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San Francisco Ethics Commission Audit Report: Committee to Take Back Our Homes, FPPC ID #960695


November 30, 1999

I. Introduction

This Audit Report contains information pertaining to the audit of the Committee to Take Back Our Homes, Identification Number 960695 ("the Committee") for the period from January 1, 1996 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 ("CFRO") (S.F. Administrative Code Section 16.501, et seq.).

For the period covered by the audit, the Committee reported total contributions of $510,229 and total expenditures of $497,510. 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 its initial Statement of Organization with the Commission on March 28, 1996, indicating that it had not yet qualified as a committee. The Committee was primarily formed to qualify a ballot petition that would exempt owner-occupied buildings of less than five units from the regulations of the Rent Control Ordinance. Once this issue qualified for the ballot as Proposition E, Rental Housing Expansion Reform, for the June 2, 1998 election, the Committee filed an amended Statement of Organization indicating that it supported the passage of this ballot measure. On August 2, 1999 the Committee filed a Recipient Committee Statement of Termination, indicating that its filing obligations were completed on June 30, 1999. The Committee's treasurers were Dawn Bellet and Orion J. Culver.

III. Audit Authority

San Francisco Charter Section C3.699-11(4) mandates that the Commission 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 to any committee in a calendar year must file "major donor" statements. (Government Code Sections 82013(c) and 84211(v)). The Act requires committee treasurers to notify donors who contributed $5,000 or more in a calendar year that the contributor is required to file a "major donor" statement 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 ("FPPC")).

VI. Material Findings

Section 84104: Failure to Maintain Records of Major Donor Notification

The Committee received two contributions of $5,000 and $7,500, respectively. The Committee's representative, the person responsible for preparing the campaign statements and major donor notices, reported that major donor notices had been sent and were kept with the Committee's records. However, the representative informed the Committee's treasurer, Orion J. Culver, that he examined the Committee's files and was not able to locate copies of any major donor notices that may have been sent. Mr. Culver noted that all of the Committee's other files seemed to be in order and complete.

In determining whether a Committee violated the requirement to notify potential major donors, the FPPC and the Political Reform Audit Division of the Franchise Tax Board ("FTB") consider two factors: 1) the total number of potential major donors not notified; and 2) whether those potential major donors filed major donor statements in any event. As noted above, the Committee was obligated to send two notices to potential major donors. Neither of the two donors filed major donor statements. It is unknown whether these two donors reached the $10,000 threshold requiring the filing of a major donor statement. In view of these findings, the Auditor determined that the failure to notify potential major donors was not material.

In the above circumstances, the FPPC and FTB would not consider material the Committee's failure to notify potential donors. These agencies would consider material the Committee's failure to maintain records of such notices. Accordingly, the Auditor identified as a material finding the Committee's failure to comply with its record-keeping requirements with respect to maintaining notifications of possible major donor obligations. (Government Code Section 84104).

VII. Conclusion

Through the examination of the Committee's records and campaign disclosure statements, the Auditor verified that the Committee accurately and timely disclosed all contributions received and expenditures made. The Auditor found a material violation of the Act in the Committee's failure to maintain records of major donor notifications. (Government Code Section 84104).

Date:  November 30, 1999

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