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San Francisco Ethics Commission Audit Report: DeWitt Lacy for Supervisor 2010, FPPC ID #1320405


I. Introduction

This Audit Report summarizes the audit results of the committee, DeWitt Lacy for Supervisor 2010, Identification Number 1320405 (“the Committee”), from January 1, 2009 through December 31, 2010.  The audit was conducted to determine whether the Committee materially complied with the requirements of the Political Reform Act (“the Act”) (California Government Code (GC) section 81000, et seq.) and San Francisco’s Campaign Finance Reform Ordinance (“CFRO”) (San Francisco Campaign and Governmental Conduct Code (SFC&GCC) 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 the committee complied with applicable requirements of State and local laws. 

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

IV. Committee Information

The Committee was formed on August 26, 2009 to support the election of DeWitt Lacy to the Board of Supervisors, District 10 in the November 2, 2010 general election. The Committee has had four treasurers and one assistant treasurer. The current treasurer is DeWitt Lacy. The Committee has not terminated and remains open as of the date of this report.

V. Audit Findings

For the period from January 1, 2009 through December 31, 2010 the Committee received $27,900 in contributions (no non-monetary contributions and no loans) and $42,682 in public funds. The Committee incurred $70,116 in qualified campaign expenditures.

The CFRO provides that any candidate who receives public funds must return unexpended campaign funds to the Election Campaign Fund. As of December 31, 2010, the Committee had $389.39 in unexpended funds.1

The Commission determined that there were three material findings with respect to the audit of the Committee:  1) the Committee failed to maintain complete campaign records, in violation of Government Code section 84104 and S.F. C&GC Code section 1.106; 2) the Committee failed to file its termination campaign statement, in violation of Government Code sections 84200 and 84214 and S.F. C&GC Code sections 1.106 and 1.112; and 3) the Committee failed to file Itemized Disclosure Statements for Mass Mailings, in violation of S.F. C&GC Code section 1.161(a).

Government Code Section 84104 and Campaign and Governmental Conduct Code Section 1.106: Recordkeeping

Government Code Section 84104 provides that it is the duty of each candidate, treasurer and elected officer to maintain detailed accounts, records, bills and receipts that are necessary to prepare campaign statements, and to retain the documents for a period of four years following the date the appropriate campaign statement is filed.  Section 84104 is incorporated into the Campaign Finance Reform Ordinance at S.F. C&GC Code section 1.106.

The Committee did not maintain complete records.  Of the $9,163 in unitemized contributions (contributions less than $100 each) that the Committee received, it failed to maintain supporting documents for $5,224 of contributions, or 57 percent of total unitemized contributions (16% percent of total itemized and unitemized contributions). 

Government Code Sections 84200 and 84214 and S.F. Campaign and Governmental Conduct Code Sections 1.106 and 1.112: Requirement to File Campaign Statements

Government Code Section 84200 requires that candidates and committees file semi-annual campaign statements each year no later than July 31 for the period ending June 30, and no later than January 31 for the period ending December 31.  Under S.F. C&GC Code section 1.112 during the period covered by the audit, a committee was required to file these reports electronically if it received contributions of at least $5,000 or made independent expenditures of at least $5,000 in a calendar year.  Beginning with the July 31, 2013 filing deadline, a committee is no longer required to file paper statements when it submits an electronic statement.  Electronic campaign statements are due at the same time that paper statements are due under the PRA.

The Committee has not filed any campaign statement after its filing of FPPC Form 460 for the period covering October 17, 2010 through December 31, 2010.  The Commission has provided numerous verbal and written requests to the Committee to file its termination statement.  The Committee must file FPPC Form 460 for the covering January 1, 2011 through June 30, 2011 and FPPC Form 410 Termination Statement in order to terminate.  The Committee was eligible to terminate on June 30, 2011. 

The Committee also has not filed an electronic copy of its amended Form 460 for the period covering January 1, 2010 through June 30, 2010.

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

The Political Reform Act defines mass mailings as 200 substantially similar pieces of mail sent within a calendar month.  Section 1.161 of the CFRO 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 “paid for by ______(insert candidate’s name and street address, city, state and zip code)” 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, or within 48 hours if the date of the mailing falls during the 16-day period preceding the election. 

The Committee incurred expenditures for two mass mailings.  Per Committee records, the Committee sent the two mass mailings in October 2010.  However, the Committee did not file a Form SFEC-161(a) Itemized Disclosure Statement for Mass Mailings for any of these two mass mailings.

VI. Committee’s Response to Findings

The Committee provided the following comments with respect to the audit findings:
The candidate, DeWitt Lacy, stated that he was a first-time candidate with relatively little experience with campaign finance rules.  Mr. Lacy stated that the persons hired to perform the duties of the treasurer created significant difficulties because they did not file the appropriate reports and/or did not keep the accounting correctly. 

Mr. Lacy stated that he was unaware that the Committee needed to obtain records for contributions less than $100 that were received in the form of cash, or that the Committee was required to file samples of mass mailings. 

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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