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B-114874 1 (1973-02-20)

handle is hein.gao/gaobaaenc0001 and id is 1 raw text is: xc t b L ene_, , AccoUI 6fjiO/XC t th ba o p, fiaPa byth fee 4Con tonal atio V e or of h2 isk~y ,k*3th tri I on on, Pub licatt Bra , OAS ,uI TROLLER GENERAL OF THE UNITED STATES WASHINGTON, D.C. 2o,, RELEASED B-14874 FEB 2 0 1973 Dear Mr. Gross: Your letter of October 25, 1972, requested that we eva1- uate the United States Postal Service's October 18, 1972, letter to you which expressed the opinion that the firm of Ernst - Ernst was not involved in a conflict of interest. The Postal Service's letter responded to your letter concern- ing the possibility of such a conflict because of the firm's relationship with the Postal Service and with one or more mail users who participated in rate proceedings before the Postal Rate Commission. You asked that we consider the Postal Service's comments in light of the work we performed in preparing our report to you on the Postal Service's rationale for engaging Ernst & Ernst (B-114874, Sept. 7, 1972). We discussed this matter with officials of Ernst & Ernst and of the Postal Service and reviewed pertinent records, regulations, legislation, and the Code of Professional Ethics of the American Institute of Certified Public Accountants. To place our comments on these matters in proper per- spective, it is necessary to consider the meaning of the term conflict of interest. The only legislation relating to this subject--in title 18 of the United States Code--is generally restricted in application to employees and officers of the Federal Government and not to contractors., such as Ernst . Ernst. To our knowledge, there is no definition of the specific circumstances, conditions, or actions that con- stitutes a conflict of interest in a situation such as this. Consequently, in the absence of specified criteria, the con- firmation or denial of the existence of a conflict of interest on the part of Ernst & Ernst is a matter of opinion, and, in any event, without legal effect within the application of the conflict of interest laws. Within this framework, we believe that the Postal Service's assertion that Ernst & Ernst was not in conflict of interest is reasonable. Ideally it would have been preferable for the Postal Service to have engaged a firm of certified public account- ants (CPA's) whose clientele did not include any large o,7-S

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