The Financial Disclosure Process of the Legislative Branch Can Be Improved

FPCD-81-20: Published: Mar 4, 1981. Publicly Released: Mar 4, 1981.

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The Ethics in Government Act of 1978 was enacted to require public financial disclosure of Members of Congress and other high-level officials in all three branches of government. The House Committee on Standards of Official Conduct and the Senate Select Committee on Ethics are responsible for implementing and administering the requirements of the Act. Under the Act, GAO is required to review and comment on whether disclosure requirements have been effectively implemented and whether audits for completeness and accuracy of disclosure reports should be performed. Accordingly, GAO reviewed the House and Senate financial disclosure activities for the 1979 and 1980 calendar year filing requirements.

The Ethics Committees have no formal written procedures prescribing how the systems should operate and no clear delineation of responsibilities to guide them in effectively implementing and administering the Act. Neither Committee periodically checks to ensure that legislative branch agencies are properly identifying all individuals required to file. Although compliance is a problem for candidates, neither Committee has created an effective system to obtain reports from nonfilers in a timely manner, nor are they effectively reviewing the disclosure reports to see that they are in proper form and comply with the disclosure provisions of the Act. While the Act authorizes the Attorney General to bring a civil action against any nonfiler, the Committees have not taken action to refer nonfilers for prosecution. The Act provides that a reporting individual need not report the holdings of or the source of income from the holdings of a qualified blind trust. Both Committees have approved trust arrangements where some of the trust instruments and trustees did not appear to meet the trust standards of the Act. Neither Committee monitors the administration of a qualified blind trust after it has been approved. The Act also requires that a copy of each disclosure report filed by congressional Members and candidates be sent to their states so that the report can be inspected by their constituents. Few requests are made for these reports, and states' practices vary widely as to maintenance, use restrictions, and disposition of reports.

Matters for Congressional Consideration

  1. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should establish: (1) a system that will monitor requests for and receipts of amended reports; and (2) timeframes for when an amended report should be filed.

  2. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should: (1) monitor the appointment of new employees required to file so that the committee can observe filing compliance for these individuals; and (2) notify Senators who must designate a principal assistant when they do not have an employee equivalent to a GS-16 or above on their staffs.

  3. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should follow up to ensure that individuals requested to amend their reports comply in a timely fashion.

  4. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should, if audits are made an integral part of the congressional disclosure process, develop procedures to ensure that amendments to disclosure reports, required as a result of audits, are made promptly and included with the individual's original financial report.

  5. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should, after sending the proper dunning notices to delinquent filers, refer nonfilers to the House Members for decision to refer them to the Attorney General.

  6. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should: (1) develop formal procedures and requirements for approval of a proposed trust and its trustee(s); and (2) establish procedures for monitoring and enforcing the qualified blind trust requirements set forth in the law.

  7. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should assume the enforcement initiative, after sending the proper dunning notices to delinquent filers, by referring to the Attorney General, in a timely fashion, all individuals who have failed to file disclosure reports.

  8. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should: (1) inform the House and Senate support organizations of the information needed to monitor filing compliance and specify the frequency when such information is needed; (2) regularly monitor all nonfilers and establish a policy that specifies the actions that should be taken against nonfilers; (3) develop detailed guidelines to assist Committee staff when reviewing reports for completeness and accuracy; and (4) require all candidates, including candidates who lose a primary election, to promptly file disclosure reports.

  9. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should institute the requirement for random audits of financial disclosure reports. If Congress elects to subject only Members of Congress and congressional employees to an audit requirement, both the House and Senate should adopt an appropriate rule. If the audit requirement also applies to legislative branch agency employees and congressional candidates, the law will have to be amended to require compliance by these individuals.

  10. Status:

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should: (1) develop formal written criteria to assist Members in designating principal assistants subject to potential conflicts of interest; and (2) periodically evaluate legislative branch agencies' identification of filers (including experts and consultants).

 

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