Audit of the State Election Campaign Fund—Office of Campaign and Political Finance Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the State Election Campaign Fund—Office of Campaign and Political Finance.

Overview

Section 42C of Chapter 10 of the Massachusetts General Laws requires the following:

The state auditor shall conduct a post-audit of all accounts and transactions involving the state election campaign fund for any year in which elections are held for statewide elective office and . . . publish a report of any post-audit required by this section on or before April 1 of the year following any year in which elections are held for statewide elective office.

In accordance with this statute and Section 12 of Chapter 11 of the General Laws, the Office of the State Auditor (OSA) has conducted an audit of certain activities of the State Election Campaign Fund (SECF) for the period January 1, 2018 through December 31, 2018.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Below is a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the audit findings.

Objective	Conclusion
Were all disbursements from the fund that were related to the 2018 statewide election made in compliance with Sections 1A through 8 of Chapter 55C of the General Laws?	Yes
Were receipts and disbursements recorded accurately in the Massachusetts Management Accounting and Reporting System (MMARS) and in accordance with the Office of the Comptroller of the Commonwealth’s (CTR’s) policies?	Yes
Was any unused money credited/refunded to the SECF in accordance with Section 9 of Chapter 55C of the General Laws?	Yes
Did the Office of Campaign and Political Finance (OCPF) follow up on prior audit findings?	Yes; see Finding 1

 

We gained an understanding of internal controls we deemed significant to our audit objectives through inquiries and observations. We evaluated the design of controls over disbursements, recording of receipts and disbursements in MMARS, candidate repayments to the fund, and follow-up on prior audit findings. We tested the effectiveness of controls over disbursements from the SECF and candidate repayments. We assessed whether these controls operated as management intended during our audit period. In addition, we performed the following procedures to obtain sufficient, appropriate audit evidence to address our audit objectives.

• We reviewed all 12 months of taxpayer contribution balances and Department of Revenue (DOR) receipt records from our audit period to determine whether OCPF accurately prompted the Office of the State Treasurer (OST) by email to invest the money and whether it was recorded in the Massachusetts Municipal Deposit Trust (MMDT) and MMARS account balances.
• We traced interest earned in the MMDT to MMARS entries recorded for the audit period.
• To review the fund balances, we completed a MMARS query of fund activity including receipts, interest, and disbursements from the prior audited balance date of February 1, 2015 through the end of our audit period.
• We reviewed all 17 candidates for the primary and general elections for Governor, Lieutenant Governor, Attorney General, Treasurer, and Secretary of State to determine whether required OCPF forms (20, 20R, 21, 22, 22T, 10, 30, 11, and 31) were completed, filed, signed, and submitted and were retained in compliance with state election regulation timelines for the candidates to receive public financing.
• We reviewed all seven primary and four statewide election candidates for Governor and Lieutenant Governor who were eligible to receive money to determine whether required forms were filed, signed, and submitted and whether each candidate had the required bonding on file to receive public financing in accordance with Section 8 of Chapter 55C of the General Laws and Section 4.09 of Title 970 of the Code of Massachusetts Regulations.
• We determined whether candidates for Governor / Lieutenant Governor who had received money had the proper forms (Candidate Statement of Contributions, Candidate Request for Limited Public Financing, and Candidate Public Financing Bond), and we reviewed these forms to determine whether they were signed by the candidates and submitted by the required date.
• We determined whether OCPF, OST, CTR, and DOR complied with date requirements related to availability of money, certification of candidates, certification of candidate amounts for the primary and statewide elections, reversion of undisbursed money to MMARS, and closure of all accounts that were established for candidates per the General Laws. We reviewed CTR’s certification of the available balance, the Secretary of the Commonwealth’s certification of candidates, OCPF’s MMARS expenditure refund, and the OCPF document “Surplus Funds: Application of the Pay-Back Formula” to determine whether the dates were as stipulated by the General Laws.
• We reviewed all eight fund disbursements that occurred during the audit period to determine whether the candidates were found by OCPF to be qualified, the amounts were authorized, and the transactions were recorded in MMARS.
• To determine the MMARS fund balance as of December 31, 2018, we reconciled the 47 months of taxpayer contribution receipt balances recorded in MMARS by CTR, as reported by DOR. We reconciled the MMDT investment statements for contributions, interest, and other adjustments to determine whether MMARS reflected the interest accrued on investments. We reconciled all eight disbursements made during the audit period to determine whether they were accurately recorded in MMARS. We reviewed correspondence among OST, CTR, and OCPF regarding adjustments and confirmation of balances to reconcile the MMARS balances to the MMDT balances. We needed to use the last reconciled balance from our prior audit as of February 1, 2015 to determine the accurate December 31, 2018 balance.
• We verified that unspent candidate money was processed and reverted to the SECF within two weeks after the election and reflected in MMARS and MMDT investment account balances.
• We verified that the adjustments to the MMARS account as stated in our prior audit, No. 2015-0969-3S, were made by OCPF by reviewing deposit slips and documents related to any OCPF MMARS expenditure refunds for the required dates.
• We reviewed OCPF’s internal control plan for the SECF to determine whether it had a policy to address audit findings and corrective action plans.

In 2018, OSA performed a data reliability assessment of MMARS focused on testing selected system controls (access controls, application controls, configuration management, contingency planning, and segregation of duties) for the period April 1, 2017 through March 31, 2018. Further, as part of our current audit, we compared the MMARS data to source documentation, including receipts and disbursements from SECF, from the audit period. We also reviewed selected security management controls established by OCPF to ensure that they addressed security awareness and personal security and tested those controls.

Date published:	April 1, 2019