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Tag Archives: OSTP

SOX-Like Controls for Scientific Integrity

Yesterday, President Obama called for a restoration of scientific integrity to government decision-making in a sweeping Presidential Memorandum.  Specifically, he directed the Office of Science and Technology Policy (OSTP) to develop recommendations “designed to guarantee scientific integrity throughout the executive branch.”

Well, I have a recommendation: OSTP should use the Sarbanes-Oxley Act (SOX) as a model to create a set of internal controls and disclosure controls for assessment and reporting of the use of scientific information by government agencies.

Why?  Three reasons:

  1. The principles in the Presidential Memorandum indicate several parallels to SOX and general corporate governance requirements, as set out in the chart below
  2. Scientific information is critical as an input to govenrment decision making just as much as financial information is critical to corporate decision making, and should be treated that way, and
  3. OSTP could leverage existing governance expertise, which is key, because they only have 120 days from yesterday to develop the recommendations.

Concept

Presidential Memorandum

Sarbanes-Oxley / Governance

Oversight

The Director of OSTP is responsible for “ensuring the highest level of integrity in all aspects of the executive branch’s involvement with scientific and technological processes.”

The PCAOB was created to protect investors and the public interest by promoting informative, fair, and independent audit reports.

Competence

The selection and retention of candidates for science and technology positions in the executive branch should be based on the candidate’s knowledge, credentials, experience, and integrity;

Not strictly part of SOX, but governance rules include the requirement for a financial expert on the audit committee.

Integrity/ Independence

Each agency should have appropriate rules and procedures to ensure the integrity of the scientific process within the agency;

Title II of SOX establishes standards for external auditor independence, to limit conflicts of interest.

Accuracy

When scientific or technological information is considered in policy decisions, the information should be subject to well-established scientific processes, including peer review where appropriate, and each agency should appropriately and accurately reflect that information in complying with and applying relevant statutory standards;

Title III of SOX requires that senior executives certify the accuracy and completeness of corporate financial reports.  Civil and criminal liability attaches to certifications by the CEO and CFO that the company’s public filings “fairly present in all material respects” the relevant financial information.

Disclosure

Except for information that is properly restricted from disclosure under procedures established in accordance with statute, regulation, Executive Order, or Presidential Memorandum, each agency should make available to the public the scientific or technological findings or conclusions considered or relied on in policy decisions;

This is not new with SOX.  Public disclosure has been the cornerstone of securities laws since the 1930s.

Monitor procedures

Each agency should have in place procedures to identify and address instances in which the scientific process or the integrity of scientific and technological information may be compromised; and

SOX requires certification of internal controls to ensure that any “significant deficiencies” and “material weaknesses” are addressed;  and certification of disclosure controls to ensure that “material information … is made known to management.”

Protect whistleblowers

Each agency should adopt such additional procedures, including any appropriate whistleblower protections, as are necessary to ensure the integrity of scientific and technological information and processes on which the agency relies in its decisionmaking or otherwise uses or prepares.

SOX Section 1107 contains whistleblower protections, including criminal penalties for violations.

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