SAN FRANCISCO ETHICS COMMISSION AUDIT REPORT:
SAN FRANCISCANS TO ELECT ASH BHATT COMMITTEE-BOARD OF EDUCATION
I. Introduction
This Audit Report contains information pertaining to the audit of the San Franciscans to Elect Ash Bhatt Committee, Board of Education ("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.).[1]
For the period covered by the audit, the Committee received total contributions of $67,600 and incurred qualified campaign expenditures of $67,600.[2] The Committee accurately and timely disclosed all contributions received. However, there was one material finding with respect to the audit of this Committee. The Committee failed to maintain records regarding expenditures in violation of Government Code Section 84104. Therefore, the expenditures could not be tested for accurate and timely disclosure.
II. Committee Information
The Committee was formed to support the election of Ashok Kumar Bhatt for Member, Board of Education in the November 3, 1998 election. The Committee filed its initial Statement of Organization with the Commission on October 23, 1998. It had qualified on September 23, 1998. The Committee has not terminated as of the date of this report. The Committee's treasurer is William F. McLaughlin.
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:
- Compliance with all disclosure requirements, pertaining to contributions, expenditures, accrued expenditures, and loans, including itemization when required;
- Compliance with applicable filing deadlines;
- Compliance with restrictions on contributions, loans and expenditures;
- Accuracy of total reported receipts, disbursements and cash balances as compared to bank records; and
- 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 84211 (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)).
In addition, the Act requires that committee treasurers must maintain detailed accounts, records, bills and receipts that are necessary to prepare campaign statements and comply with the campaign disclosure provisions of the Act. (California Code of Regulations Section 18427). The detailed accounts, records, bills and receipts are to be retained by the filer for a period of four years. (Government Code Section 84104). 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
At the initial audit meeting, the candidate, Ashok Kumar Bhatt, informed the Auditor that the Committee had provided copies of documentation supporting contributions and expenditures at the time of filing its campaign statements. The Ethics Commission files contain only the campaign statements filed by the Committee. Mr. Bhatt also stated that the Committee's bookkeeper had discarded the records (i.e., check register, bank statements, copies of contributor checks, copies of deposit slips, cancelled checks, invoices, mass mailings and correspondence) that were used in preparing the campaign disclosure statements. However, the Committee's treasurer, William F. McLaughlin, provided the Auditor with the Committee's check register. With assistance from the bank at which the Committee's bank account was held, Mr. Bhatt was able to provide copies of bank statements and checks that were deposited into the campaign bank account.
Through the examination of the Committee's bank statements, check register, copies of checks deposited into the campaign bank account and campaign statements, the Auditor verified that the Committee accurately and timely disclosed all contributions received. The Auditor also verified that all payments that had cleared the bank account and that were recorded on the Committee's check register, were disclosed on the campaign statements. However, since the Auditor was unable to review cancelled checks and invoices, the expenditures could not be fully examined.
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.
However, the Committee failed to comply with its record-keeping requirements with respect to maintaining records regarding expenditures. (Government Code Section 84104). As a result, a determination could not be made with respect to the accurate and timely disclosure of expenditures.
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 8, 2000
[1] During the period covered by the audit, the section of law was codified in the Administrative Code at Section 16.501, et seq. However, the section has since been moved from the Administrative Code to the Campaign and Governmental Conduct Code Section 1.100, et seq.
[2] Under the CFRO, candidates for the Board of Education who voluntarily limit their spending to $75,000 may accept contributions of up to $500 per contributor. Candidates who do not agree to comply with the spending cap may accept contributions of up to $150 per contributor. Please note that while the two-tiered contribution limits were in effect for the 1998 election, they are no longer in effect.