of the 3,074 new registrants we identified from fiscal year 2012, we were  able to match 2,753 reports filed in the first quarter in which they were  registered. This is a match rate of 90 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 2011 and the first and second quarters  of 2012 from the House Lobbyists 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 Very Easy or Somewhat Easy to Meet, A Few Lobbyists Reported Challenges in Complying with the Act
paragraphs: As part of our review, 90 different lobbying firms were included in our  sample. Of the 90 different lobbying firms in our sample, 32 reported  that the disclosure requirements were “very easy” to comply with, 39  reported they were “somewhat easy” and 19 reported that the disclosure  requirements were “somewhat difficult” or “very difficult”. Last year, we  also asked the lobbying firms in our sample if they found the disclosure  requirements easy to meet. Of those 90 firms, 61 agreed that the  requirements were “easy” to meet, 25 reported that requirements were  “somewhat easy” to meet, and 4 reported that the disclosure  requirements were “not easy” to meet.

In addition, some lobbyists provided feedback identifying specific  challenges to compliance, as shown in figure 2. The most frequently cited  challenges were differentiating between lobbying and non-lobbying  activities and determining the most appropriate issue code to use.

Most lobbyists we interviewed rated the terms associated with LD-2  reporting requirements as “very easy” or “somewhat easy” to understand  with regard to meeting their reporting requirements. Figure 3 shows how  lobbyists rated the ease of understanding the terms associated with LD-2  reporting.

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 authority and resources to enforce  compliance with LDA requirements, including imposing civil or criminal  penalties for noncompliance. Noncompliance of LDA reporting  requirements refers to the lobbying firm’s failure to file its quarterly LD-2  disclosure reports and semiannual LD-203 reports on certain political  contributions by the filing deadline. In our 2012 report, we described the  Office’s process for addressing referrals received from the Secretary of  the Senate and Clerk of the House. Additionally, we described the  Office’s staff and use of its LDA database to pursue enforcement actions  and centralize the process of checking and resolving referrals. The LDA  database allows the Office to track when LD-2 and LD-203 referrals are  received, record reasons for referrals, record actions taken to resolve  them, and assess the results of actions taken.

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 lobbyists to comply  with the law by promptly filing the appropriate disclosure reports, and  inform lobbyists of potential civil and criminal penalties for not complying.  In addition to sending letters, a contractor sends e-mails and calls  lobbyists to inform them of their need to comply with LDA reporting  requirements. Not all referred lobbyists receive noncompliance letters, e- mails, or phone calls because some of the lobbyists have terminated their  registrations or filed the required financial disclosure reports before the  Office received the referral.

Typically, lobbyists resolve their noncompliance issues by filing the  reports or terminating their registration. As we previously reported,  resolving referrals can take anywhere from a few days to years  depending on the circumstances. During this time, the Office continues  to monitor and review all outstanding referrals and uses summary reports  from the database to track the overall number of referrals that become  compliant as a result of receiving an e-mail, phone call, or noncompliance  letter. According to officials from the Office, more referred lobbyists are  being contacted by e-mail and phone calls, which has decreased the  number of noncompliance letters the Office sends to lobbyists. Officials  from the Office stated that the majority of these e-mails and calls result in  the registrant becoming compliant without sending a letter. Currently, the  system collects information on contacts made by e-mail and phone calls  in the notes section of the referral entry in the database, but does not  automatically tabulate the number of e-mails and phone calls to lobbyists,  as it does for letters sent. Officials stated they would consider developing  a mechanism for tracking e-mails and phone calls.

section_title: Status of LD-2 Enforcement Efforts for the 2009, 2010, 2011 and 2012 Reporting Periods
paragraphs: As of March 5, 2013, the Office had received approximately 2,062  referrals from both the Secretary of the Senate and the Clerk of the  House for noncompliance with LD-2 requirements for the 2009, 2010,  2011, and 2012 reporting periods. Table 5 shows the number of referrals  the Office received and the number of noncompliance letters the Office  sent during these reporting periods. The number of referrals received will  not match the number of letters sent because some referred lobbyists  receive a phone call or e-mail instead of a noncompliance letter.  Additionally, letters sent includes those sent to referred registrants who  may have been referred for noncompliance with more than one client.  According to officials from the Office, the Office has not sent any  noncompliance letters for the 2012 reporting period because it is still  processing the referrals it received for prior reporting periods.

As shown in figure 4, about 63 percent (1,311 of 2,062) of all the lobbyists  who were referred by the Secretary of the Senate and Clerk of the House  for noncompliance for the 2009, 2010, 2011, and 2012 reporting periods  are now considered compliant because lobbyists either filed their reports  or terminated their registrations. In addition, some of the referrals were  found to be compliant when the Office received the referral, and therefore  no action was taken. This may occur when 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. About 36 percent (734  of 2,062) of referrals are pending action because the Office was unable to  locate the lobbyist, did not receive a response from the lobbyist, or plans  to conduct additional research to determine if it can locate the lobbyist.  The remaining 1 percent (17 of 2,062) of referrals did not require action or  were suspended because the lobbyist or client was no longer in business  or the lobbyist was deceased. The Office suspends enforcement actions  against registrants that are repeatedly referred for not filing disclosure  reports, but do not have any lobbying activity. The suspended registrants  are periodically monitored to determine whether the registrants actively  lobby in the future. As a part of this monitoring, the Office checks the  lobbying disclosure databases maintained by the Secretary of the Senate  and the Clerk of the House. Also, the Office’s Civil Division staff  discusses the status of pending and suspended referrals with the  Secretary of the Senate and Clerk of the House contacts to determine  whether to continue enforcement actions, which includes considering  legal actions or dismissing certain referrals.

As of March 5, 2013, the Office has also received approximately 2,472  referrals from the Secretary of the Senate and the Clerk of the House for  noncompliance with LD-203 requirements for the 2009, 2010, and 2011  reporting periods. For LD-203 referrals, 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. As of February 25, 2013, the Office has mailed LD-203  noncompliance letters to approximately 62 percent (482 of 773) of the  referrals for the 2009 reporting period and 21 percent (270 of 1,296) of  the referrals for the 2010 reporting period. According to officials from the  Office, the Office is still processing the LD-203 referrals it received for the  2011 reporting period and has not yet sent noncompliance letters.  Officials said they have not addressed the 2011 referrals because they  have been focusing on the referrals for prior years. Table 6 shows the  number of referrals the Office received for noncompliance with the LD- 203 reports filed for the 2009, 2010, and 2011 reporting periods and the  number of letters sent by the Office.

As shown in figure 5, about 45 percent (1,122 of 2,472) of the lobbyists  who were referred by the Secretary of the Senate and Clerk of the House  for noncompliance for the 2009, 2010, and 2011 reporting periods are  now considered in compliance because lobbyists either have filed their  reports or have terminated their registrations. About 55 percent (1,349 of  2,472) of the referrals are pending action because the Office was unable  to locate the lobbyist, did not receive a response from the lobbyist, or  plans to conduct additional research to determine if it can locate the  lobbyist.

Many of the pending LD-203 referrals represent lobbyists who no longer  lobby for the organizations affiliated with the referrals, even though these  organizations may be listed on the original lobbyist registration. Office  officials stated that they continue to experience challenges with  increasing LD-203 compliance because the Office has little leverage to  bring individual lobbyists into compliance. Office officials said that there  have been complaints within the lobbying community regarding  responsibility for responding to letters of noncompliance with LD-203  requirements. Although firms are not responsible for an individual  lobbyist’s failure to comply with the LD-203 disclosure requirement, nor  are firms required to provide contact information for the noncompliant  lobbyist, Office officials stated that many firms have assisted them by  providing contact information for lobbyists, and only a few firms have not  been willing to provide contact information for noncompliant lobbyists.  Officials said they have often suggested to registrants to terminate or  inactivate lobbyists from the client and firm registration when the lobbyists  leave the firm. Many of the LD-203 referrals remain open in an attempt to  locate individual lobbyists, and may take years to resolve.

section_title: Enforcement Settlement Actions
paragraphs: We previously reported that the Office developed a system to track  lobbyists and lobbying firms that have a history of chronic noncompliance  and have repeatedly been referred by the Senate and House for failing to  file disclosure reports. Officials reported that as a result of the tracking  system and the actions of staff assigned to these cases, the Office has  been able to identify more noncompliant lobbyists for civil enforcement  action. In 2011, the Office settled its first enforcement case since the  enactment of HLOGA in 2007, reaching a $45,000 settlement with a  lobbying firm. The firm has fully complied with its outstanding and  ongoing reporting requirements. 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.

Officials reported that for the 2012 reporting period, the Office sent  demand letters, made phone contacts or sent emails to eight registrants  on the chronic offenders list. Demand letters list the number of times the  registrant was referred by the Secretary of the Senate and Clerk of the  House; describe the number of occasions that lobbying disclosure reports  were not filed by the deadline; and request registrants to immediately file  the outstanding reports and contact the Office within 10 days to resolve  the matter. Four of the registrants filed the outstanding reports or  terminated their registration after being contacted by an Assistant U.S.  Attorney. Additionally, in September 2012, the Office reached settlement  agreements with two of the registrants from the chronic offenders list.  One firm agreed to pay $50,000 and the other $30,000 in civil penalties  for repeatedly failing to file disclosure reports. As of March 2013, both  firms have paid the fines in full and complied fully with their outstanding  and ongoing reporting requirements. The Office sent demand letters to  the remaining two registrants from the chronic offenders list on February  4, 2013. As of March 5, 2013, the two registrants have not responded to  the demand letters. The Assistant U.S. Attorney is preparing a  memorandum to request legal authority to pursue civil or criminal  penalties against both registrants. Civil Division management will review  this request and determine the appropriate action.

The Office continues to monitor and review the chronic offenders list to  determine whether to continue enforcement actions, which includes  considering legal actions or dismissing certain cases.

section_title: Agency Comments
paragraphs: We provided a draft of this report to the Attorney General for review and  comment. The Assistant U.S. Attorney for the District of Columbia  responded on behalf of the Attorney General that the Department of  Justice had no comments.

We are sending copies of this report to the Attorney General, Secretary of  the Senate, Clerk of the House of Representatives, and interested  congressional committees and members. In addition, this report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-6806 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 challenges and potential improvements to compliance, if any;  and describe the resources and authorities available to the U.S. Attorney’s  Office for the District of Columbia (the Office) and the efforts the  Office has made to improve enforcement of the LDA.

To respond to our mandate, we used information in the lobbying  disclosure database maintained by the Clerk of the House of  Representatives (Clerk of the House). To assess whether these  disclosure data were sufficiently reliable for the purposes of this report,  we reviewed relevant documentation and spoke to officials responsible for  maintaining the data. Although registrations and reports are filed through  a single web portal, each chamber subsequently receives copies of the  data and follows different data cleaning, processing, and editing  procedures before storing the data in either individual files (in the House)  or databases (in the Senate). Currently, there is no means of reconciling  discrepancies between the two databases caused by the differences in  data processing. For example, Senate staff told us during previous  reviews that they set aside a greater proportion of registration and report  submissions than the House for manual review before entering the  information into the database, 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 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 2011and the first and second quarters of  calendar year 2012, as well as for sampling year-end 2011 and midyear  2012 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 2011 and  the first and second quarters of 2012. We excluded reports with no  lobbying activity or with income less than $5,000 from our sampling  frame. We drew our sample from 49,286 activity reports filed for the third  and fourth quarters of 2011 and the first and second quarters of 2012  available in the public House database, as of our final download date for  each quarter. One LD-2 report in the sample was amended after the  lobbyist was notified of being selected for the sample but prior to the  review. As a result, we excluded this report from our sample and replaced  it with another LD-2 report for the same quarter. Our sample was not  designed to detect differences over time and we did not conduct tests of  significance for changes from 2010 to 2012.

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 10.5 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 disclose properly  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 2011 or midyear 2012 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 2011  and the first and second quarters of 2012, 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  2,753, or 90 percent, of the 3,074 newly filed registrations. We began by  standardizing client and registrant names in both the report and  registration files (including removing punctuation and standardizing words  and abbreviations, such as “company” and “CO”). We then matched  reports and registrations using the House identification number (which is  linked to a unique registrant-client pair), as well as the names of the  registrant and client. For reports we could not match by identification  number and standardized name, we also attempted to match reports and  registrations by client and registrant name, allowing for variations in the  names to accommodate minor misspellings or typos. For these cases, we  used professional judgment to determine whether cases with typos were  sufficiently similar to consider as matches. We could not readily identify  matches in the report database for the remaining registrations using  electronic means.

To assess the accuracy of the LD-203 reports, we analyzed stratified  random samples of LD-203 reports from the 31,894 total LD-203 reports.  The first sample contains 80 reports of the 10,948 reports with political  contributions and the second contains 80 reports of the 20,946 reports  listing no contributions. Each sample contains 40 reports from the year- end 2011 filing period and 40 reports from the midyear 2012 filing period.  The samples from 2012 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 8.6 percentage points or less, and to within 4.7 percentage points  of estimate when analyzing both samples together. Our sample was not  designed to detect differences over time and we did not conduct tests of  significance for changes from 2010 to 2012. We analyzed the contents of  the LD-203 reports and compared them to contribution data found in the  publicly available Federal Elections Commission’s (FEC) political  contribution database. We interviewed 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 explain 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. Our estimates of  the percentage of reports that omit contributions is a lower-bound  estimate. We did not estimate the percentage of other non-FEC political  contributions that were omitted because they tend to constitute a small  minority of all listed contributions and cannot be verified against an  external source.

To identify challenges to compliance, we used structured interviews and  obtained the views from 90 different lobbying firms included in our sample  of 100 LD-2 reports rather than on the total number of interviews  conducted, on any challenges to compliance. To obtain their views, we  asked them to rate their ease with complying with the LD-2 disclosure  requirements using a scale, of “very easy”, “somewhat easy”, “somewhat  difficult” or “very difficult.” In addition, using the same scale we asked  them to rate the ease of understanding the terms associated with LD-2  reporting requirements.

To describe the resources and authorities available to the Office and its  efforts to improve its enforcement of the LDA, we interviewed officials  from the Office and obtained updated information on the capabilities of  the system they established to track and report compliance trends and  referrals, and other practices established to focus resources on  enforcement of the Act. The Office provided us with updated reports from  the tracking system on the number and status of referrals and chronically  noncompliant offenders.

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 2012 through April 2013  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 7).

section_title: Appendix III: List of Sampled Lobbying Contribution Reports with Contributions and No Contributions Listed
paragraphs: See table 8 for a list of lobbyists and lobbying firms from our random  sample of lobbying contribution reports with contributions. See table 9 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
paragraphs: J. Christopher Mihm, (202) 512-6806 or mihmj@gao.gov.

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Bill Reinsberg, Assistant Director;  Shirley Jones, Assistant General Counsel; Crystal Bernard, Amy  Friedlander, Robert Gebhart, Lois Hanshaw, Stuart Kaufman, Natalie  Maddox, and Anna Maria Ortiz made key contributions to this report.

Assisting with lobbyist file reviews were Vida Awumey, Peter Beck,  Benjamin Crawford, Alexandra Edwards, Hayley Landes, Latesha Love,  Alan Rozzi, Stacy Spence, Megan Taylor, Daniel Webb, Jason  Wildhagen, and Weifei Zheng.


Question-summary annotations: questions: question: Why might the estimated number of LD-203 reports omitting one or more reportable political contributions seem large or small?
answer: For LD-203 reports, GAO estimates that a minimum of 6 percent of all LD-203 reports omitted one or more reportable political contributions that were documented in the Federal Election Commission (FEC) database.

question: How did the number of lobbyists in GAO's sample change?
answer: Twenty-eight lobbyists in GAO's sample, compared to17 last year, stated that they planned to amend their lobbying registration (LD-1) or LD-2 report following GAO's review to correct one or more data elements.
child_questions: question: How did lobbyists in GAO's sample try amending their lobbying registration or LD-2 report following GAO's review?
answer: Of these, 19 lobbyists had filed an amended report as of March 2013.

questions: question: What authority does the Office for the District of Columbia in regards to LDA requirements?
answer: The U.S. Attorney's Office for the District of Columbia (the Office) stated that it has sufficient authority and resources to enforce compliance with LDA requirements, including imposing civil or criminal penalties for noncompliance.

question: During the 2012 reporting period, why did the Office reach out or take action against eight registrants?
answer: Officials reported that during the 2012 reporting period, the Office took steps to pursue legal action, made phone contacts, or sent emails to eight registrants that had been repeatedly referred for failure to file required disclosure reports.
child_questions: question: What action did registrants take after this?
answer: Four of the registrants filed the outstanding reports or terminated their registration after being contacted by an Assistant U.S. Attorney. Additionally, in September 2012, the Office reached settlement agreements with two of the registrants for $50,000 and $30,000 in civil penalties.

question: As of 2013, what action did the Office take against registrants?
answer: As of March 2013, both firms have paid their fines in full and complied with their ongoing reporting requirements. In February 2013, the Office sent demand letters to the two other registrants who, as of March 2013, have not responded.

questions: question: What does HLOGA require lobbyists to file?
answer: HLOGA requires lobbyists to file quarterly lobbying disclosure reports and semiannual reports on certain political contributions.
child_questions: question: What does HLOGA require GAO to do?
answer: HLOGA also requires that GAO annually (1) audit the extent to which lobbyists can demonstrate compliance with disclosure requirements, (2) identify challenges to compliance that lobbyists report, and (3) describe the resources and authorities available to the U.S. Attorney's Office for the District of Columbia and the efforts the Office has made to improve its enforcement of the LDA, as amended.

question: How long has GAO been making reports under the mandate?
answer: This is GAO's sixth report under the mandate.