In recent months, the D.C. Democratic State Committee has come under the disapproving glare of city campaign finance officials. That glare remains trained on the local Democratic umbrella organization.

According to an interim audit report released Monday, the city campaign finance office did not accept explanations offered by DCDSC officials for fundraising irregularities. Audit officials maintain that the committee needs to return some $37,000 to donors, and it may be subject to fines.

At issue was lax reporting of receipts and expenditures by the DCDSC, but more importantly questionable practices in fundraising for last year’s Democratic National Convention.

Top DCDSC honchos, including chair Anita Bonds, set up a separate organization to raise funds for the District’s DNC delegation. But they did so in some instances by invoking the name and authority of the DCDSC itself, raising issues as to whether the fundraising was subject to city contribution limits and disclosure regulations.

After a preliminary audit report was issued in August, raising such concerns, the DCDSC responded by providing affidavits and other documentation stating that the convention account was wholly separate and not subject to city regulation. The Office of Campaign Finance, however, isn’t buying what the DCDSC is selling.

“Overall, the audit findings are devoid of any substantial documentation upon which to conclude that the [convention committee] intended or attempted to operate independently of the DCDSC,” the report reads. “In fact, the activity was integrated to the extent that the D.C. Denver Convention 2008 is indistinguishable as a separate entity and bares absolutely no independent identity.”

In the report just released, city auditors point out that a solicitation to convention donors came on DCDSC letterhead and was signed by Bonds as “DC Democratic Chairman,” and that 17 checks deposited in the convention account were made payable to the DCDSC. It also noted that more than $45,000 in convention expenses were spent on non-DNC matters—-in particular, a inauguration gala hosted by Bonds & Co. in January. The report also notes that the convention committee had never registered with federal election authorities, either.

In sum, the report says, the convention committee is “not clearly distinguishable” and “is not a separate entity” from the D.C. Democratic State Committee.

David Meadows, the DCDSC’s executive director, declined to comment on the report’s contents. “This is an ongoing investigation and we look forward to a resolution,” he says.

Last night, DSDSC members gathered for the group’s regular monthly meeting. The finance inquiry has deeply split the membership already, and members discussed the report for more than an hour without coming to a resolution on how to proceed. The $37,000 that OCF holds should be returned exceeds what’s currently in the DCDSC coffers. Action has been delayed until the next meeting, on Dec. 3.

The DCDSC has until Dec. 9 to respond to the interim findings, before a final report—-and possible sanctions—-are issued.