Based on reports from around town here in D.C., the Government Accountability Office (“GAO”) has begun a new wave of audits of firms that are registered under the federal Lobbying Disclosure Act (“LDA”). These periodic audits are required under legislation enacted in 2007, the Honest Leadership and Open Government Act (“HLOGA”). HLOGA requires that registrants be selected for audit on a “random” basis. GAO issues a report each March or April aggregating and summarizing its findings, but generally does not single out particular firms in those reports. (An exception to that rule is that GAO has in the past identified by name firms that have refused to cooperate with GAO by submitting to an audit.)
Audits are conducted not only for lobbying firms but also for corporations and associations that are registered under the LDA. After several years of these random audits, we have a pretty good sense of the approach that GAO takes, and the best practices for firms that are audited. If your firm is contacted by GAO for an audit, you should conduct, or have counsel conduct, a pre-audit, in which you review the report or reports that GAO has indicated that it will audit. If issues are identified in the pre-audit, it generally makes sense to prepare an amended report, advise GAO of your own findings, and then file the amendment. The optimal approach will depend on the facts and circumstances, and you should consult counsel. In the case of an audit of a Form LD-203 (the twice yearly form on which federal lobbyists and LDA-registered firms disclose political contributions and certify to gift rule compliance), it makes sense to compare your filed LD-203 to the FEC’s contribution database in order to identify any discrepancies.
Most GAO audits are brief and efficient. The auditors will expect to see orderly records that provide factual support for the information contained in your LDA filings. You should have a system in place to create and maintain appropriate backup for your LDA reports, and you should maintain the backup materials so that they can be accessed and shared with GAO auditors as needed.