City and County of San Francisco
Ethics Commission

English

I. Introduction

This Audit Report summarizes the audit results of the committee, Alix Rosenthal for Supervisor, Identification Number 1287650 (“the Committee”), for the period from January 1, 2006 through December 31, 2006.  The audit was conducted to determine whether the Committee materially complied with the requirements of the Political Reform Act (“the Act”) (California Government Code section 81000, et seq.) and San Francisco’s Campaign Finance Reform Ordinance (“CFRO”) (San Francisco Campaign and Governmental Conduct Code section 1.100, et seq) (S.F. C&GC Code).

II. Audit Authority

San Francisco Charter section C3.699-11 authorizes the Ethics Commission (“the Commission”) to audit campaign statements that are filed with the Commission along with other relevant documents to determine whether a committee complied with applicable requirements of State and local laws.  Section 1.150(a) of the CFRO requires the Commission to audit all candidates who receive public financing.

III. Audit Scope and Procedures

This audit was performed in accordance with generally accepted auditing standards.  The audit involved a review of the Committee’s records for the 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;
5. Compliance with all record-keeping requirements;
6. Compliance with all provisions related to the Commission’s public financing program; and
7. Any unexpended public funds that must be returned to the City up to the amount of public funds received by the candidate.

The Commission posts audit reports to its web site and, in cases of violations of law, forwards them to the appropriate enforcement agency.

IV. Committee Information

The Committee was formed in July 2006 to support the election of Alix Rosenthal to the Board of Supervisors, District 8 in the November 7, 2006 general election.  Amy Todd served as the treasurer.  The Committee received public funds.  The Committee was active as of December 31, 2006.

V. Audit Findings

For the period covered by the audit, the Committee received $35,044 in contributions and $32,004 of public funds, and incurred $66,876 in expenditures.  The CFRO provides that any candidate who receives public funds must return unexpended campaign funds to the City up to the amount of public funds received by the candidate (S.F. C&GC Code) § 1.148(d)).  The Committee did not have any unexpended funds. [1]

The Commission determined that there were three material findings with respect to the audit of the Committee, as follows:

1. The Committee used $26,602 or about 40% of campaign finances to reimburse the candidate for campaign-related expenditures made from the candidate’s personal funds in violation of California Government Code section 85201 and S.F. C&GC Code section 1.106.

Government Code section 85201 and S.F. C&GC Code section 1.106 require candidates to deposit personal funds into the campaign bank account and make expenditures from that account instead of spending personal funds on campaign expenses and later seeking reimbursement from campaign funds.

The Committee reimbursed the candidate for the following expenses:

Date per bank statements	Invoice Date(s)	Check No.	Description	Amount
8/21/06	08/05/06	1004	Reimbursement: campaign party supplies (8/5/06)	$560
10/10/06	08/11/06	1025	Reimbursement: registrar of voters	$419
10/10/06	07/21/06	1026	Reimbursement: letter heads, business cards and mailbox service	$2,229
10/10/06	9/14/06-9/29/06	1027	Reimbursement: printing stickers, flyers	$1,731
10/10/06	August-September	1029	Reimbursement: campaign dinners	$342
10/10/06	6/9/2006-9/13/06	1030	Reimbursement: printing labels and office supplies	$435
10/10/06	10/4/06-10/8/06	1032	Reimbursement: advertising, toner, mailing labels and stamps	$1,931
10/30/06	09/15/06	1042	Reimbursement: color printing from Howard Quinn Co.	$4,449
10/30/06	10/27/06	1034	Reimbursement: clipboards from Walgreens	$5
11/8/06	10/19/06	1045	Reimbursement: printing cost from Howard Quinn Co.	$4,991
11/8/06	10/27/06, 10/31/06	1046	Reimbursement: mailing, addressing, and labels	$3,384
1/29/07	10/27/06	1056	Reimbursement: four page tabloid, mailing and addressing from Howard Quinn Co.	$4,991
1/29/07	12/08/06	1057	Painting fee for the campaign office	$200
2/20/07	11/06/06	1059	Reimbursement: radio Ad 92.7	$924
4/23/07	04/08/07	1061	Reimbursement: campaign expenses	$11
Total				$26,602

1. The Committee failed to accrue $6,691 or about 10% of expenses, in violation of Government Code section 84211 and S.F. C&GC Code section 1.106.

Government Code Section 84211, which is incorporated into local law by S.F. C&GCC §1.106, requires that costs incurred by a committee, but not paid during the reporting period, be reported as “accrued expenditures.”  Committees must report the name and address of each creditor owed $100 or more, a written description of the goods or services purchased, and the amount owed.

The details of the expenses not accrued are as follows:

Invoice Date(s)	Check No.	Payee	Description	Total of Expenditures Not Accrued	Period during which expenditure
					should have been reported	was reported
10/30/06	1055	Rick Galbreath	Campaign manager salary (10/16-10/23/06)	$1,500	10/22/06-12/31/06	1/1/07-7/31/07
10/27/06	1056	Alix Rosenthal	Reimbursement: 4 page tabloid, mailing and addressing from Howard Quinn Co.	$4,991	10/22/06-12/31/06	1/1/07-7/31/07
12/08/06	1057	Alix Rosenthal	Painting fee for the campaign office	$200	10/22/06-12/31/06	1/1/07-7/31/07
Total				$6,691

1. The Committee did not disclose sub vendor information totaling $9,451 or about 14%, in violation of Government Code section 84211.

Government Code section 84211 requires a committee to itemize payments of $500 or more made on the committee’s behalf by an agent or independent contractor (also known as sub vendor payments) during the period covered by the campaign statement by providing the name, street address, the amount of each expenditure, and a brief description of the consideration for which each expenditure was made.

The following sub vendor information was not disclosed:

Check No.	Payee	Description	Payee	Amount	Invoice date  of agent-made payment
1003	Rick Galbreath	Reimbursement: office supplies, stamps and security deposit for street sign	City and County of SF	$500	07/28/06
1026	Alix Rosenthal	Reimbursement: letter heads, business cards and mailbox service	Inkworks Press Inc.	$2,229	7/21/06
1027	Alix Rosenthal	Reimbursement: printing stickers, flyers	Accurate Printing, Spotlight Design & Printing	$1,731	9/14/06-9/29/06
1056	Alix Rosenthal	Reimbursement: 4 page tabloid, mailing and addressing from Howard Quinn Co.	Howard Quinn Co.	$4,991	10/27/06
Total				$9,451

VI. Committee’s Response to Finding:

The Committee did not provide any comments on the audit report.

[1] Unexpended funds are calculated by subtracting any unpaid bills, on-going qualified campaign expenditures, 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 or defeated.