Executive Order 11222 prescribes standards of ethical conduct for Government officials and directs the Civil Service Commission to establish guidelines for agency financial disclosure systems. Several Members of Congress requested that we review the effectiveness of Federal agencies' financial disclosure systems. This report discusses the financial disclosure system of the Energy Research and Development Administration.

We made our review pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 53), and the Accounting and Auditing Act of 1950 (31 U.S.C. 67).

We did not obtain formal comments from the Energy Research and Development Administration. However, we did discuss the report informally with officials in the Administration's Office of General Counsel, which is responsible for the financial disclosure system. Their comments were considered and included in the report where appropriate.

We are sending copies of this report to the Director, Office of Management and Budget; the Administrator, Energy Research and Development Administration; and other interested parties.

Lever A. Ateste

Comptroller General

of the United States

3

Scope of review

FINANCIAL DISCLOSURE REQUIREMENTS

Agency regulations

Conflict-of-interest restrictions

REVIEW OF FINANCIAL DISCLOSURE STATEMENTS

ERDA's action on questionable finan-

cial interests

Late submission of some statements

Agency action to strengthen its finan-

cial disclosure system

1

1

334

7

78

9

10

4

CONCLUSIONS

APPENDIX

I

Reports issued on agencies' financial dis-

closure systems

11

COMPTROLLER GENERAL'S
REPORT TO THE CONGRESS

AN IMPROVED FINANCIAL

DISCLOSURE SYSTEM

Energy Research and Development

Administration

DIGEST

THE SYSTEM WORKS

Energy Research and Development Administration
programs are aimed at finding new supplies of
energy and conserving available supplies.
Because these programs depend on close coop-
eration and contracts with industry and uni-
versities, agency employees must maintain the
highest standards of conduct. To help insure
high standards of conduct, certain employees
must fill out financial disclosure statements
which the agency reviews.

The agency's financial disclosure system is
effective for detecting and resolving ques-
tionable financial interests held by employ-
Disclosure statements for 1,661 agency
employees showed that agency reviewers were
detecting potential conflicts. (See pp. 7
and 8.)

SOME PROBLEMS HAVE BEEN NOTED

In many cases, however, employees were not
advised in writing of potential conflicts and
necessary remedial action. Also, reviewing
officials did not always report to the ethics
counselor or deputy counselor the results of
efforts to resolve potential conflict prob-
lems.

Many agency employees have financial inter-
ests in organizations doing energy-related
work. The agency requires these employees
to disqualify themselves from working on
matters in which they have financial inter-
ests. However, not all agency reviewing
officials have taken action to insure that
disqualifications occurred. In addition,
procedures for monitoring disqualifications
have not been established. (See p. 8.)

Tear Sheet. Upon removal, the report cover date should be noted hereon.

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FPCD-77-14