Follow-Up of Board of Ethics Lobbyist Registration Audit

The City of Chicago Office of Inspector General (OIG) has completed a follow-up to its March 2016 audit of the lobbyist registration process. Based on the Board of Ethics’s (BOE) responses, OIG concludes that BOE has partially implemented corrective actions related to two of the audit findings and fully implemented corrective actions related to a third audit finding.

The purpose of the March 2016 audit was to review BOE’s efforts to identify active lobbyists and to provide reasonable assurance as to the veracity of information in lobbyist disclosures. The audit also evaluated BOE’s process for levying fines against late-registering lobbyists. Our audit found that,

  1. BOE did not provide reasonable assurance as to its identification of all active lobbyists or the veracity of information in lobbyist disclosures;
  2. process gaps and clerical errors related to hardcopy disclosures impeded BOE’s ability to identify and levy fines against late filers; and
  3. while BOE properly identified late, electronically-filed registrations in 2014, it declined to levy the full fine allowable under the Ethics Ordinance.

Based upon the results of our audit, we recommended that BOE,

  1. exercise its authority to “recommend policies, procedures and practices designed to ensure compliance with any federal, state or local law or regulation or any of the city’s compliance-related policies and internal controls”1 to implement more robust quality assurance best practices. In addition, we recommended that BOE include, under the lobbyist registration signature line, a reference to the penalty for providing false statements;
  2. stop accepting lobbyist disclosures via hardcopy submission, address recordkeeping issues, document criteria used to assess the completeness of a registration, formalize reliance on postmarks as evidence of filing dates, and treat hardcopy submission envelopes as public records; and
  3. levy the full amount of fines allowable by the Ethics Ordinance beginning with the first day after the annual registration deadline and formalize in its Rules and Regulations its guidelines for what constitutes a “suitable explanation” for late filing.

In its response to the audit, BOE described a number of corrective actions it would take.

In February 2017, OIG inquired with BOE regarding the status of the corrective actions the Board committed to in response to OIG’s audit and any other actions it may have taken. On the following pages we have summarized the three original audit findings and recommendations, as well as BOE’s response to our follow-up inquiry.

Based on BOE’s follow-up response, OIG concludes that BOE has partially implemented corrective actions related to the audit’s first finding. BOE researched the practices of other jurisdictions but chose not to implement any changes to address the concerns conveyed in our recommendation. BOE’s recent spate of probable cause findings related to potential unregistered lobbying activity illustrates the need for more robust quality assurance practices governing lobbyist registration. We encourage the Board to identify and, if necessary, recommend amendments to the Ethics Ordinance that would boost the likelihood of identifying lobbyists who have failed to file or have provided inaccurate disclosures.

OIG concluded that BOE fully implemented corrective action on the audit’s second finding by transitioning to an electronic-only filing system in 2017. BOE partially implemented corrective actions on the third finding. The Board disagreed with our finding regarding the date when fines should be levied and thus took no action to address it. However, the Board did amend its guidelines with regard to what constitutes a suitable justification for late filing by providing examples of circumstances in which the Executive Director may exercise his discretion to accept a late filing.