Ethics Commission
City and County of San Francisco

San Francisco Ethics Commission Audit Report: DALY 06, FPPC ID #1284226

I. Introduction

This Audit Report summarizes the audit results of the committee, Daly 06, Identification Number 1284226 (“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).

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 unexpected 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 apparent violations of law, forwards them to the appropriate enforcement agency.

IV. Committee Information

The Committee was formed in March 2006 to support the re-election of Chris Daly to the Board of Supervisors, District 6 in the November 7, 2006 general election.  Supervisor Daly served as his own 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 $165,552 in contributions and $43,750 in public funds, and incurred $207,151 in expenditures.  The CFRO provides that any candidate who receives public funds must return unexpended campaign funds to the Election Campaign Fund.  The Committee did not have any unexpended funds.[1]

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

  1. The Committee received eight cash contributions of $100 or more in violation of Government Code section 84300. 

Government Code section 84300 states that no contribution of $100 or more may be made or received in cash.

The cash contributions are as follows:

Contributor

Contribution Date

Contribution Amount

   

Tom Evans

3/4/06

$100

Richard Evans

3/4/06

$100

Harold Evans

3/4/06

$100

Mary Evans

3/4/06

$100

Jim Evans

3/4/06

$100

Steve Smith

No date

$100

Cathy Smith

No date

$100

Michael Stause

10/25/06

$150

   

 Total

 

$850

 

  1. The Committee used $9,742 or about 5% of campaign finances to reimburse the candidate for campaign-related expenditures made from the candidate’s personal funds in violation of Government Code section 85201 and CFRO section 1.106.

Government Code section 85201 and CFRO 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 check register

Date per bank statement

Invoice Dates

Check No.

Description of Expense

Amount

      

05/30/06

05/30/06

3/3/06, 4/18/06

1007

Office supplies

$1,598

07/05/06

07/14/06

6/26/06, 7/3/06

1009

Postage

$250

08/30/06

08/31/06

8/1/06, 8/12/06,
8/16/06, 8/17/06

1019

Computer equipment

$6,074

10/01/06

10/05/06

9/13/06, 9/12/06,

1035

Two Scanners

$910

10/25/06

10/26/06

10/10/06

1071

Food, office supplies, Messenger fees, Hunan restaurant,

$556

12/29/06

01/30/07

10/15/06

1108

Sprint PCS phone

$354

      

Total

    

$9,742

 

VI. Committee’s Response to Finding

The Committee was provided an opportunity to review and comment on this audit report. The Committee’s comments are as follows:

While Daly 06 deposited seven cash contributions of $100 and one cash contribution of $150, the campaign returned $1 or $51 to each donor with checks (check numbers 1001, 1002, 1003, 1004, 1005, 1025, 1026, and 1093).  Therefore, no cash contribution of $100 or more was received by the Committee.   

On several occasions, campaign expenses that I incurred were reimbursed to me by the campaign.  This was always done within reporting periods to ensure transparency of all campaign expenditures.  I do not read California Government Code section 85201 to prohibit this accounting practice. 

Section 85201 clearly prohibits use of a candidate’s personal funds outside of the campaign bank account to promote the election of the candidate.  Personal funds of $500 and another $500 from my wife, Sarah Low Daly, were contributed to Daly 06 and appropriately deposited in the campaign bank account. No other personal funds were contributed to the campaign. Therefore, Daly 06 did not violate this provision.

Furthermore, several of the subject expenses were incurred in my role as Treasurer of Daly 06 and not as the candidate.

[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 the 30th day following the date of the election.

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