REPORT OF THE AUDIT DIVISION

ON Alan Keyes For President '96, Inc.

Alan keyes committee

and other authorized committees

EXECUTIVE SUMMARY

Alan Keyes for President '96, Inc. (the Primary Committee) registered with the Federal Election Commission on May 26, 1995. In addition, the Alan Keyes Committee (the Exploratory Committee) registered with the Commission on October 24, 1994. Finally, there were 20 other committees which were authorized by the Candidate. With the exception of the Primary Committee, all committees have been terminated.

The audit was conducted pursuant to 26 U.S.C. §9038(a) which requires the Commission to audit committees that receive matching funds. The Candidate received $2,145,766 in matching funds.

The findings of the audit were presented to representatives of the Primary Committee at a conference held at the end of fieldwork and were addressed in the Exit Conference Memorandum presented on September 30, 1997. The Committees' responses to those findings are contained in the audit report. The following is an overview of the findings contained in the audit report.

MISSTATEMENT OF FINANCIAL ACTIVITY - 2 U.S.C. §§434(b)(1), (2) and (4). Both, the Primary Committee and the Exploratory Committee misstated financial activity on disclosure reports filed during 1995. Additionally, two authorized committees misstated financial activity on disclosure reports filed during 1996. The Committees filed adequate amended disclosure reports.

ITEMIZATION OF DISBURSEMENTS - 2 U.S.C. §434(b)(5)(A). The Primary Committee and the Exploratory Committee failed to itemize disbursements totaling $49,446 and $85,453, respectively. Both Committees have filed amended reports disclosing these disbursements.

DISCLOSURE OF OCCUPATION/NAME OF EMPLOYER - 2 U.S.C. §§434(b)(3) and 431(13)(A). Exploratory Committee reports inadequately disclosed occupation and name of employer for contributions from individuals totaling $73,666 and, in addition, it was also found not to have demonstrated best efforts to obtain, maintain and disclose this information. The Primary Committee submitted documentation of its efforts to obtain the needed information and filed the necessary amended reports.

FAILURE TO FILE DISCLOSURE REPORTS - 2 U.S.C. §§432(e) and (f). During 1996, three authorized committees did not file disclosure reports as required. In addition, a fourth committee never registered with the Commission and never filed any disclosure reports for 1995. The Primary Committee filed a statement of organization and the requisite disclosure reports for these other authorized committees.

RECEIPT OF ANONYMOUS CASH CONTRIBUTIONS IN EXCESS OF THE LIMITATION - 2 U.S.C. §441g and 11 CFR §110.4©(3). The review of contributions from individuals received by the Exploratory Committee identified excessive, anonymous cash contributions which totaled $10,435. As permitted under 11 CFR §110.4©(3), the Primary Committee donated the excessive, anonymous cash contributions to a non-profit organization.

UNRESOLVED PROHIBITED CONTRIBUTIONS - 2 U.S.C. §441b(a). Testing of the Primary Committee's contributions initially indicated that it had received a number of prohibited contributions. However, the Primary Committee provided documentation establishing that it had not received a material amount of corporate contributions.

UNRESOLVED EXCESSIVE CONTRIBUTIONS - 2 U.S.C. §441a(a)(1)(A). Reviews of contributions from individuals received by the Primary and Exploratory Committees identified unresolved, excessive contributions totaling $69,271. The Primary Committee provided documentation resolving one $4,000 contribution and submitted a payment of $65,271 to the U.S. Treasury.

DETERMINATION OF NET OUTSTANDING CAMPAIGN OBLIGATIONS - 11 CFR §§9034.5(a) and 9034.1(b). A Statement of Net Outstanding Campaign Obligations was prepared based on a review of the Primary Committee's financial activity through September 30, 1997, to include an analysis of allowable winding down costs. It was determined that the Primary Committee had not received matching funds in excess of its entitlement.

NONQUALIFIED CAMPAIGN EXPENSES - UNDOCUMENTED - 11 CFR §§9032.9(a), 9033.11(b) and 9038.2(b)(3). Disbursements totaling $94,469 were identified which lacked adequate supporting documentation, or for which no canceled check or other payment device was maintained. The Primary Committee provided sufficient documentation for disbursements totaling $25,141 and made a pro rata repayment, to the U.S. Treasury in the amount of $8,728 for the remaining non-qualified campaign expenses.

STALE-DATED COMMITTEE CHECKS - 11 CFR §9038.6. The Primary Committee paid the U.S. Treasury $10,737 for unnegotiated, stale-dated checks that had been issued by the Exploratory Committee.