A recently released audit of the Arizona Republican Party’s finances during the 2022 election cycle shows what might have led to a mostly unsuccessful outcome for GOP candidates that year.
The independent audit was conducted by the accounting firm Atchley & Associates and was commissioned by successful businessman and current Treasurer of the AZGOP, Elijah Norton.
Norton sought the audit after claims of mismanagement and reports of irresponsible spending by former AZGOP chair Kelli Ward, former executive director Pam Kirby, and former treasurer Shelia Muehling, were made by candidates and political consultants alike.
“Rumors swirled that the prior administration (for terms herein, “prior administration” means former Chairwoman Kelli Ward, Executive Director Pam Kirby, and in some areas as it pertains to financial reporting: former Treasurer Shelia Muehling – as those individuals had discretion over how party funds were spent) had mismanaged party funds. Some rumors also circulated that the prior chair had stolen party funds or engaged in “kickbacks” from vendors. Notwithstanding everything else, I would like to put to rest the rumors that the prior administration engaged in theft or fraud – as nothing in the operational or CPA audit that was conducted showed that theft or fraud occurred by any officers of the prior administration in 2022,” wrote Norton in his audit transmittal letter.
“What was revealed, however, in my opinion shows a clear failure to properly deploy assets in the right areas – instead of prioritizing voter contact – the prior administration – in my opinion placed a higher value on events, travel, and fundraising expenses. I believe the end result spoke for itself,” continued Norton.
Norton compiled a “list of the key financial points that were found.” Among them were an astonishing 51 percent of its budget spent for fundraising, and $1.2 million, or more than 20 precent of party donations on salaries, $614,681, or 10 precent, on event expenses and $140,666 on supplies:
- The most glaring revelation at first glance of the financial is this – the party raised $6,218,583 in donations in 2022. While nowhere near as high as the $19,710,116.06 that was raised in 2024, it should be noted that over 51% – or $3,184,198 of this number was spent on fundraising expenses. In fact, the “fundraising expense” line on the financials is the highest expenditure of the year. In contrast, for the year 2024, as of November 30th of 2024, less than $100,000 was spent on fundraising expenses and fundraising consulting expenses for the party.
- Another area of interest was the amount spent on salaries. In 2022, $1,182,399 was spent on salaries for party employees – nearly 20 percent of all party donations. While 90-120 days before the general election, the RNC did coordinate with the party to hire temporary employees, this number as a percentage of total donations is extremely high. For example, as of November 30th, 2024 – despite seeing over triple the amount of donations – and being in a presidential election year – the AZGOP spent $1,153,705.63 on payroll, which amounts to less than 6% of all party donations for the 2024 fiscal year.
- A major point of contention for the prior administration was their excessive “event” expenditures. Despite 2022 not requiring a state convention or tickets, hotel expenses, or other expenses to the RNC quadrennial convention, the 2022 administration spent $614,681 (or nearly 10%) on “event expenses”. The election party cost the AZGOP $406,231.99 – which included $209,285 paid to two vendors for “production expenses” as well as $226,296.99 payable to the Scottsdale Resort at McCormick Ranch (the hotel where the party was held). The “election bus” was another large expenditure. Four vendors appear to have been paid for the bus, which totaled $66,950.50. To contrast, in 2024, $434,589.07 was spent on event expenses and $77,418.56 was spent on travel, for a total of $512,007.63. These expense lines contained the expenses for not just the state convention, but also the travel expenses for party staffers to travel to Milwaukee as well as lunches and state-specific functions at the convention. It should be noted that the AZGOP did not pay for delegates – all delegates travelled on their own dime.
- The areas of “voter contact” on the 2022 financial statements, were the “Advertising & Public Relations”, “Printing”, and “Communications” lines. These areas totaled $365,611 and amounted to only 5.9% of the total party budget. By contrast, in 2024, as of November 30th, 2024, the AZGOP spent $14,610,764.17 on voter contact – or approximately 74% of the entire 2024 budget.
- In 2022 the party spent over $140,666 on supplies – an extremely high amount in proportion to the amount of money the party raised. Over $15,000 of this was due to the prior treasurer negotiating a commercially unreasonable, 5-year copy machine lease that still incumbers the party to this day. As someone who has negotiated over 4 of such leases, the one she negotiated was much higher than market value. The prior treasurer also insisted that the party pay for 3 different storage units, costing the party over $1,200 per month – again which could have been avoided by using one unit.
- In 2022 the party did virtually NO coordinated mail – with the exception of one Congressional candidate, who contributed $165,500 to the AZGOP – however that candidate’s campaign team reported it was difficult to get mail out expeditiously – in one instance the candidate’s team reported they were unable to locate the prior treasurer to get the needed approvals for nearly an entire 24-hour period.
- In 2022 no state legislators utilized the party as a vehicle to have a coordinated mail campaign as occurred in 2024, where the party did over $750,000 in coordinated mail with legislative candidates.
- The prior administration often sent out e-mails about the 2022 election audit – asking donors to donate to the AZGOP to advance the audit, however no AZGOP funds, that we could verify, were actually used to assist the audit. The cost was borne by the Arizona State Senate.
- The prior executive director has stated that she had signed an engagement letter with an accounting firm. Numerous other parties have reported that she stated a prior CPA firm had been provided information and started the process to begin an audit. Employees of the party when I first took office were under the impression a retainer had also been paid to the firm. It is true that a firm in Phoenix – Wallace, Please & Dreher- was engaged. However, Nikki Kuretich, who is an employee at the firm, stated plainly in an e-mail to me that “no work was done or billed for the 2022 audit”.
- During the 2022 election cycle, virtually NO major historical donor donated to the Arizona Republican Party. It should be noted that the RNC gave the AZGOP $1,059,757.50 in transfers during the 2022 election cycle. The NRCC gave $845,000; the NRSC gave $452,000. Take Back the House and Take Back the Senate – two house GOP and senate GOP PAC’s gave $317,412.41. In total, large committees gave the 2022 AZGOP $2,674,169.91. In 2024, as of November 30th, 2024, the large committees gave the AZGOP $16,495,161.66.
“Another major problem that we found had to do with the way the prior treasurer prepared the financial statements,” wrote Norton. “Under Generally Accepted Accounting Principles, the Internal Revenue Code, and state and federal law, not-for-profit entities do not have Income Statements or Balance Sheets. Since by definition they cannot make a profit or have equity, not-for-profit entities have Statement of Activities instead of Income Statements and Statements of Financial Condition instead of balance sheets. The prior treasurer – on multiple occasions and including at the state meeting – distributed incorrect financial statements that a for-profit entity would normally distribute. The 2022 audit attached was prepared correctly. Furthermore, the prior treasurer kept a second set of books in QuickBooks – despite the AZGOP paying for Red Curve – a nationally recognized political accounting and compliance firm over $3,500 per month to keep the AZGOP books. Red Curve uses NetSuite – a widely used advanced accounting platform. The 2022 audit was prepared using the RedCurve financials, as they were the financials that were reported to the FEC and Arizona Secretary of State – not the prior treasurer’s second set of books.”
