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San Francisco Ethics Commission Audit Report: Casey for Supervisor ’98, FPPC ID #980991




I. Introduction

This Audit Report contains information pertaining to the audit of Casey for Supervisor '98, Identification Number 980991 ("the Committee") for the period from January 1, 1998 through December 31, 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. Campaign and Governmental Conduct Code Section 1.100, et seq., formerly S.F. Administrative Code Section 16.501, et seq.).

For the period covered by the audit, the Committee received total contributions of $201,285 and incurred qualified campaign expenditures of $200,438. There was one material finding with respect to this Audit Report. The Committee failed to properly disclose expenditures of $65,379, or 32 percent of the total expenditures made, in violation of Government Code Sections 84211(b), (h), (i), and (j).

II. Committee Information

The Committee was formed to support the election of Donna Casey for Member, Board of Supervisors in the November 3, 1998 election. The Committee filed its initial Statement of Organization with the Secretary of State on March 25, 1998. The Committee qualified as a committee on April 22, 1998. The Committee filed its Statement of Termination on May 11, 2000 indicating that its filing obligations were completed on July 2, 1999. The Committee's treasurer was Robert O'Neil.

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

The Act requires that all campaign expenditures incurred be reported on the campaign disclosure statements. (Government Code Section 84211 (b)). Detailed information, such as vendor name, vendor address, a description of the expenditure, and payment amount is required for all expenditures of $100 or more. (Government Code Section 84211 (j)). In addition, for each reporting period, the campaign statements must contain: 1) the total of expenditures made to persons who received $100 or more; 2) the total of expenditures made to persons who received less than $100; and 3) the total amount of expenditures made and the total cumulative amount of expenditures made. (Government Code Sections (b), (h), and (i)). An expenditure can be disclosed on various schedules of the campaign statements depending on whether it was paid or accrued at the close of a reporting period and whether reportable subvendor information existed. (Government Code Sections 84211 (b), (h), (i), and (j)). The CFRO incorporates the Act's provisions regarding disclosure and record-keeping. (S.F. Campaign and Governmental Conduct Code Section 1.106). For this reason, a violation of Section 84211 of the Act is also a violation of the CFRO.

VI. Material Findings

Section 84211: Failure to Properly Report Expenditures Totaling $65,379

The Committee's actual qualified campaign expenditures were $200,438. The Committee failed to properly report expenditures of $65,379, or 32 percent of total expenditures (see attachment). These expenditures should have been disclosed on the various schedules of the campaign statements, primarily on Schedule E ("Payments and Contributions Made"). The Auditor determined that the Committee attempted to "account" for these expenditures on the campaign statements by: 1) increasing the "total previous period expenditures" reported; and 2) adjusting the beginning cash balances.

In order to determine why the Committee failed to reconcile its expenditures, the Auditor performed a detailed bank reconciliation by comparing the disbursements indicated on the bank statements with the Committee's check register and campaign statements. In conducting the bank reconciliation, the Auditor prepared a checklist, which included the check number, payee, check amount, reporting period in which the check was written and reporting period in which the check cleared. In order to determine why a significant discrepancy existed, the Auditor traced from the above-referenced checklist to the items reported on the campaign statements. The Auditor also reviewed corresponding invoices and receipts. After conducting this procedure, the Auditor was able to determine which disbursements were not reported on the campaign statements. The bank reconciliation indicated that the Committee disbursed approximately more than $65,000 in excess of the amount disclosed on the campaign statements. Please see the attached list for a listing of such disbursements.

At the post-audit conference, the candidate, Donna Casey, explained that the treasurer and an assistant had performed the data entry tasks for the campaign. Data was entered into the Committee's database, including complete data regarding expenditures. The data was then transferred to campaign reporting software, which allowed the Committee to file required electronic and paper campaign statements. However, not all of the expenditure information was transferred during this process. Ms. Casey stated that she and campaign staff attempted to reconcile the campaign statements but could not do so. Ms. Casey stated that it was not her intention to conceal any expenditure.

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 that the Committee maintained the necessary documentation regarding contributions and expenditures. However, the Committee failed to properly disclose expenditures of $65,379, or 32 percent of the total expenditures made, in violation of Government Code Sections 84211(b), (h), (i), and (j).

Audit reports are posted to the Commission's web site and are forwarded to the Members of the Ethics Commission and, in cases of a violation of law, to the appropriate enforcement agency.

Date:  June 13, 2000

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