84.13

OPINION NO. 84-13

An advisory opinion has been requested as to whether a teacher of business law and the Chairman of the Business Administration Department at Towson State University (TSU) may own and manage a private CPA review course.

This request is presented by the office of the TSU President on behalf of a faculty member (the Faculty Member) who teaches business law and is currently Chairman of the Business Administration Department at TSU. This Department, with the Accounting and Economics Departments, make up the School of Business and Economics. Though he does not teach any accounting courses, the Faculty Member's classes include accounting majors along with business and economics majors and other disciplines. He is also the owner and manager of a private incorporated post secondary school offering review courses in preparation for the Maryland CPA exam. This exam is given by the Maryland Board of Public Accountancy (the Board), and involves several units, each of which must be passed in order for a person to be certified as a public accountant.

The Public Accountancy Law (Article 75A, Annotated Code of Maryland) establishes certain educational requirements for a person to be eligible to sit for the exam, including a baccalaureate degree with an accounting major. Accountancy Board regulations define a major in accounting as constituting a minimum of 36 hours in accounting and related accounting subjects. These include, among others, financial accounting, auditing, and business law. Exams are given twice a year in May and November. Applicants must apply 60 days before the exam, and must have completed the educational requirements prior to application. To some extent passing scores may be retained and the applicant may retake the exam as to the other units. The CPA review courses taken by applicants are not licensed or otherwise regulated by the Board, though they must be approved by the State Board for Higher Education in order to be eligible for veteran's benefit payments. According to Board personnel, individuals inquiring about a review course are referred to the Yellow Pages, without recommendation or identification of particular courses.

The Faculty Member's course is advertised, by its corporate name only, in the school papers of several Baltimore schools, including TSU, University of Baltimore and Loyola University. He also has a brochure, which does identify him by name, that he places at bulletin boards of the campuses. He may also use direct mail advertising, using lists of individuals who recently took the exam that are available from the Board. Apparently, only about 20 percent of those taking the exam pass it all the first time, and often 50 percent or more of those in his course are taking the exam for the second time. The Faculty Member states that his students have all already graduated from college, with the August-to-November course including a larger percentage of recent graduates.

According to the Faculty Member, he has never announced his courses in his TSU classes, or otherwise recruited students for his course from his classes. He has never had a current TSU student in a review course, and he states that he does not have or expect to have duties advising students as to matters that would involve review courses or other post graduate activities. The price of the course is $445. He estimates that approximately 30 percent of his students are former TSU students, and approximately 30 percent are graduates of the University of Baltimore. He indicates that this is generally reflective of the geography of the area and the market for CPA review schools. (There are apparently three such schools in the area.) According to him, TSU's student population includes about 67 percent Baltimore residents, and the school therefore has the largest number of local graduates taking the CPA exam.

This request raises potential issues under §3-103(a)(1)(ii), 3-104 and 3-107 of the Public Ethics Law.1 First, §3-103(a)(1)(ii) forbids any outside employment that would impair an employee's impartiality or independence of judgment. The Faculty Member is the manager of the review course, and would have an employment relationship with it. Based on our prior interpretations of this section, this employment would be prohibited if the relationship between the Faculty Member's official duties and the course gives rise to clear and serious concerns about his ability to engage in the activity and still maintain his impartiality and independence of judgment in carrying out his official duties. See our Opinions No. 83-25, No. 83-4, No. 82-51, No. 82-37, and No. 81-28 for additional discussion of this provision.2

In our review of this section the Commission has not required the existence of an actual present conflict, though we have generally looked to identify some substantive official work responsibilities that would or could be impacted by an employee's private affiliations. (See in particular our Opinion No. 81-28.) For example, in Opinion No. 83-25, we considered application of this provision to a State University instructor of music who also owned and managed a music supply business. Given the individual's significant day-to-day relationships with students and his responsibilities to advise them regarding purchase of instruments, sheet music and other supplies, we concluded that his operation of the business in selling supplies to students was inconsistent employment prohibited by §3-103 (a)(1)(ii).

We find the circumstances here, however, to be quite different. The Faculty Member's course involves only graduates, and he indicates that he does not in any way market or have other direct dealings with his students regarding his CPA review course. He teaches only two of the University's twenty-one business law sections, and does not advise students. We thus do not see the same kind of direct relationship between the Faculty Member's teaching duties and his private business as existed in our earlier Opinion. Many of his students would not be accounting majors anticipating taking a CPA review course, nor would the course be tied in any direct way to the student's progress in a TSU business law course. The Faculty Member indicates that the University does not offer a similar or related course, and states that courses in the School of Business and Finance are not generally geared in any direct way to the practical aspects of passing the CPA exam. Further, we note in our review of this request that the Faculty Member is covered by the American Association of University Professors Statement on Professional Ethics, which prohibits any "exploitation of students for private advantage," and also by provisions of the faculty contract. The University representative indicates that this activity is acceptable and consistent with these guidelines.

Under all of these circumstances, and given the distance between the Faculty Member's teaching and departmental responsibilities and his private review course activities, we do not believe that there is a likelihood of impairment of judgment or impartiality as contemplated by §3-103(a)(1)(ii). We are aware, though, of the potential issues raised here under the use of prestige provisions in §3-104, and the improper use of information bar of §3-107. Both of these could be at issue given the Faculty Member's access in the classroom to students who could expect to be candidates for the CPA exam, and his review course, and because of his access to information about students, and their majors and academic schedules. We have not in the past, however, taken the position that the mere potential for abuse to occur under these sections was a basis for absolutely barring an activity altogether under §3-103(a)(1)(ii). (See, for example, Opinions No. 84-5 and No. 82-49.)

We do not believe that the facts presented by the Faculty Member require a different approach here. We do, however, advise him that, though the circumstances do not require an absolute bar under §3-103(a)(1)(ii), he must be aware of the continued application of the other provisions of the Law, and take great care to avoid any situations that would raise issues under them. For example, §3-101 would prohibit his participation in any student advising or other matters that would impact on the course. He must also be sure not to use any information about students or their activities (gained through his official position) to market or otherwise advance his review course, and should take care to avoid any marketing in his classroom or in other campus situations where he might be viewed as using his position as a teacher to advance his private economic interests.3

Reverend John Wesley Holland
    Betty B. Nelson
    Barbara M. Steckel
    Thomas D. Washburne

Date: May 1, 1984

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1 Article 40A, Annotated Code of Maryland, the Ethics Law. Since there are no contractual or regulatory relationships between the individual's course and TSU, there would appear to be no issues under the strictly worded provisions of §3-103 (a)(1)(i).

2 Except as otherwise expressly cited to the Maryland Register, Opinion citations are to Commission Opinions published at COMAR Title 19A.

3 We note that the Faculty Member's brochure, which is available on campus, does identify his TSU background and credentials. We have in prior cases indicated that the usual and standard identification of State employment as part of one's resume or qualifications does not by itself constitute misuse of prestige as contemplated in §3-104. (See, for example, Opinions No. 82-36 and No. 82-37.) As long as his identification as a TSU professor is limited to this, and is not highlighted as part of a marketing or advertising campaign, then its continued use would be allowable.