February 22, 2000
DO-00-007
MEMORANDUM
TO: Designated Agency Ethics Officials
FROM: Stephen D. Potts
Director
SUBJECT: Use of brokerage statements in lieu of entries on SF 278s
Adherence to criteria governing the use of brokerage
statements as attachments to a public financial disclosure report
in lieu of entering data directly on the SF 278 has gradually
eroded over the past few years. Brokerage statements, as well as
bank statements, personal spreadsheets, and any other financial
materials, are acceptable as attachments in lieu of direct entries
on an SF 278 only if they meet the statutory and regulatory
reporting requirements. Absent compliance with those requirements,
the Office of Government Ethics (OGE) and agency reviewing
officials cannot accept them. This memorandum will serve to
reemphasize what is necessary for the proper use of attachments,
and to seek more rigorous compliance from filers and reviewers.
The financial disclosure statute at 5 U.S.C. app.
§ 102(b)(2)(A) permits OGE to authorize the use of alternative
formats for disclosing information otherwise required by one or
more schedules of a financial disclosure form. By regulation, OGE
accomplished that at 5 C.F.R. § 2634.311(c)(1): "In lieu of
entering data on a schedule of the report form designated by the
Office of Government Ethics, a filer may attach to the reporting
form a copy of a brokerage report, bank statement, or other
material, which, in a clear and concise fashion, readily discloses
all information which the filer would otherwise have been required
to enter on the schedule" (emphasis added).
Because brokerage statements and other financial reports exist
in many varieties, it is impossible to enunciate guidelines that
will cover every situation. It can be said, however, that
attachments in lieu of entries on the SF 278 are insufficient for
purposes of Schedule A when they do not disclose the type and
amount of income from each asset during the full reporting period,
or when they do not reflect income for assets that have been sold
during the period, or when they do not clearly indicate which
assets are still held and provide a current value for each.
Furthermore, attachments are inadequate if they require
interpolation or estimation by reviewers in order to be understood,
or if they require reviewers to perform extensive mathematical
calculations or to compile several sets of monthly or quarterly
values for a large number of assets. It cannot be said that such
attachments "readily" disclose "in a clear and concise fashion" all
information required by the SF 278, the statute, and the
regulation. Similar concerns can arise with respect to the
reporting of asset transactions (purchases, sales and exchanges) on
Schedule B.
It is the responsibility of filers to ensure that they observe
the limitations on using attachments in lieu of data entries on an
SF 278, as the financial information to be disclosed is required by
law and is fully described in the instructions to the SF 278.
Nonetheless, we are asking ethics officials to remind filers,
through appropriate guidance memoranda or other means, that if they
choose to use attachments in lieu of direct entries, those
attachments must clearly, concisely, and readily disclose all
required information, in accordance with the above standards.
This applies immediately to all new public filers. However,
incumbents who will be filing annual reports in 2000 or termination
reports prior to May 31, 2001, may be permitted to continue using
attachments that have previously been accepted for their reports,
even though those attachments may not strictly meet the clarified
standards enunciated herein. Other than that accommodation, the
requirements outlined above for use of attachments must be followed
by all filers of public financial disclosure reports. Of course,
the same rules also apply to filers of confidential disclosure
reports (OGE Form 450), under the regulation cited above, though
the use of attachments with those reports may be less common.
Based on past experience, we can anticipate a large influx of
new filers in connection with the upcoming Presidential transition.
In the midst of the processing pressures surrounding review of
financial disclosure reports for those nominee and new entrant
filers, many of whom will be unfamiliar with the public financial
disclosure system, it is easy to lose sight of the need for
completeness of all reporting entries, including those supplied by
information on attachments. Therefore, it is appropriate to
reiterate now the scrutiny that will be applied in the review of
financial disclosure reports. When in doubt, the better practice
for filers may be to compile the data from their brokerage reports
and enter it directly on the disclosure report form.