REPORT OF THE AUDIT DIVISION
ON
PETE WILSON FOR PRESIDENT COMMITTEE, INC.;
PETE WILSON FOR PRESIDENT COMPLIANCE COMMITTEE, INC.;
AND
PETE WILSON FOR PRESIDENT AUDIT FINES AND PENALTY ACCOUNT, INC.;
EXECUTIVE SUMMARY

The Pete Wilson for President Committee, Inc. (the Primary Committee) registered with the Federal Election Commission on April 3, 1995. In addition, the Pete Wilson for President Compliance Committee, Inc. (the Compliance Committee) registered with the Commission on April 20, 1995. Finally, the Pete Wilson for President Audit Fines and Penalty Account, Inc. (the Audit Fines Committee) registered with the Commission on January 23, 1996.

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 $1.7 million in matching funds.

The findings of the audit were presented to the Committees at a conference held at the end of fieldwork and were addressed in the Exit Conference Memorandum presented on November 4, 1996. 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.

APPARENT EXCESSIVE CONTRIBUTIONS RESULTING FROM STAFF ADVANCE AND EXTENSION OF CREDIT BY A COMMERCIAL VENDOR - 2 U.S.C. §§441a(a)(1)(A) and (b); 11 CFR §§ 116.5 and 116.3. The exit conference memorandum questioned whether a staff advance constituted a $28,193 excessive contribution and whether an extension of credit by a commercial vendor constituted a $213,365 prohibited contribution. In response, the Primary Committee argued that the staff advance should be considered an ordinary course extension of credit by a vendor rather than as a staff advance. The report concludes that a contribution occurred under either analysis. With respect to the commercial vendor, the Primary Committee contends that no extraordinary extension of credit occurred. After considering the information and explanations provided, the report concludes that the contribution did occur.

MISSTATEMENT OF FINANCIAL ACTIVITY - 2 U.S.C. §434(b)(1), (2) and (4). The exit conference memorandum noted that both the Primary Committee and Compliance Committee misstated financial activity on disclosure reports filed for the first four months of 1996. Both Committees filed adequate amended reports during the course of audit fieldwork.

DISCLOSURE OF DEBTS/OBLIGATIONS AND OCCUPATION/NAME OF EMPLOYER - 2 U.S.C. §§434(b)(3) and (8). The exit conference memorandum found that Primary Committee reports inadequately disclosed debts/obligations. The Primary Committee filed the necessary amended reports. In addition, the Compliance Committee was found not to demonstrated best efforts to obtain, maintain and disclose occupation/name of employer. The Compliance Committee has filed the necessary amended reports.

DETERMINATION OF NET OUTSTANDING CAMPAIGN OBLIGATIONS - 11 CFR §§9034.5(a) and 9034.1(b). The exit conference memo noted that the Primary Committee had not received matching funds in excess of its entitlement. The Primary Committee argued that an AT&T phone system, which was valued at its purchase price in this analysis, should have been valued at a lesser amount. The determining factor was whether the telephone system became a Primary Committee asset when it was installed, prior to the Candidate's date of ineligibility, or when the Primary Committee purchased it, well after the date of ineligibility. During its discussion of this matter, the Commission could not garner sufficient votes to adopt either position. As a result, no further matching fund payments are anticipated and the valuation of the telephone system on the NOCO is unchanged.

APPARENT NONQUALIFIED CAMPAIGN EXPENSES - COMPLIANCE COMMITTEE EXPENSES PAID FOR BY THE PRIMARY COMMITTEE - 11 CFR §§9032.9(a), 9034.4(b)(3) and 2 U.S.C. §9038(b)(2)(A). The exit conference memorandum noted apparent nonqualified campaign expenses in the form of payments by the Primary Committee for fundraising and administrative costs incurred by the Compliance Committee. After evaluation of the General Committee's response, the Commission determined that a repayment to the U.S. Treasury totaling $29,861 is required.

STALE-DATED COMMITTEE CHECKS - 11 CFR §9038.6. The report states that the Primary Committee and the Compliance Committee are required to pay to the U.S. Treasury $32,929 and $63,450, respectively, for unnegotiated, staledated checks.