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HomeMy WebLinkAbout97-570 WesnerDorothy E. Wesner, CPA Clark, Lauer & Schaeffer Routes 11 & 15 Suite 210 10 Courtyard Offices Selinsgrove, PA 17870 -9374 Dear Ms. Wesner: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL May 21, 1997 97 -570 Re: Public Employee /Official, FIS, Township, Independent Auditor, Certified Public Accountant, Audit Manager. This responds to your letter of April 21, 1997, in which you requested advice from the State Ethics Commission. Issue: Whether the financial reporting and disclosure provisions of the Ethics Law apply to a certified public accountant (CPA) whose employer (a firm) is the appointed independent auditor for a Township, where the CPA is the audit manager for the audit, the audit only takes parts of 3 -4 weeks, the work is limited to the audit, and there is no on -going work performed for the Township. Facts: As a Certified Public Accountant (CPA) employed by a certified public accounting firm that is the appointed independent auditor for a Township, you seek an advisory from the State Ethics Commission. You have submitted the facts which form the basis for this advice both through your advisory request letter and in a telephone conversation with Commission staff. You state that you are not a partner in the CPA firm that employs you, but you are the audit manager for this particular audit by the firm. The firm has audited the Township records since 1993. Each year, the firm has been asked by the Township to submit a letter in the nature of a bid, and each year, the firm has submitted such a letter. You do not know whether the Township has requested or received other bids from other firms. You note that each year the appointment of the firm has been made by no later than January since the audit must be done by March 15. Wesner, 97 -570 May 21, 1997 Page 2 The audit work takes parts of 3 -4 weeks to complete. The Township is only billed for the audit, and normally, you do not do any other work for the Township, although the Township will sometimes call you with a question that has implications for the audit. However, you note that in 1997, you may perform a few hours of extra work related to the Township's installation of a computer for accounting purposes. You stress that despite performing this work, you will have no way of knowing whether your employer will get the audit work next year. Based upon all of the above facts, you request an advisory as to whether you are required to file a Statement of Financial Interests pursuant to the Ethics Law. Discussion: In determining whether you are required to comply with the financial reporting and disclosure provisions of the Ethics Law, the primary question to be answered is whether you are a "public official" or a "public employee" as those terms are defined in the Ethics Law: Section 2. Definitions "Public Official." Any person elected by the public or elected or appointed by a governmental body, or an appointed official in the Executive, Legislative or Judicial Branch of the State or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense, or to otherwise exercise the power of the State or any political subdivision thereof. "Public employee." Any individual employed by the Commonwealth or a political subdivision who is responsible for taking or recommending official action of a non - ministerial 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 minimis 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. Under the facts which you have submitted, and in light of the decision of the Commonwealth Court of Pennsylvania in Rogers v. State Ethics Commission, 470 Wesner, 97 -570 May 21, 1997 Page 3 A.2d 1120 (Pa. Commw. Ct. 1984), the necessary conclusion is that you are not to be considered a "public official" or "public employee" as defined in the Ethics Law and that you are not required to file a Statement of Financial Interests with the Township. In Rogers, supra, the Commonwealth Court held that a certified public accountant who performed an independent audit for a political subdivision was not a "public official" or "public employee" subject to the Statement of Financial Interests filing requirement of the Ethics Law where the services that were performed were limited to those outlined in the engagement letter between the accountant and subdivision, the field work for the audit was usually performed in a few days, there was no on -going relationship between the auditor and the political subdivision, and the auditor had no year -round duties or responsibilities related to that subdivision. After noting the Ethics Law's purpose of assuring public confidence in government by preventing personal gain through public office, the Court stated: . . . we note that an independent auditor provides neutral information regarding financial matters, and may not take or recommend official action. The auditor merely provides a report, which is a matter of public record, to a political subdivision attesting to its financial condition. Id., 470 A.2d at 1122. Since the facts which you have submitted are like those which were before the Commonwealth Court in the Rogers case, your work for the above referenced Township would not make you subject to the financial reporting and disclosure requirements of the Ethics Law. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Conclusion: Under the submitted facts that: (1) you are a certified public accountant employed by a certified public accounting firm which is the appointed independent auditor for a Township; (2) you serve as the audit manager for the Township audit; (3) the audit only takes parts of 3 -4 weeks; (4) the work is limited to the audit; and (5) there is no on -going work performed for the Township, you are not to be considered a "public official" or "public employee" as defined in the Ethics Law. Accordingly, you would not be subject to the reporting and disclosure requirements of the Ethics Law and you need not file a Statement of Financial Interests. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(11), 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. This letter is a public record and will be made available as such. Wesner, 97 -570 May 21, 1997 Page 4 Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717- 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. V Si cerely, .,A incent J. i opko Chief Counsel