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The Federal Election Commission (FEC) may audit a committee if the committee’s reports do not meet the minimum requirements for substantial compliance with the Federal Election Campaign Act.
Avoiding an FEC audit is essential because the audit can be time-consuming, resource-intensive, and expensive. The FEC may take several years to complete an audit. The document requests and responses to an audit can be confusing or burdensome. The audit can also lead to referrals for additional enforcement and other compliance actions.
The following tips are provided to help a committee avoid a Federal Election Commission audit:
Timely respond to all requests for information and clarification from the FEC Reports Analysis Division. When an FEC analyst sends a request for information, the FEC is trying to clear up discrepancies in the report or get more information or an explanation to support the way the committee reported the transaction. Therefore, contacting or responding to the analyst to help clear up the discrepancy and provide supporting documentation or explanation may avoid an audit. However, the response to the request must be timely. The response due date will appear in the upper-right corner of the letter.
File complete and accurate reports. The FEC’s Reports Analysis Division reviews all reports. If there is an inconsistency or information is missing on the reports, the analyst may contact the committee and request additional information.
Report all receipts and disbursements. The Federal Election Campaign Act requires committees to report all receipts and disbursements. Analysts check to see if the committee has reported all these transactions.
Itemize receipts and disbursements that require itemization. The Federal Election Campaign Act requires committees to itemize certain receipts and disbursements. The analyst will check to see if the committee has itemized the receipts and disbursement.
Ensure that the reported purpose for disbursements is adequate. Committees must report the purpose of some disbursements. The purpose is a specific description of why the committee made the disbursement. The FEC maintains non-exhaustive lists of adequate and inadequate purposes.
Implement and maintain internal financial controls and checks and balances. While the Federal Election Campaign Act and the Federal Election Commission's regulations do not require that committees implement and maintain internal controls, such a system will help committees file complete and accurate reports.
Take timely action to remedy excessive and unlawful contributions. If the committee discovers that it has received excessive or unlawful contributions, the committee must take timely remedial action. For excessive contributions, the committee can refund, redesignate, or reattribute the contributions. If the committee received an unlawful contribution, it must refund the contribution. Examples of unlawful contributions include contributions from a corporation or labor union.
Properly allocate between federal and nonfederal activities. If the committee is involved in both Federal and non-Federal activity, the committee must properly allocate between Federal and non-Federal activities.
Utilize Federal Election Commission resources (campaign and committee guides and RAD analyst). The FEC has multiple resources that can be used to resolve discrepancies and issues with reporting. The resources include the assigned analysts and the FEC website.
Consult and work with a campaign finance attorney. A campaign finance attorney can assist committees with following these tips to avoid a Federal Election Commission audit. A campaign finance attorney will be vital if the FEC selects the committee for an audit. Contact The Holloway Law Office for assistance in avoiding an audit and to help if the committee is selected for an audit.