DOCUMENT RESUME 00650 "- (A0751057] An Improved Financial Disclosure System. FPCD-77-14; B-1039d7; B-180228. January 26, 1977. 15 pp. Report to the Congress; by Elmer B. Staats, Comptroller General. Issue Area: Personnel Management and Compensation: Employee Conflicts of Interest (301). contact: Federal Personnel and Compensation Div. Budget Function: General Government: Central Personnel Management (805); Natural Resources, Environment, Energy: Energy (305). and Organization Concerned: Energy Research and Development Administration. Congressional Relevance: House Committee on Science and Technology; Senate Committee on Interior and Insular Affairs; Congress. Authority: Energy Reorganization Act of 1974 (P.L. 93-438). 18 c.S.C. 208. Executive Order 11222. 10 C.F.R. 0.735. The financial disclosure system of the Energy Research and Development Administration (ERDA) was examined to determine if the agency adequately reviewed financial disclosure statements and detected and acted on any a'parent or potential conflicts of interest. Findirgs/Conclusiins: ERDA's finaucial disclosure system is effective for detecting end resolving questionable financial interests held by employees, and agency reviewers are detecting potential conflicts of interest. It appears that ERDA's regulations provide an adequate for avoiding conflicts in contracting with private mechanism industry for supplies and services. In some cases, employees have not been advised in writing of potential conflicts and necessary action. Reviewing officials do not always report to remedial counselor the results of efforts to resolve potentialthe ethics and not all agency reviewing officials have taken conflicts, action to insure that employees are disqualified from matters they have financial interests. In August 1976, ERDA in which issued new regulations tightening standards of conduct and requiring information to be submitted in its financial disclosure more system. (RRS) C) CA REPORT TO THE CONGRESS BY THE COMPTROLLER GENERAL ',. 7 : OF THE UNITED STATES An Improved Financial Disclosure System Energy Research and Development Administration Standards of ethical conduct for Government officials are prescribed by an Executive order. In line with this order, the Energy Research and Development Administration established a financial disclosure system which is effective for resolving the problem of questionable financial interests held by employees. FPCD-77-14 J 97 7 COMPTROLLER GENERAL OF THE UNITED STATES PJ~B~ ~j~.e i WASHINGTON, D.C. GUN 6-103987 B-180228 To the Presiaent of the Senate and the Speaker of the House of Representatives Executive Order 11222 prescribes standards of ethical conduct for Government officials and directs the Civil Serv- ice Commission to establish guidelines for agency financial disclosure systems. Several Members of Congress requested that we review the effectiveness of Federal agencies' finan- cial disclosure systems. This report discusses the finan- cial disclosure system of the Energy Research and Develop- ment Administration. We made our review pursuant to the Budget and Account- ing Act, 1921 (31 U.S.C. 53), and the Accounting and Audit- ing Act of 1950 (31 U.S.C. 67). We did not obtain formal comments Lrom the Energy Re- search and Development Administration. However, we did dis- cuss the report informally with officials in the Administra- tion's Office of General Counsel, which is responsible for the financial disclosure system. Their conmments were con- sidered and included in the report where appropriate. We are sending copies of this report to the Director, Office of Management and Budget; the Administrator, Energy Research and Development Administration; and other interested parties. Comptroller General of the United States Contents DIGEST i CHAPTER 1 INTRODUCTION 1 Scope of review 1 2 FINANCIAL DISCLOSURE REQUIREMENTS 3 Agency regulations 3 Conflict-of-interest restrictions 4 3 REVIEW OF FINANCIAL DISCLOSURE STATEMENTS 7 ERDA's action on questionable finan- cial interests 7 Late submission of some statements 8 Agency action to strengthen its finan- cial disclosure system 9 4 CONCLUSIONS 10 APPEINiIX I Reports issued on agencies' financial dis- closure systems 11 II ERDA memorandum on additional review pro- cedures 13 ABBREVIATIONS AEC Atomic Energy Commission CSC Civil Service Commission ERDA Energy Research and Development Administration GAO General Accounting Office COMPTROLLER GENERAL'S Ai IMPROVED FINANCIAL REPORT TO THE CONGRESS DISCLOSURE SYSTEM Energy Research and Development Administration DIGEST THE SYSTEM WORKS Energy Research and Development Administration programs are aimed at finding new supplies of energy and conserving a'7ailable supplies. Because these programs depend on close coop- eration and contracts with industry and uni- versities, agency employees must maintain the highest standards of conduct. To help insure high standards of conduct, certain employees must fill out financial disclosure statements which the agency reviews. The agency's financial disclosure system is effective for detecting and resolving ques- tionable financial interests held by employ- ees. Disclosure statements for 1,661 agency .employees showed that agency reviewers were detecting potential conflicts. (See pp. 7 and 8.) SCME PROBLEMS HAVE BEEN NOTED In many cases, however, employees were not advised in writing of potential conflicts and necessary remedial action. Also, reviewing officials did not always report co the ethics counselor or deputy counselor the results of efforts to resolve potential conflict prob- lems. Many agency employees have financial inter- ests in organizations doing energy-related work. The agency requires these employees to disqualify themselves frcm working on matters in which they have financial inter- ests. However, not all agency reviewing officials have taken action to insure that disqualifications occurred. In addition, procedures for monitoring disqualifications have not been established. (See p. 8.) c'r Sbst Upon rernoval, the report car date should be noted hereon.i FPCD-77-14 AGENCY PLANS FOR IMPROVEMENT On its own initiative, and before GAO announced its audit plans, the Energy Re- search and Development Administration began a comprehensive review of its entire Conduct of Employees regulations, including the finan- cial disclosure system. Based on this review, the agency issued new regulations in August 1976 which tightened the standards of conduct and required more information to be submitted in its financial disclosure system. Included in the new regulations is an explicit require- ment that reviewing officisas report in writ- ing to the counselor or deputy counselor on remedial actions ta;ken. GAO discussed, with representatives of the agency's Office of General Counsel, its con- cern over employees not being advised in writ- ing of potential conflicts and necessary re- medial action and the agency not having pro- cedures for monitoring disqualifications. As a result, the agency ethics counselor issued c memorandum to all reviewing officials on No- vember 5, 1976, instructing them to (1) advise employees--and the counselor--in writing of any necessary remedial action, including dis- qualification from a particular assignment, and (2) establish a means for monitoring dis- qualifications. (See app. II.) CONCLUSION In view of the agency's recent actions to strengthen its financial disclosure system, GAO is not making any recommendations. How- ever, the agency should continue to give pri- ority attention to its financial disclosure system, making the provisions in the November memorandum a part of its new Conduct of Em- ployees regulations. This is one in a series of GAO reports issued on financial disclosure systems in the Government. (See pp. 11 and 12.) ii CHAPTER 1 INTRODUCTION The Energy Research and Development Administration (ERDA) was established by the Energy Reorganization Act of 1974 (Public Law 93-438) and became operational on Janu- ary 19, 1975. It was created by combining elements from existing agencies, such as the Atomic Energy Commission, Na- tional Science Foundation, Environmental Protection Agency, and the Department of the Interior. ERDA brought together the majo: energy research and de- velopnent procgr.ss of the Federal Governmena aimed at finding ways of increasing the supply of energy while conserving the enierrgy already available. ERDA's mission, as defined by the Cjngress, is to: -- Increase tile productivity of the nation and mnake it self-sufficient in energy. -- Develop all sources cf energy required to fulfi.l present and future needs. -- Restore, protect, and enhance the environment. -- Insure public health and safety. The fulfillment of ERDA's mission depends on the even- tual transfer of proven energy technology to private indus- try for commercial application. To achieve this goal, ERDA's programs are operated through cooperation and con- tracts with industry and universities. Because of this close interaction between industry and Government, ERDA's employees must maintain the highest standards of conduct. SCOPE OF REVIEW Ouz review, conducted at ERDA headquarters, Germantown, Maryland, and Washington, D.C., was made pursuant to re- quests from several Members of Congress. The primary con- cerns expressed in these requests were whether -- Federal agencies have effective financial disclosure systems for revealing conflicts of interest, -- all required financial disclosure statements are promptly and properly filed, and -- all required financial disclosure statements are ade- quately reviewed. 1 From February through April 19 6, we examined the 1975 financial disclosure statements of 1,469 ERDA employees and 192 consultants. Field office statements which were filed and reviewed in their respective offices were sent to ERDA headquarters for us to review. The main purpose of our examination was to determine if the agency adequately reviewed the financial disclosure statements and detected and acted on any apparent or poten- tial conflicts. Thus, we did not contact any employees to determine if (1) they still owned reported interests or (2) their position descriptions were current. Neither did we obtain data on previous private sector employment of agency employees. The confidentiality of disclosure statements was main- tained at all times. Instead of names, we used codes trace- able to employees and their questionable interests. Lists of these codes were given to ERDA at the completion of our audit. In addition, we reviewed selected job descriptions of employees not currently required to file financial disclo- sure statements to determine whether they should be filing because of their duties. We also reviewed the regulations in effect at the time of our audit--and new regulations sub- sequently approved--governing employee standards of conduct. Our review did not focus on statutory criminal provi- sions concerning thie activities of Federal employees affect- ing their personal financial interests (18 U.S.C. 208 (1974)). We noted, however, that the requirements of the statute are no more stringent than the requirements in the agency's regulations. The Administrator of ERDA during our audit was Robert C. Seamans, Jr. His tenure was from January 1975 to the pres- ent. We did not review the Administrator's financial disclo- sure statement. Executive Order 11222 requires his statement to be filed directly with the Civil Service Commission (CSC), and as part of ongoing work we are reviewing CSC implementa- tion of the Executive order end the financial disclosure sys- tem for high-ranking Federal officials. We will be reporting separately tl. the Congress on the results of this work. A list of other reports issued on agencies' financial disclosure systems is contained in appendix I. 2 CHAPTER 2 FINANCIAL DISCLOSURE REQUIREMENTS The President, on May 3, 1965, issued Executive Order 11222 prescribing standards of ethical conduct for Govern- ment officials and employees and directing the Civil Ser%- ice Commission to establish implementing regulations. In November 1965, CSC issued instructions requiring each agency to prepare employee conduct standards and to establish a sys- tem for reviewing employees' financial disclosure statements. The CSC regulations require each agency to obtain state- ments of outside employment and financial interests from: -- Employees paid at a level of the Executive Schedule in subchapter II of chapter 53 of title 5, United States Code. -- Employees, classified at GS-13 or above, who are in decisionmaking positions or have duties which could involve conflict-of-interest situations. -- Employees classified below GS-13 who occupy a posi- tion otherwiF- meeting the above criteria. (An agency must obtain written CSC approval to require the em- ployee to file.) Special GoveLnment employees (experts and consultants) are are also required to file financial disclosure statements. AGENCY REGULATIONS Under the Executive order, each agency is responsible for issuing regulations on standards of conduct for its em- ployees, providing interpretations and advice to its employ- ees, and enforcing its regulations. At the time of our au- dit, ERDA was operating under the Atomic Energy Commission's (AEC's) regulations which were published in the Federal Reg- ister on March 17, 1966, and codified as 10 C.F.R. 0.735. ERDA, on its own initiative and before GAO announced its audit plans, undertook a comprehensive review of its en- tire Conduct of Employees regulations, including the finan- cial disclosure system. As a result of ERDA's review, new regulations were issued which tightened the standards of conduct and required the submission of more information in the financial disclosure system than had previously been re- quired. The new regulations were published in the Federal Register on August 17, 1976, and codified as 10 2.F.R. 735. 3 The AEC regulations required statements to tb filed no later than 30 days after entrance on duty and updated annu- ally as of June 30. ERDA's new regulations require that em- ployees' statements be filed within 10 days after entrance on duty and updated annually as of September 30. Also, state- ments for employees assigned as heads of divisions, offices, or field organizations and statements for consultants and persons employed under professional term appointments must be submitted before appointment or assumption of duties. ERDA's General Counsel is its ethics counselor and serves as its designee to CSC on conflict-of-interest matters. The counselor is authorized to designate deputy counselors for headquarters and field offices. lie is responsible for assur- ing that co'unseling and interpretations on questions of conflict-of-interest matters are available to deputy cokn- selors. Employees financial statements receive a dual review. Initially the statements are submittec to and reviewed by the appropriate division, office, or field organization head--the official presumably most familiar with the employ- ee's duties and the organizations with which the employee may deal. The reviewer must record, on the employee's finan- cial statement, his opinion concerning possible conflicts and forward the statement to the counselor or deputy counselor for legal review. If a conflict-of-interest question exists, the ERDA counselor or deputy counselor must notify the reviewer, who will then, with the employee, attempt to resolve the problem. CSC and ERDA regulations provide for remedial action which may include -- changes in assigned duties, -- divestment by the employee of his conflicting inter- ests, -- disciplinary action, or -- disqualification from a particular assignment. CONFLICT-OF-INTEREST RESTRICTIONS ERDA's regulations on standards of conduct are issued to each employee. The Regulations include prohibiting employees from -- having a direct or indirect financial interest that conflicts substantially, or appears to conflict 4 substantially, with his Government duties and respon- sibilities; -- engaging in, directly or indirectly, a financial transaction as a result of, or primarily relying on, information obtained through his Government employ- ment; or -- participating personally and substantially as a Gov- ernment officer or employee, through decision, ap- proval, disapproval, recommendation, or otherwise, in a contract, claim, application, controversy, or other matter in which, to his knowledge, he; his spouse; minor child; partner; organization in which he is serving as officer, director, trustee, partner, or em- ployee; or any person or organization with whom he is negotiating or has any arrangement concerning prospec- tive employment has a financial interest. However, agency regulations also provide for granting ad hoc exemptions, exemptions cf remote or inconsequential financial interests, and special exemptions for special Government em- ployees. These exemptions ate allowed under the conflict-of- interest statute (18 U.S.C. 208). Under the ad hoc exemption provisions, an ERDA employee can request an exemption from the prohibitions by informing the head of his division, office, or field organization of the nature and circumstances of the particular matter and of the financial interests involved. He may then approve the employee's participation after determining that -- the financial interest is not so substantial as to be deemed likely to affect the integrity of the employ- ee's services and -- no provision of law and no regulation would appear to be violated by the employee's participation. Other action which many be taken on a case-by-case basis includes advising an employee in writing that he is relieved from participation in a particular matter in which he has a financial interest. This action is generally referred to as "disqualification." Also, in this coiniection, a general exemption adopted in 1964 by AEC permitted an employee or consultant to partici- pate in a matter in which he had a financial interest in an enterprise not exceeding $7,500--market value--and not ex- ceeding 1 percent of the dollar value of the particular class of holding. Under this general exemption, employees were not required to report information on remote financial interests. 5 ERDA's revised regulations lowered the exemption level to $5,000 but kept the 1-percent dollar value and required employees to report all financial interests even though they are exempted. Other changes in the new regulations clarify policy and the procedures for administering ERDA's ethical conduct program. 6 CHAPTER 3 REVIEW OF FINANCIAL DISCLOSURE STATEMENTS Some 1,469 Energy Research and Development Administration employees, including headquarters and field staff, and 192 consultants were required to file financial disclosure state- ments as of June 30, 1975. These statements listed creditors, property interests, and business entities in which the employ- ees or consultants had a financial interest. During a review of the statements, we noted that 204 em- ployees (includes headquarters and field employees and consult- ants) listed employment and/or financial interests in organi- zations with energy-related business. Corporations included major oil, gas, and electric companies; public utilities; solar energy; and nuclear research-related industries. Some of these corporations had contractual dealings with ERDA, and several employees owned securities in corporations whose busi- ness related to the mission of the division in which the em- ployee was working. ERDA'S ACTION ON QUESTIONABLE FINANCIAL INTERESTS Of the 204 employees who listed employment and/or finan- cial interests in energy-related organizations, ERDA decided that some action was necessary for 195 employees. For the other nine employees, ERDA advised us that the employees' re- sponsibilities did not, and were not likely to, involve par- ticipation in matters in which they had employment or finan- cial interests. Actions taken on the 195 employees included granting ad hoc exemptions to 21 employees. In these cases, ERDA de- termined on a case-by-case basis that the financial interest of the employee was not so substantial as to be deemed likely to affect the integrity of the employee's services. ERDA also determined that no provision of law and no regulation would appear to be violated by the employee's participation in matters in which he had the financial interests. ERDA re- quired two other employees to divest themselves of certain financial interests. For 172 other employees, an ERDA deputy counselor rou- tinely sent memorandums to the respective reviewing officials indicating employees' names and the organizations they listed with which ERDA has or is likely to do business and noted that care should be taken to insure that the employees do not participate in a matter in whicn they have employment or fi- nancial interests. 7 The files showed that only 13 of those 172 employees were directed not to participate in matters involving organi- zations in which they have a financial interest. Ten were informed in writing and three were informed verbally and a record was made on their financial disclosure statements. For 158 employees, although the counselor or deputy counselor had detected potential conflicts and brought them to the attention of reviewing officials, no record indicated that the employees had been advised of the results of the review. Also, nothing in the files indicated that the reviewers reported to the counselor or deputy counselor (as required by agency regulations) the results of efforts to resolve poten- tial conflicts. At the time of our review, 49 heads of divisions, of- fices, or field organizations in ERDA were designated as re- viewing officials. Of 17 reviewing officials interviewed, 10 said they did not closely monitor employees' holdings or take action to insure disqualifications other than cautioning the employees at the time statements were filed and reviewed. Also, procedures for monitoring disqualifications had not been established. LATE SUBMISSION OF SOME STATEMENTS We noted that 48 individuals in the Fossil Energy Divi- sion failed to submit statements until that division's re- viewing official was notified of the GAO audit in February 1976. The division is made up of personnel who were trans- ferred from the Department of the Interior. The reviewing official responsible for collecting the statements indicated that the division and the rest of ERDA had little communica- tion because of confusion resulting from the transfer. ERDA requires the heads of divisions, offices, and field organizations to identify those employees required to file statements, prepare a list of such temployees, provide the em- ployees with blank statements, and collect completed state- ments. The Fossil Energy Division had followed the Department of the Interior's procedures in which the notifications to file come from the main personnel office. The ERDA deputy counselor for legal review said he was unsuccessful in getting the division to follow ERDA's procedures because of the disorganization following the transfer of personnel. We believe this situation is unlikely to occur in the future as ERDA's new regulations are clear concerning proce- dures for identifying those employees required to file and for collecting completed statements. 8 AGENCY ACTION TO STRENGTHEN ITS FINANCIAL DISCLOSURE SYSTEM We discussed, with representatives of ERDA's Office of General Counsel, our concern over not advising all employees in writing of potential conflicts and necessary remedial ac- tion and not having procedures for monitoring disqualifica- tions. As a result, ERDA's ethics counselor, in November 1976, issued instructions to all reviewing officials to ad- vise employees in writing--and to send a copy to the counselor--of any necessary remedial action, including dis- qualification from particular assignments, and to establish a means for monitoring disqualifications. (See app. II.) Also, the new ERDA regulations now make explicit a re- quirement that the reviewing official report in writing to the counselor or deputy counselor regarding the remedial action taken. This requirement should provide the counselor with in- sight into the reviewing official's application of le legal advice required. 9 CHAPTER 4 CONCLUSIONS Unlike regulatory agencies whose rulings generally have broad, industrywide impact, the actions of agencies, such as the Energy Research and Development Administration, generally are more limited in effect. Most of ERDA's actions involving private industry take the form of contracts for supplies or services, and these generally affect only the parties in- volved. We believe ERDA's regulations provide an adequate mechanism for avoiding conflicts in these situations. Since many of ERDA's employees have financial interests in organizations with which ERDA has or is likely to do busi- ness, reviewing officials must notify and counsel these em- ployees regarding the results of the review of their financial interest statements. Reviewing officials must also take ap- propriate action throughout the year to insure that employees do not participate in matters in which they have a financial interest and must not limit their actions to when the state- ments are filed and reviewed. ERDA reviewing officials had not been effectively follow- ing through in cases where the deputy counselor identii~ed interests likely to be affected by an employee's duties. Re- sults of reviews were seldom communicated in ,writing to em- ployees. Also, reviewing officials seldom reported in writing to the counselor or deputy counselor the results of efforts to resolve employee conflicts or potential conflict problems. And, not all reviewing officials monitored employees' holdings or took action to make sure disqualifications occurred other than cautioning the employees at the time disclosure state- ments were filed and reviewed. ERDA's revised regulations and subsequently added review steps (see p. 13) strengthen the financial disclosure system, particularly in tht areas noted above. We believe this sys- tem is effective for detecting and resolving questionable fi- nancial interests held by employees. In view of the positive actions taken, we are not making any recommendations. However, ERDA should continue to give priority attention to its financial disclcsure system and in- clude in its new Conduct of Employees regulations the provi- sions of the November 5, 1976, memorandum. (See app. II.) '0 APPENDIX I APPENDIX I REPORTS ISSUED ON AGENCIES' FINANCIAL DISCLOSURE SYSTEMS Report title, number, and Agency issue date Federal Power Commission Need for Improving the Regula- tion of the Natural Gas Indus- try and Management of Internal Operations, B-180228, 9/13/74. Department of the Interior Effectiveness of the Financial Disclosure System for Employees of the U.S. Geological Survey, FPCD-75-131, 3/3/75. Civil Aeronautics Board Effectiveness of the Financial Disclosure System for Civil Aeronautics Board Employees Needs Improvement, FPCD-76-6, 9/16/75. Federal Maritime Commission Improvements Needed in the Fed- eral Maritime Commission's Fi- nancial Disclosure System for Employees, FPCD-76-16, 10/22/75. U.S. Railway Association Improvements Needed in Procure- ment and Financial Disclosure Activities of the U.S. Railway Association, RED-76-41, 11/5/75. Department of the Interior Department of the Interior Im- proves Its Financial Disclosure System for Employees, FPCD-75- 167, 12/2/75. Department of Health, Ed- Financial Disclosure System for ucation, and Welfare Employees of the Food and Drug Administration Needs Tighten- ing, FPCD-76-21, 1/19/76. Department of the Interior Letter report to Congressman John Moss on U.S. Geological Survey employees' divestiture, FPCD-76-37, 2/2/76. 11 APPENDIX I APPENDIX I Report title, number, and Agyncy issue date Inter-American Foundation Inter-American Foundation's Fi- nancial Disclosure System for Employees and its Procurement Practices, ID-76-69, 6/30/76. Department of Transporta- Problems with the F nancial tion Disclosure System, Federal Aviation Administration, FPCD-76-50, 8/4/76. Department of Commerce Problems Found in the Financial Disclosure System for Departnent of Commerce Employees, FPCD-76-55, 8/10/76. Small Business Administra- Management Control Functions of tion the Small Business Administra- tion--Improvements Are Needed, GGD-76-74, 8/23/76. Export-Import Bank Export-Import Bank's Financial Disclosure System for Employees and its Procurement Practices, ID-76-81, 10/4/76. Federal Communications Com- Actions Needed to Improve the mission Federal Communications Commis- sion's Financial Disclosure System, FPCD-76-51, 12/21/76. Tennessee Valley Authority Tennessee Valley Authority: Information on Certain Con- tracting and Personnel Man- agement Activities, CED-77-4, 12/29/76 (Restricted). 12 APPENDIX II APPENDIX II COPY UNITED STATES ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION WASHINGTON, D.C. 20545 Nov 5 1976 Heads of Divisions and Offices, HQ REVIEW PROCEDURES - EMPLOYEES' CONFIDENTIAL STATEMENT OF EMPLOYMENT AND FINANCIAL INTERESTS - ERDAM APPENDIX 4124 The recent revision to ERDA's Conduct Regulations will re- quire revised procedures for processing employees' Confiden- tial Employment and Financial Interest Statements. As you know, the reporting system Utilizes a dual review procedure -- the first by the head of the division or office head (reviewing official) and the second by the legal office (General Counsel or his designee). This dual review of state- ments takes advantage of the knowledge and expertise of both management and the legal office. Thr jh this procedure, the familiarity of management with the emp.oyee's duties and re- sponsibilities as they relate to the interests of those hav- ing or seeking business with the agency is initially uti- lized. This knowledge is coupled with the knowledge of the legal office to identify conflicts or potential conflicts problems. Following this second (legal) review, advice as to actual or potential conflicts situations is given in writing to the reviewing official by the legal office. In the past, communication of that advice to the employee was left to the judgment of the reviewing official. The result was that some employees may not have received notice of potential conflicts problems and therefore may not have fully benefited from the program. The objective of the program is essentially to pro- vide advice and counseling to employees to assist them in avoiding conflict of interest situations. To strengthen our financial interest statement program, each reviewing official is requested to do the following in connec- tion with the review of financial interest statements: 1. Review each financial interest statement in the light of the particular duties and responsibilities of the individ- ual employee, as to the existence or likelihood of con- flicts. If there are any questions, note them on the form under the section for the reviewer's action. Sign and send the form to the legal office, (John Cho, Assistant General Counsel) in accordance with the instructions on the form; 13 APPENDIX II APPENDIX II Multiple Addressees 2. Following review by the legal office, the reviewing offi - cial will receive written advice. Assess the advice received. If there are any questions concerning the advice, discuss them with the conflicts counselor. Advise the em- ployee_in writing on necessary remedial action (etg., dis- Qualification fromparticular assignments, divestment of interest) with a copyto thle conflicts counselor- 3. Require the emloyee to re-ort when remedial action for wh-ich is resconsible, such as< Vestment of interests, le Is completed. nless t appear at the action taken is inadequate, (in which case th , ewing-iEoff--c-a- should pursue the matter wth the emloee), the outcome should be reported bWl the reviewin offlclal--ln wrilF to the conflicts counselor. 4. Establish a means for monitorinc the observance of any disqualification from particular assignments without com- promis the confidentiality of the information. For ex- ample, the employee may be instructed to avoid participa- tion in certainspecific ares related to the emloee financial interest; and the employeeTs immediate supervi- sor be informedof the disqualification ithout necessar- ily revealing the details of the financial interest givin rise to the dijualif cation. Note: Underscored language represents additional steps. All correspondence indicated above should, of course, be by sealed envelopes marked "Confidential -- Personal Financial Information -- Open By Addressee Only." Clarification appears necessary as to who should review the confidential statements of employees. The regulation desig- nates the recipients of statements (in general, Heads of Di- visions and Offices, Headquarters and of Field Offices) and identifies them as reviewing officials. It is realized that the review function can be time-consuming, particularly when lar i numbers of employees are reporting. On the other hand, an efficient conflicts program is critical to the continued well-being of the agency. Personal atten- tion by the designated officials will assure review of employ- ees' statements at a high level, by someone with overall knowledge of the activities of the Division or Office, while 14 APPENDIX II APPENDIX II minimizing the number of persons having access to the per- sonally sensitive information as to employees' interests. For these reasons, it is strongly urged that the review func- tion be delegated only for the most compelling reasons, and then only to the deputy or other second-ranking official in the organization. To the extent forms have already been re- viewed by other delegated senior staff, there will be no need to repeat the process. However, future reviews should be on the above basis. James A. Wilderotter General Counsel 15
An Improved Financial Disclosure System
Published by the Government Accountability Office on 1977-01-26.
Below is a raw (and likely hideous) rendition of the original report. (PDF)