Advisory Opinion No. 2013-35 RHODE ISLAND ETHICS COMMISSION Approved: November 19, 2013 Re: Dorothy Z. Pascale QUESTION PRESENTED: The Petitioner, the Chief of the Rhode Island Bureau of Audits, a state employee position, requests an advisory opinion regarding whether the Code of Ethics prohibits her from engaging in self-employment, on her own time, as an income tax preparer. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Code of Ethics does not prohibit the Petitioner, the Chief of the Rhode Island Bureau of Audits, from engaging in self-employment, on her own time, as an income tax preparer. The Petitioner is the Chief of the Rhode Island Bureau of Audits (“BOA”). The BOA, a division of the Rhode Island Department of Administration, is authorized by statute to conduct audits of any state department, state agency, or private entity that is a recipient of state funding or state grants. R.I. Gen. Laws § 35-7-3. Through such audits the BOA provides the Governor and the Director of Administration with an independent appraisal and evaluation of the effectiveness of a department’s or private entity’s financial and operational controls. The Petitioner states that she is a Certified Public Accountant (CPA). Utilizing her financial education and training, the Petitioner has for many years engaged in part-time self-employment as a tax preparer, assisting taxpayers in the preparation of their state and federal income tax forms. The Petitioner states that all such tax preparation work is conducted on her own time from her home, during evenings and weekends, and without the use of any BOA resources or equipment. She represents that to the best of her knowledge none of her tax clients are vendors or consultants of the State. She further represents that she has never appeared before the Rhode Island Division of Taxation to represent a client in an audit situation and that she would not do so. In such a situation, the Petitioner states that she would refer an audited client to another CPA to provide any needed assistance or representation before the Division of Taxation. The Petitioner is seeking the instant advisory opinion because the BOA is currently conducting a routine cash control audit of the Division of Taxation. The Petitioner advises that the Division of Taxation is not a part of the Department of Administration, but is a division of the Rhode Island Department of Revenue. The Petitioner informs that cash control audits generally involve a review of an agency’s handling and accounting of money and, in the case of the Division of Taxation, would primarily focus on the payments it receives from taxpayers. The Petitioner represents that it is customary for such audits to be supervised by either the BOA’s Chief or its Deputy Chief, and that this particular audit of the Division of Taxation is being supervised by the Deputy Chief. The Petitioner states that her supervision is not required for this audit, and that she has removed herself from any involvement. Notably, the Petitioner represents that the BOA is a paperless office and the software auditing package the office utilizes is “permission driven,” so that given her recusal she has no access to the files relating to the Division of Taxation’s audit. Furthermore, she represents that in the unlikely event that the Deputy Chief required guidance or direction relative to this audit, he may seek input from the BOA’s Internal Audit Advisory Committee made up of five non-BOA members.[1] Once completed, the audit report will become a public document. Given these representations, and particularly in light of the BOA’s current audit of the Division of Taxation, the Petitioner seeks an opinion as to whether the Code of Ethics prohibits or limits her ability to continue offering tax preparation services to Rhode Island taxpayers. The Code of Ethics provides that no public official or employee shall have an interest or engage in any business, employment, transaction or professional activity which is in substantial conflict with the proper discharge of her duties or employment in the public interest. R.I. Gen. Laws § 36-14-5(a). More specifically, the Code prohibits a public official or employee from accepting other employment that would impair her independence of judgment as to her official duties or require or induce her to disclose confidential information acquired by her in the course of her official duties. Section 36-14-5(b). Additionally, the Code prohibits a public official from using her public office or confidential information received through her public office to obtain financial gain for herself, a family member, business associate, or any person by which she is employed or whom she represents. Section 36-14-5(d). Provided that the above Code provisions concerning conflicts of interest, use of confidential information and maintaining independence of judgment are satisfied, the Code does not preclude a public employee from engaging in outside or secondary private employment. For example, in Advisory Opinion 2006-20, the Commission opined that the South Kingstown (“Town”) Superintendent of Communications, who reviewed plans for fire alarm systems for conformity with the Rhode Island State Fire Safety Code (“Safety Code”), could conduct training seminars for a fee in his private capacity regarding the Safety Code, given that his work could be completed on his own time and without Town resources, that it involved the State Fire Safety Code and not the views or practices of the Town, and that he would not solicit attendance for his seminars through his public office. See also A.O. 2012-32 (opining that Providence’s Acting Director of Planning and Development could teach a course entitled “Downtown Development” at Brown University, provided that all teaching work was performed on his own time, without public resources or confidential information, and the petitioner recused from any matters relating to Brown that came before him in his public capacity as Acting Director); A.O. 2011-41 (opining that the Clinical Director (Psychologist) for the Rhode Island Department of Corrections was not prohibited by the Code of Ethics from continuing to provide consulting services, in his private capacity, to another state agency as an independent contractor, provided that all such work was performed on his own time and without the use of public resources or confidential information obtained as part of his public employment). In the present matter, the Petitioner represents that she will perform all work relating to her tax preparation business outside of her public office, on her own time, and without the use of any BOA resources or equipment. The BOA is a division of the Department of Administration, while the Division of Taxation is part of the completely separate Department of Revenue, so that this is not a situation in which the Petitioner would be appearing or representing herself or her tax preparation clients before her own agency, as is prohibited by section 36-14-5(e) of the Code. The Petitioner has also represented that she will not utilize any confidential information acquired through her public employment to benefit herself or her clients, and she relates that the potential for her to acquire such information is substantially limited by the internal controls that the BOA utilizes. Under these circumstances, we do not perceive any danger that the Petitioner’s independence of judgment would be impaired as to her official duties at the BOA. For all of the foregoing reasons, and relying upon the Petitioner’s representations, it is the opinion of the Rhode Island Ethics Commission that Code of Ethics does not prohibit the Petitioner from continuing to engage in private self-employment as an income tax preparer. Code Citations: 36-14-5(a) 36-14-5(b) 36-14-5(d) Related Advisory Opinions: A.O. 2012-32 A.O. 2011-41 A.O. 2006-20 Keywords: Private Employment This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, policy or canon of professional ethics may have on this situation. [1] The Petitioner states that she has no supervisory authority over the Internal Audit Advisory Committee, which is comprised of the Director of Administration, the Director of the Office of Management and Budget, the State Controller, the Director of Taxation and a member from private industry.