Political reform audit

Background

The Political Reform Audit Program was created after California voters passed the Political Reform Act of 1974, which was intended to improve political entities’ disclosure and accountability. We are a separate, nontax audit program.

What we do

We audit state and local political entities pursuant to Government Code Section 90000 et seq. We determine their compliance with the Political Reform Act’s disclosure and record keeping requirements. We also educate them to improve future compliance.

Who we audit

  • Candidate-controlled committees.
  • State ballot measure, state general purpose, and primarily formed committees.
  • Lobbyists, lobbying firms, and lobbyist employers.

In most cases, the Fair Political Practices Commission (FPPC) randomly selects entities for audit. FTB audits the selected entities. We do not audit candidates for State Controller, the Board of Equalization, or the Public Employees Retirement System’s Board of Administration. FPPC conducts those audits.

Purpose

A Political Reform Audit evaluates an entity’s record keeping and disclosure for compliance with the Political Reform Act. The auditor follows a standard audit program to review an entity's case. The auditor may offer helpful suggestions to improve an entity's understanding of all issues and increase future disclosure statement accuracy.

Selection criteria

Generally, audit selection occurs either through an FPPC public drawing or because the entity meets mandatory legal thresholds. For example:

  • FPPC randomly selects a district for audit in a public drawing. FTB audits candidates and their committees that meet mandatory thresholds in the district.
  • An entity meets the mandatory audit threshold when contributions or expenditures reach specific amounts, such as:
    • $25,000 for statewide candidates.
    • $10,000 for measure committees.
  • FPPC randomly selects an entity in a public drawing, such as a political action committee.

For more detailed information about FPPC’s selection process and drawing results, see "The Selection Process."

Audit questionnaires

FTB will send you a contact letter notifying you of the audit. We then request that you complete a questionnaire. It helps us understand your record keeping and disclosure procedures. The following are the three types of questionnaires available:

  • FTB 780, General Purpose Committee Audit Questionnaire.
  • FTB 781, Measure Committee Audit Questionnaire.
  • FTB 782, Candidate Audit Questionnaire.

After completing the questionnaire, provide it to the auditor that is assigned to your case.

Procedures

We adhere to both generally accepted auditing standards and FPPC’s auditing standards.

Common audit procedures include:

  • Reconciling bank statements with campaign statements.
  • Validating that entities filed their reports and statements timely with the appropriate filing officer.
  • Tracing contributions and expenditures from source documents to campaign statements.

Auditors maintain detailed work papers to support all audit reports. Senior audit staff performs quality review of all work papers and reports.

Location

We strive to perform audits at your choice of location and time. Some audits occur partially or entirely in our office.

Timeframe

The field examination of your records may take a few hours or several days, depending on the campaign size, condition, and organization of the records. The auditor evaluates each case and provides an estimated timeframe.

Records you need

Provide all information and records used to prepare the filed statements and reports. This can include:

  • Copies of contributors’ checks.
  • Copies of deposit slips.
  • Occupation and employer documentation.
  • Canceled checks.
  • Check registers.
  • Bank statements.
  • Receipts and invoices.
  • Credit card statements.
  • Media buy lists.

The report

Once we conclude the audit we provide the entity with a report that contains any material findings. You may submit comments for any findings. Examples of material findings include:

  • Personal use of campaign funds.
  • Inadequate disclosure of contribution or expenditure information.
  • Missing disclosure reports.
  • Failure to maintain required records.

Where we send the report

For state candidates and committees

  • Audited entity.
  • FPPC.
  • Secretary of State.
  • Attorney General.

For local candidates and committees

  • Audited entity.
  • FPPC.
  • Local filing officer.
  • District attorney.

After we issue the report

The Secretary of State or the local filing officer makes the report available to the public. If we identify violations, FPPC, and possibly other enforcement agencies, review the reports and determine whether to initiate a subsequent investigation. If they investigate, an enforcement agency representative may request additional information and documentation.

If you have questions about FPPC’s enforcement process, visit their website or call them at:

Website
http://www.fppc.ca.gov/
Phone
866-275-3772
916-322-5660

Retain your records even if an enforcement agency does not initiate a subsequent investigation. We will advise you how long you must retain them.

Contact information

Fair Political Practices Commission

If you have questions about the Political Reform Act or FPPC regulations, call their technical advice line at:

Phone
866-ASK-FPPC
866-275-3772

Franchise Tax Board

If you have questions about the audit, contact either the auditor that handles your case or the Political Reform Audit Program’s main number at:

Phone
916-845-4847
Weekdays, 7 AM to 5 PM

For privacy information, get FTB 1132A, Franchise Tax Board Political Reform Audit Privacy Notice.