Ethics Commission
City and County of San Francisco

San Francisco Ethics Commission Audit Report: Daly 2002, FPPC ID #1244756

SAN FRANCISCO ETHICS COMMISSION AUDIT REPORT:

DALY 2002

I.           Introduction

This Audit Report contains information pertaining to the audit of the committee, Daly 2002, Identification Number 1244756 (“the Committee”), for the period from January 1, 2002 through January 31, 2003.  The audit was conducted to determine whether the Committee materially complied with the requirements and prohibitions imposed by the Political Reform Act (“the Act”) (California Government Code Section 81000, et seq.) and San Francisco’s Campaign Finance Reform Ordinance (“CFRO”) and Electronic Filing Ordinance (S.F. Campaign and Governmental Conduct Code Sections 1.100, et seq., and 1.300, et seq.).

For the period covered by the audit, the Committee received total contributions of $64,814 and $40,049 in public funds, and incurred expenditures of $95,714.  The law provides that any candidate who receives public financing must return unexpended campaign funds to the Election Campaign Fund up to the amount of public funds received by the candidate.  The auditor determined that the Committee must return $7,441.16 unexpended funds to the Election Campaign Fund.[1]

There were four material findings with respect to this Audit: 1) the Committee failed to retain copies of contribution checks for 30 percent of the dollar amount of total itemized contributions that it received, in violation of Government Code Section 84104; 2) the Committee failed to file one Late Contribution Report, in violation of Government Code Section 84203 (please note that the Committee filed this report after the auditor brought the non-filing to its attention); 3) the Committee failed to obtain and disclose contributor information for some contributions, in violation of San Francisco Campaign and Governmental Conduct Code Section 1.114(d); and 4) the Committee failed to file Itemized Disclosure Statements for, and to retain samples of, three mass mailings, in violation of S.F. Campaign and Governmental Conduct Code Section 1.161 and Government Code Section 84104 (see 2 Cal. Code Regs. §18401(b)(7)), respectively.

II.         Committee Information

The Committee was formed in May 2002 to support the election of Chris Daly for Member, Board of Supervisors, District 6, in the November 5, 2002 election.  Supervisor Daly is the Committee’s treasurer.  As stated above, the Committee received public financing for Supervisor Daly’s 2002 supervisorial campaign.  The Committee has not terminated as of the date of this report.

III.       Audit Authority

San Francisco Campaign and Governmental Conduct Code Section 1.150(a) requires that the Commission audit all candidates who receive public financing.   Audits of publicly financed candidates include a review of campaign statements and other relevant documents to determine whether the candidate complied 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;
  • Compliance with all record-keeping requirements; and
  • Compliance with all provisions related to the Commission’s public financing program.

V.         Summary of Applicable Law

Government Code Section 84104: Requirement to Maintain Records

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.  The detailed accounts, records, bills and receipts are to be retained by the filer for a period of four years. (Government Code Section 84104).

Government Code Section 84203: Filing of Late Contribution Reports (Form 497)

“Late contribution” means any contribution, including a loan, which totals in the aggregate $1,000 or more that is made or received by a candidate, a controlled committee, or a committee formed or existing primarily to support or oppose a candidate or measure before the date of the election at which the candidate or measure is to be voted on but after the closing date of the last campaign statement required to be filed before the election. (Government Code Section 82036).  The combined activities of affiliated entities shall be used to determine whether the $1,000 threshold is met or exceeded. (California Code of Regulations, Title 2, Section 18428).

Late contributions must be reported within 24 hours of receipt by facsimile transmission, telegram, guaranteed overnight mail through the United States Postal Service or personal delivery. (Government Code Section 84203(b)).  A candidate or committee that receives a late contribution must include on the Late Contribution Report: 1) its full name and street address; 2) the date and amount of the late contribution; and 3) the contributor’s name, street address, occupation, and employer, or if self-employed, the name of the business.  Late Contribution Reports must be filed with each office with which the candidate or committee is regularly required to file campaign statements. (Government Code Section 84203(a)).

S. F. Campaign and Governmental Conduct Code Section 1.114(d): Requirement to Obtain and Disclose Contributor Information

S. F. Campaign and Governmental Conduct Code (“S.F. C&GCC”) Section 1.114(d) states that if the cumulative amount of contributions received from a contributor is $100 or more, the committee treasurer may not deposit the contribution unless the committee treasurer has the following information: the contributor’s full name; the contributor’s address; the contributor’s occupation, and the name of the contributor’s employer or, if the contributor is self-employed, the name of the contributor’s business.   S.F. C&GCC Section 1.114(e) states that each treasurer who receives a contribution which does not comply with the requirements of this Section must forfeit the contributions to the City and County for deposit in the General Fund.

S.F. Campaign and Governmental Conduct Code Section 1.161: Filing of Itemized Disclosure Statement for Mass Mailings

The Political Reform Act defines mass mailings as 200 substantially similar pieces of mail sent within a calendar month.  S.F. Campaign and Governmental Conduct Code Section 1.161 requires any candidate for City elective office who pays for a mass mailing that advocates for or against candidates for City elective office to include on the mailing the statement of “paid for by ______(insert candidate’s name and street address)” in not less than 14-point type and in a color or print which contrasts with the background so as to be easily legible.  The candidate must also file with the Ethics Commission a clearly legible original or copy of the mass mailing and an Itemized Disclosure Statement within five working days after the date of the mailing.

VI.        Material Findings

Government Code Section 84104: Failure to Maintain Record of Contributions Received

The Committee’s records did not include copies of contribution checks for 61 contributions, each in amounts of $100 or more, totaling $17,486, which represents 30 percent of the dollar amount of total itemized contributions that the Committee received.  Please note that the Committee retained records regarding 210 of the 271 contributions of $100 or more that it received, totaling $39,897.

Government Code Section 84203: Failure to Report Late Contributions for the General Election.

During the late reporting period for the November 5, 2002 election, the Committee received two contributions from affiliated entities aggregating to $1,000, thus triggering the requirement of filing a Late Contribution Report, which the Committee failed to file.  Please see Attachment 1 for a list of the two late contributions.  Please note that the Committee filed the Late Contribution Report after the auditor brought the non-filing to its attention.

S. F. Campaign and Governmental Conduct Code Section 1.114(d): Failure to Obtain and Disclose Contributor Information

A review of the Committee’s campaign statements indicated that the Committee reported 271 contributions of $100 or more.   Of the 271 itemized contributions, contributors’ information was not fully or properly disclosed for 15 contributions, which includes missing street addresses and contributor’s occupation and/or employer information.  Per S.F. C&GCC §1.114(e) these contributions will be forfeited to the City.  $1,961.10 will be forfeited (please note that the first $99.99 of each forfeitable contribution is exempted from the forfeiture).

S.F. Campaign and Governmental Conduct Code Section 1.161 and Government Code Section 84104 (see 2 Cal. Code Regs. §18401(b)(7)): Failure to File Sample or Itemized Disclosure Statement for Mass Mailings

The Committee incurred $42,428 in expenses for the printing and postage of mass mailings.   The Committee filed two Itemized Disclosure Statements for Mass Mailings reflecting costs of $5,518.  Because the Committee failed to file with the Ethics Commission or retain samples of the mailings that it produced and mailed as required by SFC&GC Code §1.161 and 2 Cal. Code Regs. §18401(b)(7), the auditor was unable to determine for certain how many other mailings there were in addition to the two for which Itemized Disclosure Statements for Mass Mailings were filed.  The auditor believes, from a review of the invoices and receipts, that there were three other mailings for which samples and Itemized Disclosure Statements for Mass Mailings were not filed.

VII.      Conclusion

Through the examination of the Committee’s records and campaign disclosure statements, the auditor identified four material findings: 1) the Committee failed to retain copies of contribution checks for 30 percent of the dollar amount of total itemized contributions that it received, in violation of Government Code Section 84104; 2) the Committee failed to file one Late Contribution Report, in violation of Government Code Section 84203 (please note that the Committee filed this report after the auditor brought the non-filing to its attention); 3) the Committee failed to obtain and disclose contributor information for some contributions, in violation of San Francisco Campaign and Governmental Conduct Code Section 1.114(d); and 4) the Committee failed to file Itemized Disclosure Statements for and to retain samples of three mass mailings, in violation of S.F. Campaign and Governmental Conduct Code Section 1.161 and Government Code Section 84104 (see 2 Cal. Code Regs. §18401(b)(7)), respectively.

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.

_________________________________                                          __________________

             Grace Chau                                                                                          Date

             Auditor

______________________________________                                __________________

             Ginny Vida                                                                                           Date

Executive Director                                           

S:\AUDIT\2002 Committees\Daly 2002\Report-Daly 2002.doc

Attachment 1

List of the late contributions that the Committee received for which a Late Contribution Report was not filed for the November 5, 2002 election:

Contributor Amount Date Received
 Angela Alioto $ 500 10/22/02
 Angela Alioto Professional Law Corporation $ 500 10/25/02
 Aggregate Total $ 1,000   

[1] The unexpended funds were calculated by subtracting unpaid bills and forfeitures from the amount of cash that the Committee had on hand on the 30th day following the election in which the candidate was elected.  The Committee’s cash balance on December 5, 2002 was $20,128.70 and unpaid bills and forfeitures were $10,726.44 and $1,961.10, respectively.

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