Newly revealed draft audit findings for the years 2015-2016 show that the South Dakota Democratic Party understated disbursements by $2.5 million, received $67,182 worth of contributions from unregistered organizations and failed to disclose $46,097 worth of debts and obligations.

The audit was performed by the Audit Division of the Federal Election Commission. The commission is scheduled to review a memorandum about the audit Thursday, Aug. 22.

The chairwoman of the South Dakota Democratic Party during the years covered by the audit was Ann Tornberg, who no longer holds the position. She had not yet read the draft audit report, she said Wednesday.

“We’re of course looking into it,” Tornberg said, “and audits are a pretty regular thing with the FEC, and we’ll do whatever we need to do in order to correct the situation.”

The party's current executive director, Stacey Burnette, who did not occupy the position during the period covered by the audit, sent an emailed statement Wednesday in response to a phone message.

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"The South Dakota Democratic Party is currently working with the FEC on an audit," the statement said. "Our new chair Paula Hawks and I look forward to resolving any outstanding issues with past FEC reports."

Hawks did not respond to a phone message.

Bill Nibbelink has been the treasurer of the South Dakota Democratic Party since 2000. Wednesday, a staff member at the party’s headquarters said Nibbelink was on vacation and would be difficult to contact.

The draft audit report does not say precisely what motivated the audit, but the report does say, “The Commission generally conducts such audits when a committee appears not to have met the threshold requirements for substantial compliance” with the Federal Election Campaign Act.

The draft report also says, “The Commission may initiate an enforcement action, at a later time, with respect to any of the matters discussed in this report.”

The report’s first finding says a comparison of the state party’s bank activity with its original reports to the FEC revealed that disbursements were understated by $2,500,147 during the 2015 and 2016 calendar years.

“Most of the disbursements that were understated ($2,494,000) related to transfers to the Democratic National Committee which were not disclosed on the originally filed reports,” the draft audit report says.

Those transfers to the Democratic National Committee have already been subjected to scrutiny by watchdog groups and the media. According to the Center for Responsive Politics, the South Dakota Democratic Party was one of 38 state Democratic parties — plus the Democratic National Committee and the Hillary Clinton presidential campaign — that participated in the Hillary Victory Fund.

The victory fund utilized a legal way to pool the contribution limits of all its participating entities, thereby allowing individual donors to write checks as large as $418,800, even though the legal limit on contributions from individuals to federal candidates in 2016 was $2,700.

After the victory fund collected the contributions, it divvied the money up among the participating entities in amounts equal to legal contribution limits. Then, because party committees can legally make unlimited transfers among themselves, the state parties transferred money to the Democratic National Committee.

That’s how the South Dakota Democratic Party ended up serving as a pass-through for about $2.5 million from the Hillary Victory Fund to the Democratic National Committee. But, according to the draft audit, the state party did not initially disclose the disbursements it made to the Democratic National Committee. The disbursements were disclosed in later, amended reports to the FEC.

The draft audit report says, “SDDP stated it overlooked filing procedures and required better training on reporting to the Commission. SDDP added that there was no intent to understate disbursements on the original reports filed.”

The draft audit report’s second finding says the audit staff identified 144 contributions to the South Dakota Democratic Party from unregistered organizations, totaling $67,182. The report says the contributions “may have been made with impermissible funds.”

A memorandum from audit staff says the state party has since submitted statements attesting to the permissibility of all but $23,827 worth of the contributions. The audit staff is recommending that the FEC "find that SDDP received impermissible contributions" in that amount.

The memorandum also says the state party pledged to refund contributions for which no permissibility statements have been provided, but according to the memorandum, “To date, no evidence of such action has been demonstrated.”

The draft audit report’s third finding says the state party failed to disclose debts and obligations to nine vendors totaling $46,097. The vendors “mainly provided printing and catering services,” the report says.

The state party has since filed amended reports to disclose those debts and obligations, but the disclosures in the amended report were filed incorrectly, according to the draft audit report, and no further amended reports have been filed.