The Federal Election Commission (FEC) has published best practices and internal controls in its campaign guide to be used by separate segregated funds (SSFs). SSFs are political action committees set up by a corporation, association, or labor union. SSFs are different from nonconnected committees, which are not affiliated with another organization and solicit funds from the general public.
These best practices are not legally required, but instead are a safe harbor for the SSFs. This means that if an SSF follows all of these practices, it will avoid monetary fines due to any misappropriation of the SSF’s funds. If some of these practices are followed, but not all, the FEC will consider reducing the fine when determining the punishment.
The minimum controls required to reach safe harbor status are:
- Any bank account that is opened must be opened using the SSF’s name and employer ID number.
- Someone other than a check signer must be in charge of the SSF’s major accounting controls. This includes accounting review, reconciliation of bank statements to accounting records, and disclosure reports on a monthly basis prior to filing with the FEC.
- Checks over $1,000 must be authorized by two signers.
- Two people must authorize all wire transfers regardless of dollar amount.
- A person with no bank access or check signing ability must be in charge of receiving all incoming checks. They must make a list of the checks received and mark them “For Deposit Only to the Account of the Payee.”
- SSFs must use an imprest system for petty cash, and the value of the fund should be no more than $500. This means that after a period of time, the person in charge of petty cash must make sure the petty cash is reimbursed equal to the expenditures in that period. Therefore, after the periodic reimbursements to the fund, the fund should always go back to the original amount.
The FEC recommends additional controls, but they do not impact the safe harbor. If a misappropriation of SSF funds is discovered, the SSF must notify the FEC and amend reports to correct any errors.