georgia d epartm ent of a ud its and a ccounts p erf orm ance a … · we also identified problems...

270 Washington Street, SW, Suite 1-156 Atlanta, Georgia 30334 Phone: (404)656-2180 www.audits.ga.gov

Why we did this review Since 2011 the Georgia Government Transparency and Campaign Finance Commission (the Commission) has been the subject of controversy, which has raised questions about its ability to manage its responsibilities effectively, and has resulted in the loss of public trust and confidence. The Commission requested the Department of Audits and Accounts (DOAA) conduct a performance audit. We accepted their request with the belief that it is in the public interest to have an objective review of the Commission. Performance audits are designed to provide an independent, objective, and nonpartisan assessment of performance and to provide recommendations for improving efficiency and effectiveness.

This performance audit examines the extent to which the Commission has controls in place to ensure that it is operating effectively and efficiently and the extent to which it can improve its independence and effectiveness.

Georgia Department of Audits and AccountsPerformance Audit Division

Greg S. Griffin, State AuditorLeslie McGuire, Director

Georgia Government Transparency

and Campaign Finance Commission

Commission effectiveness limited by poor

management controls

What we found

The Commission has not developed a system of management controls necessary to ensure that it is efficiently and effectively fulfilling its duties and responsibilities outlined in the Ethics in Government Act (the Act).1 As a result, some aspects of the Act have not been implemented, and there is evidence of inconsistent treatment of late filings and complaint investigations, resulting in fines and fees being assessed or waived in an inequitable manner.

Specifically, the Commission lacks formalized policies and procedures and a monitoring system to ensure that:

disclosure reports are submitted and reviewed as required;

cases are progressing in a timely manner from initial complaint, to investigation, to resolution;

complaints and investigations are handled consistently and thoroughly; and,

like cases are treated similarly in terms of fee and fine assessments.

We also identified problems with the hiring of underqualified staff, protection of assets, and controls over data and documentation. These problems included potentially inappropriate expenditures for personal legal services, which have since been turned over to the Attorney General’s Office for further review.

1The Act requires specified individuals and entities to disclose campaign funding, spending, and private interests. The Commission’s three primary duties regarding the Act are: to receive, maintain, and review information submitted by covered entities; to review and, as necessary, investigate allegations of violations of the Act; and to educate those subject to the Act.

Performance Audit Report No. 13-28 October 15, 2014

While the Commission’s management controls are deficient, the underlying cause of the Commission’s performance issues is its dysfunctional organizational culture. Underqualified staff, persistent personnel issues, numerous lawsuits, an unprofessional work environment, and a high turnover rate have also contributed to the Commission’s performance. There have been four executive secretaries since 2006. Over the past two years, the Commission has experienced a 46% turnover rate, which includes the departure of the top individuals in the office. As a result, the Commission has become largely ineffectual while dealing with personnel matters and lawsuits. The Commission’s 216 open cases have been open an average of 3 years. For 1.5 years, no complaint cases were heard by the Commission.

Although the majority of the issues identified can be remedied through improved implementation and operations, we found various practices that could help bolster the independence and effectiveness of the Commission and restore public confidence in its ability to fulfill its mission. These areas of consideration include funding stability, funding/staffing adequacy, and commission composition, role, and independence. For instance, other states have appointed a diverse membership to their commissions and have implemented independent funding streams to mitigate political influence.

What we recommend

This report provides 42 recommendations for addressing the management control deficiencies identified during our review. In addition, the report provides information for the General Assembly to consider to improve the effectiveness and structural independence of the Commission. For a list of recommendations, see Appendix A.

In its response to the report, the Chair of the Commission indicated that the Commission appreciated the thoroughness of the report and that it is “committed to addressing each of the concerns raised in the audit and implementing its recommendations, subject only to the parameters established by budgetary and staffing limitations.” It noted that it had already begun to take action by, for example, addressing the backlog of cases. It indicated that the Commission has “been able to place 52% of all cases under active management. In addition, the Commissioners with the help and support of current staff, have begun developing a case tracking system to address other cases.” According to the Commission’s response, the tracking system should help with prioritizing the backlog, monitoring the status of investigations and allowing it to confirm that cases are progressing in a timely manner. The Chair also indicated that the Commission has been developing a set of criteria and a fee matrix designed to ensure that comparable cases are treated similarly in terms of fee and fine assessments as well as late fee appeals. The response indicated that the Commissioners believe “in view of the departures of key staff members during the course of the audit…opportunities exist to address general concerns raised in the audit regarding oversight and direction, as well as specific concerns relating to such matters as unauthorized expenditures, electronic security protocols, official communications, and records retention.”

13-28 Georgia Government Transparency and Campaign Finance Commission i

Table of Contents

Background 1

Organization and Staffing 6

Information Systems 7

Activity Data 8

Financial Information 8

Findings and Recommendations 10

Summary 10

The Commission has not established the necessary business practices to

effectively perform its primary duties of ensuring all required registrations

and report filings occur or that complaints and investigations are handled in

a timely, consistent, and thorough manner. 10

Regulated Entities 13

The Commission should ensure it has a method for identifying all entities

subject to the Act. 13

Filings 15

The Commission’s E-filing system incorrectly flags individuals as late filers

or non-filers. 15

The Commission does not have processes in place to ensure all filed reports

are accurate. 16

The Commission does not apply late fees to filings of public officers,

candidates, and committees appropriately and consistently. 17

The Commission has applied late fees and escalations to lobbyists as allowed

by the Act; however, it has not collected all fees due nor has it granted

waivers of these fees appropriately or consistently. 19

Complaints and Investigations 22

The Commission staff’s initial complaint review process to evaluate whether

a complaint should be rejected or accepted is adequate; however, not all

respondents were informed of the complaint against them within the period

required by law. 22

The Commission staff does not have sufficient processes to ensure

investigations are conducted in a timely manner. 23

The Commission lacks policies and procedures needed to ensure

investigations are conducted in a consistent and thorough manner. 26

13-28 Georgia Government Transparency and Campaign Finance Commission ii

The Commission does not document all contacts with respondents and

complainants during an investigation. 31

The Commission should develop procedures to ensure staff enforces all

orders as directed. It should also seek clarification to determine when a case

can be re-opened. 31

Other 33

The Commission does not have a system for tracking documents and

changes to those documents. 33

The Commission lacks a process for consistently closing case files. 34

Action should be taken to determine if identified expenditures for legal

services were appropriate. 34

The Commission has hired staff that did not meet minimum qualifications

for the position and suffers from unusually high turnover resulting in a

potentially underqualified staff. 36

The Commission staff does not manage and safeguard its assets to prevent

fraud, waste, and abuse. 37

Various models, practices and legal provisions were identified that could

help bolster the independence and effectiveness of the Commission and

restore confidence in its ability to fulfill its mission. 39

Appendices

Appendix A: Table of Recommendations 42

Appendix B: Objectives, Scope and Methodology 45

Appendix C: Flow Chart of the Complaint Process 52

Georgia Government Transparency and Campaign Finance Commission 1

Committees and

Commissions

Ethics Committees are

composed of legislators

and provide internal

oversight.

Ethics Commissions

are “regulatory entities”

and provide guidance

to covered individuals,

investigate complaints,

and impose penalties.

Source: NCSL 50 state survey

Background

The Georgia Government Transparency and Campaign Finance Commission (the Commission) was created to “protect the integrity of the democratic process and to ensure fair elections.” Under the enabling Act (O.C.G.A. 21-5-1 et seq.), certain individuals and entities are required to disclose campaign funding, spending, and private interests. Given the few limits placed on campaign contributions and expenditures, Georgia’s approach to ethics relies on disclosure to shine a light on personal and political financial activity for the public to see and judge.

The Act specifically identifies who is subject to the law and what requirements each must meet. The entities are described below and the requirements each must meet are described in Exhibit 1.

Candidates include individuals who seek nomination for election or seek election, whether successfully or not. Individuals are deemed to be seeking nomination if they have qualified for the election, received contributions, or expended funds in pursuit of the nomination or election.

Candidate Committees include a candidate, person, or committee that accepts contributions or expends funds to bring about the nomination or election of an individual to elected office.

Campaign Committees include several subcategories, with each defined as a person or committee that accepts contributions or expends funds to achieve a specific purpose, whether in support of or in opposition to: a constitutional amendment; proposed question; recall; or state-wide referendum.

Independent Committees include individuals or groups that accept contributions or make expenditures to affect the outcome of an election or advocate for election or defeat of a candidate.

Individuals include those who contribute more than $25,000 to candidates or committees. Those who contribute to only one candidate in one calendar year are exempt.

Lobbyists include individuals who receive compensation for and make expenditures to promote or oppose legislation.

Political Action Committees include any committee, or group of people, that receives donations from its members and contributes to one or more candidates for public office or campaign committees of candidates.

Public officers2 include all constitutional officers, elected state officials, executive heads of state agencies or departments, executive directors and members of all state boards, commissions, councils, or authorities; elected county officials; elected members of locals boards of education; and elected municipal officials.

Public employees include those who for themselves, or for a business in which they or a family member have a substantial interest, conduct business with the state.

Vendors include anyone who sells to or contracts with state government.

2 The Act refers to “public officers” and “public officials.” Because there was no consistent distinction between the two terms, we chose to use “public officer” in this report.


Exhibit 1: Filing Requirements for Covered Entities

Entity Registration Financial

Disclosure Disclosure

Report1 Other Requirements

Candidates X X Declaration of Intent Candidate Committees X X Declaration of Intent Campaign Committees

Constitutional Amendment2 X X

Proposed Question3 X X

Recall2 X X

Statewide Referendum2 X X

Independent Committees3 X X Directors and Members of State Boards, Commissions, Councils, and Authorities

Annual Conflict of Interest Affidavit

Individual Contributors3 X X Lobbyists3 X X

Political Action Committees3 X X

Public Officers X

Public Employees X Vendors X 1Includes Campaign Contribution Disclosure Reports, Lobbyists Disclosure Reports, and Vendor Annual Gift Disclosures.

2The Act does not explicitly state “register;” however, additional language indicates similar treatment to those committees

required to register. The Commission has established registration forms for all of the identified entities. 3Statutory Language specifies “registration;” for Individual Contributors, the requirement only applies to those contributing

more than $25,000 to a candidate or committee.

Source: Official Code of Georgia

The Commission has three primary duties:

to receive, maintain, and review information submitted by covered entities;

to review and, if deemed necessary, investigate allegations of violations of the Act; and,

to educate those subject to the Act.

The Commission does not have jurisdiction over issues related to the ethical or moral conduct of officials, conflicts of interest, misuse of state funds, violations of other provisions of the elections code, or the activities of state employees.

To conduct its duties, the Commission has the authority to establish rules and regulations to guide entities required to register and file. In 2009, the rule making authority was removed by vote of the General Assembly. In 2014, this authority was reinstated under O.C.G.A. 21-5-6(a)(7).

Registration Requirements

According to the Act, individual contributors, lobbyists, and specified committees are required to register with the Commission. The Commission has developed registration forms for committees and individual contributors. The Act outlines the requirements for lobbyists more specifically, requiring annual registration. While there are no registration fees for any of the entities, lobbyists pay $20 for their identification card. They must disclose their clients, contact information, and criminal history3. According to the Act, if a lobbyist has provided false or incomplete information, the Commission staff can deny registration to him or her. Additionally, lobbyists who have previously violated the Act are not allowed to register.

3 The Act defines the crimes that must be reported as crimes of “moral turpitude.”


Reporting Requirements

Candidates for state-level office, state-level campaign committees and lobbyists are required to file with the Commission. Candidates for local offices are required to file with their local qualifying officers, who send a copy to the Commission.4

The Act requires four types of annual and/or periodic reports to be filed with the Commission. Individuals can file reports electronically through the Commission’s “E-filing” system or they can submit paper forms. Commission staff must enter the data from paper submissions into its information system.

Campaign Contribution Disclosure Reports (CCDRs): Candidates, campaign committees, certain campaign contributors, and elected public officers are required to file reports disclosing contributions and expenditures. The type of election, committee, and amount of the contributions determines the filing schedule. The Act regulates campaign

4 County election superintendents or city clerks often serve as qualifying officers.

An Explanation of Common Terms

The Commission uses a variety of terms to describe the types of documents individuals and entities

submit. These documents include filings, registrations, disclosures, and reports.

The term “filings” refers to any official document sent to the Commission to comply with a statutory

requirement. As illustrated below, there are several types of filings. “Registrations” give notice to the

Commission that an individual or entity is subject to the Act. Examples of registrations include the

annual paperwork required of lobbyists and the declarations of intent to accept campaign

contributions filed by candidates. “Disclosures” can be divided into two types. The first is a

traditional disclosure document such as the annual personal financial disclosure required of

candidates and public officers. The second is a sub-category called “Reports.” Examples of

“Reports” include campaign contribution disclosure reports and lobbyist disclosure reports; these

types of disclosures record the activity of the covered person or entity.

Filings

Reports

Disclosures

· Candidate and Public Officer Personal Financial Disclosures

· Candidate Campaign Contribution

Disclosure Reports

· Lobbyist Disclosure Reports

Registrations· Candidate Declaration of Intent to

Accept Campaign Contributions

· Lobbyist Registrations

Source: OCGA 21-5-1 et seq.


contributions and expenditures, including who may accept campaign contributions, who may provide contributions, the maximum amounts of contributions, and how contributions may be used. The Act requires the Commission to inspect each report for conformity with the law.

Personal Financial Disclosure Statements (PFDs): Candidates, state employees conducting more than $9,000 of business with the state, and public officers must file an annual financial disclosure statement with the Commission. Public officers are defined as Constitutional officers, elected state officials, executive heads or directors of every state department or agency, members of the General Assembly, elected county officials (including boards of education), and elected municipal officials.

Annual Report: O.C.G.A. 45-1-6 requires state vendors, defined as any individual or business who sells or contracts with a state government entity, to file an annual report with the Commission disclosing gifts worth more than $250 given to public employees.

Lobbyist Disclosure Reports: Lobbyists are required to file electronic disclosure reports that include lobbying expenditures, specific legislation at issue, and the name of the person being lobbied. The filing schedule is dependent on the type of lobbying activity. When the legislature is in session, lobbyists are required to submit the disclosure reports twice per month. At other times, legislative lobbyists file monthly.

The Act explicitly requires the Commission make CCDRs and PFDs available to the public during regular office hours. There is no requirement that these reports be posted online; however, it has been the Commission’s practice to use its website to provide public access. The Commission is required by law to put advisory opinions, orders, and a list of non-filers on its website.

Enforcement and Compliance

The Commission is charged with enforcing the Act, which includes holding individuals and entities responsible for filing and filing by the established deadlines as well as handling and investigating complaints. The Commission can apply late fees for failures to file or late filings. The late fees are set by the Act and increase over time.

The Commission receives complaints from individuals alleging violations of the Act. The Act states that the Commission is required to investigate allegations that a covered individual or entity has failed to file or has violated the Act. Cases are initiated in one of two ways: 1) through the filing of sworn, written complaints alleging a violation of the Act; or 2) through the Commission staff initiating its own complaint, known as a probable cause matter. Its authority is limited to those violations outlined in the Act such as failure to register with the Commission, and failure to include all required information in a report. Additionally, complaints may allege that the individual or entity accepted contributions over the statutory limit or expended campaign funds on items not related to campaign activities.


Parties to the Complaint

Complainant: Individual alleging a violation of the Act

Respondent: Individual or entity against whom the

complaint is made

Resolutions

Dismissal: Commission or staff determine the

complaint is not substantiated

Compliance Order: A written agreement that does

not admit violations or include fines

Consent Order: A written agreement that must

include admissions of violations and may include fines or fees

If staff determines the complaint is within its jurisdiction, a case is opened and the Commission staff conducts an investigation. The investigation may include an audit of disclosure reports, interviews, and the collection and analysis of additional documentation.

When the Commission receives a complaint, staff is required by law to notify the respondent within two days. Commission staff may dismiss, recommend settlement, or refer cases for a preliminary hearing before the full Commission. If the Commission hears the case, it may dismiss the case or find probable cause to believe a violation has occurred, at which point the matter proceeds to a hearing before an administrative hearing officer. See Appendix C for a flow chart of the process.

If the Commission finds the Act has been violated, it has authority to issue an order directing the violator:

to cease and desist from violating the Act;

to make public complete statements containing the information required by law (to refile and correct the reports at issue); and,

to pay a civil penalty of up to $1,000 per violation for the first violation; up to $10,000 per violation for the 2nd violation; and up to $25,000 per violation for 3rd or subsequent violations.

During initial review, or during the investigation, the Commission may determine that an error was the result of a technical defect. The Act defines a technical defect as an accounting error, an incorrect date, an incorrect address, or other similar error. In these cases, the staff notifies the respondent of the defect and gives him or her 30 calendar days to correct it or prove there is no defect. If the respondent does not correct the defect or prove there is no defect, the Act provides that the Commission shall impose and collect an administrative fee not to exceed $50 per technical defect.

If the Commission determines a criminal violation has occurred, the Act states that it shall refer the case to the appropriate law enforcement authority for further investigation and prosecution. Any knowing failure to comply or knowing violation of this chapter constitutes a misdemeanor.

Commission staff assesses and collects the fees and fines. They receive cash, checks, and credit card payments both in the office and online and make routine deposits through the State Accounting Office.

Education

To educate individuals and entities subject to the Act, the Commission is required to publish uniform accounting methods, write advisory opinions on request, and hold semiannual training on filing and registration. According to staff, training sessions are held in the Commission’s office on a monthly basis; these sessions are advertised on its website. Training materials are also available on its website.


Organization and Staffing

Five members are appointed to the Commission. The Governor appoints three, the Committee on Assignments of the Senate appoints one, and the Speaker of the House appoints one. Additionally, one of the three appointed by the Governor must be from the opposing political party. O.C.G.A. 21-5-6(a)(8) grants the Commission the authority to “do any and all things necessary or convenient to enable it to perform wholly and adequately its duties and to exercise the power specifically authorized to it…”

The Commission employs an executive secretary, who hires staff and oversees the day-to-day operations. The office has four divisions: Audit, Education, Legal and Information Technology. The Education Division accepts and records the required filings and provides training regarding these requirements. The Audit Division conducts random audits or audits in support of an investigation. The Legal Division reviews complaints and conducts investigations as necessary. The office also employs, a secretary, a receptionist, and a clerical support specialist. In addition to the full-time staff, three contract employees staff the Information Technology division. The Commission also contracts with an outside attorney to write advisory opinions addressing questions posed to the Commission (e.g., questions regarding interpretation of the Act) and to draft rules. (See Exhibit 2.)

From January 2006 to June 2013, the Commission was administratively attached to the Secretary of State’s Office. Effective July 1, 2013 per Executive Order the Commission was moved and administratively attached to the State Accounting Office.

Exhibit 2: Organizational Chart for the Georgia Governmental Transparency and Campaign Finance Commission

Executive

Secretary

Audit Division

(1 staff)

Legal Division

(3 staff)

Education Division

(4 staff)

IT Division

(3 contract

employees)

Georgia Government Transparency

and Campaign Finance Commission

(5 members)

Administrative

Staff

(3 staff)

Source: Commission documents and interviews; numbers are as of August 2014


Information Systems

To collect, compile and report on all of the information various entities are required to submit, the Commission operates several information systems. According to the Commission’s IT contractors, the following three systems are publicly available:

www.ethics.ga.gov – The Commission’s website contains minutes and videos from Commission meetings, current laws and rules, filing and registration requirements and schedules, and information regarding complaints and the resolution of complaints.

E-filing system – This system is available through a link on the Commission’s website; regulated entities can register and file disclosure reports electronically. E-filers must apply for a Personal Identification Number (PIN) from the Commission prior to being assigned a filer ID and a password. Based on the E-filer’s registration information, the system creates individual filing schedules and calculates fees owed for late and non-filers.

The Media Site - Also available through a link on the Commission’s website, this site generates reports from data collected and maintained by the Commission through the E-filing system and through its Intranet (which is discussed below).

The Commission also maintains information regarding disclosure reports, registrations, complaints, and investigations on its Intranet and on files saved to its local network drives. These are discussed below.

Intranet – The Commission makes changes to data maintained in the E-filing system through the Intranet. Examples of changes include: entering new data from registrations and filings submitted in paper form, correcting mistakes, and reducing or inactivating late fees automatically generated by the E-filing system for late and unfiled disclosure reports. The Intranet also includes a database Commission staff use to record and maintain basic complaint information such as: date received, if rejected or accepted, the current status of accepted complaint cases (i.e., closed, open, investigation, referred to the Attorney General, etc.), and the date closed.

Local Network Drives – Commission staff collects and maintains documents related to core business functions, such as complaint intake and management, case investigation and adjudication, and the intake and acceptance or denial of late fee waiver requests in this system.

http://www.ethics.ga.gov/


Activity Data

According to Commission staff, 1,103 lobbyists registered in calendar year 2014. Registration occurs in the Commission’s office, most often during the two weeks before the start of the legislative session. There are 12,243 candidates, 26 independent committees, and 194 non-candidate committees on file with the Commission.

In fiscal year 2014, 46,213 electronic and 2,655 paper reports were filed with the Commission. From January to September 2014, the Commission has received 52 complaints and opened 25 cases. According to the Commission’s Intranet, the Commission currently has 216 open cases, 30 of which have been referred to the Attorney General’s Office for collections or to proceed to hearing.

Financial Information

The Commission is funded through state appropriations. In addition, the Commission is authorized by law to retain $25 from each fee it collects for late reports and disclosures, and to carry any unspent retained revenue into the next fiscal year. Effective January 1, 2014, the Commission can also retain fees associated with aspects of lobbyists’ registrations. As seen in Exhibit 3, in fiscal year 2014 the Commission was appropriated $1,324,736. Appropriations increased 22% from 2012 to 2013 but remained roughly the same from fiscal year 2013 to 2014. Because retained revenue has increased, the Commission’s fund balance has increased each year. In fiscal year 2015, the Commission’s budgeted appropriation is $1.35 million.

Personal services are the largest component of the Commission’s expenditures. This expenditure has decreased since fiscal year 2012. However, the expenditures for consultants, the largest portion of the contracts category, have increased over the past three years to $233,172.


Exhibit 3: Commission Budget and Expenditures Fiscal Years 2012 - 2014

Actual

FY 2012 Actual

FY 2013 Actual

FY 2014

Revenues

State Appropriations1 $1,101,242 $1,344,810 $1,324,736

Other 24,298 41,883 72,233

Total $1,125,540 $1,386,693 $1,396,969

Expenditures

Personal Services $853,834 $807,677 $694,888

Regular Operating 82,862 60,025 80,308

Equipment 0 0 0

Computer Charges 11,864 166,8082

32,839

Real Estate 61,675 62,847 62,860

Telecommunications 40,336 40,877 9,5653

Contracts 42,806 210,183 350,250

Total4 $1,093,376 $1,348,417 $1,230,708

Retained Revenue

Starting Balance $5,646 $27,248 $31,579

Revenues 24,298 41,883 72,233

Available Funds 29,944 69,131 103,812

Expenditures (2,696) (37,552) (26,383)

Fund Balance $27,248 $31,579 $77,429

1 The Commission’s appropriation is budgeted at the agency level; the Appropriations

Act does not break it into subcategories. 2 The Commission encumbered and prepaid a fiscal year 2014 lease for computer

servers. 3 The decrease was a result of the Commission’s attachment to a different agency with

a lower cost contract for services. 4 Totals may be off due to rounding.

Sources: Budgetary Compliance Reports, Budget Comparison Reports, and Appropriations Acts


Definitions of Terms

For purposes of this report,

we used the term

“Commission” to refer to the

entity as a whole. When

issues or recommendations

are directed to a particular

group within the

Commission, we refer to the

“Commissioners” or the

“staff”.

Findings and Recommendations

Summary

The Commission has not established the necessary business practices to effectively perform its primary duties of ensuring all required registrations and report filings occur or that complaints and investigations are handled in a timely, consistent, and thorough manner.

The Commission has not developed a system of internal controls necessary to ensure that it is effectively fulfilling its duties associated with report filings, complaints, and investigations. Commissioners have not provided adequate oversight of and direction to the Executive Secretary, and the Executive Secretary did not establish processes needed to ensure that the staff operated effectively on a day-to-day basis. During the period reviewed the Commission was not achieving its mission.

While additional oversight, policies, and procedures are needed, the underlying cause for the Commission’s

performance is a dysfunctional organizational culture. An organization’s culture begins with the proper “tone at the top” and influences every employee’s behavior. This tone is set by management’s operating style, integrity, ethical values, and commitment to competence. We found the Commission hired individuals who did not meet minimum qualifications for their position. We observed unprofessional communication between and about employees, micro-management of minor issues but abdication of more significant matters, and inappropriate authority delegated to personnel. As a result, the Commission became ineffectual while dealing with personnel matters and lawsuits.

The operating environment and lack of management controls resulted in problems with the Commission’s handling of filings, complaints, and investigations, as well as the management of personnel, data, and assets.

Filings – The Commission does not have effective methods to ensure entities have filed all required reports, filed reports are accurate, or all late filings are treated appropriately or consistently.

The Commission’s information system incorrectly flags some entities as having not submitted a report when the report was submitted via mail or electronically filed under a different identification number. The system also does not have controls that could identify obvious problems when a report is submitted, such as missing data in critical fields or inconsistent expenditures, contribution, or account balance totals.


The Commission has not notified public officers, candidates, and non-candidate committees of assessed late fees, as required by law. Since it has failed to properly notify the entities, the Commission has disregarded the statutorily required higher fee amounts, resulting in assessed fees millions lower than allowed for in state law.

The Commission has waived or reduced late fees for more than 400 cases in 2012 and 2013, but lacks policies and documentation to guide its decisions. More than 50 waivers were granted for hardships, but the Commission has no policies that define a hardship or the documentation necessary to prove a hardship. Fees in other cases were waived or reduced after a hardship application was denied and/or with no explanation, and the reductions vary despite circumstances in cases appearing similar.

See pages 15-21 for additional information on report filings.

Complaints/Investigations – The Commission has an adequate system to initially screen complaints for further review; however, it does not have methods to ensure that investigations are conducted consistently, thoroughly, and in a timely manner.

The Commission does not consistently handle investigations, resulting in similar cases handled differently and respondents paying different fees and fines. The Commission has expanded some investigations to include all disclosure reports filed by the respondent within the statute of limitations, while limiting its review to the allegations in other cases. It also has inconsistently categorized issues as technical defects, resulting in similar issues being defined as technical defects in some cases and as more serious violations in others.

Commission investigations often focus on issues such as the number of errors or omissions, instead of potentially more substantial matters such as the reason for mistakes. It also often relies on statements or attestations made by those being investigated, rather than obtaining documentation (e.g., receipts, invoices) that might support the legality of the expenditure.

The Commission has an increasing number of investigations with an average age of three years. It does not have a method for prioritizing its backlog of cases, nor does it have a method to monitor the status of investigations.

See pages 22-33 for additional information on complaints and investigations.

Other Administrative Issues – The Commission has high turnover in key positions and low tenure. It also hired some staff who did not meet the position qualifications. The Commission has experienced a 46% turnover rate over the past two years, which includes the departure of the top individuals in the office. Of the eight staff members hired between January 2011 and April 2014, four did not meet the minimum qualifications set forth in the job announcement.5 In addition, we found inadequate controls over

5 Ten staff were hired during the period; however no resumes were on file for two staff and, therefore, qualifications could not be assessed.


the Commission’s assets and data. The Commission did not maintain an accurate inventory of computer equipment and did not have adequate controls associated with payments received or for its postage. Regarding data security, we found that one employee had access to other employees’ passwords and had used a different employee’s password to change files. In addition, confidential data contained in electronic and hard copy files is at risk for being disclosed as there are no procedures for closing out cases and systematically redacting such data.

See pages 34-42 for additional information on other administrative issues.

Recommendations to address the operational issues identified are included at the end of each finding. A description of the objectives, scope, and methodology used in this review is included in Appendix B.


Non-Candidate

Committees include:

constitutional

amendment committees,

proposed question

committees, recall

committees, state-wide

referendum committees,

independent

committees, and political

action committees.

Regulated Entities

The Commission should ensure it has a method for identifying all entities subject to the Act.

To monitor compliance with the various statutory requirements, the Commission must have a process for determining who is subject to the Act. As described in the background, 10 entities are subject to some aspect of the Act; however, not all are required to register with the Commission. As a result, the Commission should develop other means of ensuring it knows who is required to file and what they are required to file.

According to the Act, non-candidate committees and lobbyists are required to register with the Commission while candidates are not.6 We found there is not a control in place to ensure all non-candidate committees are registered as required. However, the controls established for identifying non-registered lobbyists are sufficient. In addition, while candidates are not required to register, there are initial filing requirements they must meet that help to ensure the Commission can identify them. These points are discussed below.

Non-candidate committees are required to register with the Commission prior to accepting contributions or making expenditures. During the 2012 election year, 238 non-candidate committees filed reports with the Commission. These committees disclosed contributions of approximately $37 million and expenditures of approximately $30 million. However, the staff note that it does not have a process to determine whether all non-candidate committees have registered. Our review of other states’ practices revealed no methods for systematically identifying such groups that would not also require a change to Georgia’s law. The Federal Election Commission’s data shows growth over the past ten years in both the number of such committees reporting (60% increase) and the amount of funds raised by these committees (115% increase). If such trends continue, this growth indicates the increasing importance of monitoring these committees.

Lobbyists are required to register with the Commission annually. Once registered, each lobbyist is issued a badge that includes a color photo and identifying information. The lobbyist must display the badge while lobbying in a government facility. The Commission relies on the badge to identify properly registered lobbyists. It relies on complaints from the public and other registered individuals to identify unregistered persons lobbying. We identified three complaints alleging an individual was lobbying illegally. In these cases, the staff investigated the complaints and found that the individuals in question were not engaged in the purported lobbying activities.

6 We focused our review on non-candidate committees, lobbyists, and state-level candidates. The Commission also has jurisdiction over public employees, individual contributors of more than $25,000, public officers and vendors. It also needs to ensure these entities are registered as required.


State-level candidates must file a declaration of intent to receive campaign contributions before accepting such funds and must qualify for the election. This filing serves to inform the Commission regarding when an individual becomes subject to the statutory requirements for candidates. According to staff, the Commission also receives the qualifying information from the Secretary of State’s Office. Both of these requirements prompt the staff to enter the individual into the system. We reviewed ballots from the July 2012 primary elections and determined that 100% of a sample of candidates listed on the ballots was in the Commission’s system. Therefore, the risk that candidates could run for office without the Commission having them in the system is low.

RECOMMENDATIONS

The Commission should use its information system to cross-reference information from the candidates’ disclosure reports that identify contributions from non-candidate committees to the list of registered non-candidate committees.


Each time an individual

runs for office, or takes

a new post, he or she

may be assigned a

Personal Financial

Disclosure filer ID.

Over time, those who

have run for multiple

offices can be assigned

multiple filer IDs.

Filings

The Commission’s E-filing system incorrectly flags individuals as late filers or non-filers.

The Commission staff cannot rely on the E-filing system to accurately identify late and non-filers. We found the system is flagging some individuals and entities as non-compliant when they have already submitted filings. It is also incorrectly flagging some individuals who are no longer required to submit filings to the Commission as late or non-filers.

The E-filing system serves as the basis for determining when individuals owe late fees.7 Therefore, if information in the system is wrong, individuals can be identified as in violation of the law when they are not, individuals cannot rely on the system themselves to assess compliance, and individuals could overpay fees owed. Likewise, the Commission cannot rely on the system to determine the total amount of late fees owed. The causes for these problems are discussed below.

Duplicate IDs – Our review identified 23 individuals flagged as not meeting the filing requirements when they had. Because the Commission assigns each individual a new filing ID each time they run for a new office or accepted a new post, and does not deactivate the old IDs, all 23 had multiple filer IDs. The system treats each filer ID as a unique individual and establishes filing requirements. As a result, while each of the 23 filed the required report, they had another ID, which showed them as delinquent on the website.

Incomplete Entries – We estimate 19% of the Personal Financial Disclosures (PFDs) flagged in the Commission’s system as unfiled have been submitted by mail rather than filed electronically. According to the Commission’s data, as of January 2014, there were 1,129 delinquent PFDs for 2012. Our review of a statistically significant sample of these cases found that 19% (22 of 116) had PFDs on file, which the Commission received by mail. Although the Commission’s website indicates the reports were filed by mail, staff failed to enter it so this information is not reflected in the E-filing system. As a result, these individuals are flagged as late or non-filers even though they met filing requirements.

Outdated Requirements – When the issues noted above were discussed with staff, they noted that the system has not been updated to reflect the most recent changes to the law, which also creates problems. For example, the Act now requires local candidates submit disclosure reports to the local qualifying officers instead of to the Commission. However, staff note that the fee system is automatically flagging these local candidates and assessing fees even though they are no longer required to file with the Commission. As of September 2014, the Commission’s IT contractors noted they are working on solutions; however, they indicated they must first address more fundamental

7 The E-filing system creates a filing schedule for each entity based on statutory requirements and the data entered in the system. When reports are late, the system automatically calculates and assesses the applicable late fee. This information is published in the “Late and Non-Filer” report on the Commission’s website. Filing requirements are based on the type of entity (candidate, lobbyist, etc.), time of year and election cycle (i.e., whether it is an election year).


problems within the system before being able to address issues such as those cited above.

RECOMMENDATIONS

The Commission should:

Require the IT Contractors to develop a plan that defines the “fundamental” problems within the E-filing system and develop a timeline for addressing problems associated with duplicate IDs and the outdated requirements in the system; and,

Ensure all reports received by mail are entered into the information system.

The Commission does not have processes in place to ensure all filed reports are accurate.

The Commission does not inspect the content of filed reports upon receipt and notify the entity when the report does not conform to the law or does not comply with the filing requirements. In addition, its information system does not have edit checks to identify errors such as missing data in critical fields or inconsistencies between totals. If errors were identified upon receipt, the Commission could notify the individual, who could then make corrections without consequence. However, if these same errors are identified during a complaint investigation, penalties could apply. Public officers, candidates, non-candidate committees, and lobbyists file with the Commission and, according to O.C.G.A. 21-5-6, it is the Commission’s duty “to determine whether the required statements and reports have been filed and, if so, whether they conform to the requirements….”

According to staff, they review paper filings8 for signature, number of pages and notary stamp, if required. They do not review content to assess conformance with the law; they only conduct a more in-depth review as part of a complaint investigation. Our review of 20 cases closed since July 2011 found that nine individuals paid fines associated with issues that could have been identified had staff reviewed the filings upon receipt. However, because these filings were not reviewed, these individuals did not have the opportunity to correct the errors.

While required by law, the practice of reviewing every filed report would be impractical given that, in fiscal year 2014, the Commission received 46,213 electronic reports and 2,655 paper reports. Therefore, developing preventive controls, such as edit checks within the system, should be considered to make the process more manageable. Alternatively, additional staff may be required to review all reports as currently required by law.

8 While campaign contribution disclosure reports and lobbyist disclosure reports are required by law to be filed electronically, other filings, such as lobbyist registrations, may be made by paper.


RECOMMENDATIONS


Develop sufficient edit checks to minimize manual review and meet requirements set by law; and,

Determine if additional staff are needed to conduct manual reviews, and, if so, how many.

The Commission does not apply late fees to filings of public officers, candidates, and committees appropriately and consistently.

According to the Act, the Commission should assess fees when public officers, candidates, and candidate committees file their required disclosure reports late. The initial late fee amount is $125. According to the Act, after 15 days, an additional fee of $250 is applied and, after 45 days, another fee of $1,000 is due. As a result, a candidate who files 46 days late would be subject to a total of $1,375 in late fees. We found that Commission staff has not appropriately notified filers of late fees and, because of this, they have not applied the escalations. It should be noted that the Commission is allowed by the Act to retain $25 of the initial late fee assessed. However, it cannot retain any portion of the escalated fees. These issues are discussed below:

Lack of notification: Prior to January 1, 2014, Georgia law required the Commission to notify public officers, candidates, and committees by registered or certified mail of any assessed late fees and to include the schedule of increasing late fees in this notice. The Commission has not implemented this requirement; consequently, the delinquent filers have not been formally notified. While not providing a formal notification, the Commission has published the names of late and non-filers on its website and, as shown in Exhibit 4, some individuals have paid late fees during this period.

Lack of escalation: Because the Commission has not formally notified public officers, candidates, and committees of their late fees as required, it has chosen not to apply the statutory fee escalations. Instead, it assesses the initial fee of $125. As a result, as shown in Exhibit 4, the Commission assessed $800,875 in fees for late and unfiled reports, which is $5.4 million less than the $6.2 million allowed by the Act. Even if the statutory fee amount is overstated due to errors in the database, the Commission has assessed significantly less than it could have had the escalations been applied.


Exhibit 4: Assessed Fees for 2013 CCDRs and 2012 PFDs1 Reflect a Small Portion of the Statutory Fees Allowed

Report # of Unfiled

Reports2

# of Late Reports

Assessed Fee

Statutory Fee

Fee Paid

2013 CCDR 3,395 1,326 $590,125 $4,333,625 $17,130

2012 PFD 1,129 557 $210,750 $1,823,750 $13,125

Total Fees During the

Period 4,524 1,883 $800,875 $6,157,375 $30,255

1 2012 is the most recent reporting period.

2 As cited in a previous finding, there is evidence to suggest the data related to late and unfiled reports could

be overstated because of duplicates and errors in the system. As a result, the calculated statutory fee could also be overstated.

Source: Commission records

In July 2012, the Commission purchased approximately $55,000 of postage through an online mailing service. According to the Executive Secretary, the goal was to use this service for these late fee notifications. However, as of August 2014, the service had never been used. When asked about the unspent funds, current staff indicated they were unaware of the service and unclear on how to access it. Recently, they reported they have been able to access the account.

It should be noted that as of January 1, 2014, the Act allows the Commission to notify late filers of their fees electronically (e.g., by email) if they filed using the same means. However, it must still notify non-filers of the associated late fee through certified mail. As shown in Exhibit 4, the majority of the problems identified were with unfiled reports.

RECOMMENDATIONS


Ensure public officers, candidates, and committees are notified, as required by law, when the required filings are late or absent;

Determine whether the online mailing service can be used to send these notifications and begin doing so, or close the account; and,

Apply escalations to the late fees as appropriate.


Initial Late Fee: $275

Additional late fee of $1,000 is

applied after 7 days, if filing is due

during legislative session or after 15

days otherwise

Additional late fee of $10,000 is

applied after 21 days, if filing is due

during legislative session or after 45

days otherwise

Source: O.C.G.A. 21-5-71 (f)(2)

The Commission has applied late fees and escalations to lobbyists as allowed by the Act; however, it has not collected all fees due nor has it granted waivers of these fees appropriately or consistently.

In addition to allowing the Commission to apply late fees, and escalations to those fees, when lobbyists fail to file or file late, the Act also allows the Commission to waive these fees in certain circumstances. Our review found that the Commission has not collected all the fees assessed and does not have procedures in place to ensure that fee waivers are applied appropriately and consistently. As shown in the box to the left, the fees escalate quickly. As a result, a lobbyist who files 22 days late during the legislative session is subject to a $11,275 late fee.

In calendar year 2012, the Commission had 600 lobbyist filings subject to a late fee. Applying the statutory escalations, the total amount due would have been $1.2 million. However, after waivers were granted, the Commission assessed late fees for 523 filings. The actual late fee assessments were approximately 34% ($400,000) of the statutorily allowed amount. As shown in Exhibit 5, the Commission is not receiving full payment for these fees either. In 2012, payments reflected 27% of the amount ultimately assessed ($106,626 of $399,526).

Similarly, in calendar year 2013, the Commission had 625 filings subject to a late fee. After waivers were granted, fees were assessed for 512 filings. The actual late fee assessments were approximately $1.56 million (45%) of the statutorily allowed $3.45 million. 9

Exhibit 5: Over 70% of Fees Actually Assessed in 2012 Have Not Been Paid Calendar Years 2012 and 2013

We also found that the Commission does not apply late fee waivers appropriately or consistently. According to the Act, the Commission may waive late fees if these fees cause an undue hardship on the filer or if the associated report does not contain expenditures or contributions. In April 2012, the Commission delegated its waiver authority to the Executive Secretary. The Commission now only hears a waiver

9 It should be noted that since the data included in this review was obtained in January 2014, it does not reflect subsequent fee waivers and reductions. As a result, a portion of the 2013 assessments will likely be waived or reduced as it has been the Commission’s practice to reduce fees through negotiation.

Final Assessed

Fee Amont

# of Unfiled or

Late Reports

Total Assessed

Fees

Total Fees

Paid Difference

# of Unfiled or

Late Reports

Total Assessed

Fees

Total Fees

Paid Difference

25.00$ 2 50$ 50$ -$ 0 -$ -$ -$

137.50$ 21 2,888$ 2,888$ -$ 0 -$ -$ -$

275.00$ 444 122,100$ 90,300$ 31,800$ 212 58,300$ 45,375$ 12,925$

637.50$ 3 1,913$ 1,913$ -$ 0 -$ -$ -$

1,275.00$ 32 40,800$ 11,475$ 29,325$ 188 239,700$ 118,575$ 121,125$

10,275.00$ 5 51,375$ -$ 51,375$ 0 -$ -$ -$

11,275.00$ 16 180,400$ -$ 180,400$ 112 1,262,800$ 22,550$ 1,240,250$

Total 523 399,526$ 106,626$ 292,900$ 512 1,560,800$ 186,500$ 1,374,300$


2012 2013


request if the Executive Secretary and the lobbyist have been unable to reach agreement. When the Commission reviewed waiver requests, it had no established criteria for what must be submitted to support a request for a waiver, nor was such criteria developed by the Executive Secretary. Of the 288 waivers the Executive Secretary granted in 2013, 13 were granted without any explanation being included in the file; another 147 were granted after the initial hardship waiver request was denied. The Executive Secretary noted these were granted as a “courtesy.” (See Exhibit 6.) Our review of the waivers revealed denials of requests for waiver when statutorily allowed, varying degrees of documentation being required to prove a “hardship,” fee reductions without explanation after a hardship waiver request was denied, and fee reductions granted when there was no documented request for such. Examples are discussed below:

Denial of request for waiver when statutorily allowed – A lobbyist filed a report 12 days late during the legislative session resulting in a $1,275 late fee. The filed report contained no expenditures, which the Act cites as a valid reason for waiving the fee. However, the waiver request was denied.

Degree of documentation required – A lobbyist was assessed $23,825 in fees for filing three late reports. A waiver request was submitted following an email exchange between the lobbyist and the Executive Secretary, which indicated the hardship was “as discussed with Holly LaBerge, Executive Secretary, on May 8, 2013.” Executive Secretary notes that waiver was granted due to “personal and financial circumstances discussed in confidence;” however, no documentation is included. A second lobbyist was assessed $12,550 for filing two late reports. The submitted waiver request indicates he “does not have the financial means to pay.” The Executive Secretary denied the request because “there was no supporting documentation submitted for the claim that [he did] not have the financial means to pay [the] fines.” The lobbyist submitted a copy of his pay stub and the waiver was granted.

Fee reduction following denial of waiver request: A lobbyist was assessed $3,825 for filing three reports late. The submitted hardship waiver states he was out of the country during the filing period and did not have access to internet services. The Executive Secretary denied the waiver noting, “being out of the country with no access to a computer does not constitute a hardship.” However, she reduced the fee to $825.

Fee reduction without corresponding request: A lobbyist was assessed $1,275 for a late filing. There is no evidence a hardship waiver request was submitted; however, the Executive Secretary reduced the late fee to $275 noting it is being done as a courtesy to the state agency involved.


Exhibit 6: Waivers Granted due to Data Problems and as a Courtesy Have Increased Report Years 2012 and 2013

RECOMMENDATIONS


Collect the late fees due to the state as required by law;

Develop policies and procedures for assessing waiver requests and identifying what type of documentation is required to support the request;

Develop policies and procedures for determining when a partial waiver is appropriate and what documentation is required to support the request; and,

Routinely report to Commissioners on the number and dollar value of waivers granted.

$-

$500,000

$1,000,000

$1,500,000

CommissionMotion

Data Problems HardshipApproval

CourtesyWaiver

No Explanation

2012 Fees Waived/Reduced(205 Total)

2013 Fees Waived/Reduced(288 Total)

Reason Cited for Granting Waiver/Reduction


4

3

114

3 14 31

147

51

13

Am

ount W

aiv

ed/R

educed


Complaints and Investigations

The Commission staff’s initial complaint review process to evaluate whether a complaint should be rejected or accepted is adequate; however, not all respondents were informed of the complaint against them within the period required by law.

We found that the Commission’s staff adequately reviews incoming complaints to determine if they involve allegations that fall within the Commission’s jurisdiction and have been filed in compliance with the Commission’s rules and state law. However, the Commission has not always complied with O.C.G.A. 21-5-7, which requires that a copy of the complaint be sent by certified mail to the respondent (the person against whom the complaint has been filed) within two business days of the Commission’s receipt of the complaint.

Our review of 20 complaints found that Commission staff reviewed the allegations contained in complaints and appropriately rejected those that involved allegations outside the Commission’s jurisdiction. The Act encompasses a number of different types of violations, all of which concern the Commission’s core mission of promoting transparency, compliance, and disclosure (see Exhibit 7).

Commission staff also ensured that complaints included other information and signatures as required by Commission rule and law, rejecting those that did not contain all required information. While the Act only requires that complaints be produced in writing and complainants provide a sworn verification of their knowledge or belief that the alleged violations occurred, the Commission has promulgated rules imposing additional standards that must be met for complaints to be accepted.

While Commission staff appropriately screened complaints to further review, we found that it did not always notify the respondents by certified mail within two days as required by law. Instead, they conducted the review to determine whether to accept and then notified respondents. However, the Act does not require the determination to accept be made before notice is given; rather, it states that the “person against whom the complaint is made shall be furnished… a copy of the complaint by the commission within two business days of the commission’s receipt of such complaint…” We reviewed 53 cases the Commission accepted for investigation from July 2009 through March 2014. In 15 (28%) of these cases, the Commission staff exceeded the two day statutory requirement, taking from three to seven days to notify the respondents. Commission staff indicated that, when a complaint is rejected, respondents are notified through regular mail. However, as noted above, the law does not make a distinction regarding notification based on whether the complaint is accepted or rejected.

RECOMMENDATIONS

The Commission should ensure staff are complying with state law and notifying all respondents within two business days of the receipt of a complaint.


The Commission staff does not have sufficient processes to ensure investigations are conducted in a timely manner.

The Commission has not established a standard for how long an investigation should take or developed a method to track and manage the investigative process. Its current case management system for tracking open cases identifies the status at a very basic level indicating if it is: being investigated, inactivated, pending, forwarded to the Attorney General, or assigned for an Administrative Procedures Act (APA) hearing10. We found that the majority of open cases were in investigative status. Our analysis of open cases revealed that no action had been taken for an average ranging from 1.5 to 4.1 years. To be able to see all stages, we also included cases the Commission closed. This analysis showed the majority of open cases have not progressed past the initial stages and it took a median of over a year to get to the last stage of the process. Our analyses are discussed in more detail below.

Case Status

From January 2012 to August 2014, the Commission closed 40 complaint cases and accepted 125. According to its case tracking system, it has 216 open cases as of August 2014. As shown in Exhibit 8, these cases have been open for an average of 3.3 years. The majority (183 of 216) of open cases are currently in investigative status. These cases have been open for an average of over two and a half years. The remaining 30 open cases are either with the Attorney General’s Office or have proceeded to a hearing. These cases have been open for an average of 7 years.

10 Cases forwarded to the Attorney General are for collection of unpaid fees and fines. Cases forwarded for an APA Hearing are cases in which the Commission has found probable cause that a violation occurred; however, the respondent and the Commission have not reached agreement through a negotiated order, so the case must proceed for hearing.

Exhibit 7 Commission Jurisdiction Does Not Extend to All Complaints

Examples of complaints within jurisdiction Examples of complaints outside jurisdiction

Failure to register as a candidate, public officer, or lobbyist when required

Failure to file required disclosure reports or filing false, inaccurate, or incomplete disclosure reports

Misuse of campaign funds

Accepting contributions from prohibited sources or in excess of contribution limits

Ethical/moral conduct of candidates/lobbyists/public officers

Conflict of interest laws (outside of failure to disclose such interests on proper forms)

Misuse of state / local funds

Violations of other provisions of the Elections code

Violations of criminal law

Additional complaint requirements adopted by Commission

The name and address of the person or persons filing the complaint, anonymous complaints are not accepted.

The sworn verification and signature of the complainant.

The name and address of the party or parties against whom the complaint is filed, and if any such party is a candidate, the office being sought.

A clear and concise statement of the facts upon which the complaint is based along with an allegation that such facts constitute one or more violations of law under the jurisdiction of the Commission.

A general reference to the statutory provision(s) of the Campaign Finance Act, Vendor Gift Disclosure Law, Commission Rule, or any other statute within the jurisdiction of the Commission allegedly violated.

Source: O.C.G.A. 21-5-6(b)(9) and Commission rules


Exhibit 8: Average Age of Open Cases is Over Three Years Old As of August 28, 2014

Current Status Number of

Cases Average Age

Open Cases – Total 216 3.3 years

Accepted and Under Investigation

1 183 2.6 years

Commission Hearing forwarded to APA or AG

2 30 7.2 years

Other3 3 n/a

1 Cases categorized as Under Investigation include those that have been to a

hearing but the result is unknown, a fine has been assessed but has not been paid, and investigations have not been concluded. 2 Our analysis of case files identified two cases that were listed as Under

Investigation but included documentation indicating they were referred to the Attorney General. 3

Other includes cases labeled Inactivated or Pending.


Status of Open Cases in Investigative Phase

Many actions occur during the investigative phase; however, the Commission does not track these actions in a systematic or routine way. This information is included in investigative files; as a result, the Commission could track and create reports to identify the last steps taken in a case, which may identify reasons the case is not moving forward, or identify steps that require additional staff resources. We reviewed 151 open cases identified as in investigative status as of February 2014 to determine the last action taken by staff. No action had been recorded in these files for an average of 1 ½ years and up to 4.1 years. The five most common actions included 107 (71%) of the cases. Exhibit 9 shows the time since this last action. For 33% (35 of 107) of the cases, the last action recorded was the Commission’s receipt of a response to the complaint. Without researching each individually, the Commission cannot know why these 35 cases are not moving forward in the process.

Exhibit 9: Majority of Cases Stalled at Early Point in the Process As of February 2014

Last Action Number of Cases

Average Age From Last Action

Maximum Age From Last Action

Complaint Notice Mailed to Respondent

33 1.1 years 3.9 years

Response to Complaint 35 1.4 years 4.1 years

Audit 8 1.1 years 3.9 years

Draft Subpoena 10 4.1 years 4.1 years

Investigative Report 21 1.0 years 2.7 years

1 The last action recorded in the remaining files for cases in investigative status include Notices of

Additional Allegations or Technical Defects, drafts of Consent Orders or Compliance Orders, signed orders, requests for additional information, etc. It should be noted that one file was empty and three files could not be located.



Time to Reach Milestone – All Cases

Staff have not tracked cases by investigative stage. To do so, they would need to identify the milestones investigations generally include and track each case’s progress according to these. Based on interviews with staff and a review of cases, we identified milestones related to interactions with the respondent as well as to actions the staff takes to investigate cases. We found that no single milestone in the process drives the age of the cases; delays occur at all milestones. We reviewed a 25% sample of all cases (57 cases) submitted and accepted by the Commission between July 2009 and March 2014 to determine how long it took to reach identified milestones. As shown in Exhibit 10, notices are sent and responses are received relatively quickly. However, the median time to reach all remaining milestones exceeded 6 months. It took a median of 243 days for the 21 cases that had a completed audit to reach this milestone. For the 16 cases that reached the completed investigative report milestone, it took a median of 327 days. For the 10 cases closed with a signed order, it took a median of 278 days to reach this milestone.

Exhibit 10: Delays Occur at All Milestone Points As of March 2014

As described in a subsequent finding, the Commission has experienced unusually high turnover in its staff, which may be a contributing factor to the lack of timeliness of investigations. The lack of direction provided to staff, through policies and procedures, may also have contributed. In addition, the Commission was without an attorney, who serves as the primary investigator, for approximately 6 months during our review. However, the Commission also lacks a basic tracking system that categorizes and tracks investigations against established milestones. Such a system would allow it to identify how long cases are taking to progress from one milestone to the next and to identify where cases are stalling. The Commission could use this type of system to establish baselines for how long different categories of cases should take to reach each identified milestone. While it is likely that investigations will vary in how long it takes to complete them, based on number of issues, complexity and so on, establishing a baseline would allow it to identify those investigations that may

Milestone

Notice Sent to Respondent (n=53)

Response from Respondent (n=40)

Audit Report Complete (n=21)

Order Sent to Respondent (n=8)

Probable Cause Hearing (n=5)

Investigative Report Complete (n=16)


Years from Complaint

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

Order Signed by Respondent (n=10)

MinimumMedian

Maximum


require more resources. In September, staff reported that they have begun prioritizing cases; they are addressing the most recently received ones first and working their way through the backlog. Prior to this, the Commission did not have any established manner for prioritizing which cases to focus on completing first.

RECOMMENDATIONS


Establish a tracking system;

Establish policies for how long investigations should take;

Track how long investigations are taking and adjust resources as necessary; and,

Establish a policy for how the backlog of cases will be managed.

The Commission lacks policies and procedures needed to ensure investigations are conducted in a consistent and thorough manner.

The Commission has inconsistently investigated cases with similar allegations or findings. However, the Act requires that once investigations are complete and final orders are prepared, these orders, issued by the Commission, “serve as precedent for all future orders and opinions of the Commission.” As a result, once decisions are issued through signed orders, they should inform future decisions about similar cases. We found that the Commission did not always perform audits to the same depth, categorized similar errors as both technical defects and violations, failed to consistently notify respondents of technical defects, assessed civil penalties in some cases but not in other similar cases, and negotiated similar cases to different outcomes. In addition, Commission staff often relies on unsubstantiated evidence, such as declarations from respondents that expenditures are “campaign related,” rather than requiring documentation verifying the legality of questionable expenditures. These problems can be partly attributed to staff conducting investigations without written policies to guide their decisions.

To gain an understanding of the Commission staff’s investigative practices, we reviewed 50 cases closed from July 2011 to August 2014.11 Our review of the cases revealed a number of inconsistencies discussed in greater detail below. Five of the reviewed cases are used to illustrate the inconsistencies. For a more complete description of these five cases, see Exhibit 11 at the end the finding.

Inconsistent audits–Staff reported that, while there is no established guidance, the practice has been to audit all disclosure reports during an investigation. As a result, it is reasonable to expect that these audits could identify violations in addition to those cited in a complaint. However, we found these audits were not always conducted and, when conducted, were inconsistent. We reviewed investigations closed since July 2011, and found 43% (19 of 44) did not include an audit. In addition, we found that the audits

11 A total of 50 cases were reviewed; however six involved organizations or individuals not required to file disclosure reports and were, therefore, not included in the analysis.


for the remaining 25 varied in the degree to which all disclosures were reviewed. In six cases, only transactions or disclosures associated with the complaint were reviewed; in 12 cases, additional disclosures were included in the review; and in seven cases, the staff reviewed all of the disclosures the individual had submitted. Examples of these inconsistencies and the impacts are discussed below using Case 2 vs. Case 1. Commission staff did not conduct an expanded audit in the case of an

October 2011 complaint that was dismissed due to lack of sufficient evidence of the allegation. However, the staff did conduct an expanded audit in a May 2012 case despite a similar determination that the complaint was not a violation. As part of the audit, the Commission determined the candidate did not clearly indicate that two separate purchases for hats and ink pens were campaign related and found he filed a late report. The Commission charged the candidate with four violations and assessed $400 in civil penalties.

We found that the candidate not subjected to an expanded audit had a similar issue in his reports. That candidate had filed reports that included t-shirts without stating they were for campaign purposes. Because the candidate was not subjected to an expanded audit, the candidate was not charged with a violation or subjected to civil penalties.

Inconsistent assessment of fines/fees – The Commission has not consistently assessed civil penalties for failing to file or filing late disclosure reports. An example of the inconsistency and its impact is discussed below using Case 1 vs. Cases 3 and 5.

A candidate found to have filed a PFD late was cited with a violation of the Act and required to pay a $100 civil penalty, in addition to the $125 late fee. However, two other candidates found by the Commission to have filed late were charged the $125 late fee but were not cited with a violation or subjected to the additional civil penalty.

Inconsistent application of the term technical defect – The Act defines a technical defect as “…an incorrect date or a failure to include a date, an incorrect contributor’s occupation or a failure to include a contributor’s occupation, an incorrect address or e-mail address, an incorrect employer or a failure to include an employer, accounting errors, or any other similar defects.” The Commission has not provided definitions or examples to explain this definition further; nor has it identified any additional situations that would constitute a technical defect. As a result, similar errors may be categorized as violations by the Commission in one case and as technical defects in another. The categorization determines how fines are calculated and how the errors can be remedied. Examples of these inconsistencies and the impacts are discussed below using Case 5 and Case 1. During an expanded audit, the Commission determined that a candidate

failed to clearly identify in a CCDR that expenditures for t-shirts, hats and balloons were campaign-related. The Commission treated this failure as a technical defect and allowed the candidate to correct the


filing and no fine was charged. By contrast, when another candidate failed to note that expenditures for hats and ink pens were campaign-related, the candidate was cited as violating the act and assessed civil penalties of $100 per violation.

Inconsistencies in negotiations that result in re-categorizing violations as defects – The Commission has not established guidelines regarding if or when it is appropriate to re-categorize a violation as a technical defect after orders are drafted. It is also unclear whether this practice is permitted by the Act. We found that the Commission re-categorized violations in some cases but did not do so in others. This negotiation results in the final disposition reflecting the more benign technical defects and administrative fees as opposed to violations and associated civil penalties. However, it also ignores the statutorily required steps the Commission is to follow that allow individuals to cure technical defects within 30 days of notification. As noted earlier, these negotiations lead to orders and potentially serve as precedent for all future orders and opinions of the Commission. Examples of these inconsistencies and the impacts are discussed below using Case 3 vs. Case 1 vs. Case 4.

A candidate who the Commission identified as failing to disclose that multiple expenditures were campaign-related was initially cited with violations and subject to civil penalties of $1,000 per violation. However, during negotiations, the Commission allowed the candidate to correct the reports and have the “cured” violations dismissed. In a second case, a candidate found to have committed the same violation was not allowed to amend the reports and have the violations dismissed. The errors were deemed violations and the candidate was required to pay $100 for each of the three violations. In a third case, a candidate was found to have committed violations by failing to disclose properties and loans. During negotiations, the Commission changed the category of the error to technical defect and assessed administrative fees. The candidate was not provided an opportunity to “cure” the defects.

Inadequate evidence accepted to remedy errors – When errors are identified, the Commission has relied on the candidate’s explanation or rationale to serve as corrective action instead of requiring documentation to prove the error has been rectified. Additionally, it has penalized candidates who did not include the explanation, even when they did provide documentation. Examples illustrating the Commission’s practice of accepting unsubstantiated evidence to amend errors are discussed below using Case 1 vs. Case 3.

A candidate was found to have failed to provide sufficient explanations for three expenditures. When notified of these problems, the candidate amended the filings by adding the words “for campaign” to each of the expenditures and the Commission took no further action. However, when another candidate was notified of the same insufficiencies, he provided copies of invoices and receipts which clearly showed the items in question were for campaign purposes. However, because he did not also add the language “for campaign” to the filed report he was charged with three violations and required to pay $300.


RECOMMENDATIONS

To ensure consistent treatment of cases, the Commission should:

Establish policies and procedures to guide when expanded audits will be conducted;

Request an Attorney General Opinion to provide additional clarification on what constitutes a technical defect versus a violation and when an error can be recategorized;

Establish a definition for technical defect, apply this definition consistently, and publish as a rule;

Add information to its case tracking system that would provide a searchable history of case dispositions; and,

Ensure similar cases are treated in a similar manner by using prior cases as precedent.


Exhibit 11: Descriptions of Five Cases Included in Analysis of Investigations

Case Description

Case 1

A complaint alleged that the candidate illegally displayed campaign signs on a vehicle in a county-owned lot. The Commission’s investigation into the allegation found that this did not constitute a violation of the Act because the lot was open to the public. The Commission elected to conduct an expanded audit of the candidate’s filings. It determined that he had filed a late PFD report, failed to include complete addresses for one contributor and four expenditure recipients, and had not provided sufficient documentation for two separate purchases of hats and a purchase of ink pens that were included on a CCDR. Upon notification, the candidate provided detailed invoices regarding these purchases that showed they were related to his campaign. The Commission charged the candidate with five technical defects and four violations. He was fined $250 in administrative fees, $400 in civil penalties and a $125 late fee, all of which he paid.

Case 2

A complaint alleged that the candidate illegally used a county-owned van for campaign purposes. The Executive Secretary administratively dismissed the complaint, stating there was not sufficient evidence to prove this violation occurred. The Commission did not assess any fines nor did it conduct an audit to review the candidate’s filings.

Case 3

A complaint alleged that the candidate failed to disclose property ownership on his PFDs and failed to pay a late fee. The Commission investigation into the allegations found that the candidate had filed late and failed to pay the late fee; it also found that the candidate had failed to include the property ownership on PFDs filed in two consecutive years. The candidate paid the late fee during the investigation and the Commission dismissed this allegation. The Commission determined that the failure to disclose the property ownership constituted two violations of the Act and assessed $200 in civil penalties, which the candidate paid. The Commission elected to conduct an expanded audit of the candidate’s filings and found that the candidate failed to include an adequate explanation on his CCDRs for 13 expenditures. These expenditures were initially categorized as violations and subject to a maximum penalty of $1,000 per violation. During the negotiation process, the filer was notified of the problem and corrected the CCDRs to include the information. The Commission dismissed 12 of the violations. The candidate failed to correct the 13

th violation, which involved providing explanation to demonstrate that an expense for a

July 4th booth was campaign-related. The Commission categorized this issue as a technical defect and assessed a $50 administrative fee, which the candidate paid.

Case 4

A complaint alleged the candidate failed to disclose various properties and loans on his PFD. The Commission reviewed this allegation and conducted an expanded audit; its investigation found 36 violations that were then grouped into 12 technical defects. The candidate had already filed amended PFDs correcting some of the problems identified. The Commission re-categorized these errors and omissions as technical defects and assessed a $600 administrative fee (12 x $50), which the candidate paid.

Case 5

A complaint alleged the candidate illegally displayed campaign signs on a vehicle in a county-owned lot and illegally distributed campaign material at the Sherriff’s Office. The Commission dismissed these allegations. The Commission elected to conduct an expanded audit and found that this candidate had filed a disclosure report late and failed to include an adequate explanation on his CCDRs for multiple expenditures. After the candidate paid the required late fee of $125 and amended the CCDR to correct the defect, the Commission staff administratively dismissed this case.

Source: Commission closed case files


The Commission does not document all contacts with respondents and complainants during an investigation.

The Commission has not developed standards to ensure investigative files reflect all of the conversations that occur during an investigation. The file should contain records to support the conclusions drawn and the recommendations made, including phone conversations and meeting notes. Absent a process for including such information, it is not possible to know if information is missing or was not obtained. We found references to phone conversations decision makers within the Commission were having with respondents or their representatives. These conversations occurred during the investigation, but were not included in the file.

The Executive Secretary indicated she had a phone conversation with a respondent’s representative, during which she said a threat was made to the Commission’s authority. No record of the call was included as part of the official investigative record.

Our review of a closed case identified two emails, each referencing a separate phone call between staff and the respondent. There was no record of these calls in the file.

The previous Chairman noted that he received communications from respondents during investigations; however, it was not the practice to document such communications.

RECOMMENDATIONS


Create a contact log to record and track all communications that occur during the course of an investigation;

Include the contact log as part of the case file; and,

Ensure policy addresses the need for both staff and Commissioners to document these contacts.

The Commission should develop procedures to ensure staff enforces all orders as directed. It should also seek clarification to determine when a case can be re-opened.

Although the Commissioners voted unanimously in a preliminary hearing to close two complaint cases with compliance orders and to close a third case with a consent order to pay late fees, more than a year later staff had not taken the steps necessary to carry out these orders.

According to O.C.G.A. 21-5-6, it is the duty of the Commission “to issue orders, after the completion of appropriate proceedings, directing compliance with this chapter or prohibiting the actual or threatened commission of any conduct constituting a violation.” As of August 2014, staff had not provided the official compliance and consent orders for signature to either the respondent or the commission chair. These


documents signify a legal contract between the parties whereby the respondent agrees to the terms of the order. Because these documents have not been produced, the three cases are officially categorized as “open.” However, there is no documentation in the case files or in Commission meeting minutes during this period indicating that the Commissioners voted to change their initial decision to close the cases by compliance and consent orders. Therefore, based on the last official action of the Commissioners, the cases should currently be “closed.”

Three months after the Commissioners’ decision was rendered, staff requested they reopen the cases to hear new evidence. Staff reported that the respondent submitted amended filings less than 10 days before the initial preliminary hearing; however, they had been unable to review these filings in time to include any conclusions in the investigation. The staff reviewed the filings after the preliminary hearing and determined that the amendments did not correct the identified problems. According to its rules, the Commission can make a motion to review its own orders. While no time limits are specified in the rule, it is required to be “timely.” The staff’s request for such a motion was three months after the initial decision. As of August 2014, the Commission has not issued an order to reopen the case or review its decision.

However, it is unclear whether staff can request these cases be reopened since they were never officially closed. In addition, it is unclear under what circumstances it is appropriate to reopen cases. To address this question, we have submitted a request for an official opinion to the Attorney General’s Office. The clarification is needed to address the questions of what constitutes new evidence as well as identifying the formal actions required of the Commissioners to officially reopen cases.

RECOMMENDATIONS


Based on the opinion of the Attorney General’s Office, establish rules regarding when and how a case can be reopened; and

Determine the maximum amount of time that can pass between the initial decision and a request for review and under what circumstances such requests can be made.


Other

The Commission does not have a system for tracking documents and changes to those documents.

Information contained in both electronic and paper records is at risk for being lost or altered without accountability. According to the staff, complaint cases are maintained in both physical and electronic formats while they are open; once closed, the physical file is scanned, added to the electronic file to create a complete case file. However, staff could not locate a physical file for an open case and, for a closed case, neither the electronic nor the physical copy could be located. In addition, these files are being updated throughout the investigative process. However, because passwords are shared, there is no assurance that the changes made are attributed to the correct employee. These cases include sensitive items such as tax records, financial information, and the home addresses of both complainants and respondents. Absent a process for ensuring information is protected, this sensitive information is potentially vulnerable to being deleted or exposed. These issues are discussed below.

Lack of a tracking system – Physical complaint case files are kept in multiple folders located throughout multiple filing cabinets in the office. There is no system for ensuring multiple files for one case are kept together, or for identifying which staff member has a case file. A scanning project complicates the situation because no record was kept of which files were scanned and subsequently shredded. As a result, when we discovered cases for which there was no physical file, it was not clear whether the file had been scanned and shredded, or was simply misplaced.

Lack of password controls – While each staff member is assigned a unique password, staff members reported that, prior to February 2014, one employee had access to all passwords. In addition, the IT contractor continues to have access to all passwords. According to GTA guidelines, “all passwords shall be treated as sensitive, confidential information and shall not be shared with anyone”. We found evidence that the employee used her knowledge of another staff member’s password to access the employee’s computer, log into the Commission’s intranet, and make changes to lobbyist files. The incident was not reported and was not discovered until an unrelated inquiry by a third party was investigated. This lack of controls further compounds the Commission’s inability to maintain a reliable audit trail regarding changes to documents and databases.

RECOMMENDATIONS


Develop a tracking system for all case files, both physical and electronic, that ensures files are complete and can be located; and,

Institute proper controls to ensure passwords are confidential and not shared.


The Commission lacks a process for consistently closing case files.

Currently, the Commission’s closed case files are disorganized and duplicative. Once closed, these cases are subject to public inspection. The disorganized nature of these files puts the Commission at risk for having incomplete files as well as inadvertently making confidential information public. More practically, these files are unnecessarily large and cumbersome to maintain, taking up large amounts of physical space and data. We reviewed case files that were several hundred pages long because multiple copies of the same documents were included. For example, we identified instances where: the same draft of a proposed consent order was included in a case file nine times; the same letter to a respondent was included six times; and, the same consent order and copies of the check used to pay the fine was included three times. Additionally, we saw instances where attachments were separated from the source, eliminating context or an ability to identify the creator or the purpose of the document.

Once a case is complete, staff print out documents from the electronic file deemed relevant, combine these with hard copy documents already on file, scan this compiled package, and store it as the official final case file. However, we also found that they are retaining physical copies of the same files.

We saw a “close-out checklist” included in 59% (10 of the 17) of files reviewed. This form largely addresses close-out of the case within the information system, noting, for example, that the “date closed should be entered” and the “disposition field should be marked as applicable”. This form could be revised to also address the content and organization of the final electronic case file. Alternatively, the Commission could consider moving to an electronic case file system for all cases.

RECOMMENDATIONS


Eliminate unnecessary duplicate copies of documents upon closeout of the case file;

Create an index of documents for closed files; and,

Create a table of contents to organize sections of the closed file.

Action should be taken to determine if identified expenditures for legal services were appropriate.

In fiscal years 2014 and 2015, the Executive Secretary authorized a total of $10,780 be paid to a law firm. There were six invoices, dated January – April and July – August 2014 and each invoice referenced “General Advice.” Our review found:

Reports that the Commission specifically denied the request for payment for these services: According to the current Commission chair, during the executive session portion of the March 2014 Commission meeting, the Executive Secretary requested the Commission pay expenses related to her personal attorney. The current chair stated that the request was denied and the Executive Secretary was so informed.


No evidence that the Attorney General’s office authorized the procurement of these services: According to O.C.G.A. 45-15-34, the Department of Law has “complete and exclusive authority and jurisdiction in all matters of law relating to the executive branch of the government and every department, office, institution, commission, committee, board and other agency thereof. Every [entity] is prohibited from employing counsel in any manner whatsoever unless otherwise specifically authorized by law.” According to a 1995 Attorney General (AG) Opinion, attorneys hired by the state may not “provide legal advice or representation to the agency, and no attorney-client relationship or privilege arises between the legal services officer and other agency officers or employees, or the agency itself.” According to the AG’s office, it did not grant authority for the Commission to procure services for advice.

Procurement dissimilar to other legal services obtained by the Commission: Agencies may employ persons with legal training and experience to serve as “administrative legal service officers,” as long as they are not providing legal advice and representation. The Commission currently has a contract with an attorney to write advisory opinions at the request of the Commission based on questions posed regarding the Act. His services were procured through a request for proposal process. Three bids were received and one selected. According to documentation, the Commissioners were involved in the process. In December 2013, the Commission hired an attorney to “assist with cases and the Commission’s workload.” According to the Commission meeting minutes, the attorney was hired by unanimous vote of the Commissioners. There was no request for proposals for the procurement in question, nor was there a contract or purchase order in place. In addition, as noted earlier, the Commissioners indicated they did not authorize the procurement.

The current Commission chair indicated she requested the engagement letter and timesheet detail from the law firm. According to her, the attorney declined to provide the requested information citing attorney-client privilege. Given these issues, we have forwarded this matter to the AG’s office to determine if the nature of the expenditure is a matter of legal noncompliance, fraud, or abuse. According to the Commission chair, they have also forwarded this information to the AG’s office.

RECOMMENDATIONS

The Commission, in cooperation with the AG’s office, should continue to review these expenditures to determine if they are legally noncompliant, fraudulent, or abusive.


The Commission has hired staff that did not meet minimum qualifications for the position and suffers from unusually high turnover resulting in a potentially underqualified staff.

To effectively and efficiently perform its duties and achieve its mission, the Commission must have competent staff. Our review found that four of the eight staff members hired between January 2011 and April 2014 did not meet the minimum qualifications listed on the applicable job description. 12 There should be a structured screening process in place to ensure that only qualified applicants are hired.

We also found that the Commission has experienced unusually high turnover compared with the rest of state government. As noted by industry experts, high turnover rates are related to lost productivity, loss of institutional knowledge, unexpected recruitment costs, and diminished productivity within an organization. All of these are factors that inhibit an office from achieving its mission.

In both fiscal years 2013 and 2014, the turnover rate for Commission staff was 46%. By comparison, during fiscal year 2013, the average turnover rate for all state employees in Georgia was 18% and agencies of comparable size to the Commission had a turnover rate ranging from 8% to 33%.13 As seen in Exhibit 12, turnover at the Commission has declined since fiscal year 2010; however, it has remained above 40%. The Commission experiences turnover through both involuntary and voluntary terminations at a high frequency. In fiscal year 2013, the Commission’s involuntary turnover rate was 27% and the voluntary rate was 18%.The average length of employment for current staff is 3.6 years as of April 2014.14 Comparatively, the average tenure of a state employee is 9.7 years. Other state agencies of a similar size have an average tenure of 11.3 years

We analyzed the Commission’s salaries to determine if low salaries could be contributing to an inability to find qualified applicants or the high turnover rate. However, our analysis did not find the Commission’s salaries to be particularly low. We found that the median salary advertised for open positions was $45,139 and, once hired, staff was paid above the median advertised salary for their position. We also found that, compared to other similar state positions, the Commission’s median salary is higher. For example, statewide, the average salary for an Office Admin Generalist in fiscal year 2013 was $34,033 whereas the Commission paid its Office Admin Generalist approximately $44,000.

12 During this period, the Commission also hired two clerical staff; however, no resumes were on file for these individuals. In addition, since our review, the Commission has hired an additional five staff. These staff were not included in our review. 13 Fiscal year 2013 was the most recent year for which data was available. 14 The tenure analysis is based on the seven individuals who were employed by the Commission as of April 2014.


Exhibit 12: Since 2013, Staff Turnover Has Been Over 40% Fiscal Years 2009 to 2014

EmployeeCount

Turnover

0%

20%

40%

60%

80%

100%

0

4

8

12

16

20

2009 2010 2011 2012 2013 2014

Tu

rno

ve

r R

ate

Em

plo

ye

es

Fiscal Year

Source: Agency Personal Action Reports

RECOMMENDATIONS


Establish minimum requirements for the various job functions and hire according to these requirements; and,

Establish a benchmark for turnover and track to identify potential corrective action.

The Commission staff does not manage and safeguard its assets to prevent fraud, waste, and abuse.

The staff is responsible for managing the Commission’s assets and establishing sound financial management processes that ensure state funds are protected. However, we found that staff has not established processes for effectively managing its physical assets. We also found it has not established proper financial management procedures to reduce the opportunity for fraud, waste, and abuse. These issues are discussed below.

The staff should have a complete and current inventory of all equipment. At the time of the audit, the staff did not have a complete, current inventory of all equipment and they could not provide an inventory of computer equipment. During an interview, the auditors were shown the server room, which also serves as a storage room, and noticed a large amount of computer equipment of varying ages, many without property tags. Some of the equipment was marked for destruction. Without a complete and current inventory, this equipment could be stolen or lost without detection. During the course of the audit, staff reported that they had begun to compile an inventory.


The staff should improve its process for accepting cash payments for fines and fees to reduce the likelihood of fraud, waste, and abuse. Specifically, the staff utilize multiple receipt books for recording fine payments. As a result, there is no sequential numbering to the receipts, making it difficult to determine if there are any missing receipts. In addition, staff does not currently ensure that for every receipt a payment is recorded in the system and a corresponding deposit is made. It should be noted that we reviewed a sample of receipts and found that the payments were recorded in the system. Finally, until February 2014, one staff member had passwords to all computers and could serve all roles from accepting payments to recording payments to delivering the cash to the State Accounting Office for deposit, resulting in a lack of segregation of duties and an increased risk of fraud or abuse.

The staff should improve its process for managing postage to address weaknesses and reduce the likelihood of fraud, waste, and abuse. The staff buys postage to send certified mail to respondents. Since fiscal year 2012, the Commission has spent at least $2,234 on postage. Generally, postage should be treated as cash in that the staff should record the purchase of the postage, when it is used, and how much is used, and how much is available. At the time of the audit, staff was not keeping such records. As of September 2014, staff report that they have purchased a postage meter and are now recording their usage.

As noted in an earlier finding, staff established an account with Click-2-Mail to send notifications to respondents through certified mail electronically; however, it had never been used. In September 2014, the Commission’s IT contractors indicated they were trying to automate the mailings and this service would then be usable. However, we do not have a timeline for this completion. The account currently has a balance of $55,217. According to the company, the funds have been rolling forward since June 2012. We did confirm with the company that a customer could close the account and request that funds be returned.

RECOMMENDATIONS


Establish inventory controls and track all equipment;

Establish processes for accepting cash payments that include proper segregation of duties and tracking of payments;

Establish processes for managing postage purchases and usage; and,

Determine whether the Click-2-Mail account is an effective and efficient method for handling its mail needs and either begin using it or close the account and recoup the $55,217 currently in the account.


Various models, practices and legal provisions were identified that could help bolster the independence and effectiveness of the Commission and restore confidence in its ability to fulfill its mission.

Ultimately, the Commission’s independence and effectiveness is decided by the public’s perception and its confidence in it. Likewise, regulated individuals and entities need to trust that the Commission is fairly and promptly handling cases and can provide accurate information on how to comply with the Act. To identify ways in which the independence and effectiveness of the Commission could be improved, we researched and compared the Commission’s responsibilities, board composition and role, funding, and staffing to other states’ ethics commissions and to other state regulatory bodies. We used the published results from a nationwide survey of campaign finance and ethics commissions, we conducted our own review of similar agencies in southeastern states, and we also spoke with experts and practitioners from other states. As a result of this review, we found that some aspects of the Commission are similar to other entities, while also identifying practices in other states or regulatory agencies that may benefit the Commission.

Duties, Responsibilities, and Jurisdiction

Georgia’s Commission has the full range of powers, responsibilities, and jurisdiction found in other states. These powers and responsibilities include: the development of forms and manuals, examination of reports and monitoring of compliance; ability to subpoena witnesses, issuing advisory opinions, issuing orders that are enforceable in court, provision of ethics training, and issuing an annual report. Georgia’s commission has jurisdiction over election participants such as candidates and committees, public officials, lobbyists, and vendors. This broad jurisdiction is not typical of other states’ commissions. In fact, only three other states (Louisiana, New Jersey, and Texas) have as broad a jurisdiction as Georgia.

Commission Composition

By law, five members are appointed to the Commission. The Governor appoints three, the Committee on Assignments of the Senate appoints one, and the Speaker of the House appoints one. Additionally, one of the three appointed by the Governor must be from the opposing political party. On the surface, these appointments would appear to have some balance between executive and legislative branch representatives; however, when the governor and both chambers of the General Assembly are of the same majority party, there can be problems with Commission’s real or perceived independence. We identified other states that had attempted to ensure the independence of their Commissions by taking steps to balance the membership. For example:

The Ohio Ethics Commission balances the number of minority and majority party representatives;

Arkansas is one of six states that include appointments from the judicial branch, so all branches of government are represented;

Washington required that its commission include two state employees; and,

Louisiana’s governor and legislature select from nominees chosen by eight private universities.


Commission Independence

The 5-member Commission is subject to the conflict of interest disclosure requirements of the Act, which largely address financial interests. Commissioners also have a practice of recusing themselves if they deem themselves to have a conflict on a particular case. Nevertheless, to improve transparency, the Commission members could consider developing an official recusal policy, signing independence statements that disclose potential threats to independence related to the business of the Commission, and/or adopting an ethics policy for the Commission. For example, possible perceived or real threats to independence may include instances in which they are hearing a complaint case involving (1) close friends or family, (2) the person who appointed him/her to the Commission, (3) individuals or entities to which they have made donations, (4) individuals or entities that they represent in their private legal practices. Instituting policies or practices that address familiarity and self-interest threats helps set a tone regarding the importance of independence and transparency for the agency. Any threats to independence or recusals should be documented.

Role of the Commission

As non-paid volunteers, the most visible responsibility of the 5-member Commission is to review and reach decisions regarding disposition of cases. State law, however, also assigns responsibility to the board to employ an executive secretary to manage the day-to-day operations of the Commission and its staff. Implicit in the Commission’s authority to employ an executive secretary is the responsibility to provide monitoring and oversight of the executive secretary and the agency’s overall performance. Commissioners report they have conducted performance reviews of the Executive Secretary. However, monitoring and oversight should also include requiring regular reports of the activities, accomplishment, and outcomes achieved by the Commission. These regular reports can serve as the basis for asking questions about the day-to-day operations and the efficiency and effectiveness of the Commission.

Funding Stability

To protect the Commission’s budget from political influence during the budgetary process, there are options for ensuring an independent source of funding that would allow the Commission to carry out its duties with some of level of predictability and stability.

Establish a fee established specifically for the operation of the Commission – Tennessee’s Registry retains all fees and is allowed to carryover any balance from year to year.

Establish in law that a portion of the fees collected by the Commission can be retained – Currently, the Commission may retain $25 of every late fee, all fees collected for Open Records requests, and a portion of the fees associated with lobbyist’s registration. In fiscal year 2014, the Commission retained approximately $72,233 in fees. To remove the reliance on appropriation by the General Assembly, the law could be revised to allow the Commission to retain additional monies. For example, the South Carolina Commission is permitted to retain all lobbyist fees and the first $100 of all fines.


Establish in law a percentage of the general fund for the Commission’s budget – In Alabama, for example, by law, the Ethics Commission funding “shall not be less than one tenth of one percent of the total State General Fund amount.” Alabama’s state general fund is a subset of its overall state appropriation amount. In fiscal year 2015, the State General Fund appropriation was $1.84 billion. According to the Director of the Commission, this change in the law has helped ensure the Commission’s independence.

Funding/Staffing Adequacy

Due to the wide variation in ethics commissions, it was difficult to assess the adequacy of the Commission’s funding compared to other states.15 According to the National Conference of State Legislatures’ Center for Ethics in Government, commissions’ annual budgets ranged from $150,000 (Illinois) to $8.3 million (California). Texas, which is similar to Georgia in terms of its duties, responsibilities, and jurisdiction, had a fiscal year 2013 annual budget of $1.9 million compared to the Commission’s fiscal year 2015 budget of $1.3 million.

Based on the results of this audit, we identified a number of problems that may require additional funding and or staff to remedy. Specifically, we identified a number of problems with the Commission’s data system that, if fixed, could serve to improve efficiency by limiting some of the need for manual processes and, once data integrity is improved, by using the data to help focus the Commission’s efforts. The cost to fix problems and add functionality to the system was not readily available and still needs to be assessed. In conjunction with this assessment, the Commission may also need to evaluate the need for additional staff to conduct desk reviews of submitted reports and/or an additional auditor to work investigations and complaints. As discussed previously, due to the lack of activity at the Commission over the last three years, staff will need to collect data to develop baseline estimates of how long various activities, including complaints investigations, take in order to develop workload measures and determine number of staff needed to comply with the law and to complete work in a timely manner.

RECOMMENDATIONS


Consider developing a formal recusal process as well as requiring Commissioners to disclose potential threats to their independence.

Improve its oversight by requiring regular reporting and improve its monitoring by conducting ongoing assessments of the staff’s effectiveness and efficiency.

The General Assembly could consider changes to the Commission’s composition and funding to improve the structural independence of the body.

15 Variation includes the number of covered entities and individuals (e.g., all state employees compared to only candidates and elected officials), as well as the agency’s responsibilities (e.g., investigate complaints compared to receiving and reviewing filings). For example, the Arkansas Ethics Commission does not receive or process filings, but is charged with reviewing filings and investigating complaints.


Appendix A: Table of Recommendations

Summary Finding

The Commission has not established the necessary business practices to effectively perform its primary duties of ensuring all required registrations and report filings occur or that complaints and investigations are handled in a timely, consistent, and thorough manner. (p.10)

No Recommendations

Regulated Entities

The Commission should ensure it has a method for identifying all entities subject to the Act. (p. 13)

1. The Commission should use its information system to cross-reference information from the candidates’ disclosure reports that identify contributions from non-candidate committees to the list on registered non-candidate committees.

Filings

The Commission’s E-filing system incorrectly flags individuals as late filers or non-filers. (p. 15)

2. The Commission should require the IT contractors to develop a plan that defines the “fundamental” problems with the E-filing system and develop a timeline for addressing problems associated with duplicate ID’s and the outdated requirements in the system.

3. The Commission should ensure all reports received by mail are entered into the information system.

The Commission does not have processes in place to ensure all filed reports are accurate. (p.16)

4. The Commission should develop sufficient edit checks to minimize manual review and meet requirements set by law.

5. The Commission should determine if additional staff are needed to conduct manual reviews, and, if so, how many.

The Commission does not apply late fees to filings of public officers, candidates, and committees appropriately and consistently. (p.17)

6. The Commission should ensure public officers, candidates, and committees are notified, as required by law, when the required filings are late or absent.

7. The Commission should determine whether the online mailing service can be used to send these notifications and begin doing so, or close the account.

8. The Commission should apply escalations to the late fees as appropriate.

The Commission has applied late fees and escalations to lobbyists as allowed by the Act; however, it has not collected all fees due nor has it granted waivers of these fees appropriately or consistently. (p.19)

9. The Commission should collect the late fees due to the state.

10. The Commission should develop policies and procedures for assessing waiver requests and identifying what type of documentation is required to support the request.

11. The Commission should develop policies and procedures for determining when a partial waiver is appropriate and what documentation is required to support the request.

12. The Commission should routinely report to commissioners on the number and dollar value of waivers granted.


Complaints and Investigations

The Commission staff’s initial complaint review process to evaluate whether a complaint should be rejected or accepted is adequate; however, not all respondents were informed of the complaint against them within the period required by law. (p.22)

13. Commission staff should ensure staff are complying with state law and notifying all respondents within two business days of the receipt of a complaint.

The Commission staff does not have sufficient processes to ensure investigations are conducted in a timely manner. (p.23)

14. The Commission should establish a tracking system.

15. The Commission should establish policies for how long investigations should take.

16. The Commission should track how long investigations are taking and adjust resources as necessary.

17. The Commission should establish a policy for how the backlog of cases will be managed.

The Commission lacks policies and procedures needed to ensure investigations are conducted in a consistent and thorough manner. (p.26)

18. The Commission should establish policies and procedures to guide when expanded audits will be conducted;

19. The Commission should Request an Attorney General Opinion to provide additional clarification on what constitutes a technical defect versus a violation and when an error can be recategorized.

20. The Commission should establish a definition for technical defect, apply this definition consistently, and publish as a rule.

21. The Commission should add information to its case tracking system that would provide a searchable history of case dispositions.

22. The Commission should ensure similar cases are treated in a similar manner by using prior cases as precedent.

The Commission does not document all contacts with respondents and complainants during an investigation. (p.31)

23. The Commission should create a contact log to record and track all communications that occur during the course of an investigation.

24. The Commission should include the contact log as part of the case file.

25. The Commission should ensure the policy addresses the need for both staff and Commissioners to document these contacts.

The Commission should develop procedures to ensure staff enforces all orders as directed. It should also seek clarification to determine when a case can be re-opened. (p.31)

26. The Commission should, based on the opinion of the Attorney General’s Office, establish rules regarding when and how a case can be reopen.

27. The Commission should determine the maximum amount of time that can pass between the initial decision and a request for review and under what circumstances such requests can be made.

Other

The Commission does not have a system for tracking documents and changes to those documents. (p. 33)

28. The Commission should develop a tracking system for all case files, both physical and electronic, that ensures files are complete and can be located.


29. The Commission should institute proper controls to ensure passwords are confidential and not shared.

The Commission lacks a process for consistently closing case files. (p. 34)

30. The Commission should eliminate unnecessary duplicate copies of documents upon closeout of the case file.

31. The Commission should create an index of documents for closed files.

32. The Commission should create a table of contents to organize sections of the closed file.

Action should be taken to determine if identified legal expenditures were appropriate. (p. 34)

33. The Commission, in cooperation with the AG’s office, should continue to review these expenditures to determine if they are legally noncompliant, fraudulent, or abusive.

The Commission has hired staff that did not meet minimum qualifications for the position and suffers from unusually high turnover resulting in a potentially underqualified staff. (p. 36)

34. The Commission should establish minimum requirements for the various job functions and hire according to these requirements.

35. The Commission should establish a benchmark for turnover and track to identify potential corrective action.

The Commission does not manage and safeguard its assets to prevent fraud, waste, and abuse. (p. 37)

36. The Commission should establish inventory controls and track all equipment.

37. The Commission should establish processes for accepting case payments that include proper segregation of duties and tracking of payments.

38. The Commission should establish processes for managing postage purchases and usage.

39. The Commission should determine whether its Click-2-Mail account is an effective and efficient method for handling its mail needs and either begin using it or close the account and recoup the $55,217 currently in the account.

Various models, practices and legal provisions were identified that could help bolster the independence and effectiveness of the Commission and restore confidence in its ability to fulfill its mission. (p.39)

40. The Commission should consider developing a formal recusal process as well as requiring Commissioners to disclose potential threats to their independence.

41. The Commission should improve its oversight by requiring regular reporting and improve its monitoring by conducting ongoing assessments of the staff’s effectiveness and efficiency.

42. The General Assembly could consider changes to the Commission’s composition and funding to improve the structural independence of the body.


Appendix B: Objectives, Scope and Methodology

Objectives

The Georgia Government Transparency and Campaign Finance Commission (the Commission) requested that the Department of Audits conduct a review of the Commission. The State Auditor considered this request and, based on public concerns about the Commission’s ability to fulfill its major responsibilities as required by law, determined that a performance audit will be conducted by DOAA Performance Audit Division. This audit examined the oversight and management of the registration, filing, and complaint investigation responsibilities of the Commission. The objectives of the audit were:

To determine the extent to which the Georgia Government Transparency and Campaign Finance Commission has established and implemented sufficient controls over its core operations as outlined in existing ethics laws and regulations;

To determine the extent to which the Commission has implemented sufficient controls over its administrative functions; and

To compare Georgia’s public ethics system with other states and with the federal government to determine the extent to which it follows standard industry practices for administering and monitoring public ethics programs and to identify opportunities to improve Georgia’s system.

Scope

The audit covered activities related to the Commission that occurred during fiscal years 2012-2014, with consideration of earlier or later periods when relevant. Information used in this report was obtained by reviewing relevant laws, rules, and regulations, interviewing Commission members and staff, interviewing staff from the State Accounting Office, interviewing officials from similar commissions in other states, interviewing experts in the field, and analyzing data from the Commission’s E-filing system and Intranet. As discussed in the findings related to late fees and filings, we identified problems in the Commission’s E-filing system that compromises the reliability of late and non-filer data. However, for the purposes of additional analyses included in the report, the Commission’s data was deemed to be sufficiently reliable to identify trends in filing, the assessment of late fees, the number of complaints filed, and the completion of investigations.

Government auditing standards require that we report the scope of work on internal control significant within the context of the audit objectives. All of the work conducted for the first two objectives can be classified as an assessment of internal controls, also known as management controls, over Commission operations. The first objective addresses controls over core operations, while the second objective addresses the controls over administrative operations. Specific information related to the scope of our internal control work is described by objective in the methodology section that follows.


Methodology

Objective 1: To determine the extent to which the Georgia Government Transparency and Campaign Finance Commission has established and implemented sufficient controls over its core operations as outlined in existing ethics laws and regulations, we reviewed Commission records related to the filing of disclosure reports, the registration of regulated entities, the assessment and waiving of late fees, and the intake and investigation of complaints. These records were obtained from a variety of sources and were analyzed in a variety of ways. The general methodologies associated with each data source are explained below:

E-filing system – The Commission’s E-filing system includes databases of registration information and records of disclosure reports filed by individuals regulated by the Commission. These individuals include lobbyists, candidates, public officers, campaign committees, and qualifying officers. The system also includes a database of assessed fees for late filings. We obtained a backup copy of these databases. We then analyzed the databases to identify trends in the number of individuals filing reports for the 2012-2014 reporting periods, the number of individuals who filed late or failed to file during these periods, and the amount of fees assessed or waived for late filed and non-filed reports. We also tested the reliability of this information and found weaknesses in the data resulting in inaccurate fee assessments for some individuals.

Intranet – We identified the complaints received as of August 2014, the number of open cases and their basic status, and the number of cases closed. This information was obtained by querying the Commission’s database of cases available on its Intranet. The Intranet is used by Commission staff to record and maintain basic complaint information such as: date received, if rejected or accepted, the current status of accepted complaint cases (i.e., closed, open, investigation, AG/APA, etc.) and the date closed. We obtained read-only access to the Intranet enabling us to perform customized queries of this data.

Case Files – We reviewed files for all 50 complaint cases closed since July 2011 to assess the Commission’s internal controls over this process. We also reviewed 151 open case files. These files were available in either hard copy or in electronic form available on the Commission’s local network drives. To review case files saved electronically, we obtained a full restore of the Commission’s local network drives. This restore includes files stored as of January 24, 2014.

Late Fee Records – We reviewed Commission records related to the assessment, waiving, and payment of fees associated with late filed and unfiled disclosure reports. The reporting periods for calendar years 2012 and 2013 were reviewed. These records were obtained by analyzing data available from the Commission’s E-filing system and from lobbyist files available in hard copy form and stored electronically in the Commission’s local network drives.

Official E-mail – We obtained and reviewed official emails of all current Commission staff members to identify business processes related to complaint intake and investigation, as well as processes related to enforcing the filing requirements established in law. The email accounts were also reviewed to identify case-related communications that did not appear in case


files. The Commission’s IT contractor provided the audit team with a backup copy of these emails on February 25, 2014. Upon review of these email accounts, we determined that the accounts for two Commission staff members (the Executive Secretary and the Confidential Secretary) could not be opened. Functioning copies of these emails were provided on March 19, 2014.

Images of Hard Drives – We imaged and processed the hard drives of computers used by key Commission staff members. In processing these images, steps were also taken to recover deleted files. All resulting files were reviewed to identify records pertaining to our objectives that were unavailable on the Commission’s local network drives and hard copy files.

Interviews – We interviewed Commission board members, Commission staff members, and the Commission’s legal counsel to obtain an understanding of the Commission’s current business practices related to filings and complaint investigations, the Ethics in Government Act, and challenges faced by the Commission.

Objective 2: To determine the extent to which the Commission has implemented sufficient controls over its administrative functions we conducted the following work.

Interviews – We interviewed Commission staff members to obtain an understanding of administrative functions and internal controls established for purchasing, accounts receivable, cash management, and asset management.

Personnel Files – Personnel files for current and previous Commission staff were reviewed to determine if hired staff met established minimum qualifications per the job descriptions and to calculate tenure.

Hiring and Termination Data – Data from the PeopleSoft Human Capital Management System regarding employees of the Commission since fiscal year 2009 was obtained and reviewed to calculate the turnover rate. This rate was compared to statewide averages reported by the Department of Administrative Services.

Official E-mail – The emails were also reviewed to determine how the Commission staff interacted with each other internally as well as how it interacted with the public.

Financial Records – Invoices, purchasing card records, vendor contracts, receipt books, and payment records in the Fees database of the E-filing system were reviewed to assess internal controls related to financial management.


Objective 3: To compare Georgia’s public ethics system with other states and with the federal government to determine the extent to which it follows standard industry practices for administering and monitoring public ethics programs and to identify opportunities to improve Georgia’s system, we conducted the following work:

Researched other states, other similar state agencies and a federal agency – We researched and compared the Commission’s responsibilities, board composition and role, funding, and staffing to other states’ ethics commissions and to other state regulatory bodies. Our research found that there are no established best practices or industry standards for administering and monitoring public ethics commissions. We used the published survey results from the National Conference of State Legislatures’ Center for Ethics in Government current through November 2013. We conducted our own review of similar agencies in southeastern states, and spoke with experts and practitioners from other states. We also researched investigative processes of the Office of Congressional Ethics.

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. We assessed the controls over data used for this examination and determined that the data used were sufficiently reliable for our analyses. While we concluded that the information was sufficiently reliable for the purposes of our review, we found some data inconsistencies that are discussed further in the report findings.

Limitations, Impairments, and Potential Legal and Regulatory Non-compliance

We disclose the following limitations, impairments, and potential noncompliance with laws and regulations encountered during this performance audit:

Reliance on Documentation: At the time the Commission requested this performance audit, it had been the subject of controversy with regular news stories raising questions about the Commission’s ability to independently and effectively carry out its responsibilities. In addition, there were on-going lawsuits and internal personnel issues. As the audit progressed from planning to fieldwork, key personnel were either dismissed or resigned. Collectively, these circumstances made it difficult to place reliance on staff’s explanation of how the Commission operates and makes decisions. As a result, the audit team relied heavily on documentary evidence to decipher the Commissions operations by reviewing case files, emails, and other computer records.

Notices to Produce: O.C.G.A. 50-6-7 requires state officials to produce books, records, and other papers to the state auditor for examination. While reviewing how Commission staff makes decisions regarding complaints and investigations, we learned that the Executive Secretary (Holly LaBerge) frequently utilized her personal email account and personal cell phone to conduct official business of the Commission. In addition, we learned that the former Confidential Secretary (Lisa Dentler) used a private email account for official commission business. The


Executive Secretary declined our request to provide email, text, and phone log records from her personal email account and cell phone related to the Commission’s official business. The Confidential Secretary was no longer employed by the Commission.

As a result, we issued Notices to Produce to both individuals under O.C.G.A. 50-6-7 & 50-6-29 on June 19 and June 27, 2014, respectively. Through her personal attorney, the Executive Secretary provided DOAA with emails (which included some texts forwarded to her personal email account) on July 18, 2014 using the key words identified in the Notice, but refused to provide business-related text messages, call logs, and contacts also outlined in the Notice. No other information outlined in the Notice was forthcoming until we requested the photocopied text messages she provided to the press for an August 6, 2014 article, which should have been produced under the original Notice. These photocopied text messages were provided to DOAA on August 18, 2014. To date, no other text records have been provided and it is unclear as to whether there are other text messages that meet the requirements set forth in the Notice that have not been produced. According to the last communication from her attorney, she is not intending to provide any of the remaining records outlined in the Notice. In September, the Executive Secretary was terminated by the Commission.

The Notice to the Commission’s former Confidential Secretary required her to produce all business-related records, including attachments, from a gmail account she established for business purposes. The Notice was sent certified mail, and we have confirmation that she received it. However, the former Confidential Secretary has not provided the records. Over the course of several months, we attempted to contact her in reference to the Notice; the Attorney General’s Office has also attempted to reach her regarding the Notice. The Attorney General’s Office finally heard from her on September 17, 2014; however, to date, she has not provided the requested documents.

DOAA issued Notices to Produce for these records to ensure that it has a complete understanding of business processes and decisions made by the Commission. If the business of the Commission had been conducted using state email accounts and state cell phone devices, we would be able to readily access and analyze it. In both cases, Commission staff elected to, and was permitted to, use private email accounts and personal devices to conduct state business. We believe that the business-related records in these accounts, and on personal devices, are public records and are the property of the Commission and the state. The Commission board was notified in August of the Executive Secretary’s and the former Confidential Secretary’s noncompliance with O.C.G.A. 50-6-7.

Although we deem the findings included in this report to be sufficiently supported by the evidence obtained thus far, there is the potential that the information contained in the requested records, if obtained, could result in either additional findings and recommendations or the reinforcement of current findings and recommendations.

Potential Abuse: During the fieldwork of this audit, the audit team discovered a document that was written by the Executive Secretary that indicated that she had received texts and phone calls from two members of the Governor’s staff. She


deemed these communications threatening and indicated the staff member said the Commission’s rule making authority may not be reinstated if the complaints against the Governor were not “resolved” prior to the Commission meeting. We looked into this matter to determine if the proper authorities were aware of the reported threat and to determine if it potentially violates any law. Discussions with the Department of Law and the Federal Bureau of Investigation revealed that they were aware of the memo, but neither indicated what or if there was anything being done to look into the matter further.

The key events that took place during the audit are summarized in the chart on the following page.


Audit Timeline

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

2014

Oct.

Apr. - Former Executive Secretary Stacey

Kalberman wins lawsuit

Jun. - Former employees John Hair, Elisabeth

Murray-Obertein, and Sherilyn Streicker settle

legal claims

Aug. - Holly LaBerge releases text messages to

the media

Sep. - Holly LaBerge placed on administrative

leave and dismissed by Commissioners.

2013

Dec.2013 - Commissioners hires an outside

consultant

Sep. 2013 - Commissioners request Attorney

General (AG) appoint a Special Attorney General1

Feb. 2014 - State OIG2 requests Commission’s

purchase card records; audit team cooperates

Audit team continues to review

Commission work product

Commissioners request Dept. of Audits

(DOAA) conduct a performance audit

DOAA accepts request

Audit team holds entrance conference

with Executive Secretary Holly LaBerge

Audit team begins interviews with staff

to document processes and procedures

Audit team receives copies of staff

members’ state emails and shared

network drives

Audit team receives copies of state

emails for Holly LaBerge and Lisa

Dentler

DOAA sends Notice to Produce (NTP) to

Holly LaBerge and Lisa Dentler for

business related emails, call logs, and/or

texts from their personal devices

Audit team finds memo written by Holly

LaBerge describing Nathan Deal cases

Holly LaBerge’s personal attorney

indicates she is not intending to produce

any of the remaining items

Audit team contacts AG’s Office about

enforcing the NTPs

Audit team conducts exit interviews

with Commissioners and staff, and

provides Commissioners with a draft of

the audit report

Audit Actions

Jul. - Holly LaBerge invokes whistleblower

protection and releases memo to the media

Sep. - Holly LaBerge and AG’s Office sanctioned

by trial judge because of memo

Jan. - Staff Attorney Murray-Obertein placed on

administrative leave by Holly LaBerge and

dismissed by Commissioners

Feb. - Confidential Secretary Dentler resigns

Apr. - New Confidential Secretary hired

Jul. - Two new staff attorneys hired

Aug. - Confidential Secretary resigns

Key Events

Feb.2014 - Commissioners dismiss outside

consultant

1 A private attorney hired by the AG

2 State Office of the Inspector General

Source: News reports, agency documents, and audit team communications

Sep. - Commission staff discovers copies of paid

invoices for Ms. LaBerge’s personal attorney.


Appendix C: Flow Chart of the Complaint Process

Source: O.C.G.A. and Commission Rules

Complaint Submitted

Accept after Initial Review?

Yes

Rejected

NoInvestigation

Opened; Notice Given

InvestigationTechnical Defect

Identified;Notice Given

Defects identified

Administratively Dismissed

No findingsCured within 30

days?

$50 Administrative Fee Applied

No

DismissedYes

Draft Compliance Order or Consent Order

Negotiation results in Accepted Order?

Yes

Commission Rejects Settlement and Sets

New Terms

No

Negotiated Settlement Approved

by Commission?

Case Closed with Order

Yes

Board Finds Probable Cause?

No

Case forwarded for APA Hearing

YesDismiss

No

Table Decision and Conduct Additional

Investigation

No

Violations identified

The Performance Audit Division was established in 1971 to conduct in-depth reviews of state-funded programs.

Our reviews determine if programs are meeting goals and objectives; measure program results and effectiveness;

identify alternate methods to meet goals; evaluate efficiency of resource allocation; assess compliance with laws

and regulations; and provide credible management information to decision-makers. For more information, contact

us at (404)656-2180 or visit our website at www.audits.ga.gov.

http://www.audits.ga.gov/

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