July 31, 1995
                                        DO-95-030


MEMORANDUM

TO:       Designated Agency Ethics Officials

FROM:     Stephen D. Potts
          Director

SUBJECT:  Confidential Financial Disclosure Update


     Executive branch agencies are approaching the third (and for
some, the fourth) annual filing of confidential financial
disclosure reports under the regulation at 5 C.F.R. part 2634,
subpart I.  Therefore, we would like to offer some timely guidance
and update you on continuing initiatives to improve the system.

THE ANNUAL FILING CYCLE

     Annual confidential disclosure reports are due at the end of
October for regular employees who have served in a designated
position for more than 60 days during the reporting period.  The
green SF 450 is still the appropriate form to use during this
annual cycle.  We have taken the steps required to extend its use
as a standard form until a replacement is ready next year.

     Please note that the current SF 450 does not reflect the 1993
amendment to 5 C.F.R. § 2634.907, which exempts from confidential
disclosure a filer's deposit accounts in banks and similar
financial institutions, money market mutual funds and accounts,
U.S. Government obligations, and U.S. Government agency securities,
as well as the income from these assets.  We strongly recommend
that you provide written guidance to confidential filers, reminding
them that they do not have to disclose this information.

     Under 5 C.F.R. § 2634.903(d), agencies may grant extensions up
to 90 days beyond the October 31 due date for annual confidential
disclosure filing.  Ninety days is the maximum extension that an
agency may grant.  The regulation does not reserve any authority
for the Office of Government Ethics (OGE) to further extend due
dates for confidential disclosure reports.

     For annual filers who have served in a designated position in
excess of 60 days during the reporting period but who will be
leaving Government service prior to the annual due date, we have
suggested to agencies that they need not collect a report.  Even
though the regulation does not directly cover this approach, it is
consistent with the regulatory scheme of not requiring confidential
reports at the conclusion of Government service.  

THE REVISED CONFIDENTIAL DISCLOSURE REPORT

     In April, we distributed for comment a draft replacement for
the SF 450.  See DAEOgram of April 20, 1995.  Fourteen agencies
responded.  Based on suggestions received, we have made some 
clarifying changes and have simplified the concept of an excepted
investment fund.  We have now begun the process of submitting this
form to the Office of Management and Budget for approval under the
Paperwork Reduction Act and to the Federal Register for public
notice.  We are hopeful that this OGE form will be ready next
spring as a replacement for the SF 450.  

TESTING ALTERNATIVE REPORTING APPROACHES

     Based on last year's single-issue audit and brown bag lunches
sponsored by OGE, we have been considering methods to improve the
confidential disclosure system.  See DAEOgram of January 19, 1995. 
In furtherance of that goal, we have authorized the Department of
Education to test an alternative procedure for the upcoming annual
filing cycle.  That alternative will permit certain confidential
filers who have no new items to report since filing their last
SF 450 to sign a certificate in lieu of a new SF 450.  We will be
closely monitoring the results of that test to determine whether it
could be expanded for broader use in the executive branch.

AGENCY COLLECTION OF SUPPLEMENTAL INFORMATION

     Some agencies have statutory provisions or supplemental
standards of conduct regulations approved by OGE that prohibit the
holding of certain financial interests, either altogether or above
a specified value.  Because the confidential financial disclosure
system establishes a value threshold for reporting and does not
require disclosure of dollar amounts, some of these agencies may
wish to seek additional information from their employees, in order
to monitor compliance with their rules on prohibited holdings.  

     Two options are available.  Agencies may choose to collect
this information as part of a separate reporting procedure
applicable to all employees covered by their restrictions, without
OGE's approval.  If agencies prefer, however, to collect this
information as a supplement to the SF 450 for confidential filers
(either directly on the SF 450 or as a modifying addendum), they
must seek specific approval from OGE in writing.  This is required
by 5 C.F.R. §§ 2634.103, 2634.601(b), and 2634.901(b) whenever an
agency wishes to collect additional information supplementing the
confidential financial disclosure form.  Similarly, agencies must
seek specific approval from OGE for confidential supplements to the
public financial disclosure form (SF 278).