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

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the State Election Campaign Fund (SECF) for the period January 1, 2022 through December 31, 2022. For our second audit objective, regarding the receipts and disbursements recorded in the Massachusetts Management Accounting and Reporting System (MMARS), we extended the scope of the audit to January 1, 2019 through December 31, 2022.

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 and the conclusion we reached regarding each objective.

Objective	Conclusion
Were all disbursements from the SECF for the 2022 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 MMARS and in accordance with the Office of the Comptroller of the Commonwealth’s (CTR’s) policies?	Yes
Were any unused funds refunded to the SECF in accordance with Section 9 of Chapter 55C of the General Laws?	Yes

To accomplish our objectives, we gained an understanding of the Office of Campaign and Political Finance’s (OCPF’s) internal controls we deemed significant to our audit objectives by reviewing applicable agency policies and procedures, as well as conducting interviews with OCPF’s management. We evaluated the design of controls over disbursements, recording of receipts and disbursements in MMARS, and candidate repayments to the fund. We tested the effectiveness of controls over disbursements from the SECF and candidate repayments. In addition, we performed the following procedures to obtain sufficient, appropriate audit evidence to address our audit objectives.

Disbursements from the SECF

To determine whether all disbursements from the SECF were made in compliance with Sections 1 through 8 of Chapter 55C of the General Laws, we performed the following procedures.

• For the 21 candidates for the primary and general elections for Governor, Lieutenant Governor, Attorney General, Treasurer, and Secretary of State, we reviewed the required OCPF forms (20, 20R, 21, 22, and 22T) to determine whether the candidates completed, filed, and signed the forms and that OCPF retained the forms in compliance with timelines established by Section 1A of Chapter 55C of the General Laws. (See Appendix D for a list of OCPF forms and their names.)
• We examined emails between OCPF, the Office of the State Treasurer and Receiver General (OST), CTR, and the Secretary of the Commonwealth to determine whether OCPF complied with date requirements regarding the availability of funds from the SECF, certification of candidates, and certification of the amounts of funds for candidates for the primary and statewide elections. We examined OCPF forms (8 and 7-P) for the Attorney General candidates to determine whether the candidates were eligible to receive funds and amounts of funds for candidates were certified in accordance with Sections 2 and 3 of Chapter 55C of the General Laws.
• We determined whether the two candidates for Attorney General who received funds from the SECF had filed the required OCPF forms (2, 3, 4-6). We reviewed these forms to determine whether they were signed by the candidates and filed with OCPF by the required date and whether each candidate had the required bonds on file to receive public financing in accordance with Sections 4 through 8 of Chapter 55C of the General Laws.

Recording of Receipts and Disbursements from the SECF

To determine whether OCPF ensured that receipts and disbursements from the SECF were accurately recorded in MMARS, we performed the following procedures.

• We reviewed all 48 months of taxpayer contribution balances and Department of Revenue (DOR) receipt records, and we determined whether OCPF notified OST by email to invest the funds and whether it was recorded in both the Massachusetts Municipal Deposit Trust (MMDT)—OCPF’s bank account—and MMARS account balances.
• We traced interest earned in the MMDT to MMARS entries recorded for all 48 months.
• We completed a MMARS query of SECF activity, including receipts, interest, and disbursements, for the 48 months and obtained the prior starting balance (as of January 1, 2019). We used this information to recalculate the balance as of December 31, 2022.
• To determine the SECF balance in MMARS as of December 31, 2022, we recalculated OCPF’s reconciliation of the 48 months of MMARS fund balance for the period January 1, 2019 through December 31, 2022. We verified the accuracy of DOR receipts of contributions, MMDT monthly investment statements, and interest accrued to determine whether MMARS reflected the interest accrued on investments. We verified that all six disbursements for Attorney General candidates made during the audit period were accurately recorded in MMARS. We examined emails between OST, CTR, and OCPF regarding confirmation of the balances of MMARS and MMDT. We used the last reconciled balance (as of December 31, 2018) from our prior audit to determine the accurate December 31, 2022 balance.

Refund of Surplus Funds to the SECF

To determine whether OCPF ensured that the candidates’ unused funds were refunded to the SECF, we performed the following procedures.

• We examined the required OCPF forms (10 and 11) for the two Attorney General candidates who received funds from the SECF to determine whether the candidates completed, filed, and signed the forms and that OCPF retained these forms in compliance with timelines established by Section 9 of Chapter 55C of the General Laws.
• To confirm the reversion of surplus funds to MMARS, we examined OCPF’s MMARS Expenditure Refund Report and the OCPF form (M-98-02) to determine whether the funds were returned to the SECF in accordance with Section 9 of Chapter 55C of the General Laws.

Work Performed by CTR

CTR conducted an audit of the accounts and transactions involving activity in the SECF related to one candidate for Lieutenant Governor involved in the primary election held in 2022. We obtained and reviewed CTR’s workpaper and noted that CTR performed the following audit procedures:

• Analyzed fund income and expenditures posted to MMARS for OCPF;
• Reviewed MMARS reports detailing the transactions posted, which included the beginning balance, transfer in and out balance, cash expenses, and refund (if applicable);
• Verified that funds were distributed to the candidate by reviewing OCPF’s calculation of funds available for the primary election as well as limits allowed for candidates for Lieutenant Governor;
• Reviewed forms documenting candidate eligibility for matching campaign funds;
• Reviewed forms documenting agreement to statutory expenditure limits for the primary election;
• Reviewed forms documenting that the candidate applied for matching campaign funds;
• Verified that the bond for the candidate was posted;
• Reviewed statements of qualifying contributions;
• Verified the accuracy of public financing amounts received by the candidate; and
• Verified that any unspent public financing amounts were returned.

CTR noted that OCPF was in compliance with Sections 1A through 8 and 9 of Chapter 55C of the General Laws.

Data Reliability Assessment

In 2018 and 2022, the Office of the State Auditor performed data reliability assessments of MMARS that focused on testing selected system controls (access controls, configuration management, contingency planning, and segregation of duties). We reviewed OCPF’s cybersecurity awareness policy and personnel screening policy and procedures and conducted tests regarding OCPF employees who had access to MMARS during the audit period to determine whether OCPF had completed the employee’s background check and whether the employee had completed cybersecurity awareness training. To determine the completeness and accuracy of the data, we selected a sample of five months of monthly MMARS reports and traced them to the bank statements and DOR’s blue book.⁴ Further, we selected a random sample of five deposit amounts from DOR’s blue book and traced them to the bank statements and the monthly MMARS reports.

Based on the results from the data reliability procedures above, we determined that the data were sufficiently reliable for our audit.

Conclusion

Our audit revealed no significant instances of noncompliance that must be reported under generally accepted government auditing standards.

4.    According to DOR’s website, DOR’s blue book is a “monthly [report] of state tax and other revenue collected by DOR.”

Date published:	March 31, 2023