Governmental Update

Elizabeth Thyer, CPA, Partner

One of the hot topics from the audits last year was the Gift Law. Chapter 68B of the Code of Iowa prohibits public officials and employees from accepting or soliciting gifts from anyone defined as a restricted donor. Even if the public official or employee has a long-standing relationship or friendship that predates their role in government, the acceptance of gifts is prohibited to prevent unacceptable conflicts of interest or the appearance of impropriety.

A restricted donor is defined as (1) a person that is seeking to be a party to any one or combination of sales, purchases, leases or contract to, from or with the government entity in which the donee holds office or is employed or (2) a person who will personally be, or is the agent of a person who will be, directly and substantially affected financially by the performance or nonperformance of the donee’s official duty in a way that is greater than the effect on the public generally or on a substantial class of persons to which the person belongs as a member of a profession, occupation, industry or region.

There are some exceptions to the Gift Law. There are several examples outlined in the Code of Iowa as allowable items. These items include: (1) items available or distributed free to members of the general public (2) nonmonetary items with a value of $3 or less (3) items received from an organization the donee belongs to as a dues-paying member, but only if the items are given to all members of the organization and if the dues paid are not inconsequential compared to the items received (4) food/beverage/lodging for participation in a panel or speaking engagement (5) items at conferences or seminars of organizations primarily for state or local government officials or employees.

Some examples of potential non-compliance are detailed as follows: (1) a vendor taking a public official or employee out for meals, (2) multiple restricted donors pooling funds to give a gift with a value over the $3 limit (3) a vendor providing a free gift with a purchase made by the government entity (4) a vendor offering trips or vacations or allowing government officials or employees to stay free in a vendor’s condo (5) vendors or customers providing items such as fruit baskets, poinsettias, gift cards, free clothing samples, etc.

If a nonmonetary gift is received that violates the Gift Law, there are some options for the disposition of this matter. It is allowable to donate the gift within 30 days to a public body, the Department of Administrative Services, or an educational or charitable organization. It is also allowable to share the fruit basket with all city or county staff.