Political & Election Law: A Checklist for Doing Periodic Reviews of a PAC’s Policies and ProceduresThursday, June 15, 2017
It is important to do a periodic review of a PAC’s policies and procedures, operations, and reporting to ensure that the PAC is staying current with the best practices recommendations from the Federal Election Commission and state campaign finance officials. The policies and procedures a PAC operates under not only help ensure compliance with the law, but they also help protect the PAC’s donors and members and provide assurances that the money they contribute is being used efficiently and effectively.
A Best Practices Review will look at your PAC’s governing documents and policies. At a minimum, your PAC should have policies that address the following issues:
- Management structure and decision-making processes
- Guiding principles for selecting which committees the PAC will contribute to
- Legal and effective fundraising
- Procedures for requesting and approving a contribution
- Check-writing authority with built-in checks and balances
- Process for approving political activity, candidate visits, or other expenditures of company/ association funds for political purposes
- Recordkeeping and reporting practices that comply with applicable law and deadlines
Other things that a thorough review will check for are:
- A “spot check” of your reporting to ensure that your reports reconcile with bank records
- Any updates required to your Statement of Organization, or organizing documents
- Compliance with the FEC’s recommended internal controls to prevent misappropriations and associated misreporting
- Missing or insufficient information on campaign finance reports
- Internal communications that suggest contributions are being made for impermissible purposes (for example, quid pro quo contributions)
A third party review is important because:
- It evaluates whether and how policies are implemented in practice
- Ensures there is a complete and thorough review to discover any inadequate or insufficient policies or practices
- Periodic third party review can be an affirmative defense in an FEC enforcement action
- Highlight opportunities for the PAC to expand beyond current scope of activities
A periodic audit of your PAC’s activities protects PAC managers, sponsors, donors, and the candidates they support and the scope of inquiry can be customized to fit the needs of your organization. It’s the responsibility of PAC management to ensure that the PAC operates within the confines of the law, and an internal audit or review is a prudent step to ensure that you’re meeting those obligations.
The primary author of this blog post was Karen Blackistone Oaks, a partner with The Gober Group. She specializes in advising clients that are engaged in multi-faceted, multi-million dollar policy campaigns that incorporate a wide range of advocacy strategies.