I. Introduction
This Audit Report summarizes the audit results of the committee, Friends of Owen O’Donnell, Identification Number 1307894 (“the Committee”), for the period from January 1, 2008 through December 31, 2008. 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:
- 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;
- Compliance with all provisions related to the Commission’s public financing program; and
- 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 June 2008 to support the election of Owen O’Donnell to the Board of Supervisors, District 5. Richard Smoke served as the treasurer. The Committee was active as of December 31, 2008.
V. Audit Findings
For the period covered by the audit, the Committee received $43,323 in contributions, non-monetary contributions of $1,000, and $58,413 in public funds and incurred qualified campaign expenditures of $100,401. 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 (San Francisco Campaign and Governmental Conduct Code (S.F. C&GC Code) § 1.148(d)). The Committee did not have any unexpended funds.[1]
The Commission determined that there were four material findings with respect to the audit of the Committee, as follows:
- The Committee failed to timely disclose expenditures of $12,364, or 12 percent of the total expenditures made, in violation of Government Code sections 84211(b), (h), (i), and (j).Government Code section 84211(b) requires that all campaign expenditures incurred be reported on the campaign disclosure statements. 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 sub vendor information existed. (Government Code sections 84211 (b), (h), (i), and (j)). The CFRO incorporates the Act’s provisions regarding disclosure and record keeping. (S.F. C&GC Code section 1.106). For this reason, a violation of section 84211 of the Act is also a violation of the CFRO.
The Committee’s actual qualified campaign expenditures were $100,401. The Committee failed to timely report expenditures of $12,364, or 12 percent of total expenditures. These expenditures should have been disclosed on Schedule E (“Payments and Contributions Made”) of FPPC Form 460 by the date listed in column F of the following table. On 7/31/09, the Committee amended its campaign statements to report $10,611 of the $12,364 in expenditures not timely reported. However, because these expenditures were reported much later than required, this finding is deemed material.
The following expenditures were not reported:
Payee Description Amount Period/Schedule in which expenditure should have been reported Spotlight Design & Printing Envelope, letterhead, design $985.90 Schedule E on report ending 9/30/08 David Latterman – Fall Line Analytics Polling and vote accounting $4,000.00 Schedule E on report ending 9/30/08 Traversant, Inc Mailers $6,300.00 Schedule E on report ending 12/31/08 JKW Political Consulting Retainer for Oct 1, precinct list printing, remittance envelopes $2,310.55 Schedule E on report ending 12/31/08 JKW Political Consulting Polling and vote accounting $2,000.00 Schedule E on report ending 12/31/08 Unitemized not reported $19.19 Schedule E on report ending 9/30/08 Unitemized not reported $4.95 Schedule E on report ending 10/18/08 Unitemized not reported $108.50 Schedule E on report ending 12/31/08 Partial expenditures reported as follows: Fall Line Analytics – $3,000, JKW – $63.65, Kris O’Donnell – $55, JKW – $246.90 ($3,365.65) Net not reported $12,363.54 - The Committee failed to disclose contributions of $8,317, or 19 percent of the total contributions received, in violation of Government Code section 84211(c) and (d).Government Code sections 84211(c) and (d) provide that each campaign statement contain the total amount of contributions received during the period covered by the campaign statement from persons who have given a cumulative amount of one hundred dollars ($100) or more, and the total amount of contributions received from persons who have given a cumulative amount of less than one hundred dollars ($100). In addition, for persons who give a total of $100 or more in a calendar year, the campaign statement must also list the contributor’s name, street address, occupation and employer information, and the date and amount of such person’s contribution. Government Code section 84211(f).
The Committee received a total of $43,323 in contributions. The Committee did not properly report contributions of $8,317, or 19 percent of total contributions received. The Committee was required to disclose these contributions on Schedule A of Form 460. On 11/4/09, the Committee amended its campaign to report some of the contributions listed below.
The contributions that were not reported on the campaign statements are listed below:
Batch Deposit date Last name/ company name First name Amount Check date Period in which these should have been reported 3 7/22/08 Levin Daniel $100 7/16/08 F460 ending 9/30/08 14 8/14/08 Rogers M.D. $100 8/5/08 F460 ending 9/30/08 20 8/25/08 Glover Orlene $100 8/15/08 F460 ending 9/30/08 21 8/25/08 Lenvin Nancy $125 8/15/08 F460 ending 9/30/08 21 8/25/08 Prudhomme Anthony $100 8/16/08 F460 ending 9/30/08 22 8/25/08 Varni Robert $100 8/16/08 F460 ending 9/30/08 22 8/25/08 Varni Sharon $100 8/16/08 F460 ending 9/30/08 23 8/25/08 Aoyagi Shoichi $20 8/20/08 F460 ending 9/30/08 23 8/25/08 Aoyagi Tamara $10 8/18/08 F460 ending 9/30/08 23 8/25/08 Chrys Chrys $25 8/20/08 F460 ending 9/30/08 23 8/25/08 Daniels Ralph $50 8/18/08 F460 ending 9/30/08 23 8/25/08 Daniels Valerie $50 8/19/08 F460 ending 9/30/08 23 8/25/08 Feakins Nicholas $250 8/19/08 F460 ending 9/30/08 23 8/25/08 Hesse Marianne $50 8/20/08 F460 ending 9/30/08 23 8/25/08 Hundley Grant $500 8/20/08 F460 ending 9/30/08 23 8/25/08 McKenna Carolyn $250 8/20/08 F460 ending 9/30/08 23 8/25/08 Meghrigian Astrid $100 8/16/08 F460 ending 9/30/08 23 8/25/08 Olson Sean $100 8/18/08 F460 ending 9/30/08 23 8/25/08 Pashelinsky Erin $100 8/20/08 F460 ending 9/30/08 23 8/25/08 Richen Peter $25 8/19/08 F460 ending 9/30/08 23 8/25/08 Rosas Elizabeth $100 8/18/08 F460 ending 9/30/08 23 8/26/08 Stasukelis Lori $150 8/19/08 F460 ending 9/30/08 23 8/26/08 Torrington M. Christine $15 8/20/08 F460 ending 9/30/08 24 8/25/08 Deasy Bernard $95 8/20/08 F460 ending 9/30/08 24 8/25/08 Epstein Robert $500 8/25/08 F460 ending 9/30/08 24 8/25/08 Gardner Francesca $150 8/12/08 F460 ending 9/30/08 24 8/25/08 Klammer Joseph $25 8/19/08 F460 ending 9/30/08 24 8/25/08 Mason Jr. Robert $5 8/21/08 F460 ending 9/30/08 24 8/25/08 Mason III Robert $5 8/21/08 F460 ending 9/30/08 24 8/25/08 Newsom Barbara $500 8/20/08 F460 ending 9/30/08 24 8/25/08 Trimple Stephanie $100 8/8/08 F460 ending 9/30/08 24 8/25/08 Vaughn Aaron $5 8/21/08 F460 ending 9/30/08 25 8/25/08 Chan Douglas $75 8/21/08 F460 ending 9/30/08 25 8/25/08 Hwang Keith $50 8/20/08 F460 ending 9/30/08 25 8/25/08 Olson Sean $400 8/20/08 F460 ending 9/30/08 25 8/25/08 Susan Reid Susan $75 8/14/08 F460 ending 9/30/08 25 8/25/08 Shaw Taylor $100 8/12/08 F460 ending 9/30/08 25 8/25/08 Terheyden Jean $50 8/19/08 F460 ending 9/30/08 25 8/25/08 Terheyden William $50 8/20/08 F460 ending 9/30/08 25 8/25/08 Tupper Rebecca $99 8/21/08 F460 ending 9/30/08 26 8/25/08 Gulick John $75 8/22/08 F460 ending 9/30/08 27 8/26/08 Hildebrand Frances $100 8/20/08 F460 ending 9/30/08 27 8/26/08 Lee Jing $50 8/18/08 F460 ending 9/30/08 27 8/26/08 Milstein Michael $50 8/25/08 F460 ending 9/30/08 27 8/26/08 Robins Christian $50 8/21/08 F460 ending 9/30/08 27 8/26/08 Whitehead Cynthia $500 7/25/08 F460 ending 9/30/08 28 8/26/08 Kendrick Stephen $500 7/28/08 F460 ending 9/30/08 29 8/26/08 Lazarus Ann $100 8/4/08 F460 ending 9/30/08 29 8/26/08 Moore James $100 8/7/08 F460 ending 9/30/08 55 10/1/08 Bingaman Jeff $500 9/22/08 F460 ending 10/18/08 71 11/6/08 Anasazi A&M Associates $500 9/30/08 F460 ending 12/31/08 75 10/29/08 Bingaman Anne $500 9/22/08 F460 ending 12/31/08 h 6/26/08 Weaver Robert $100 6/24/08 F460 ending 6/30/08 PayPal transfer which cleared the bank on 11/10/08 $387.87 F460 ending 12/31/08 Total $8,316.87 - The Committee did not file the required itemized disclosure statements for the three mass mailings that it produced and sent, in violation of San Francisco Campaign and Government Conduct Code (S.F. C&GC Code) section 1.161. S.F. C&GC Code section 1.161 requires any candidate seeking City elective office who pays for a mass mailing that advocates for or against candidates to include on the mailing the statement, “paid for by _____ (insert candidate’s name and 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 Commission two original pieces of the mass mailing and an itemized disclosure statement within five working days after the date of the mailing.
The Committed incurred expenditures for three mass mailings. Per the Treasurer and Committee records, the Committee sent 24,000 of each of the three mass mailings in late October or early November. However, the Committee did not file any of the three forms SFEC-161(a): Itemized Disclosure Statement for Mass Mailings that it was required to file.
- The Committee did not accrue expenses totaling $20,849 or about 21% of total expenditures in the proper reporting period, in violation of Government Code section 84211(k).Government Code section 84211(k), which is incorporated into local law by San CFRO section 1.106, requires that committees to report expenditures during the reporting period in which they were incurred. Expenditures that are incurred in one reporting period but paid in a subsequent reporting period should be reported as “accrued expenditures” on the campaign statements covering the reporting period in which they were incurred. 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 Committee did not accrue $20,849 in expenses in the correct reporting period, which represents 21% of the total campaign expenditures.
The following expenditures were not accrued in the proper reporting period:
Period in which expenditure should have been reported Period in which expenditure was actually reported Description Vendor Check # Amt Sch F on report ending 12/31/08 Sch E on report ending 6/30/09 Political event at G.P. residence on 10/29/08 Mr. & Mrs. Gordon P. Getty check $5493.50 Sch F on report ending 6/30/08 Sch E on report ending 9/30/08 Postage at Post All Center Kristina O’Donnell check $50.00 Sch F on report ending 6/30/08 Sch E on report ending 9/30/08 Supplies at Office Depot Kristina O’Donnell check $40.10 Sch F on report ending 10/18/08 Sch E on report ending 12/31/08 Supplies at Office Depot Kristina O’Donnell 1128 $50.00, $37.13, $7.89, $29.99 Sch F on report ending 10/18/08 Sch E on report ending 12/31/08 Postage for O’Donnell mailing #1 Flying Colors LLC 2005 $5,280.00 Sch F on report ending 10/18/08 Sch E on report ending 12/31/08 Printing and mailing for O’Donnell mailer #1 (24,000 mailers) Flying Colors LLC Cashier’s check $8,433.76 Sch F on report ending 9/30/08 Sch E on report ending 12/31/08 Additional cost for the “Website donation form” authorized on 9/10/08 Traversant, Inc 1127 $500.00 Sch F on report ending 9/30/08 Sch E on report ending 12/31/08 Fundraising letter – merge, print, postage JKW Political Consulting 1124 $428.00 Sch F on report ending 9/30/08 Sch E on report ending 10/18/08 postcard Spotlight Design & Printing 1120 $499.10 Total $20,849.47
VI. Committee’s Response to Findings
The campaign was sloppy in some of its reporting, but not intentionally inaccurate. Most of the errors occurred early in the campaign as the campaign principals learned how to use the system. Therefore, the errors were from inexperience with campaigns and the system, not from an intent to intentionally avoid the reporting requirements.