Chicago’s Committee for ’96 (Host Committee) registered with the Federal Election Commission on August 16, 1994 as the Host Committee for the presidential nominating convention for the Democratic Party.

The audit was conducted pursuant to Section 9008.54 of Title 11 of the Code of Federal Regulations which directs the Commission to conduct an examination and audit of each host committee registered under 11 CFR 9008.51.

The findings of the audit were presented to the Committee at an exit conference held on July 25, 1997 and in the Exit Conference Memorandum (ECM). The Committee’s responses to the findings are contained in the audit report.

The following is an overview of the findings contained in the audit report.

Apparent Convention Expenses Paid By The Host Committee And City Of Chicago- 26 U.S.C. 9008(h), 11 CFR 9008.3(a)(4)(vii), 11 CFR 9008.7(a)(4), 11 CFR 9008.12(b)(3) and (b)(7), 11 CFR 9008.52 (c), 11 CFR 104.3(a). The Audit staff identified payments totaling $2,580,742, made by the Host Committee and the City of Chicago for certain production and telecommunications expenses which did not appear to fall within the categories of permissible expenses which could be paid by the Host Committee or the City of Chicago. The production payments, which totaled $1,455,407, were made to six vendors for services such as providing a public address system, constructing camera platforms and lighting, providing stagehands, riggers, projectionists, electricians, teamsters, etc. Based on the Democratic National Convention Committee’s response to its ECM, the Audit staff conceded that audio services, including a public address system, provided by one vendor could be permissibly paid. The Commission determined that services provided by the remaining five vendors were permissible Host Committee expenditures. Regarding the telecommunications expenses, the Commission determined that payments totaling $726,835 for the DNCC’s local and long distance telephone charges could not be permissibly paid by the Host Committee or City of Chicago.

In-Kind Contributions to the Host Committee Viewed As Apparent Convention Expenses- 11 CFR 9008.(b)(3), 11 CFR 9008.7(a)(4)(ix). The Audit staff identified an "electronic voting system" contributed by AT&T, valued at $150,000, and a "credentials management system" contributed by the Polaroid Corporation, valued at $15,000, which appeared to be items which should have been paid for by the DNCC. The Commission determined however, that the use of funds for a voting tabulation system was a permissible Host Committee expense. In addition, based on the Host Committee’s response to the ECM, the Audit staff concluded that the credentials management system was a security measure and, as such, did not result in a prohibited in-kind contribution.