Fast Track Audit Policy

Los Angeles City Ethics Commission

Fast Track Audit Policy Adopted August 2, 2004 Amended ___________, 2013

Introduction In 2004, the City Ethics Commission (Commission) adopted a Fast Track Audit (FTA) Policy to promote timely campaign audits. The Commission continues and reaffirms its commitment to efficient audits and the fullest possible enforcement of the laws under its jurisdiction. The Commission recognizes, however, that most audit findings are a result of administrative errors or unintentional oversights. Amending this FTA Policy will allow participants to resolve audit findings before Commission staff commences enforcement proceedings and is based on the following premises: 1.

The expedient resolution of audits and audit findings is the best use of scarce public resources that can be used to investigate other cases that involve significant or intentional misconduct;

2.

Voluntary cooperation with Commission staff is a factor that the Commission must take into consideration when framing a penalty under Los Angeles Administrative Code § 24.1.2(e)(7)(F)(vi); and

3.

Prompt admission of violations benefits the public, whereas delay and false denial undermines the public trust.

The Commission, therefore, amends this FTA Policy to provide for the resolution of audit findings when a participant clearly demonstrates acceptance of responsibility for its violations by taking, in a timely fashion, the actions listed below. This policy provides only guidance and does not create any substantive or procedural rights, nor does it limit any enforcement prerogative of the Commission.

Definitions “Board of Education office” means the office of a member of the Board of Education of the Los Angeles Unified School District. “City office” means the office of mayor, controller, city attorney, or councilmember of the City of Los Angeles. “Citywide office” means the office of mayor, controller, or city attorney of the City of Los Angeles. “Participant” means any of the following: • An individual seeking or holding City or Board of Education office; • A committee organized by an individual for the purpose of seeking City or Board of Education office;

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• A City or Board of Education officeholder subject to a recall election; • A committee organized by a City or Board of Education officeholder, including a committee to respond to a recall election; a committee to support or oppose a ballot measure; a committee for expenses related to serving, assisting, or communicating with constituents; or a committee to respond to legal proceedings arising from an election or the performance of governmental duties. For the purposes of this policy, if a “Participant” is an individual, the term “Participant” includes any committee controlled by the Participant.

Fast Track Time Line The goal of the FTA Policy is to complete each campaign audit within a prescribed time line without compromising quality, oversight, or public policy. 1.

A fast track audit of a single committee will be completed within 20 business days for City Council and Board of Education participants and within 29 business days for Citywide participants.

2.

A fast track audit is available to participants who meet all of the following requirements: a.

File campaign reports using the Commission’s electronic filing system.

b.

Maintain financial data electronically and make that data available on or before the scheduled audit start date.

c.

Present all records in an organized manner on or before the scheduled audit start date.

d.

Provide credible and contemporaneous records that document responses to questions from Commission staff regarding missing, incomplete, or insufficient information.

3.

A participant who does not meet the requirements above throughout the audit process will be removed from FTA status. The participant’s audit may start as scheduled, but the audit will not be bound by the time lines identified in paragraph 1.

4.

The Commission staff will provide as much notice as possible of target audit schedules, to assist participants in preparing their financial data and other records. Every effort will be made to follow the target audit schedules, but they may be revised by Commission staff at any time.

Resolution of Findings 1.

If a participant properly complies with all the requirements of this policy, any findings in the participant’s audit report are not subject to Commission enforcement proceedings, including a probable cause report, a probable cause determination, a public accusation, and an administrative hearing.

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2.

The FTA Policy has the following minimum requirements and applies only when a participant complies with all of the following requirements: a. Full Admission. The participant must execute a written FTA agreement fully admitting all potential violations identified in the final audit report. The terms of the agreement are not subject to modification, and the participant may not strike or interlineate any portion of the agreement. The FTA agreement, signed by the Executive Director, will be incorporated into all related audit reports and will be a public record. b. Payment. The participant must make a payment to resolve all potential violations identified in the audit report. The amount of the payment is determined by Commission staff in its sole discretion and is based on the formula in section 3 below. Payment must be made by cashier’s check and must be payable to the City’s general fund. c. Expedited Resolution. Within 60 calendar days of the completion of a participant’s last Commission audit for that audit cycle, the participant must return the original executed FTA agreement and cashier’s check to the Commission. All of the participant’s audit reports for that election cycle will be publicly released after the earlier of the date the Commission staff receives the original executed agreement and cashier’s check or 60 calendar days after the participant’s final audit is completed. Until the original executed agreement and cashier’s check are received, Commission staff may revoke the agreement and limit or deny participation in this FTA Policy. d. Waiver of Procedural Rights. The participant must waive all procedural rights under Los Angeles City Charter § 706 and Los Angeles Administrative Code § 24.1.2. These rights include but are not limited to the right to receive a probable cause report, a determination of probable cause, and a public accusation; the right to have an administrative hearing held to determine liability; the right to personally appear at an administrative hearing, to subpoena and cross-examine witnesses, and to have the Commission or an administrative law judge hear the case. e. Waiver of Judicial Review, Appeal, and Collateral Attack. The participant must waive, to the full extent of the law, any right to seek judicial review of, appeal, or collaterally attack the potential violations identified in the audit report, the related payment, or any action by the Commission or Commission staff with respect to the violations. If the respondent breaches the FTA agreement at any time, in any way, including but not limited to seeking judicial review of, appealing, or collaterally attacking the potential violations, the Commission may commence enforcement proceedings for potential violations that were the subject of the FTA agreement. Additionally, the Commission may use any factual admissions made by the participant in the agreement in any such enforcement proceeding. f.

No FTA Agreement in Prior Election Cycle. If a participant enters into a FTA agreement to resolve audit findings during an election cycle, the participant is not eligible to have audit findings resolved under this policy during the next election cycle in which the participant is a candidate.

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g. Less than Ten Audit Findings. If a participant collectively has ten or more audit findings during an election cycle, the participant is not eligible to have audit findings resolved under this policy during that election cycle. 3.

If a participant has never entered into a FTA agreement with the Commission, the payment is $1,000 per potential violation. If a participant has entered into one prior FTA agreement with the Commission, the payment is $2,500 per potential violation. A participant with two or more FTA agreements is not eligible to have audit findings resolved under this policy.

4.

Commission staff determine whether audit findings may be resolved under this policy in cases in which the requirements are met. Audit findings may not be resolved under this policy if, in the judgment of Commission staff, extenuating circumstances exist. Extenuating circumstances include but are not limited to a pattern of violating laws within the Commission’s jurisdiction; evidence of intentional conduct; the enforcement history of a participant; a failure to cooperate during the audit process; evidence of egregious conduct, including but not limited to money laundering; and the overall interests of justice.

5.

Commission staff retain the discretion to impose additional procedural requirements for FTA agreements.

6.

If a participant enters into an FTA agreement and evidence emerges of other violations not set forth in an audit report, the participant may still be subject to Commission enforcement proceedings for those other violations. If evidence emerges that the participant was not truthful regarding violations in the FTA agreement, the participant may still be subject to Commission enforcement proceedings for those violations. Any penalty assessed through the Commission’s enforcement process for the violations will be reduced by the payment made under this FTA Policy for those violations.

7.

An FTA agreement is limited to the Commission only and cannot bind any other federal, state, or local prosecuting, administrative, or regulatory authorities, although the Commission will bring an agreement to the attention of other authorities if requested by the participant.

Effective Date This revised policy is effective as of ____________, 2013, and may only be applied, if at all, to mandatory or discretionary Commission staff audits completed after that date.

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