Federal Election Commission

Office of Inspector General -- Semiannual Report

Period ending September 30 , 2005

If you require the entire printed version of this report, contact the Office of Inspector General, Federal Election Commission, 999 E Street, NW, Washington, DC 20463 or call Dorothy Maddox-Holland, Special Assistant, phone: (202) 694-1015, fax: (202) 501-8134, or e-mail: [email protected]

Executive Summary

          This Semiannual Report to Congress, covering the period of April 1, 2005 through September 30, 2005, is submitted in accordance with the Inspector General Act of 1978, as amended. The Executive Summary highlights the most significant activities of the Federal Election Commission (FEC), Office of Inspector General (OIG) during this reporting period and are described in greater detail in subsequent sections of this report.

          The Office of Inspector General is responsible for directing and carrying out audits, inspections, and investigations related to the Federal Election Commission programs and operations. The OIG recommends policies that promote economic, efficient, and effective use of agency resources and programs that prevent fraud, waste, abuse, and mismanagement. The OIG is also responsible for keeping Congress and the Commission fully informed regarding problems and deficiencies detected in FEC programs and operations, and the necessity for corrective action.

          The audits performed by the OIG are conducted in accordance with the Government Auditing Standards issued by the Government Accountability Office (GAO). The investigations carried out by the OIG comply with the Quality Standards for Investigations developed by the President’s Council on Integrity and Efficiency (PCIE) and the Executive Council on Integrity and Efficiency (ECIE).

          The fieldwork on OIG-02-03, Audit of the FEC’s Public Disclosure Process has been completed and the draft report prepared. The main objectives and purpose for conducting this audit are to: 1) determine the extent, if any, of disclosure differences between candidate contributions reported by political committees and related political committee contributions reported received by candidates; and 2) determine whether an adequate process is in place to remedy any reporting discrepancies.

          As part of the fieldwork, a review was done to evaluate the effect of returned checks by a candidate to a political action committee (PAC) on the disclosure process. This review assessed the occurrence of reporting variances between political action committees’ disbursements and candidate committees’ receipts in the 2001/2002 and 2003/2004 election cycles. The candidates’ financial disclosure reports were examined to identify non-reporting of in-kind contributions from PACs. In-kind contributions are donations of goods, services, or property offered free or at a less than usual charge.

          Additional details pertaining to the Audit of the FEC’s Public Disclosure Process OIG-02-03 can be found on page 8, the section entitled Audits.

          The Chief Financial Officers Act of 1990 (Public Law 101-576, commonly referred to as the “CFO Act”), as amended, requires the FEC Office of Inspector General, or an independent external auditor as determined by the Inspector General, to audit the agency’s financial statements. Under a contract monitored by the OIG, Clifton Gunderson (GC) LLP, is the independent certified public accounting firm performing the FEC’s FY 2005 financial statement audit.

          The OIG monitored the performance of the financial statement audit contractor. To do this, the approach and planning of the audit, along with the qualifications and independence of the auditors was reviewed. The work of the auditors throughout the audit was monitored along with examining audit documents and audit reports to ensure compliance with Government Auditing Standards and OMB Bulletin No. 01-02, Audit Requirements for Federal Financial Statements.

          The OIG initiated an audit follow-up of the Audit of the FEC’s Fiscal Year 2004 Financial Statements – OIG-04-01 to determine the extent of corrective action taken by management to address the forty-two outstanding audit findings and recommendations included in the FY 2004 independent auditors report.

          Management provided the OIG with a corrective action plan, as well as updates, which detailed the actions taken and planned by management to implement the audit recommendations. The OIG’s audit follow-up represents the OIG’s assessment of management’s implementation of audit recommendations since the completion of the FY 2004 audit and as of September 30, 2005. The OIG’s audit follow-up resulted in the closure of twelve audit recommendations.

          The OIG continues to work with agency management to address the remaining outstanding recommendations. The section entitled Audit Follow-up, starting on page 12, contains in depth information regarding the steps taken to complete the audit follow-up assessment.

          The OIG closed one hotline complaint during this reporting period. There are currently seven hotline complaints open; three are in progress, and four are pending. One investigation remains open pending a decision by FEC management. For detailed information as it relates to the hotline complaints, see page 14; for work associated with the investigation, see page 15.

          Other activities that the Office of Inspector General participated in can be found in the section entitled Additional Office of Inspector General Activity located on page 16.