CEO 77-28 -- March 9, 1977

CONFLICT OF INTEREST

EXECUTIVE DIRECTOR OF STATE BOARD OF ACCOUNTANCY TEACHING COURSE FOR CONTINUING EDUCATION CREDIT

To: Douglas H. Thompson, Jr., Executive Director, State Board of Accountancy, Gainesville

Prepared by: Phil Claypool

SUMMARY:

Section 112.313(7)(a), F. S. 1975, prohibits a public employee from having employment or a contractual relationship with a business entity which is subject to the regulation of his public agency or which creates a continuing or frequently recurring conflict between his private interests and the performance of his public duties or impedes the full and faithful discharge of his public duty. While the State Board of Accountancy generally does not regulate accountancy professional organizations, to the extent that such organizations sponsor professional development courses that must be approved for credit by the board, such organizations are subject to board regulation. Therefore, were the Executive Director of the State Board of Accountancy to teach for compensation a course sponsored by a professional organization, he would have employment or a contractual relationship with a business entity, as defined in s. 112.312(3), F. S. (1976 Supp.), which is subject to the regulation of his agency. Were he to teach the course on his own behalf and to be paid directly by each practitioner enrolling in the course, he would have a contractual relationship with self- employed persons or members of firms who similarly constitute business entities. Furthermore, such teaching of courses is deemed to create a relationship which would impede the full and faithful discharge of his public duties because, as executive director of the board, he is responsible for designing and implementing all board decisions, procedures, and programs as well as for drafting proposed rules implementing and interpreting the Florida Accountancy Law. Under the board's rules, he is charged with the responsibility to guide and administratively assist the board's Committee on Continuing Professional Education, which evaluates and determines the credit to be granted for continuing education courses and, as teacher of the course, he would receive twice the credit granted to participants. Accordingly, he is prohibited by the Code of Ethics from engaging in such teaching.

QUESTIONS:

1. Would a prohibited conflict of interest exist were I, the Executive Director of the State Board of Accountancy, to teach for compensation a professional development course which would qualify accountants in the state for continuing professional education credit and which would be sponsored by a professional organization?

2. Would a prohibited conflict of interest exist were I, the Executive Director of the State Board of Accountancy, to teach a professional development course which would qualify for continuing professional education credit and which would be taught in my own name, with practitioners paying me directly?

Question 1 is answered in the affirmative.

In your letter of inquiry you have stated that you are the Executive Director of the State Board of Accountancy, which board is responsible for the administration and enforcement of Ch. 473, F. S., regulating public accountancy. Under that chapter the board has the authority to examine and certify public accountants, to prescribe standards of professional conduct, to investigate violations of Ch. 473, and to revoke certifications. In addition, the board has the authority to adopt rules and regulations regarding the programs of continuing professional education that are required by s. 473.111(4)- (9), F. S. 1975.

As executive director of the board, you are its chief administrative officer, you are responsible for drafting its rules and regulations, and you implement all board decisions. In the past, you have taught at the University of Florida a special topics course entitled "The CPA Profession: Its History, Structure, Law, Standards and Ethics." You wish to offer such a course to practitioners for the continuing professional education credit allowed by the board, with the course either taught under your own name and paid for directly by each participant or taught for a sponsor with the practitioners paying the sponsor who in turn would pay you. The course would not be offered during your normal working hours.

The Code of Ethics for Public Officers and Employees provides in relevant part:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. -- No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee . . . ; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), F. S. 1975.]

This provision prohibits a public employee from having employment or a contractual relationship with a business entity which is subject to the regulation of his agency. It also prohibits a public employee from having employment or a contractual relationship that creates a continuing or frequently recurring conflict between his private interests and the performance of his public duties.

Pursuant to the definition contained in s. 112.312(2), F. S., your agency is the State Board of Accountancy. While the board generally does not regulate accountancy professional organizations, nevertheless, to the extent that such organizations sponsor professional development courses that must be approved for credit by the board pursuant to s. 473.111(4)-(9), F. S., and board Rule 21A- 15.03, F.A.C., such organizations are subject to the regulation of the board. Therefore, if you were to teach for compensation a course sponsored by such an organization, you would have employment or a contractual relationship with a business entity, as defined in s. 112.312(3), F. S. (1976 Supp.), which is subject to the regulation of your agency.

In addition, we find that if you were to teach for compensation a course sponsored by a professional organization, an employment or contractual relationship would be created that would impede the full and faithful discharge of your public duties. As executive director of the board, you are responsible for designing and implementing all board decisions, procedures, and programs as well as for drafting proposed rules implementing and interpreting the Florida Accountancy Law, according to the job description which you have provided us. Under the board's rules, the executive director is to guide and administratively assist the board's Committee on Continuing Professional Education, which evaluates and determines the credit to be granted for continuing education courses, subject to the approval of the board. Rule 21A-15.02(1), F.A.C. For teaching a continuing education course, you will receive twice the credit granted to participants. Rule 21A-15.03(4)(b)3, F.A.C. Therefore, your public duties necessarily will put you in the position of assisting the board and its Committee on Continuing Professional Education to evaluate matters which will relate directly to your private interests.

Accordingly, we find that the Code of Ethics for Public Officers and Employees prohibits you from teaching a professional development course for compensation which would qualify for continuing professional education credit and which would be sponsored by a professional organization.

Question 2 is answered in the affirmative.

The Code of Ethics, in s. 112.313(7)(a), quoted above, prohibits a public employee from having a contractual relationship with a business entity which is subject to the regulation of his agency. The term "business entity" is defined as follows:

[A]ny corporation, partnership, limited partnership, proprietorship, firm, enterprise, franchise, association, self-employed individual, or trust, whether fictitiously named or not, doing business in this state. [Section 112.312(3), F. S. (1976 Supp.).]

If you were to teach a continuing education course in your own name and if you were to be paid directly by each practitioner who takes the course, you would have a contractual relationship with each practitioner taking the course. Those practitioners who were self- employed would constitute "business entities"; as all practitioners are regulated by the board, the Code of Ethics therefore prohibits you from contracting with self-employed practitioners. Although not addressed specifically by the Code of Ethics, we perceive that a similar conflict would arise were you to be paid directly by a practitioner who is a partner or employee of an accounting firm and who would be reimbursed for his continuing education expenditures by the firm. In addition, as expressed in the rationale of question 1, above, we find that your teaching a continuing education course for compensation and contracting directly with the practitioners who would take the course would involve you in a contractual relationship which would impede the full and faithful discharge of your public duties.

Accordingly, we find that the Code of Ethics prohibits you from teaching a professional development course which would qualify for continuing professional education credit and which would be taught in your own name, with practitioners paying you directly.