CEO 89-24 -- June 14, 1989

CONFLICT OF INTEREST

BOARD OF INDEPENDENT COLLEGES AND UNIVERSITITES MEMBER PROVIDING ACCOUNTING SERVICES TO COLLEGES AND UNIVERISITIES UNDER REGULATION OF BOARD

To: (Name withheld at the person's request.)

SUMMARY:

A certified public accountant who serves on the State Board of Independent Colleges and Universities would violate Section 112.313(7)(a), Florida Statutes, were his firm to provide accounting services to colleges and universities under the regulation of the Board. Section 112.313(6), Florida Statutes, could be violated if he were to use his position as Board member in an attempt to solicit business from entities under the Board's regulation. CEO 86-37 and CEO 85-14 are referenced.

QUESTION:

Would a prohibited conflict of interest be created were a member of the State Board of Independent Colleges and Universities, or his firm, to provide accounting services to colleges which are regulated by the Board and to solicit colleges to become clients of the firm by informing them that the member's experience on the Board enhances the services, including assistance in meeting regulatory requirements, which the firm can provide?

Your question is answered in the affirmative.

In your letter of inquiry you advise that . . . has been appointed by the Governor to serve as a member of the State Board of Independent Colleges and Universities. Pursuant to Chapter 246, Florida Statutes, the Board has the authority to issue licenses for the operation of nonpublic colleges and to grant applications for exemptions from licensing requirements to certain colleges. The Board conducts an annual review to determine if a license should be renewed and has the power to refuse, suspend, or revoke licenses, to place a licensee on probation, and to impose administrative fines.

You further advise that the subject Board member is a certified public accountant, whose clients include owners of private postsecondary vocational, technical, trade, and business schools. His accounting firm proposes to send a letter to independent colleges and universities in Florida. The proposed letter states that the firm can "provide a complete package of professional services designed specifically for schools," including "accounting and auditing (including the required federal funds audits), tax preparation and planning, management advisory services and computer system selection and implementation." The letter indicates that one of the partners in the firm is a member of the Board, chairs the newly-formed Finance Committee, and is a member of the Board's Rules Committee. It states that his "experience in dealing with the institutions that come under the Board's jurisdiction and review has broadened his ability to help our school clients." The letter closes by stating that with its many years of diversified experience, the firm "can help you enhance your business and meet all regulatory requirements."

The Board member believes that having clients that are nonprofit or proprietary colleges would not constitute a conflict of interest so long as he does not earn 50 percent of his total salary from education or education-related clients. On the Board member's behalf, you ask whether it is a conflict of interest for him to inform colleges under the Board's purview that he or his firm can provide professional services to them and that his experience as a Board member enhances the services which he or the firm can provide.

We believe that the primary question raised by your inquiry is whether the Board member or his firm can provide accounting services to colleges and universities which are regulated by the Board on which he serves. In this regard, Section 112.313(7)(a), Florida Statutes, states:

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.

This section prohibits the Board member from having a contractual relationship with any independent colleges or universities which are regulated by the Board. In CEO 86-37, we determined that an attorney has a contractual relationship with each client represented by his firm. Under the rationale of that opinion, we are of the view that an accountant has a contractual relationship with each client of his accounting firm. See CEO 85-14. Therefore, the Board member would violate Section 112.313(7)(a) if he serves on the Board while his firm provides accounting services to colleges and universities which the Board regulates.

We note the Board member's belief that he would not be prohibited from providing services to regulated colleges and universities so long as he does not derive 50 percent of his income from providing such services. Presumably, this statement is based upon Section 246.031(1)(c), Florida Statutes, which provides that two members of the Board shall be "lay citizens who do not derive a majority of their income from educational or education-related fields."

Section 112.313(7)(b), Florida Statutes, states that Section 112.313(7)(a) does not prohibit a public officer from practicing in a particular profession or occupation when such practice by persons holding public office is required or permitted by law or ordinance. Although it is beyond our authority to render an opinion interpreting provisions of Chapter 246, the plain meaning of Section 246.031(1)(a) does not require a person to derive any portion of his income from colleges and universities regulated by the Board, or even from educational or education-related fields. As presumably a Board member could derive income from educational or education-related fields without having any contractual relationships with regulated schools, we do not believe that the language in Section 246.031(1)(a) would allow us to conclude that the Legislature intended to permit persons who derive income from regulated colleges and universities to serve on the State Board of Independent Colleges and Universities. Nor do we conclude that requiring the appointment of a "lay citizen" is the equivalent of requiring a Board member to practice in a particular profession or occupation. Therefore, we are of the opinion that this situation does not fall within the exemption created by Section 112.313(7)(b), Florida Statutes.

As Section 112.313(7)(a) prohibits the Board member from having a contractual relationship with colleges and universities which are regulated by the Board on which he serves, obviously the solicitation of business from regulated colleges and universities for his firm would be inappropriate. Such solicitation, as proposed, would constitute a violation of Section 112.313(6), Florida Statutes, which states:

MISUSE OF PUBLIC POSITION.--No public officer or employee of an agency shall use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31.

Accordingly, we find that an accountant who serves on the State Board of Independent Colleges and Universities would violate Section 112.313(7)(a), Florida Statutes, were he or his accounting firm to provide services to colleges and universities which are subject to the regulation of the Board, and would violate Section 112.313(6), Florida Statutes, were he to use his position as a Board member to solicit the business of regulated colleges and universities for his accounting firm.