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

Letter

Background

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.

Documentation to Support Some LD-2 Report Elements Varied, but Most Newly Registered Lobbyists Met Disclosure Reporting Requirements

Lobbyists Provided Documentation for Most LD-2 Reports, but Documentation for Some Report Elements Did Not Match Their Disclosure Reports

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.

More Lobbying Firms Indicated That They Planned to Amend Their LD-2 Reports as a Result of GAO’s Review

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.

Some LD-203 Contribution Reports Omitted Political Contributions Listed in the FEC Database

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.

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

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.

U.S. Attorney’s Office Actions to Enforce the LDA

The Office’s Authorities, Processes, and Resources to Enforce LDA Compliance

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.

Status of LD-2 Enforcement Efforts for the 2009, 2010, 2011 and 2012 Reporting Periods

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.

Enforcement Settlement Actions

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.

Agency Comments

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.

Appendix I: Objectives, Scope, and Methodology

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.

Appendix II: List of Registrants and Clients for Sampled Lobbying Disclosure Reports

The random sample of lobbying disclosure reports we selected was based on unique combinations of registrant lobbyists and client names (see table 7).

Appendix III: List of Sampled Lobbying Contribution Reports with Contributions and No Contributions Listed

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.

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

J. Christopher Mihm, (202) 512-6806 or mihmj@gao.gov.

Staff Acknowledgments

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.