The General Accounting Office’s audit of Nixon campaign funds transformed a suspicious check into a public account of unreported money and possible violations of federal campaign-finance law. Its importance lay not only in the amounts it uncovered, but in the institutional independence of the auditors: unlike the Justice Department and the Federal Bureau of Investigation, the General Accounting Office belonged to the legislative branch, not the Executive. The audit gave the investigation a documentary foothold, while the reporting built around it also exposed the difference between evidence of a fund and proof of who had authorized particular uses of it.

The check and the legal question

The inquiry gathered force after reporters traced a $25,000 cashier’s check payable to Kenneth H. Dahlberg. It had been deposited on April 20 alongside four Mexican checks, bringing the deposit to $114,000. Four days later, Bernard Barker withdrew $25,000; the remaining $89,000 was withdrawn separately. The account linked the check to money moving through a bank account associated with the Watergate investigation, but the transaction itself did not explain the full campaign-finance system behind it.

Bob Woodward called Philip S. Hughes, director of the General Accounting Office’s new Federal Elections Division, after The Washington Post published its report on the check. Hughes said the story had revealed for the first time a connection between the bugging incident and campaign-finance law. He also noted that Maurice Stans’s reports contained no record of the Dahlberg check. The omission mattered because the new Federal Campaign Expenditures Act had taken effect on April 7, requiring expenditures to be reported and imposing tighter controls on campaign donations. Hughes announced that the General Accounting Office would conduct a full audit under the new law.

That institutional distinction shaped the inquiry. The Justice Department and the Federal Bureau of Investigation were part of the Executive Branch and reported to the President; the General Accounting Office investigated for Congress and operated independently of the Executive. Woodward supplied an investigator with the information he and Carl Bernstein had gathered, then called the investigator every day for updates. The reporting thus developed alongside an official audit, but the two forms of inquiry were not interchangeable: the reporters supplied leads, while the auditors were examining campaign records under statutory authority.

Preliminary findings and a delayed report

The investigators’ early descriptions suggested that the check was part of a wider cash system. In successive conversations with Woodward, one investigator characterized the material as hundreds of thousands of dollars in unaccounted cash, then as a cash slush fund, and then as a hidden disorder beneath the apparent efficiency of computerized financial reporting. Combining those remarks with information from another investigator, Woodward came to believe that the cash fund was the same one earlier described as convention-security money. It totaled at least $100,000, and the investigator connected it to money from Barker’s account after the Dahlberg check had been cashed.

On August 22, the second day of the Republican convention in Miami, The Washington Post reported preliminary audit findings. Based primarily on Woodward’s conversations with investigators, the story said the Committee for the Re-election of the President had mishandled more than $500,000 in campaign funds, including at least $100,000 in an apparently illegal security fund. Paul E. Barrick, the committee’s new treasurer, rejected the allegations that the committee had incorrectly reported or failed to report contributions and expenditures.

The existence of the security fund became a particular point of contention. For more than five weeks, Devan Shumway, a former wire-service reporter who had joined the committee from the White House staff, had insisted that no such fund existed. After the story appeared, he said he had learned that there was one and feared that some people at the committee had not been telling him the truth. His reversal illustrated how the audit’s findings changed the terms of the dispute: the question was no longer only whether the committee’s books were properly reported, but whether a substantial cash fund had been kept outside the visible accounting system.

The public release of the report, expected on August 22, was postponed about an hour before it was due. Woodward learned from an investigator that Stans had called Hughes and asked him to come to Miami for additional material. The investigator understood the trip as the reason the report would not appear that day. The delay did not end the audit, but it made the release itself part of the unfolding story, as reporters tried to distinguish an official document’s conclusions from preliminary findings conveyed privately by investigators.

The released audit and the money trail

On August 26, three days after Richard Nixon had been renominated, the report was finally released for the Sunday papers. It listed 11 apparent and possible violations of the new law and referred the matter to the Justice Department for possible prosecution. It also stated that Stans maintained a secret cash slush fund in his office totaling at least $350,000. At one time, that fund included the money from the $25,000 Dahlberg check and the four Mexican checks totaling $89,000.

The published account combined Woodward’s work in Washington with Bernstein’s reporting from Miami. Bernstein described the Mexican money transfers and relayed an estimate from Richard Haynes that $750,000, rather than $89,000, had been moved across the border. The General Accounting Office investigator confirmed the substance of the Mexican-laundry operation to Woodward. But the reporters did not publish Haynes’s additional descriptions of Stans’s fundraising tactics: wary of the lawyer’s language, they held that material for further investigation. Their decision preserved a distinction between the money trail the audit and investigator could support and allegations they had not yet substantiated.

The audit also supplied an entry point for examining how campaign money had been authorized. In a later interview, Hugh Sloan described the procedure as routine: when first asked for money, he telephoned John Mitchell at the Justice Department, and Mitchell told him to distribute it. Sloan said such calls had begun in 1971 and that Mitchell had initially been the sole person authorized to approve expenditures from the fund; authority was later passed to others, including Jeb Magruder. This account extended the inquiry from missing or concealed funds to the chain of decisions behind their disbursement. It was Sloan’s later testimony to the reporters, however, not a finding that the audit itself had established every authorization or participant.

What the audit could establish—and what it could not

The cash trail became a tangible key to the secret activities, but it did not by itself prove that every senior official suspected by the reporters had exercised control over the fund. That distinction became consequential in October, when The Washington Post published a story asserting that H. R. Haldeman controlled it and attributing the claim to sworn grand-jury testimony and federal investigators. The editors strengthened the sourcing in the lead to include both accounts of testimony and investigators’ confirmation; the reporters believed that an FBI agent and Deep Throat had confirmed that investigators knew the information.

Sloan subsequently told Woodward that Haldeman’s name had never come up in his grand-jury interviews, that he had not been asked about him, and that his denial was limited to the story’s claim about what he had said before the grand jury. The reporters recognized that they had assumed too much: they had not asked Sloan whether Haldeman had actually approved payments, precisely what questions the grand jury had put to him, or whether both sides understood his answer in the same way. They had also relied on an indirect confirmation method with a Justice Department lawyer; the lawyer had misunderstood the instructions and intended to warn them against publication. Woodward had placed too much faith in a coded confirmation from Deep Throat rather than requiring a clear statement.

The audit therefore had a double legacy in the reporting. It established that campaign money had been mishandled, identified a secret cash fund, and connected particular deposits to the broader investigation. It also made the fund a powerful explanatory thread—so powerful that reporters later treated a plausible inference about control as more firmly verified than it was. The careful distinction between an official audit finding, a source’s account of authorizations, and a reporter’s conclusion became central to understanding both the investigation’s progress and the serious error that followed.