The GAO Report on Federal Financial Disclosures

The U.S. Government Accountability Office (GAO) report, "Financial Disclosure: Updates Are Needed to the Public Reporting Requirements," highlights critical aspects of the federal ethics program, emphasizing the effectiveness and challenges of financial disclosure systems established under the Ethics in Government Act of 1978 (EIGA). These systems aim to promote governmental integrity, mitigate conflicts of interest, and maintain public trust. Yet, they are now facing calls for modernization to address inconsistencies and outdated elements.

The financial disclosure program involves public and confidential filings by federal employees, with the Office of Government Ethics (OGE) overseeing these systems in the executive branch. Public filers, including senior officials and high-level employees, disclose financial data to ensure transparency. Meanwhile, confidential filers, generally mid-level employees with conflict-prone responsibilities like procurement and grant administration, provide similar data tailored for internal agency use. In 2023, over 29,000 public reports and 420,000 confidential reports were filed, underscoring the program's extensive reach.

The GAO underscores that the financial disclosure system is rooted in legislation from 1978, a period vastly different from today's economic landscape. Recommendations for improvement focus on four key areas: raising reporting thresholds, simplifying value categories, ensuring regulatory consistency, and eliminating unnecessary disclosures. For instance, the $1,000 asset disclosure threshold and $10,000 liability reporting benchmark were set decades ago and fail to reflect inflation and economic changes. Updating these thresholds would align reporting requirements with current financial realities, reducing undue burdens while maintaining oversight efficacy.

The GAO also calls for simplification of the value categories for disclosed assets and liabilities, arguing that the current structure creates unnecessary complexity. Standardizing these categories and aligning them with other regulatory frameworks would improve the process for both filers and reviewers. Additionally, certain disclosures—like minor cash accounts or non-influential assets—may no longer serve a purpose in identifying conflicts of interest. Removing these requirements could streamline the system, saving time without diminishing its integrity.

Modernizing public disclosure requirements would likely require legislative action, as OGE lacks the authority to amend statutory provisions. The GAO emphasizes that while OGE has updated its guidance and regulations for confidential filings, public reporting standards remain frozen in time. For instance, the STOCK Act of 2012 introduced new mandates, such as disclosure of stock transactions over $1,000, but broader reforms to the EIGA have stalled.

Moreover, the report raises concerns about the lack of recent evaluations by OGE. The last substantial review of the public reporting system occurred in 2005, predating significant economic and technological shifts. The GAO recommends that OGE update its recommendations and collaborate with Congress to ensure the program remains relevant and effective in addressing conflicts of interest and promoting transparency.

The implications of this report extend beyond administrative efficiency. A modernized financial disclosure system could enhance public confidence in government, particularly in an era of growing scrutiny over ethical standards. By addressing outdated provisions, policymakers can reduce bureaucratic burdens while ensuring the system remains robust and fit for purpose.

This blog post summarizes key points from the GAO report for informational purposes only. It does not guarantee accuracy or serve as legal advice.