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San Francisco Ethics Commission Audit Report: San Franciscans Opposed to Excessive Regulation, FPPC ID #971226


I. Introduction

This Audit Report contains information pertaining to the audit of the committee San Franciscans Opposed to Excessive Regulation, Identification Number 971226 ("the Committee") for the period from January 1, 1997 through June 30, 1998. The audit was conducted to determine whether the Committee materially complied with the requirements and prohibitions imposed by the Political Reform Act ("the Act") (Government Code Section 81000, et seq.) and San Francisco's Campaign Finance Reform Ordinance ("the CFRO") (S.F. Administrative Code Section 16.501, et seq.).

During the period covered by the audit, the Committee reported total contributions of $131,777 and total expenditures of $61,975. This audit revealed one material finding: The Committee failed to maintain copies of major donor notifications in violation of Government Code Section 84104.

II. Committee Information

The Committee filed a Statement of Organization with the Commission on August 18, 1997 indicating that it qualified as a committee on that same date. The Committee was primarily formed to oppose the passage of Proposition G, the Regulation of Campaign Consultants Ordinance, in the November 4, 1997 general election. The Committee qualified as a "committee" because it received contributions totaling $1,000 or more in a calendar year. On August 3, 1998 the Committee filed a Recipient Committee Statement of Termination indicating that its filing obligations were completed on March 30, 1998. The Committee's treasurer was James R. Sutton.

III. Audit Authority

The Commission is mandated by San Francisco Charter Section C3.699-11(4) to audit campaign statements and other relevant documents to determine whether campaign committees comply with applicable requirements and prohibitions imposed by State and local law.

IV. Audit Scope and Procedures

This audit was performed in accordance with generally accepted auditing standards. The audit involved a thorough review of the Committee's records for the time period covered by the audit. This review was conducted to determine:

  1. Compliance with all disclosure requirements, pertaining to contributions, expenditures, accrued expenditures, and loans, including itemization when required;
  2. Compliance with applicable filing deadlines;
  3. Compliance with restrictions on contributions, loans and expenditures;
  4. Accuracy of total reported receipts, disbursements and cash balances as compared to bank records; and
  5. Compliance with all record-keeping requirements.

V. Summary of Applicable Law

Individuals and entities that contribute more than $10,000 in a calendar year must file "major donor" statements. (Government Code Sections 82013(c) and 84211(v)). The Act requires committee treasurers to notify contributors from whom they receive contributions totaling $5,000 or more in a calendar year that the contributor is required to file "major donor" statements if the $10,000 threshold is met. (Government Code Section 84105). Treasurers must send the major donor notification within two weeks of receipt of the contributions. (Government Code Section 84105).

In addition, the Act requires that committee treasurers maintain detailed accounts, records, bills and receipts that are necessary to prepare campaign statements and comply with the campaign disclosure provisions of the Act. (Government Code Section 84104). The detailed accounts, records, bills and receipts are to be retained by the filer for a period of four years. (Page 71 of Information Manual D prepared by the Fair Political Practices Commission).

VI. Material Findings

Section 84104: Failure to Maintain Records of Major Donor Notification

The Committee received ten contributions exceeding $5,000. According to the records maintained by the Committee, the Committee notified only five of the ten contributors of the major donor requirements, as required by the Act.

The Committee takes the position that it in fact notified all ten contributors of these requirements, and merely failed to keep records of five of these major donor notifications. Committee treasurer James R. Sutton stated in the post-audit conference that he had relied on the Committee's bookkeeper to mail major donor notifications and keep copies for the Committee's records. He claims that the bookkeeper did in fact notify all ten contributors of the major donor requirements, but that the bookkeeper did not make copies of five of the letters. Instead, the bookkeeper simply printed and sent a computer-generated letter to each contributor, and then used that letter as a "template" for the next letter. The Auditor determined that this explanation was credible.

With respect to the five contributors for whom the Committee did not maintain a copy of the notice, the total dollar amount of contributions received represents approximately 38 percent of the total contributions received by the Committee. The Ethics Commission concluded that the Committee failed to comply with its record-keeping requirements with respect to maintaining notifications of possible major donor obligations. (Government Code Sections 84104).

VII. Conclusion

Through the examination of the Committee's records and campaign disclosure statements, the Auditor verified that the Committee accurately and truthfully disclosed all contributions received and expenditures made. However, the Committee failed to maintain records of major donor notification, in violation of Section 84104 of the Act.

_____________________________________   __________________
Shaista Shaikh                                                          Date
Campaign Finance Auditor

______________________________________   __________________
Ginny Vida                                                               Date
Executive Director   

P:\SHARED\AUDIT\1997 Audited Committees\San Franciscans Opposed to Excessive Regulation – No on Prop G\Report\draft_report-jm.doc

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