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San Francisco Ethics Commission Audit Report: Committee to Save the Central Freeway, No on E, FPPC ID #970749



I. Introduction

This Audit Report contains information pertaining to the audit of the Committee to Save the Central Freeway, No on E, Identification Number 970749 ("the Committee") for the period from July 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 $32,305 and incurred expenditures of $42,953. There was one material finding with respect to this Audit Report. The Committee failed to send major donor notifications in violation of Government Code Section 84105.

II. Committee Information

On August 31, 1998, the Committee filed its Statement of Organization with the Secretary of State indicating that it had changed its purpose from supporting Proposition H of the November 4, 1997 election to opposing Proposition E of the November 3, 1998 election. In November, 1997, the voters adopted Proposition H, which authorized Caltrans to rebuild the Central Freeway with a four-lane, single-deck, elevated structure over Market Street from Mission Street to Fell Street. Proposition E proposed to repeal Proposition H and authorize Caltrans to replace the Central Freeway with a new four-lane, two-way, single-deck elevated structure from Mission Street to Market Street and a street-level, high traffic volume boulevard along Octavia Street from Market Street to Fell Street. The Committee filed its Statement of Termination on July 30, 1999, indicating that its filing obligations were completed on June 30, 1999. The Committee’s treasurer was Daniel Lau.

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.

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).

VI. Material Findings

Section 84105: Failure to send major donor notification

The Committee received contributions of $5,000 or more from three contributors. At the initial audit meeting, the Auditor learned that the Committee had not sent major donor notices and that the treasurer, Daniel Lau, was not aware of the requirement to notify potential major donors. Mr. Lau explained that as a first-time treasurer he attempted to learn and comply with the various campaign finance laws and regulations, but failed to learn of the requirement to notify potential major donors of their filing obligations. The Ethics Commission concluded that the Committee failed to comply with the requirement to send major donor notification. (Government Code Section 84105).

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 all expenditures made and that the Committee maintained the necessary documentation regarding contributions and expenditures. However, the Auditor found a material violation of the Act in the Committee’s failure to send major donor notifications. (Government Code Section 84105).

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:  August 18, 2000

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