Lingering accounting issues dating back at least four years have pitted three members of the Ohio Republican Party’s Central Committee against Ohio Republican Party (ORP) Chairman Robert Paduchik over the scope of the ongoing audit of the ORP’s financial records – the first complete audit of the party’s finances in at least 16 years.
The Ohio Star has obtained internal emails exchanged between three of the Ohio Republican Party Central Committee 66 members – Audit Committee member Laura Rosenberger and Fiscal Review Committee members Mark Bainbridge and Denise Verdi – and Chairman Paduchik that discuss the need to improve the financial reporting practices of the ORP to accounting industry and government regulatory reporting standards, starting with an expansion of the years covered by a standard audit just now getting underway.
The Star has also obtained other ORP internal documents, including a memo on the role of CPAs at the ORP and what The Star believes to be the unaudited ORP financial statements from 2017, 2018, 2019, and 2020.
That audit, recently begun by the firm of Clifton Larson Allen LLP (CLA), is currently limited to 2019 and 2020, but Rosenberger, Bainbridge, and Verdi want the audit expanded to include the years 2017 and 2018.
Bainbridge, a senior business adviser and retired partner of the Ernst & Young certified public accounting firm’s Columbus office was elected to the ORP Central Committee in November. He had already looked into potential areas of improved GOP accounting management with outgoing chairwoman Jane Timken, who was named chairman of the ORP in January 2017 and resigned in mid-February to run for the open U.S. Senate seat, and Paduchik, state director of the 2016 Trump campaign in Ohio and Republican National Committee co-chair from January 2017 to January 2019 elected as GOP chairman in late February.
The series of ORP Central Committee emails to and from ORP Chairman Robert Paduchik, ORP Executive Director Justin Bis and other members of the Audit and Fiscal Review committees exchanged in May and June of this year cite two key issues that raised red flags about the party’s financial reporting practices – a $638,782 accounts receivable write-off in April 2021 and a a net $1.7 million direct deduction to equity in 2017.
“As members of the Audit and Fiscal Review Committees, we have several concerns that we were hoping to review with Bob at either an in-person or Zoom meeting over the past two weeks. Since that meeting did not happen, we will just write them in this email and hope we can get a meeting together possibly next week,” Rosenberger, Bainbridge and Verdi wrote in a June 16, 2021 email to Chairman Paduchik and Executive Director Bis.
“Primarily, we believe the first steps that CLA has to take involve the critical financial issues exposed by the write-off of the $640,000 receivable in April, 2021. These issues have been highlighted in prior emails which are in the thread below and evidenced in the information Justin provided,” they added.
“This kind of material misstatement is unacceptable, and also pertinent to the 2021 financial statements as the current administration recently authorized the write-off,” they continued. (emphasis added)
The full set of emails exchanged in May and June of 2021 can be seen here below:
Bainbridge wrote in one email he noticed a $638,782 account receivable in the March 2021 financial statements and inquired about its origin. Then, without explanation, the amount disappeared from accounts receivable and was apparently recorded as a write-off in the equity section of the April 2021 statement, not on the profit and loss statement in the balance sheet.
In a May 9 email to other Fiscal Review and Audit Committee members and copied to Chairman Paduchik and Executive Director Bis, Bainbridge listed a $638,782 accounts receivable entry in the March 2021 financials that had disappeared in the April report after getting recorded as a write-off without explanation. He also questioned a $1.7 million subtraction from the 2017 financial statement’s equity line, which under accounting rules is simply the difference between an organization’s assets and liabilities not subject to further accounting treatment.
Bainbridge, in the email, said neither adjustment to equity conforms to the CPA industry’s Generally Accepted Accounting Principles, or GAAP, governing how businesses and other organizations presents sources of revenue, expenses, depreciation and other accounting treatments in a fair financial presentation.
“The ORP (Ohio Republican Party) financial reporting format is antiquated, does not present the (state central committee) with the information necessary to make decisions,” Bainbridge wrote in the email.
“There is also a need for internal controls which are processes that are in place to reduce the risk that financial statements are incorrect and assets are not secured,” he continued. “The April 30, 2021 financial statement is a stellar example of what happens when internal controls are lacking.”
Bainbridge declined to comment when contacted via telephone. But he verified the authenticity of the documents after The Star shared numerous excerpts from the documents.
Verdi also declined to comment; Rosenberger was not immediately available for comment.
The Star also reached out to the spokesperson for the ORP for comment. The ORP’s spokesperson asked to see the documents in question, and The Star offered to share excerpts from the documents, but subsequent to that offer, the ORP did not provide further responses to The Star.
Chairman Paduchik, however, did respond to Bainbridge’s May 9 email in an emailed response the following day, May 10, and acknowledged the concerns.
“I have said on numerous occasions,” he wrote, “compliance issues are important and a priority for the ORP staff, SCC (state central committee) members, our candidates and constituents.” He noted various levels of compliance, including the Federal Election Commission and the Ohio Secretary of State.
He noted the Ohio GOP had hired the Canton office of Clifton Larson Allen LLP to audit the 2019 and 2020 financial records. “I expect the audit to answer most if not all of your questions.”
The Star has obtained what it believes to be the unaudited financial statements of the ORP for the years 2017, 2018, 2019, and 2020, which show that $638,782 in accounts receivable in 2018, 2019, and 2020, as well as the $1.7 million direct deduction to equity in 2017. Those documents can be seen here:
Verdi, Rosenberger and Bainbridge have apparently continued to press expansion of the audit to include 2017 and 2018 to look into the specific issues Bainbridge had identified.
A recent unsigned Ohio Republican Party memo, titled “Understanding the Role of Certified Public Accoutnants at the ORP,” that has circulated among members of the Fiscal Review and Audit Committees claims Paduchik has blocked efforts to call a joint meeting of those panels, neither of which, the memo says, has an appointed chair.
That memo can be seen below:
“These questionable adjustments to the balance sheet, like the write off of the $640,000 accounts receivable, were hidden from Committee members and management did not share this information with the Committee,” the memo said. “… Unless the contract is changed, these issues will not be audited or examined by the auditors.”
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Brian Ball is a reporter for The Ohio Star and The Star News Network. Send tips to [email protected]iostar.com.