Texas Ethics Commission Undertaking Audits of Campaign Finance Reports
Tuesday, September 13, 2016If you or your clients file reports with the Texas Ethics Commission, consider yourself warned: the Commission is expanding its traditional role as repository of records and branching out into the realm of auditor and enforcer.
Gone are the good old days where the only people scrubbing your reports were political opponents, reporters, and self-anointed watchdogs. Now, the Texas Ethics Commission itself is undertaking “facial compliance reviews” of reports submitted to the Commission. And if the Commission staff suspects that a discrepancy exists, you may receive a letter demanding that you prove your innocence.
Confident that recent upgrades to its forms and software will lead to greater accuracy, the Commission may now flag reporting issues that were previously accepted on faith. For example, for the past eight years filers have, in accordance with Commission rules, determined the “contributions maintained” amount (commonly referred to as “cash on hand”) by simply reporting the balance in all bank accounts on the last day of the reporting period. The total amount of money in the bank has not had to reconcile with contributions coming in and expenditures going out; after all, the cash-on-hand may not reflect outstanding loans or non-negotiated checks. Now, however, the Commission takes the position that the increased reporting schedules (pledges, loans, unpaid incurred obligations, credit card expenditures, etc.) make it more likely that the contributions, expenditures, and cash on hand should reconcile. If those total don’t reconcile, the Commission may send you a “Facial Compliance Review Report”, notifying you of a suspected “deficiency” and giving you a deadline to take “required corrective action” that may include the production of bank records in support of your original filing. Failure to take the required corrective action in a timely manner can lead to sanctions or a full-blown audit.
So the next time that you’re preparing to submit that campaign finance filing, be ready to prove up everything in your report because the Ethics Commission is now likely scrutinizing your report for compliance with the Texas Election Code.
Ross Fischer of the Gober Group is the former Chairman of the Texas Ethics Commission and an expert in the field of Texas campaign finance and lobby laws.