Standards for private organizations

2020 Edition

Governance (GOV) 7: Conflict of Interest

The organization prevents the enrichment of insiders and other abuses through the adoption and enforcement of a conflict of interest policy.
2020 Edition

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VIEW THE STANDARDS

Purpose

The organization's governing body is sufficiently active, capable, and diverse to guide, plan, and support the achievement of the organization’s mission and goals.
Note: Please see the Conflict of Interest Policy and Procedures Template for additional guidance on this standard.
1
The organization's practices fully meet the standard, as indicated by full implementation of the practices outlined in the GOV 7 Practice standards.
2
Practices are basically sound but there is room for improvement, as noted in the ratings for the GOV 7 Practice standards.
3
Practice requires significant improvement, as noted in the ratings for the GOV 7 Practice standards; e.g.,
  • Conflict of interest policy provides minimal guidance to stakeholders due to lack of specificity, significant missing elements, or significant stakeholders not covered; or
  • Minor conflict of interest concerns are noted.
4
Implementation of the standard is minimal or there is no evidence of implementation at all, as noted in the ratings for the GOV 7 Practice standards; e.g.,
  • Significant conflict of interest concerns have been reported.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Conflict of interest policy
  • Ethical referral policy
  • Policy prohibiting preferential treatment
  • Governing body and/or committee meeting minutes documenting discussions of potential and apparent conflicts of interest from the previous 12 months
  • Sample of network information illustrating ownership disclosure language
  • Interviews may include:
    1. CEO
    2. Governing body
    3. Advisory group
    4. CFO
    5. Relevant personnel
    6. Persons served/community members
  • Network interviews may include:
    1. Network advisory group
    2. Directors of organizations that contract with the managing entity
    3. Network personnel involved in assessments and referral

Fundamental Practice

GOV 7.01

A conflict of interest policy is tailored to the organization’s specific needs and characteristics, and:
  1. defines conflict of interest;
  2. identifies groups of individuals within the organization covered by the policy;
  3. addresses policy enforcement;
  4. provides a framework for evaluating situations that may constitute a conflict; and
  5. invests management with developing procedures that facilitate disclosure of information to prevent and manage potential and apparent conflicts of interest.
1
The organization has implemented a conflict of interest policy as per the requirements of the standard.
2
Practices are basically sound, but there is room for improvement; e.g.,
  • One of standard's elements is not fully addressed.
3
Practice requires significant improvement; e.g.,
  • The policy provides minimal guidance to stakeholders due to lack of specificity; or
  • Stakeholders are unaware of the policy; or
  • Two of the elements are not fully addressed; or
  • One of the elements is not addressed at all.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • No policy exists; or
  • The policy is not enforced or is ignored in practice.

Fundamental Practice

GOV 7.02

The conflict of interest policy requires governing body members, advisory group members, personnel, and consultants who have a financial interest in the organization’s assets, business transactions, leases, or professional services to:
  1. disclose this information; and
  2. not participate in any discussion or vote taken with respect to such interests.

Interpretation

Governing body members who receive compensation for professional services they provide as consultants cannot be part of the organization’s audit review process.
1
The organization’s conflict of interest policy fully addresses the requirement for disclosure of conflicts of interest and for recusal from decisions related to such interests.
2
Practices are basically sound but there is room for improvement; e.g.,
  • The policy related to one of the standard's elements needs clarifying.
3
Practice requires significant improvements; e.g.,
  • Applicable stakeholders are not clearly identified; or
  • The types of transactions that must be disclosed are not delineated; or
  • Safeguards regarding disclosure or recusal are insufficient; or
  • Governing body members or other important stakeholders are not aware of the policy.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • Conflict of interest violations have occurred.

GOV 7.03

The conflict of interest policy addresses nepotism with regard to hiring, supervision, and promotion.

Interpretation

This standard permits the hiring of relatives, provided that relatives are qualified and do not work within the same hierarchy of supervision.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • Some aspect of the policy requires clarification.
3
Practice requires significant improvement, e.g.,
  • Staff report that there have been instances of nepotism or preferential treatment; or
  • The organization chart indicates that at least one person is directly supervised by a relative.
4
Implementation of the standard is minimal or there is no evidence of implementation at all.

GOV 7.04

The organization prohibits:
  1. making or accepting payment or other consideration in exchange for referrals;
  2. preferential treatment of organization members, community partners, members of the organization's governing body, advisory groups, personnel, or consultants applying for and receiving the organization’s services; and
  3. steering or directing referrals to private practices in which personnel, consultants, or the immediate families of personnel and consultants are engaged.

Interpretation

It is permissible to include on referral lists personnel and consultants with private practices, or family members of personnel and consultants, but the organization may not actively direct service recipients to the practices of these individuals and must clarify in writing the relationship between the private practitioners and the organization.
 

Interpretation

When private practice is permitted on the organization’s premises persons served should receive information clarifying the relationship between the private practitioner and the organization.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • Some aspects of the policy are vaguely written, but there have been no ethical violations of the principles outlined in the standard.
3
Practice requires significant improvement, e.g.,
  • Significant aspects of the policy are vaguely written or confusing; or
  • The policy does not address at least one of the standards elements; or
  • The policy exists but enforcement is lax and there have been a few instances where it has been violated; or
  • The policy is generally understood but it is an unwritten expectation.
4
Implementation of the standard is minimal or there is no evidence of implementation at all: e.g.,
  • No policy exists; or
  • The policy is not enforced or is ignored in practice.

GOV 7.05

The network prohibits unfairly steering or directing referrals to, or "creaming" clients for specific network service provider organizations, such as network owners, or individual practitioners within the network.
NA The organization is not a network management entity.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • Some aspects of the policy are vaguely written, but there have been no violations of the principles outlined in the standard.
3
Practice requires significant improvement, e.g.,
  • The policy exists but enforcement is lax and there have been a few instances where it has been violated; or
  • The policy is generally understood but it is an unwritten expectation.
4
Implementation of the standard is minimal or there is no evidence of implementation at all: e.g.,
  • No policy exists; or
  • The policy is not enforced or is ignored in practice.

GOV 7.06

When the network management entity, organizations with an ownership interest in the network, or members of the network's board of directors provide direct services to network clients, the network management entity discloses all ownership, partnership, or governance arrangements in all written and online information describing the network.
Network

Interpretation

In partner networks, which typically consist of a group of organizations that have joined together to form a new, separately incorporated network entity, the partner organizations often have a direct financial stake in the network, as well as a direct role in the network's governance, decision-making, and outcomes. In such cases partner organizations can be considered the network's "owners." A network can use a simple statement such as "The XYZ Network is a partnership of provider organizations in Clark County" on letterhead or other written material, as long as the network makes more detailed written information, such as a list of all "owners" available upon request.

NA The organization is not a network management entity.

NA The network, board members, nor any organizations with an ownership interest in the network provide direct services to network clients.

1
Networks disclose ownership, partnership and governance arrangements as per the requirements of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • The statement is either vaguely written or somewhat confusing.
3
Practice requires significant improvement; e.g.,
  • Ownership interest, etc., is not clearly disclosed in at least one example of written material describing the network; or
  • There is a potential for actual or perceived conflict of interest, such as inappropriate competitive advantage in favor of network owners; or
  • The network makes it difficult to obtain a list of owners.
4
Implementation of the standard is minimal or there is no evidence of implementation at all.