Ethics and Conflict of Interest

Facilitator: Jerry Sullivan – Executive Director AACRAOPresenter: Mike Allen ‐ Associate Registrar 

University of Texas at Austin

AACRAO 2008 Annual Meeting in Orlando FloridaSession 4.467

Tuesday 1:30 pm Grand Ballroom 8A

Presentation OutlineIntroductionEthical Environment Statutes Relevant to Ethics and Conflict of Interest in Higher EducationCollege and University Policies on Ethics and Conflict of InterestAdministering Ethics and Conflict of Interest in Higher EducationEthics, COI, and Assn. in Higher Ed.Summary & Conclusions

IntroductionCould you, your office or your

association withstand intense public scrutiny if attention were focused on compliance with relevant ethics and conflict of interest policies? This will be a discussion about ethics, conflict of interest, lessons learned from the financial aid world, and how these concepts apply to you.

Measuring Ethical Environments

Ethical environments can measured, as demonstrated by the longitudinal studies cited earlier in this report. An internet search will reveal numerous examples of reports pertaining to measuring ethical environments and the link between organizational health and the ethics environment.[1] Performance indicators such as financial claims against the organization, service quality, sick leave and turnover are demonstrated to have direct correlations to the ethical environment.

[1] Auditing Ethics and the Link to measurable performance indicators. Colleen Waring City of Austin Auditor http://www.ci.austin.tx.us/auditor/downloads/indicators.pdf

Ethical Environment - BusinessEnronWorld ComAdelphia CommunicationsTycoSiemens

All companies that suffered large financial losses and prison sentences

Ethics Environment - BusinessEthics Resource Centers 2007 National

Business Ethics Survey – 5th

longitudinal study of U.S. Workplaces[1]

The Ethics landscape is treacherous –Corporate America is at Great RiskEmployees who don’t report misconduct are held back by feelings of futility and fear

[1] http://www.ethics.org/

Ethics Environment - BusinessCompanies that couple a strong ethical culture with a well implemented ethics and compliance program experience the greatest reduction in ethics risk

Ethics risk is most effectively reduced by enterprise wide cultural approach to ethics

Well implemented formal ethics and compliance programs dramatically increase reporting of observed misconduct

Ethics Environment - GovernmentEthic Resource Center's 2007 National Government Ethics Survey[1]

4th in series of Longitudinal study of the U.S. government workplaces

Public Trust Is at Risk - Rates of misconduct in government are already high — nearly 60 percent of government employees see misconduct. At present, 30 percent of misconduct across government goes unreported to management.

The Problem Is Likely to Get Worse One in four government employees works in an environment conducive to misconduct. Misconduct will continue to rise unless immediate action is taken.

[1] http://www.ethics.org/

Ethics Environment - GovernmentSolutions Exist Well-implemented ethics and compliance programs double reporting and lower the rate of misconduct. A strong agency-wide ethical culture also increases reporting and cuts misconduct in half. Coupling a strong ethical culture with a strong ethics and compliance program is the path to the greatest reduction in ethics risk.Now Is the Time For Government Leaders to Raise the Priority of Ethics Government leaders can make a meaningful, quantifiable difference. Ethics risk can be reduced and public trust can be secured.

Ethics Environment – Higher Education

No equivalent longitudinal studies to measure ethics environment in higher education

Antidotal evidence indicates a significant ethics and conflict of interest problem in higher education

Ethics Environment in Higher Education

Higher Ed’s Conflict of Interest Problem

As revelation after revelation about real and potential conflicts of interest wrongdoing has battered the student loan industry in recent months, college leaders and higher education groups have largely responded (when they have done so at all) by acknowledging problems — and proposing possible solutions — in and around financial aid offices.

Numerous higher education associations, of financial aid administrators and university presidents, are at work on new codes of conduct and other policies aimed at governing the relationships between loan providers, student borrowers and the campus financial aid officials who are charged with serving as objective third-party intermediaries between them.

June 6 - 2007 - Inside Higher Ed http://www.insidehighered.com/news/2007/06/06/conflicts

Ethics Environment in Higher EducationMay 14, 2007

Head of Student Financial Services Dismissed Following Investigation

AUSTIN, Texas—Lawrence W. Burt, associate vice president and director of student financial services at The University of Texas at Austin, was dismissed today (May 14) following an investigation into allegations of impropriety in his office.

At the request of the University of Texas System Board of Regents, Chancellor Mark G. Yudof and University of Texas at Austin President William Powers Jr., Barry D. Burgdorf, vice chancellor and general counsel of the University of Texas System, led the investigation. Burgdorf submitted his final report today. The report is available online (PDF).

The report found that Burt, who headed the Office of Student Financial Services since 1994, violated Regents’ Rules and Regulations and The University of Texas at Austin’s standard of conduct.

Ethics Environment in Higher EducationYale open to study-abroad investigation[1]

Yale will cooperate with a request from the Connecticut attorney general for records pertaining to its study-abroad programs as part of a probe into whether officials at universities around the state received kickbacks from study-abroad companies, University officials said Monday.

Attorney General Richard Blumenthal LAW ’73 said this weekend that he is launching an investigation into whether administrators at Yale and nine other Connecticut schools may have contracted with study-abroad companies because of financial incentives or other perks they or their universities would receive from the providers, and not merely because of the quality of their programs.

[1] February 21st - Yale Daily News http://www.yaledailynews.com/articles/view/23198

Ethics Environment in Higher EducationFormer Chancellors Plea Deal[1]Former chancellor's plea deal: Northern district prosecutors pledge not to charge Johnson's adult children U.S. Attorney Alice Martin said today that her office will not prosecute the adult children of former two-year college Chancellor Roy Johnson, who has entered a plea agreement and is cooperating with prosecutors investigating corruption in Alabama's two-year colleges. Martin announced Johnson's plea deal this morning -- a 15-count court filing that includes bribery, conspiracy, money laundering, obstruction and witness tampering. Martin said Johnson faces maximum prison time for the charges that amounts to "a life sentence" for the 62-year-old former speaker pro tem of the Alabama House of Representatives

[1] January 24, 2008 Posted in the Birmingham News

Ethical Environment in Higher EducationAlabama's two-year college system chancellor pledges to continue a much-needed cleanup despite anticipated budget problems[1]

Chancellor Bradley Byrne has worked hard to attack a culture of corruption that for years seemed to thrive on its campuses. A significant part of the problem resided in the Legislature, whose members for too long viewed two-year colleges as job factories - and not for students attending them.

Among legislators who served between 2002 and 2006, one-third had financial ties to the system, either through their own jobs, their spouses or their businesses. Byrne has worked to derail the gravy train, cracking down on legislator/employee leave time and putting a stop to this brand of double-dipping [1] Tuesday, February 19, 2008 Birmingham News

http://www.al.com/birminghamnews/stories/index.ssf?/base/opinion/1203412507231020.xml&coll=2

Ethical Environment in Higher EducationCall for Crackdown on Research Conflicts[1]U.S. health agency says NIH does little to monitor university scientists; ties to industry, and urges stronger role.

[1] Jan. 21, 2008 - Inside Higher Ed /news/2008/01/21/conflicts

Ethical Environment in Higher EducationNew Conflict of Interest Allegations[1]Some top business school admissions officials get free trips to Japan — and in some cases more — to help a company there get applicants into MBA programs.

[1] Jan. 30, 2008 - Inside Higher Ed /news/2008/01/30/agos

Ethical Environment in Higher EducationEthics and Private Admissions Counseling[1]High school and college officials may be engaged in more moonlighting —and some see incident at Penn reflecting larger issues with the industry.

[1] February 4, 2008 - Inside Higher Ed URL: /news/2008/02/04/counselors

Ethical Environment in Higher EducationTen are Indicted in Transcript Fraud[1]

Ten people, including two officials at Touro College and three former New York City public school teachers, have been indicted in an elaborate scheme to alter transcripts and even fabricate transcripts and diplomas for people who never attended Touro, Karen W. Arenson reports. Dozens or even hundreds of transcripts might have been falsified.

The Post calls the scheme a "diploma mill," stating, "It was sawbucks-for-sheepskins at Touro College, according to a shocking new Manhatten indictment." The News, reporting on what it calls a "buy-a-degree scam," notes that administrators even offered to sell physician-assistant degrees, raising the prospect that unqualified medical personnel could be treating patients.

[1] February 20, 2008 - New York Times http://cityroom.blogs.nytimes.com/2007/07/17/congestion-

pricing-shelved-transcript-fraud-albany-fund-raising-and-more/

Statutes & Higher EducationLack of unified and comprehensive law Public Companies – SOX, Stock Exchange Regulations, SEC related party transactionsState Statutes Not-for-Profits – IRS rules for tax-exempt organizationsLaws and regulations that apply to public officials, commercial bribery statutesStandards

Industry Professional AssociationsOrganizational

Board/Governing bodies Duty of LoyaltyDuty of Care

Federal Statutes & Higher EducationThe Sarbanes-Oxley Act of 2002 (Pub.L. 107-204, 116 Stat. 745, enacted 2002-07-30), also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox; is a United States federal law enacted on July 30, 2002 in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom(1) http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act#_note-0#_note-0

Federal Statutes & Higher EducationThe legislation establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms. It does not apply to privately held companies. The Act contains 11 titles, or sections, ranging from additional Corporate Board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. Debate continues over the perceived benefits and costs of SOX. Supporters contend that the legislation was necessary and has played a useful role in restoring public confidence in the nation's capital markets by, among other things, strengthening corporate accounting controls. Detractors contend that SOX was an unnecessary and costly government intrusion into corporate management that places U.S. corporations at a competitive disadvantage vis-a-vis foreign firms.

Federal Statutes and Higher EducationThe Act establishes a new quasi-public agency, the Public Company Accounting Oversight Board, or PCAOB, which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The Act also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure.[1]

[1] http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act

Federal Statutes and Higher EducationNACUBO Advisory Report 2003 [1]Recommendations of the National Association of College Business and University Business Offices pertaining to Sorbanes-Oxley (SOX) stated that while SOX does not legally apply to institutions of higher education, the concerns it covers are universal. It recommended that the issues of auditor independence, corporate responsibility, enhanced financial disclosures, accountability, and certification of financial results needed to be addressed in the context of higher education.

[1] Educause Website -http://connect.educause.edu/Library/Abstract/TheSarbanesOxleyActof2002/37001

Federal Statutes and Higher EducationU.T. System to Adopt Reforms Inspired by Sarbanes-Oxley[1]

ODESSA - Changes in financial reporting and management that conform to the spirit of the federal Sarbanes-Oxley Act were approved today (Nov. 13) by The University of Texas System Board of Regents.

The federal law, passed in 2002 in response to management scandals at several corporations, was enacted to improve the reliability and accuracy of financial information reported by corporations.

The law does not apply to higher education institutions, but the U.T. System believes "it is prudent to adopt best practices that enhance the integrity of all aspects of the System's operations and provide full disclosure of its financial dealings in accordance with the spirit of Sarbanes-Oxley," said Robert A. Estrada, a regent from Dallas and chairman of the board's Audit, Compliance, and Management Review Committee.

[1] November 13, 2003 Press Release - The University of Texas System http://www.utsystem.edu/news/2003/BORAdoptsSOXReforms11-13-03.html

Federal Statutes & Higher EducationFederal Sentencing Guidelines[1]Excerpt from the table of contents of the Federal Sentencing GuidelinesCHAPTER EIGHT - Sentencing of Organizations Part A-General Application PrinciplesPart B-Remedying Harm from Criminal Conduct, and Effective Compliance and Ethics Program

1. Remedying Harm from Criminal Conduct2. Effective Compliance and Ethics Program

Part C-Fines 1. Determining the Fine - Criminal Purpose Organizations 2. Determining the Fine - Other Organizations 3. Implementing the Sentence of a Fine 4. Departures from the Guideline Fine Range Part D-Organizational Probation Part E-Special Assessments, Forfeitures, and Costs Part F-Violations of Probation - Organizations

[1] Federal Sentencing Commission http://www.ussc.gov/

Statutes & Higher EducationOVERVIEW OF THE ORGANIZATIONAL SENTENCING GUIDELINES[1]Organizations, like individuals, can be found guilty of criminal conduct, and the measure of their punishment for felonies and Class A misdemeanors is governed by Chapter Eight of the Sentencing Guidelines. While organizations cannot be imprisoned, they can be fined, sentenced to probation for up to five years, ordered to make restitution and issue public notices of conviction and apology to their victim, and exposed to applicable forfeiture statutes. [1] Wake Forest Law Review Volume 39 2004 Number 3 - Introduction to Organizational Sentencing and

the U.S. Sentencing Commission; Desio, Paula J.

Federal Statutes & Higher Education[1] The organizational sentencing guidelines, which apply to all organizations whether publicly or privately held, and of whatever nature, such as corporations, partnerships, labor unions, pension funds, trusts, non-profit entities, and governmental units, became effective November 1, 1991, after several years of public hearings and analysis. [1] Wake Forest Law Review Volume 39 2004 Number 3 - Introduction to Organizational Sentencing and the U.S. Sentencing Commission; Desio, Paula J.

Federal Statutes & Higher EducationA. Organizational CulpabilityCriminal liability can attach to an organization whenever an employee of the organization commits an act within the apparent scope of his or her employment, even if the employee acted directly contrary to company policy and instructions. An entire organization, despite its best efforts to prevent wrongdoing in its ranks, can still be held criminally liable for any of its employees’ illegal actions.

Federal Statutes & Higher EducationThe culpability of an organization is generally determined by six factors that the sentencing court must consider. The four factors that increase the ultimate punishment of an organization are (1) the involvement in or tolerance of criminal activity; (2) the history of the organization in terms of prior violations, including civil and administrative dispositions; (3) the violation of an earlier court order during the occurrence of the offense that is being prosecuted; and (4) the obstruction of justice.

Federal Statutes & Higher EducationThe two factors that mitigate the punishment of an organization are (1) the existence of an effective compliance and ethics program; and (2) the combination of the organization’s efforts in self-reporting, cooperating with the authorities, or accepting responsibility. The potential fine range for a criminal conviction can be significantly reduced—in some cases up to 95%—if an organization can demonstrate that it had put in place an effective compliance and ethics program and that the criminal violation represented an aberration within an otherwise law-abiding community.

Federal Statutes & Higher EducationThe requirements for an effective program as defined by the guidelines are functional ones. It does not matter whether a program is called a compliance or ethics program or some other designation appropriate to the organization, as long as the organization can demonstrate that it incorporated and fulfilled the following requirements within its operational structure:

Federal Statutes & Higher Education(1) Standards and procedures to prevent and detect criminal conduct;(2) Responsibility at all levels and adequate resources, and authority for the program;(3) Personnel screening related to program goals;(4) Training at all levels;(5) Auditing, monitoring, and evaluating program effectiveness;(6) Non-retaliatory internal reporting systems;(7) Incentives and discipline to promote compliance; and(8) Reasonable steps to respond to and prevent further similar offenses upon detection of a violation.

Texas Statutes & Higher EducationTexas Ethics Commission A GUIDE TO ETHICS LAWS FOR STATE

OFFICERS AND EMPLOYEES[1]Table of Contents -

Laws Interpreted by the Ethics Commission Advisory OpinionsPART I. STANDARDS OF CONDUCT AND CONFLICT OF INTERESTThe “Should Nots” Private Interest in Measure or DecisionPART II. ACCEPTANCE OF BENEFITS Bribery Honoraria Prohibitions on Gifts Exceptions to Gift ProhibitionsGifts Prohibited by the Lobby StatuteGifts to State AgenciesDonation of Gifts to Charity

[1] Texas Ethics Commission http://www.ethics.state.tx.us/guides/G05o&e.pdf

Texas Statutes & Higher EducationPART III. ABUSE OF OFFICE Misuse of Government Property Frequent Flyer MilesPolitical CampaignsMisuse of Official Information PART IV. OTHER EMPLOYMENT Concurrent Employment Future EmploymentRevolving Door #1Revolving Door #2PART V. PERSONAL FINANCIAL STATEMENTS

Texas Statutes & Higher EducationPART VI. LOBBYING BY STATE OFFICERS AND EMPLOYEESSUMMARY APPENDIX: Penal Code Provisions Regarding Gifts to a Public Servant §36.08. Gift to Public Servant by Person Subject to His Jurisdiction§36.09. Offering Gift to Public Servant §36.10. Non-ApplicableTexas Government Code Section 572.051 Chapter 572. Personal Financial Disclosure, Standards of Conduct, and Conflict of Interest http://tlo2.tlc.state.tx.us/statutes/gv.toc.htm

Texas Statutes & Higher EducationExcerpt from Special Investigative Report Regarding allegations of Impropriety at the University of Texas at Austin Office of Student Financial Services and by its Director, Dr. Lawrence W. Burt - section III of that report.In order to understand a large part of the framework for the allegations investigated, it is important to understand the principles that govern ethics and conflicts of interest.14 The first and foremost rule of Texas ethics is that a state employee may never take anything as consideration for an official act.

Texas Statutes & Higher EducationThis provision, generally referred to as the “Texas Bribery Law,” applies to any exercise of discretion by a state employee.16 Texas law also prohibits the acceptance of an honorarium for services that a state employee would not have been asked to provide but for his official status as a state employee.17

Texas Statutes & Higher Education

14 This brief discussion of Texas ethics and conflicts of interest laws does not discuss the laws as applied toregistered lobbyists.15 Section 36.02, Penal Code.16 Section 36.02(a)(1), Penal Code.17 Section 36.07, Penal Code.18 Section 36.07(b), Penal Code; Texas Ethics Commission Advisory Opinion Nos. 36 (1992), 97 (1992),118 (1993).

Institutional PoliciesInstitutional Policies on Conflict of Interest from Leading Colleges and Universities[1]

American University Conflict of Interest PolicyBoston University Conflict of Interest PolicyCarnegie Mellon University Policy on Conflicts of Interest and CommitmentCatholic University Board of Trustees Conflict of Interest PolicyClarkson University Conflict of Interest PolicyDrexel University Policies• Annual Conflict of Interest and Disclosure Process (Trustees)

[1] National Association of College and University Attorneys Website

http://www.nacua.org/meetings/virtualseminars/january2008/resources/institutional_policies_inclu de.html

Institutional Policy - ExampleEthics Policy – UT SystemAll employees of a University of Texas System component institution are expected to conduct University business in an ethical manner. The Board of Regents of the U.T. System has set out a general outline of the level of ethical behavior expected in its Ethics Policy, which follows.

Specific ethics or employee compliance questions should be directed to your supervisor first and then to the U.T. Austin Office of Institutional Compliance. The Office of Institutional Compliance is located at Flawn Academic Center 405; (512) 232-7055.

Institutional Policy – UT Austin

The University of Texas System’s Ethics Policy, included in Rules and Regulations of the Board of Regents of The University of Texas System, applies to U.T. Austin employees and is as follows:

Officers, faculty, and employees of The University of Texas System may not have a direct or indirect interest, financial or otherwise, of any nature that is in conflict with the proper discharge of the officer’s or employee’s duties.

Officers, faculty, and employees shall timely furnish such written disclosures as may be required by state and federal authorities or by System requirement.

Institutional Policy – UT SystemAll officers, faculty, and employees shall adhere to the laws, rules, regulations, and policies of applicable governmental and institutional authorities and the following standards of conduct.The failure to do so may be grounds for disciplinary action, up to and including termination of employment.

Institutional Policy – UT System No employee shall accept or solicit any gift, favor, or service that might reasonably tend to influence the employee in the discharge of his or her official duties or that the employee knows or should know is being offered with the intent to influence his or her official conduct.

* The term “employees of The University of Texas at Austin (“U.T. Austin”)” includes all administrative officers, faculty, administrative and professional staff, classified and non-classified staff, and student employees. The University of Texas at Austin Employee Compliance Guide, p. 7

No employee shall intentionally or knowingly solicit, accept, or agree to accept any benefit for having exercised his or her official powers or performed his or her official duties in favor of another. No employee shall accept employment or engage in any business or professional activity that might reasonably expect would require or induce the employee to disclose confidential information acquired by reason of his or her official position.

Institutional Policy UT SystemNo employee shall transact any business in his or her official capacity with any business entity of which the employee is an officer, agent, or member, or in which the employee owns a substantial interest.No employee shall make personal investments that could reasonably be expected to create a substantial conflict between the employee’s private interest and the public interest.No employee shall accept other outside or dual employment or compensation that could reasonably be expected to impair the employee’s independence of judgment in the performance of the employee’s public duties.Sexual Harassment and Misconduct: The educational and working environments of the System and its components should be free from inappropriate conduct of a sexual nature. Sexual misconduct and sexual harassment are unprofessional and unacceptable.The components of the U.T. System shall adopt policies prohibiting sexual harassment and sexual misconduct and procedures for review of complaints.

Institutional Policy – UT SystemExample of a Conflict of Interest Policy for a University SystemUniversity of Texas System Conflict of Interest Policy [1]

1. Title Conflict of Interest 2. Rule and Regulation

Sec.1 Prohibition. It is the law of this state that a state officer or state employee may not have a direct or indirect interest, including financial and other interests, or engage in a business transaction or professional activity, or incur any obligation of any nature that is in substantial conflict with the proper discharge of the officer’s or employee’s duties in the public interest.

Sec. 2 Written Disclosures. Employees shall in a timely manner furnish such written disclosures as may be required by State and federal authorities or by institutional authorities.

[1] The University of Texas System Policy Man http://www.utsystem.edu/bor/rules/30000Series/30104.pdf

Institutional Policy UT System3. DefinitionsNone4. Relevant Federal and State StatutesStandards of Conduct Digest contains a list of relevant statutesTexas Government Code Section 572.005 – Determination of Substantial InterestTexas Government Code Section 572.051 – Standards of Conduct5. Relevant System Policies, Procedures, and Forms

Standards of Conduct DigestThe University of Texas System Policy UTS109, Financial Disclosure and Conflict of Interest Policy and Statement for Chancellor and PresidentsThe University of Texas System Policy UTS110, Financial Disclosure and Conflict of Interest Policy and Statement for Employees

Institutional Policies – UT Austin HOPThe University of Texas at Austin - Handbook of Operating ProceduresINDIVIDUAL CONFLICTS OF INTEREST[1]Section I. General Policy Guidelines

Definitions What is a Conflict of Interest? A conflict of interest exists when an employee owes a professional obligation to The University of Texas at Austin that is compromised or might be compromised by the pursuit of outside interests. Outside interests, such as professional activities, personal financial interests, or the acceptance of gifts from third parties, can create conflicts between the interests of the University and private interests of an employee and may prevent the employee from making decisions that are in the best interest of the University. Even if those outside interests do not actually impair or intrude upon an employee's ability to act in the best interest of the University, it may appear to the public that the employee's independence of judgment or loyalty has been affected. The purpose of this policy is to provide an executive summary of conflict of interest laws, rules, and policies, all of which are intended to preserve the public trust in the integrity of our University employees by preventing bias or the appearance of bias in decision-making. [1] The University of Texas at Austin Handbook of Operating Procedures

http://www.utexas.edu/policies/hoppm/04.A.04.html

Institutional Policy – UT HOPSection II. Relevant Policies Other Information on Ethical Behavior This policy addresses only conflicts of interest. Other ethical issues may arise, such as issues related to the use of government resources, sexual harassment, political activities, legislative lobbying, and the use of confidential information. Those issues are discussed fully in other Policies of The University of Texas at Austin as well as the University's Employee Compliance Guide at http://www.utexas.edu/administration/oic/guide.htmlGiftsService on Outside BoardsHonorariaPersonal InvestmentsSelf-dealing/Transactions with EmployeesBenefits for Performing Official Duties

Institutional Policy – UT HOPSection III. Procedure for Disclosures Required Disclosures An employee must file timely written disclosure statements as required by law, rule, or policy. An employee's position with The University of Texas at Austin, relationship with other employees, contemplated activity, etc. will determine which disclosure statements, if any, are required. Some pertinent examples include: (1) if an employee's spouse is employed by the University it must be disclosed under the Nepotism Policy. (2) If an employee is in a position to make decisions or exercise significant discretion over whether the University enters into a contract or agreement, he or she must annually complete the University's Financial Disclosure and Conflicts of Interest Statement. (3) Prior to seeking University approval for submission of sponsored research proposals, each faculty member, principal investigator, or other researcher responsible for the design, conduct, or reporting of the research or other educational activities proposed for funding, must submit a financial disclosure statement as provided by Handbook of Operating Procedures, Section 5.11, at http://www.utexas.edu/policies/hoppm/h0511.html.

Institutional Policy – UT HOPConsequences for Violations There are consequences for failing to comply with conflict of interest laws, rules, or policies. The law provides that appropriated money may not be used to compensate an employee who violates the standards of conduct. Failure to comply may be grounds for disciplinary action by The University of Texas at Austin, including termination of employment. Additionally, civil and criminal penalties may apply under certain circumstances. Summary: Employees may be subject to disciplinary action or civil or criminal penalties for violating a conflicts of interest law, rule, or policy.

Problems in spite of Policies What can happen in spite of having appropriate policies in place?Burt appointed by U.S. Secretary of Education as member of Advisory Committee on Student Financial Assistance[1]

Related Stories: Financial Aid Director Placed on Leave, Investigation Begun at The University of Texas at Austin

April 5, 2007 Davis Appointed Acting Director of Student Financial Affairs

April 10, 2007 Head of Student Financial Services Dismissed Following Investigation

May 14, 2007 • [1]The University of Texas at Austin News Release

http://www.utexas.edu/news/2006/01/30/financial/

Investigation by UT System Special Investigative Report Regarding Allegations of Impropriety at The University of Texas at Austin - Office of Student Financial Services and by Its Director, Dr. Lawrence W. Burt

Table of contents of the investigative report conducted by the Vice Chancellor and General Council of University of Texas System.[1]

I. INTRODUCTION II. EXECUTIVE SUMMARY

A. Overview of the Student Loan Investigation B. The Allegations Concerning Dr. Burt and OSFS C. Summary of Investigative Findings

III. TEXAS ETHICS AND CONFLICTS OF INTEREST LAWS ANDUNIVERSITY POLICIES

IV. STRUCTURE OF THE STUDENT LOAN INDUSTRY; ROLE OF OSFS V. LENDER LISTS AT OSFS

A. Concentration of Power in Dr. Burt B. Lack of Objective Criteria C. Failure to Use Students’ Best Interests as Overriding Consideration D. Inappropriate Use of Staff “Treats” as Criteria

[1]http://www.utsystem.edu/ogc/docs/BarrysCorner/SpecialInvestigativeReportdatedMay14,2007.PDF

Investigation by UT System VI. DR. BURT’S STOCK OWNERSHIP IN EDUCATION

LENDING GROUP, INC VII. SERVICE ON STUDENT LENDER ADVISORY COMMITTEES VIII. INVESTIGATION OF DIRECT PAYMENTS TO OR FUNDING OF OSFS BY

STUDENT LENDERS A. Free Student Exit Interview Software Provided by

Collegiate FundingService to OSFS

B. Free Loan Processing Software Provided by Nellie Mae to OSFS

C. Student Lender Underwriting of OSFS Operations IX. OSFS MANAGEMENT’S LACK OF AWARENESS REGARDING ETHICS

AND CONFLICTS OF INTEREST ISSUES X. CONCLUSIONS AND RECOMMENDATIONS

Additional Measures on Ethical CultureSubsequent to the Financial Aid Scandal - Additional Measures taken by UT System to supplement Policy Statements and Reinforce a Culture of Awareness – A series of articles.

The Bottom Line: In order to show leadership and help restore confidence in our ability to serve the best interests of our students and the people of the State of Texas, UT institutions are committing not only to following the “letter of the law” contained in the Agreement, but also to projecting a positive and forceful “tone at the top” that embodies the spirit of the highest ethical standards. OGC can provide guidance and significant resources as we work together towards a common goal of restoring complete trust in the student financial services of UT institutions, and you should not hesitate to contact us with questions or for assistance.

The Bottom Line: The application of state ethics laws to a particular situation depends on a complete development of the specific facts. However, in order to maintain the public trust, it is crucial to go beyond a legal analysis of a particular situation and to act in a way that avoids even the appearance of impropriety.

Additional Measures on Ethical CultureThe Bottom Line: The issue of vigilance concerning ethical behavior is not just one for financial aid administrators. All administrators, staff, and faculty in our institutions need to be aware of their responsibility to act lawfully, ethically, and be familiar with The University of Texas System, institutional, and professional expectations related to ethical and professional behavior and standards

The Bottom Line: UT System policies and changes in the law, together with the public’s interest in student loan corruption, mandate leadership and response from the highest levels. It is important that you comport with the agreement that UT System made with the Attorney General of Texas and follow Secretary Spellings’ recommendation to adopt the proposed DoE regulations now. It is crucial that in both substance and appearance, UT institutions administer student loans legally, ethically, and without conflicts of interest.

What makes COI Compliance so Difficult Human natureRange of activities in which it can ariseLack of unified and comprehensive law

Human Nature and COIWe all know basics – You should avoid conflict of interest, or situations that can give rise to appearance of a conflict

Do you recognize a conflict when you face one?Often poor judge of our own conflicts

Credit union example

Are you motivated to disclose them?

Range of Activities in which COI can Arise

Multiple roles and potentially conflicting roles are increasingly common for individuals and organizations

Dean of collegePresidentFaculty memberAdmission directorAthletic directorClinical professor in teaching hospital

Common Types of ConflictsGeneral financial interestInterest in Customer or SupplierGift and EntertainmentInterested Fiduciary Transactions and Self-dealingsCompeting with OrganizationUsurping Organization OpportunitiesOffer of employment by customer, supplier or competitor

Types of ConflictsOvert Bribes or Kickbacks

Subtle “Bribes”

Influence

Privileged Information

Approaching Conflicts ManagementMere presence of a conflict of interest is not per se improper, unlawful or unethicalFailure to identify and appropriately address conflicts of interest can result in unlawful, improper or unethical conflict with consequences to organization and the individualPast scandals demonstrate need for proactive approach

Recognize and disclose (transparency is key) Focus on how to respond adequately within particular context Zero tolerance is not always desirable and not typically required Document and demonstrate compliance efforts

There is no one-size-fits all approach

Who Can Have a Conflict of Interest?Individuals

When an individual's outside activities or personal interests influence or appear to influence the ability to make objective decisionsOne's official position and/or influence is used to gain an improper advantage (economic or noneconomic), for the individual, or for family members, associates, vendors, and customersExternal commitments burden or otherwise interfere with one's primary obligations

AnalysisWho is in a position to profit or cause harm when acting in a conflict situation? (Incentive)Can the individual exercise discretion? (Opportunity)

Who Can Have a Conflict of Interest?Organizations

Arise when mission of the entity is compromised because of an external financial or other business relationship at the company level that may bring financial gain to the organization, any of its units, or employees

AnalysisTo whom are the duties owed?What interests are in possible conflict?What are the company's compensation models? (Incentives. Commissions)

Administration of Policy on Campus

Mission, Vision Values Statements help create a culture.Education and training concerning ethics, standards of conduct, and conflict of interestCompliance Training Written Acknowledgement of Policies Required on Regular Basis Risk Management ProgramsEthical environments can be measured

Values Statement The Office of the Registrar emphasizes:

accuracy - to maintain exceptional quality in our records and processes;integrity - to demand responsibility, confidentiality, and honesty in our work;customer service - to help people in a timely and caring way;communication - to share expertise and listen to our clients and each other; teamwork - to foster a collaborative work environment in order to coordinate the intricacies of our collective mission

Compliance MonitoringTHE UNIVERSITY OF TEXAS AT AUSTIN STANDARDS OF CONDUCT AND POLITICAL ACTIVITIES[1]

INSTRUCTIONS: You can acknowledge these sections of the Texas Government Code on the World Wide Web at: https://utdirect.utexas.edu/pnethc/pn_ethics.WBX.

If you do not have access to the web, print a copy of this form, complete the RECEIPT section of this document, make a copy of this document for your file, and then return the original signed form by campus mail to: Human Resource Services, Employee Records Services, mail code J5600.

[1] University of Texas - Human Resources - Forms - General Forms - Ethics Statement

http://www.utexas.edu/hr/PDF/index.html#general

Compliance MonitoringUT Austin Employee Compliance Guide

Acknowledgment FormStandards of Conduct – In a NutshellIt is every employee’s job to comply with federal, state, local laws, U.T. Austin and U.T. System regulations that apply to his or her job. It is also every employee’s responsibility to report concerns to his or her supervisor or the Office of Institutional Compliance. Ethical behavior is expected.The following statements are short summaries of the full Employee Compliance Guide of the University, which you should read and understand, and which you are responsible to obey.

Compliance MonitoringUT Austin Employee Compliance Guide

1. Contacts with the Media. The University is committed to communicate as fully as possible with news media. Only senior administration is authorized to speak officially on behalf of the University. Inquiries from the news media may be referred to a high-level administrator within your reporting structure or the Office of Public Affairs. Employees may express their personal opinions, particularly on matter within their expertise.

2. Contacts with Government Agencies/Outside Investigators. The University is committed to cooperate with any government agency. If someone from the government contacts you at home or at work with a subpoena or inquiry about your work, contact your supervisor immediately. If contacted at home by a government agent with a search warrant or subpoena about your work, request that they visit you at your work the next day and then immediately call your supervisor and then notify the Office of the Vice President for Legal Affairs.

Compliance MonitoringUT Austin Employee Compliance Guide

3. RecordsA. Accurate Records. Do not alter or destroy or falsify records

or documents.B. Retention. Do not destroy official records or documents

without permission of your supervisor. There is an official schedule to be followed for destruction of records or documentation.C. Time Keeping. Staff are required to keep accurate records of the time you work, and the time and reasons for absences.

4. Workplace conductA. Fraud. Report suspicion of misuse or theft of University property or funds by others to the Office of Institutional Compliance. Vouchers for reimbursement must be accurate and only for allowable items.B. Equal Opportunity. Discrimination in employment opportunity, training and promotion based on race, color, national origin, religion, sex, age, sexual orientation, veteran status or disability is prohibited and should be reported to Equal Opportunity Services (EOS).

Compliance MonitoringUT Austin Employee Compliance Guide

C. Sexual Harassment and Sexual Misconduct. It is unprofessional and inappropriate to make sexual advances or comments to other staff, students or faculty members. You could be disciplined or fired for doing so. Report incidents to your supervisor and EOS.

D. Overtime. Non-exempt employees may not work overtime without the permission of your supervisor. Nonexempt employees will be compensated for working over 40 hours per week, either with compensatory time or pay at 1 ½ times regular pay. Exempt employees do not get overtime compensation.

E. Family and Medical Leave Act. Eligible employees may take up to 12 weeks of paid leave (when available) or unpaid leave or a combination of both, within a twelve month period for serious immediate family illness or the birth or adoption of a child. There are special requirements so check with your supervisor or Human Resources Services (HRS) if you need this leave.

Compliance MonitoringUT Austin Employee Compliance Guide

F. Outside Employment. Outside employment that conflicts or interferes with your regular work at the University is not permitted. Staff who want to work for another employer in addition to a regular job at the University, must notify your supervisor first. Faculty should see the Provost regarding permissible consulting or other employment.

G. Financial Interests. You may not have a direct or indirect financial interest or special interest in a business or other activity that conflicts with the University’s interest or might influence how you do your job at the University.

5. Research. Persons involved in research activities should make themselves thoroughly familiar with the contents and information contained in the Statement for Administrative Responsibilities for Research Activities issued annually by the Vice President for Research.

Compliance MonitoringUT Austin Employee Compliance Guide

6. Environmental Health &SafetyA. Worker Health and Safety. You must follow federal, state, and local laws and University policies about handling hazardous materials and wastes, and safe working conditions. You must report injuries that occur to you or others at work to your supervisor, HRS and EHS.B. Protection of the Environment. Manage and dispose of hazardous materials properly.C. Drugs and Weapons. You may not have or use illegal drugs, alcohol, or weapons at work. You may be disciplined or fired for doing so. You must report to your supervisor or HRS within 5 business days if you are found guilty of controlled substance abuse that has occurred in or on U.T. property.

7. Entering Into Contracts and Agreements. There are very few employees who are authorized to sign a contract or agreement for the University. Check with your supervisor before doing so.

Compliance MonitoringUT Austin Employee Compliance Guide

8. Use of UT and State ResourcesA. Use of State Property. Generally, you may not use the University’s property for non-work activities. Incidental personal use of information technology resources (phones, computers, et al.) is allowed if such use does not result in added cost to the University or hinder your work performance. Check with your supervisor.B. Computer Software. Abide by all software licenses. Some software is licensed for individual computers, some is licensed for university-wide use, and some is freely distributed over the Internet. It is your responsibility to know which licensing scheme applies to software you use, and to make no unauthorized copies of software for yourself or anyone else.C. Information Security and Confidentiality. Employees must not disclose confidential University information; student records and health records are subject to additional legal safeguards. Requests for documents under the Texas Public Information Act should be referred to the Vice President and Chief Financial Officer.D. Computer System Access and Passwords. You are responsible to select a secure password and to protect it from disclosure. You may not access computers, systems, or networks without authorization.E. Property in your possession. You may have to pay for University property you damage or lose if you are not reasonably careful with it. The level of care required depends on the item and its value

Compliance MonitoringUT Austin Employee Compliance Guide

F. Purchasing. You may not spend University funds except as authorized. Generally, you may not buy things from or sell things to the University without special prior approval. Follow the policy on purchasing from HUBs (Historically Underutilized Businesses).

9. Copyright and Intellectual PropertyA. Use of Copyrighted Materials. In general, you must obtain permission from the copyright owner to use his or her work. Guidelines offer specific limitations on the purpose, amount and numbers of copies you can make without getting permission. You should check Fair Use of Copyrighted Materials.

B. Intellectual Property. Generally, the Board of Regents owns the rights to inventions, research and writings by non-faculty created at work, with U.T. Austin facilities and equipment. Employees who create these things must tell the Intellectual Property Committee in the Office of the Vice President for Research about their creation before making it publicly known or applying for government approvals.

Compliance MonitoringUT Austin Employee Compliance Guide10. Political Activities and Contributions

A. Political Activities. You may not participate in political activities, such as campaigning for elections, during work hours or at other times if it interferes with your work duties. You cannot use U.T. Austin equipment or supplies to do political activities. You may hold a political office that offers a salary, but you may not accept the salary.B. Contributions. You may not use U.T. Austin funds to make political contributions.

11. Gifts, Honoraria and EstatesA. Gifts to U.T. Austin. Faculty and staff are NOT authorized to accept gifts on behalf of the University.B. Gifts to Influence You. You may not ask for or take any gift or favor that might influence a decision you make in your job or that you should know someone is offering to try to influence your decision. No gifts over $50 may be accepted. Token gifts (t-shirts, lunch) are acceptable, but you may not accept any cash or gift certificates.C. Gifts from Persons Doing Business with U.T. Austin/System. Do not ask for or accept such gifts.D. Honoraria. Staff must not ask for, accept or agree to accept a payment for doing something that you would not be asked to do if you were not employed at the University.E. Estates. Notify U.T. System if you are executor of a will benefiting a component institution. Do not act as witness to a will.

To report suspected non-compliance, call the Office of Institutional Compliance at (512) 232-7055 or the anonymous Helpline at 1-877-888-0002 or write to PO BOX 8118, Austin, Texas 78713 or e-mail helpline@compliance.utexas.edu.

Compliance MonitoringThe University of Texas at AustinEmployee Compliance GuideAcknowledgment FormI HEREBY ACKNOWLEDGE AND AGREE:1. That I have received a copy of the “Employee Compliance Guide”.2. That I have read this guide and understand that I am responsible and accountable for

conducting my daily work activities in an honest and professional manner.3. That I will obey the rules and regulations and policies and procedures outlined in this

Guide.4. That this original acknowledgment will be placed in my department personnel file and

maintained by my department._________________________________________Employee Name (printed)_________________________________________Employee Signature Date__________________________________________Supervisor Name (printed)__________________________________________Supervisor Signature Date

Compliance MonitoringFINANCIAL DISCLOSURE AND CONFLICT OF INTEREST STATEMENT

I. NAME OF EMPLOYEE:_______________________________________________Position Held:____________________________________________________________

II. NAME OF SPOUSE:________________________________________________Name and Address of Spouse’s Employer:____________________________________Position Held:__________________________________________________________ If Spouse is Self-Employed, Nature of Occupation:_____________________________

III. NAME OF DEPENDENT CHILD 1: ____________________________________Name and Address of Child’s Employer: ______________________________________Position Held: ___________________________________________________________If Child is Self-Employed, Nature of Occupation: ____________________________

NAME OF DEPENDENT CHILD 2:______________________________________Name and Address of Child’s Employer:____________________________________Position Held:_________________________________________________________If Child is Self-Employed, Nature of Occupation: ____________________________

Compliance MonitoringNAME OF DEPENDENT CHILD 3: ______________________________________Name and Address of Child’s Employer: ____________________________________Position Held: ________________________________________________________If Child is Self-Employed, Nature of Occupation: ______________________________IV. List each business entity in which you, your spouse, or a dependent child has a substantial interest. Also indicate the position held, whether any compensation has been received from the business entity, and the category of the type of interest as provided by Subsection (c) below. For purposes of this item:

(a) “Business entity” means any entity recognized by law through which business for profit is conducted, including a sole proprietorship, partnership, firm, corporation, holding company, joint stock company, receivership, or trust.

(b) “Compensation” does not include sources of “passive income,” such as alimony, child support, interest on savings and investments, inheritances, annuities, pensions, or dividends.

Compliance Monitoring“Substantial interest” in a business entity means:

(1) a controlling interest;(2) ownership of more than 10 percent of the voting interest;(3) ownership of more than $25,000 of the fair market value;(4) a direct or indirect participating interest by shares, stock, or

otherwise, regardless of whether voting rights are included, in more than 10 percent of the profits, proceeds, or capital gains;

(5) service as a member of the board of directors or other governing board,

including a trustee or advisory director;(6) service as an officer; or(7) service as an employee.

Individual: _______________________________________________________Name of Business Entity: ___________________________________________Office or Position Held: ____________________________________________Compensation (Yes/No)Category of Interest (1 through 7 above): ___________

Compliance MonitoringV. List each nonprofit corporation in which you, your spouse, or dependent child served as a member of the governing board, including a trustee or advisory director, or served as an officer.Individual: ______________________________________Name of Nonprofit Corporation: ______________________________________Office or Position Held: ______________________________________

Additional MeasuresRisk Management Programs serve as a deterrent Formal Risk Management programs consist of a systematic identification of the core processes for an entity, the activities associated with these processes, an evaluation of the risks associated with those activities in terms of the impact and probabilities of occurance, what kind of controls are in place to mitigate those risks and how those controls are monitored. These kinds of programs can reinforce a culture of awareness for ethical and compliant behavior and identify unknown risks as well. Additional steps can be taken to eliminate or minimize risks associated with those activities.

Compliance MonitoringVI. Identify any person or entity that has given a gift of anything of value in the preceding calendar year that exceeds $250 in value to you, your spouse, or your dependent children. Do not include gifts received from:

(1) your parent, child, sibling, grandparent, or grandchild; (2) the spouse of an individual listed in Paragraph (1); or(3) the parent, child, sibling, grandparent, or grandchild of

your spouse.Individual: ____________________________________________________Donor of Gift: __________________________________________________Brief Description of Gift: ____________________________________________

Compliance MonitoringVII. To the best of your knowledge, do any of the entities or donors identified in Items IV –VI above have any business relationship with the U.T. System or any of its institutions? ____ Yes ____ NoIf yes, provide the name of the entity and a brief description of the relationship with the U.T. System or the institution.Entity or Donor: _____________________________________Description of Relationship: _____________________________________

Compliance Monitoring

VIII. ACKNOWLEDGMENT. By executing this document, I acknowledge that I have read the Standards of Conduct provided by Section 572.051, Government Code, and the Conflict of Interest policy under the Regents’ Rules and Regulations, Series 30104.[1] The information I have provided is for the purpose of assuring compliance with the Standards of Conduct and the Regents’ Rules and Regulationsand disclosing possible conflicts of interest. I understand that it is my responsibility to comply with the Standards of Conduct, the Regents’ Rules and Regulations, and any other applicable state law, rule, or policy governing conflicts of interest.

[1] These provisions may be found on the U.T. System website at www.utsystem.edu/ogc/ethics.htm.

Compliance MonitoringIX. CERTIFICATION. I hereby certify that to the best of my knowledge and belief the information provided by me in this financial disclosure statement is true and correct.Signature: _____________________________________Date: _________________________________________

X. REVIEW BY DEPARTMENT HEAD. I am the head of the department in which this employee works. I have reviewed the information provided by the employee in this financial disclosure statement.Signature: ______________________________________Print Name: ____________________________________Title and Department: ____________________________Date: _________________________________________

Compliance MonitoringCompliance Training Reports are run on a regular basis.

Example: Office of the Registrar

Below you will find an alphabetical list of employees who have not received credit for one or more of the training modules, and a list of the specific modules still needed.

Jane Doe) has not yet completed:CW 121 Sexual Harassment (last completed 03/08/2006)CW 123 Equal Employment Opportunity -EEO- (last completed 03/08/2006)

John Doe) has not yet completed:CW 123 Equal Employment Opportunity -EEO- (last completed 03/13/2006)

Your total number of employees to be trained: 6 out of 87 employees.

Compliance MonitoringCompliance Training SystemYour Compliance Training Profile The profile below contains four lists: compliance training modules you've already completed, additional modules you are required to take, optional modules available if you wish to take them, and acknowledment statements. Click on any of the module numbers to go directly to the online training page for that module. You can find out more about compliance training by contacting the Compliance Training Coordinator at (512) 232-7842.

Compliance MonitoringName: Michael D Allen

Modules Needed CW 101 Introduction to U.T. Compliance Program (10 min.) Must be retaken on or before 04/14/2008

Modules Completed CW 102 Use of U.T. Austin Property (4 min.) CW 103 Information and Records (6 min.) CW 106 Gifts and Gratuities (4 min.) CW 107 Political Activities and Contributions (3 min.) CW 108 Copyrighted Property (5 min.)

Compliance MonitoringCW 121 Sexual Harassment (9 min.) Must be retaken on or before 01/03/2009 CW 122 A Safe Workplace (9 min.) CW 123 Equal Employment Opportunity -EEO- (18 min.) Must be retaken on or before 01/03/2009 CW 124 Overtime Compensation, Exempt & Nonexempt Timekeeping (3 min.) CW 125 Family and Medical Leave Act -FMLA (4 min.) CW 126 Outside Employment (5 min.)

Associations of Higher EducationAMERICAN COUNCIL ON EDUCATION

Working Paper on Conflict of Interest[1]Executive Summary This working paper is intended to help colleges and universities strengthen institutional policies and practices with regard to ethical institutional practices, including identification and management of conflicts of interest. The report begins with the premise that an institution’s reputation for integrity is its most precious asset. To a very large extent, higher education institutions throughout the country carry out their missions in a manner consistent with the highest ethical standards and have in place sound policies and practices to ensure ethical conduct. [1] American Council on Education Website http://www.acenet.edu/AM/Template.cfm?Section=Search

Associations in Higher Education - National Association of Student Financial Aid Administrators (NASFAA)

Statement of Ethical Principles and Code of Conduct For Institutional Financial Aid Professionals

The above principles were updated in May 2007 and are available at: http://www.nasfaa.org/subhomes/MediaCenter/NASFAACodeofConduct.pdf

Associations in Higher Education - NASFAAOn May 29, 2007 NASFAA adopted the following rules for it's annual meeting In light of recent concerns regarding the appearance of possible conflicts of interest among lenders andfinancial aid administrators, we have decided that it is in the best interests of the Association and its members to redefine the scope of permissible involvement by prospective contributors, exhibitors and advertisers in the NASFAA Annual Conference. Chief among these changes is the adoption of the following policies and procedures, which are applicable to all entities that desire either to support NASFAA activities as a donor, exhibit at a NASFAA conference, or advertise in a NASFAA publication. We believe that the adoption of these policies and procedures will clarify our relationship with the entities that support our efforts in a manner that is consistent with our NASFAA Code of Conduct for Financial Aid Administrators in avoiding any appearance of conflict of interest, as well as being consistent with NASFAA’s obligations as a tax-exempt educational organization pursuant to Sections 501(c)(3) and 509(a)(2) of the Internal Revenue Code. Each form of relationship is discussed separately below.

Associations in Higher Education – NASFAA – Annual Meeting1. Advertisers

All existing advertising agreements, including those for the Conference program, will be honored. There is no change in NASFAA policies respecting advertising in NASFAA publications and on NASFAA’s website, provided all such advertising is consistent with Internal Revenue Service requirements.

2. Exhibitors at the Annual Conference.Contracts for exhibit space at the NASFAA Annual Conference will continue to be honored.However, prospective exhibitors must agree to the rules and procedures outlined below. A prospective exhibitor who does not agree to these rules and procedures will not be permitted to exhibit, and an exhibitor who violates any of these rules must promptly cease any suchaction, and, at the discretion of NASFAA, may be required to remove his or her exhibit.

Associations in Higher Education – NASFAA – Annual MeetingGifts or give-aways must be of nominal value (i.e. less than $10 fair market value).All prize drawings, including scholarships, are prohibited. Exhibitors may not offer conference participants the opportunity to sign up for or enroll in any contests or toreceive gifts or give-aways at a later time in excess of the stated nominal value.Exhibitors are expected not to organize, sponsor or conduct any social activities directed towards Annual Conference attendees.Exhibitors may sell their products and services; however, such sales may include only products and services that are normally marketed by the exhibitor.Exhibitors may not sell their products and services in conjunction with Financial Aid Business Solutions Seminars (FABS).Demonstration rooms may not be used for meal or reception purposes. Non-alcoholic beverages and light snacks may be served.Exhibitors may organize, sponsor or conduct non-social events, such as focus, advisory or user groups. Only non-alcoholic beverages and light snacks may be served.

Associations in Higher Ed. NACACAdmissions Group to Tackle Conflict of Interest Issues[1]

Many admissions officials were aghast in February to find out that some private admissions consultants — people paid by parents to navigate the college admissions process for their children — were also holding paid jobs with colleges or high schools. The situation — which other admissions officials said was an open secret — came to light when Inside Higher Edreported on a University of Pennsylvania admissions officialwho had ties to a Japanese company that helped business school applicants and who ran her own admissions business. (The Penn official has since eliminated both of those non-Penn ties.)

[1] Inside Higher Ed, March 10, 2008 http://www.insidehighered.com/news/2008/03/10/nacac

AACRAO Task Force on EthicsAACRAO appointed an Ethics Task Force in the fall of 2007 which began preliminary organizational efforts early this spring. An ethics consultant was employed to assist in this effort and the task force will hold it's initial meeting on Tuesday, March 25, 2008.

Associations in Higher Ed. AACRAOAACRAO Professional Practices and Ethical StandardsThe American Association of Collegiate Registrars and Admissions Officers (AACRAO) is concerned with the advancement of postsecondary education and the standards and conduct of those professionals who are involved at all levels. To provide guidance to these professionals, AACRAO has adopted the following principles which exemplify those qualities and attributes that distinguish members of the Association both past and present.

AACRAOAACRAO members shall:Believe in and be loyal to the philosophy and goals of the profession and the institutions we serve.

Understand and respect the civil and human rights and responsibilities of all individuals while supporting and protecting the principles of due process and confidentiality.

Adhere to the principles of nondiscrimination and equality without regard to race, color, creed, gender, sexual orientation, age, disability, religion, or national origin.

Represent an institutional or Association perspective without vested interests or personal bias.

Initiate policies that support the goals of our profession.

Assert ourselves when policies or practices are proposed that seem to be contrary to the philosophy and goals of our professions and our institutions.

AACRAO Participate in and contribute to professional activities and their development to ensure effective and efficient management of resources, data, and personnel.Communicate an accurate interpretation of our institutions’ admissions criteria, educational costs, financial aid availability, and major offerings to assist prospective students and their parents in making an informed decision.Assist in improving educational standards and methods of evaluation at the institutional, state, and federal level so that grading is meaningful in reflecting the academic achievement of students.Understand and appreciate the dynamics of interpersonal relationships when dealing with students, parents, faculty, administration, associates, and the public.Develop and implement effective management systems that will ensure integrity, confidentiality, security of institutional records, and provide an accurate interpretation of such information.Dedicate ourselves to the ideals and principles that will enable students to develop their talents and interests to become responsible citizens and contributors to the improvement of society.Practice honesty and integrity in our professions and in our lives.

AACRAO – Conflict of Interest PolicySection 1: Interested Party.Any director, officer, volunteer, member of a committee with Board-delegated powers or employee who has a financial interest in a transaction or arrangement is an interested party, and subject to this policy.Section 2: Financial Interest. A person has a financial interest in a transaction or arrangement if the person has, directly or indirectly, through business, family, or investment –An ownership, investment, or fiduciary interest in any entity with which the Association has a transaction or arrangement, or - A compensation arrangement with the Association or with any entity or individual with which the Association has a transaction or arrangement, or a potential ownership, investment, or fiduciary interest in, or compensation arrangement with, any entity or individual with which the Association has or is negotiating a transaction or arrangement, or - an ownership, investment or fiduciary interest or compensation arrangement, or potential ownership or investment interest or compensation arrangement, with any entity or individual that is a competitor of an entity or individual with which the Association has or is negotiating a transaction or arrangement.

AACRAO – Conflict of Interest PolicySection 3: Procedures. In connection with any actual or potential conflicts of interest, the interested person shall disclose the existence and nature of his or her financial interest in a transaction or arrangement to the directors or members of committees with Board-delegated powers considering the proposed transaction or arrangement. After disclosing the financial interest, the interested person shall not participate in the Board or committee’s consideration of whether a conflict of interest exists. If the Board or committee finds that there is an actual or potential conflict of interest, the individual shall not participate in the discussion or decision. Alternately, the board or committee shall appoint a disinterested individual or a committee of

AACRAO- Conflict of Interest PolicyContinued from previous slide-

disinterested individuals to investigate the transaction or arrangement and obtain appropriate information about the terms of comparable transactions or arrangements that would not give rise to a conflict of interest and that would be reasonably available to the Association. Before entering into the transaction or arrangement, the Board or committee with board-delegated powers shall review the comparability information to determine whether the transaction or arrangement is in the Association’s best interest and for its own benefit and whether it is fair and reasonable to the Association. The Board or committee shall decide whether to enter into the transaction or arrangement by majority vote.

AACRAO-Conflict of Interest PolicySection 4: Records of Proceedings. The minutes of the Board and all committees with board-delegated powers shall contain: The names of the persons who disclosed or otherwise were found to have a financial interest in an actual or proposed transaction or arrangement, any action taken to determine whether an actual or potential conflict of interest was present, and the Board or committee’s decision as to whether a conflict of interest in fact existed. - The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including the basis for the Board or committee’s decision that the transaction was fair and reasonable to the Association, and a record of any votes taken therewith.

AACRAO-Conflict of Interest PolicySection 5: Violations of Conflicts of Interest Policy. If the Board of Directors learns that a director, officer, volunteer, member of a committee with Board-delegated powers, or employee has failed to disclose an actual or possible conflict of interest as required by Section 3, it shall inform the individual and afford an opportunity for the individual to explain the alleged failure to disclose. After hearing the individual’s response, the Board shall take appropriate action if any action is needed.

Summary and Conclusions

Ethics and conflict of interest violation have significant impact in terms of financial costs and trust in organizations. The cumulative effect of financial costs and loss of trust in organizations has resulted in significant statutory inducements to promote ethical behavior in organizations. As a result, there is a renewed interest in ethics, compliance, and conflict of interest policies in almost all organizations, both public and private.

Summary and ConclusionsAlthough some ethics policies contain statements about what organizations and their members should aspire to be, compliance programs, standards of conduct, and conflict of interest policies are generally legalist and normative in their approach. These programs are necessary to reduce or mitigate the risk of liability to top management of the organization and individuals within organizations, who are subject to prosecution under federal sentencing guidelines as well as state statutes.

Summary and ConclusionsIn addition to reducing the risk of prosecution to management of organizations, ethics policies, conflict of interest policies and standards of conduct provide behavioral guidelines that can be articulated within the organization. By education, training, and monitoring for compliance, organizations can promote a healthy ethical environment.

Ultimately it is the ethical statement of organizational values and the creation of a culture that embraces those values which results in the most effective ethical environment and healthy organizations. It is not an easy thing to do given the diversity of individuals and variety of circumstances that comprise organizations.