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HomeMy WebLinkAbout83-558 OBrienMichael C. O'Brien 11 Jewel Lane Levittown, PA 19055 Dear Mr. O'Brien: Mailing Address. STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 June 2, 1983 ADVICE OF COUNSEL 83 -558. RE: Field Auditor III, Liquor Control Board, Financial Interest Filing This reponds to your appeal from the Office of Budget and Administration decision that you must file a Financial Interest Statement. Issue: You question whether you, as a Field Auditor III, serving with the Liquor Control Board (LCB) are subject to the financial reporting and disclosure requirements of the State Ethics Act. Facts: Initially, we must note that on April 8, 1981, you had originally appealed your inclusion within the category of "public employees" subject to the financial reporting and disclosure requirements of the State Ethics Act in your capacity as a Field Auditor III, with the LCB. On June 1, 1981, the personnel director within the Governor's Office of Administration agreed with you that you should not be required to file a Financial Interest Statement. However, in 1982, you were apparently requested to execute and file a Financial Interest Statement. In response to this requirement, you filed an initiated an appeal on April 12, 1982. This appeal was based primarily on the reasoning that you were involved in internal auditing only, with no official responsibility to communicate with the public and, therefore, according to the directives of the Office of Administration, you felt that you were exempt from the disclosure and filing requirements. However, by letter dated July 15, 1982, the Office of Administration reviewed this situation and determined that you were an individual who, in their estimation, fell within the category of "public employee" and, therefore, they required you to file a Financial Interest Statement. On August 5, 1982, you were informed of your right to appeal directly to the State Ethics Commission to resolve this dispute and on August 12, 1982, you initiated such an appeal. State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Michael C. O'Brien June 2, 1983 Page 2 The position description which you have signed as your official job description indicates that your primary responsibility as a Field Auditor III is to insure that the assets of the Commonwealth are adequately safeguarded. These assets include cash, liquor inventory, equipment, postage, supplies, and real estate. In performing your jub you conduct on -site audits to account for these assets, submitting records and reports to determine and establish the accuracy of the report and compliance with prescribed procedures. In this process you are also required to review the records of licensed establishments which are audited to determine if they are in compliance with the established procedures. Your report of excessive losses, cash or inventory discrepancies, or suspected theft results in a full investigation and disciplinary action is taken against the appropriate party if sufficient evidence gathered after such investigation to warrant such action. At the end of an audit an narrative report listing the results and recommendations along with the work papers you have compiled are submitted to the supervisor and forwarded to the director and the comptroller. In addition, you may receive special assignments as required. In this area it is notable that the LCB contracts for warehousing liquor at five different locations throughout the Commonwealth and that shipments from warehouses to state stores, the pick -up and delivery or receipts from state stores to banks, are also the responsibility of the comptroller's office in relation to investigations of suspected fraud or compliance with these contract provisions. Given the large potential for dollar value loss due to fraud or negligence the comptroller is required to investigate perceived irregularities _ and such investigations, including licensee audits, are assigned to the field staff of state store audit programs with which you are associated. The obvious sophistication required in such investigations and audits results in the special assignments being made to Field Auditor III's. While the day -to -day assignments of a Field Auditor III are primarily internal auditing, these special audit assignments which cannot be adequately predicted in advance, are within the purview of your responsibility. In addition, the classification specifications for a Field Auditor III, which are incorporated herein by reference, indicate that an incumbent in this position engages in complex or supervisory auditing work in examining the books and financial records of governmental agencies or private businesses. These specifications also indicate that public contact is involved in making audits of private firms and in explaining legal provisions to taxpayers. Also, this work is generally performed with considerable independence and review of this person's work is limited to occasional conferences and periodic analysis of written reports and forms. Michael C. O'Brien June 2, 1983 Page 3 Discussion: The main question to be addressed in the context of this appeal is whether or not the State Ethics Commission, in accordance with its rules, regulations, and prior opinions, considers you a "public employee" as that term is defined in the Ethics Act. We note that the prior conclusions of the Office of Administration, whether or not they agree or disagree with this conclusion or are internally consistent, are not the prime subject of our review here. Our review is to be conducted on an independent and de nova basis. However, our conclusion is based upon a review of the classification specifications applicable to a Field Auditor III, your particular job and position description, the organizational chart accompanying same, and your representations as well as those of the Office of Administration in relation to the functions you performed. Finally, our review entails an application of these items in light of the definition of "public employee" as contained in the Ethics Act and re- printed below as follows: "Public employee." Any individual employed by the Commonwealth or a political subdivision who is responsible for taking or recommending official action of a nonministerial nature with regard to: (1) contracting or procurement; (2) administering or monitoring grants or subsidies; (3) planning or zoning; (4) inspecting, licensing, regulating or auditing any person; or (5) any other activity where the official action has an economic impact of greater than a de minimus nature on the interests of any person. "Public employee" shall not include individuals who are employed by the State or any political subdivision thereof in teaching as distinguished from administrative duties. 65 P.S. 402. Also important to are review is the definition contained in the regulations of the State Ethics Commission as follows: Inspecting, licensing, regulating, or auditing - -- The normal meanings of the terms apply, but the terms do not include activities which are exclusively internal in nature such as auditing the internal process of an organization; clerical and procedural activities in issuing permits and licenses are not included in the terms. 51 Pa. Code 1.1 (emphasis added). Michael C. O'Brien June 2, 1983 Page 4 It clear from the definition of public employee as set forth above that a person who makes recommendations or takes action of a non - ministerial nature with regard to inspecting, licensing or auditing, as in your case, would generally be included within the definition of the term "public employee" and, therefore, subject to the financial reporting and disclosure provisions of the Ethics Act. In reviewing your position description, the classification specifications of a Field Auditor III and the information provided by_the Office of Administration, we are compelled to conclude that ylu do take or recommend official action of a non - ministerial nature with respect to auditing so as to bring you within the purview of the definition of "public employee." Specifically, in making this determination we rely on the fact that the auditing function that you perform is not exclusively internal in nature. It is clear that, on occasion, you have the responsibility to and may be called upon to perform audits of private businesses or entities which contracts with the LCB. In this function, you are clearly involved in external auditing or auditing of processes and persons other than the "internal process of an organization." It is significant to note that the quotation which you rely upon in your appeal is derived from the directives of the Office of Administration. These directives, while derived from the - Ethics Act and the regulations of the Commission, represent only the interpretation of the Office of Administration and do not reflect either the provisions of the Ethics Act exactly or the content of the regulations of this Commission specifically. Thus, the indication in the directive of the Office of Administration that a person would not be "covered by the Ethics Act if he was involved in internal auditing and has no official responsibility to communicate with the public" is not to be taken as the official response of this Commission nor can it be said to be derived from the Ethics Act, the regulations promulgated thereunder, or the decisions of this Commission. Relying on our regulations and recognizing that you are not, according to either your position description or the classification specifications applicable to your position, "exclusively" involved in internal auditing, we must conclude that you have the duty and responsibility as a "public employee" to file a Financial Interest Statement as required by the Ethics Act. Conclusion: As a Field Auditor III assigned to the LCB you fall within the definition of "public employee" as set forth in the Ethics Act and as such must comply with the financial reporting and disclosure provisions of said Act. If you have not already done so, you must file Financial Interest Statements as required by this Act for all the years that you served with the LCB and such filings should be completed within 15 days of the issuance of this Advice. Forms are enclosed for your use. Please return the original of this form to your personnel office, provide a copy to this office to insure compliance with this Advice, and retain the last copy for your records. Michael C. O'Brien June 2, 1983 Page 5 Pursuant to Section 7(9)(ii), this Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. SSC /rdp Enclosures This letter is a public record and will be made available as such. cc: Daniel Pennick, Chairman Liquor Control Board Sincerely, S.ndra S. C ` jistianson General Cou el