Relative Risk - Conflicts of Interest and Near Relatives
The University of California’s Standards of Ethical Conduct include expectations that all University community members take appropriate actions to avoid not only conflicts of interest, but also the appearance of such conflicts. The articles in this issue below are intended to help identify when employment of near relatives can cause the appearance of conflict of interest, and what can be done to help mitigate that appearance.
- PPSM-21 Conflict Of Interest Scenarios
- Avoiding Near Relative Conflicts of Interest
- New Financial Management Dashboard Metrics
Near Relatives - PPSM-21 Conflict of Interest Scenarios
PPSM-21 defines a near relative (by blood, adoption, marriage, or domestic partnership) as the spouse, domestic partner (same or opposite sex), child, parent, brother, sister, all in-law relationships, aunt/uncle, niece/nephew, first cousins (to include step-relatives) and others for whom the employee is legally responsible. Identification of near relatives is supposed to occur in the job application and the Pre-Employment Data Form.
Near relatives are not prohibited from working in the same department when it is UC’s best interests, but controls need to be in place to avoid putting employees in situations where a Conflict of Interest (COI) could arise such as directly or indirectly supervising a near relative. Prior approval by the Chancellor is required when near relatives would have direct or indirect supervisory relationship to each other, share the same supervisor or when two employees become near relatives creating one of these situations. “Direct” and “indirect” supervision are not defined in UC policy, so interpretation falls to each campus.
Direct Supervision:
An employee may not participate in the process of reviewing or decision-making on any matter concerning the appointment, promotion, salary, retention, termination, or other management decisions or personnel-related decisions regarding a near relative. For example, it would be inappropriate for the supervising near relative to participate in the performance review of the reporting near relative. However, the participation of one near relative in the reorganization of a department in which a near relative works would be allowable if the action impacts everyone in the department and not just the near relative.
Indirect Supervision:
UCSF interprets “indirect supervision” as a higher up in a department with the ability to make decisions impacting how work gets done. Essentially, if one can impact how work is performed, they cannot have a near relative in their chain-of-command. For example, a manager being put in the unenviable position of reviewing the performance evaluation of their boss’s near relative would not be permitted without prior Chancellor approval, as it would be viewed as indirect supervision.
Avoiding Near Relative Conflicts of Interest
According to PPSM-21: Selection and Appointment, the employment of near relatives in the same department may only be permitted when such concurrent employment serves the best interests of the University. Without proper controls, there are opportunities for collusion and fraud, conflict of interest, and other negative unintended consequences.
The hiring of near relatives in the same department is a unique situation that requires proper controls around approval, performance evaluation, pay setting, verification of credentials, and deciding to hire the near relative whether for a paid or unpaid position. When it comes to approval, near relatives should have another person not related to them perform the function of approving timesheets, purchases, and reimbursements to name a few. Also, to avoid conflict of interest, a person not related to the near relative should conduct the following: (1) performance evaluation and pay setting of the near relative; (2) making the decision to hire the near relative whether for a paid or unpaid position; and (3) verifying credentials of the near relative. By adding an independent person in the process, the department can prevent collusion and fraud, conflict of interest, and inequity in its hiring and promotion practices.
New Financial Management Dashboard Metrics
To expand UCSF’s Continuous Monitoring Program, Audit & Advisory Services has enhanced the Financial Management Dashboard with the addition of the below six new metrics to provide department managers, Control Points, and central units with quick indicators to help monitor potential financial risks.
- Payroll Default Chartstrings: Identifies campus payroll transactions requiring correction after posting to department default chartstrings due to invalid funding setup
- Payroll Transactions in Suspense: Identifies campus payroll transactions requiring correction after posting to payroll suspense due to invalid funding setup
- Claimed Receivables: Tracks the timeliness of cash deposits and recording of the receivables to identify opportunities to reduce claim processing timeframes and improve cash flow
- Award Verification: Tracks quarterly award verifications by Principal Investigators using the Award Verification Tool as an indicator of compliance with sponsored award regulations
- Sponsored Accounts Receivables Balances: Tracks accounts receivable balances for sponsored awards
- Cost Share: Tracks the number of sponsored awards with cost share commitments and progress in meeting those commitments to comply with award contract terms
The dashboard was first launched in August 2018 and provides easy-to-view charts highlighting transactions that may merit additional management review.
For more information, see the Financial Management Dashboard section of the Audit & Advisory Services website or log into the dashboard through MyAccess. Training sessions have been scheduled as detailed below, starting in late August. Questions regarding the Financial Management Dashboard can be emailed to: [email protected]
- August 24, 2022, SOM Finance Managers meeting: 11:00 – 12:00
- September 6, 2022, SOD Finance managers meeting: 1:00 – 2:00
- September 8, 2022, SOP Finance meeting: 11:00 – 12:00
- September 12, 2022, CPFO Working Group: 3:00 – 4:00
- September 15, 2022, Research Administration Town Hall: 1:30 – 3:30