October 20, 1999
                                DO-99-037


MEMORANDUM

TO:       Designated Agency Ethics Officials 
          
FROM:     Stephen D. Potts
          Director

SUBJECT:  Results of the Confidential Financial Disclosure
          System Review


     Recently, the Office of Government Ethics (OGE) conducted a
review which focused on the confidential financial disclosure
system.  We surveyed ethics officials to  (1) assess agencies' use
of the OGE Optional Form 450-A (the standardized certificate of no
new interests), (2) examine agency efforts aimed at reducing the
number of positions required to file confidential reports, and
(3) collect their views and opinions on whether the confidential
financial disclosure system is meeting its intended purpose.  I am
pleased to share with you the results of our survey, which revealed
some interesting views and opinions concerning the confidential
system in general. 

     Based on the 44 of 50 agencies whose ethics officials 
responded to our survey, we  found  that  an  overwhelming 
majority  of  them  chose  to  implement  the  OGE Form 450-A. 
More than 75 percent of the responding agencies had allowed
employees to use the OGE Form 450-A in either 1997 or 1998 (or used
the optional form in both years).  Also, at all 34 agencies where
the optional form was first used in either 1997 or 1998, officials
indicated that they intended to permit use of the OGE Form 450-A in
1999.  

     In those agencies where the optional form had been used, most
ethics officials reported high levels of satisfaction in using the
optional form among both filers and confidential report reviewers. 
They told us that the OGE Form 450-A is working well and that they
believe that using the optional form is advantageous because it
reduces filers' and reviewers' administrative burdens.  However,
officials also reported disadvantages, including the increased
administrative burden placed on ethics officials to provide filers
copies of their previous year's confidential report and ensure that
optional forms are only being used by those filers who are able to
make the certification.

     In the 10 agencies where ethics officials did not elect to
implement the optional form, they told us that the primary reasons
for this decision were that officials believed that it would be too
confusing for filers to switch to using the optional form and they
believed that it would be too burdensome for ethics officials to
track whether the OGE Form 450-A could be used by individual
filers.

     Concerning efforts made by agencies to ensure that only those
employees whose duties present potential conflicts file
confidential reports (aimed at reducing the number of covered
positions), overall, we found that most ethics officials
(63 percent) are currently not concerned about the number of
designated filing positions within their agencies.   Officials at
many agencies apparently have taken various steps aimed at assuring
that their agencies have appropriate designated positions. 
Officials who expressed satisfaction that appropriate positions
have been designated for filing at their agencies, stated that this
is due in some part to making adjustments to the designation
categories in the past.  Only four officials indicated that too
many positions have been designated at their agencies.  Comments
made by those officials tended to focus on either having low level
procurement authority filing thresholds or having too many
employees who fall within the designated position categories.

     Among the 44 ethics officials who responded to our survey, we
found that 26 of them (59 percent) believe that the current
confidential financial disclosure system is meeting its intended
purpose--that is, it is serving as a tool to aid in detecting
conflicts of interest.  Of the remaining 18 ethics officials, 15
did not believe that the confidential system serves as a useful
tool, while 3 were not sure.  For those officials who do not
believe that the confidential system serves as a useful tool, six 
recommended that in lieu of the current system, annual verbal
briefings be substituted.  The remaining dissatisfied respondents
recommended that certain reporting requirements be eliminated or
that the reporting frequency be reduced to require filing once
every other year.  In addition, several officials opined that the
administrative costs associated with managing the current
confidential system are not worth the benefits that the system
produces.  However, none of these officials suggested an
alternative tool to aid in detecting conflicts of interest.
     
     Based on these findings, I do not intend to make changes to
the confidential system at this time.  However, I do remain
committed to routinely assessing various aspects of the executive
branch ethics program to ensure that systems and processes are
useful and are working well.  I remind you that desk officers and
ethics program reviewers  are available to respond to your
individual concerns regarding your agencies' confidential systems. 
Please feel free to send me any comments you may have concerning
the issues discussed in our review. For detailed information on our
review, please see the Attachment.

     I thank all of those officials who responded to our recent
survey.  Also, I want to thank all ethics officials for their
continued commitment to building and sustaining strong ethics
programs.  If you have any questions concerning our review, please
contact Jack Covaleski at 202-208-8000, extension 1120, or
Ilene Cranisky at extension 1218.

Attachment