B-248532 October 26, 1992

B-248532: Oct 26, 1992

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APPROPRIATIONS/FINANCIAL MANAGEMENT Accountable Officers Disbursing officers Relief Illegal/improper payments Fraud Relief is granted to finance officers who had in place at the time of the improper payments at issue an adequate system of procedures and controls to safeguard the funds in their care. (One of the documents you submitted indicates that the man was an impostor. Ford had an identification card and travel orders purported to have been issued by Headquarters. The orders were for travel from various locations to the Army's basic recruiter course at Fort Benjamin Harrison. Who is now separated from the Army. Both the persons who made the improper payments (the cashiers) and the persons in whose names the accounts are officially held (the AFOs) are liable as disbursing officers for the amounts of the improper payments.

B-248532 October 26, 1992

APPROPRIATIONS/FINANCIAL MANAGEMENT Accountable Officers Disbursing officers Relief Illegal/improper payments Fraud Relief is granted to finance officers who had in place at the time of the improper payments at issue an adequate system of procedures and controls to safeguard the funds in their care, and to their subordinates who followed these procedures. The improper payments resulted from criminal activity that even an adequate and effectively supervised system cannot always prevent.

Jerry Coleman Acting Director Defense Finance and Accounting Service Department of Defense Denver, Colorado 80279-5000

Dear Mr. Coleman:

This responds to your request that we grant relief, under our authority in 31 U.S.C. Sec. 3527(c), to the following accounting and finance officers (AFOs) for improper payments totalling $6,029: Col. Jon R. Morris, AFO, Bolling Air Force Base ($2,289); Maj. Omar R. Arocho, AFO, Homestead Air Force Base ($620); Capt. Catherine A. Frey, AFO, MacDill Air Force Base ($1,500); 1st Lt. Timothy D. Brown, AFO, Myrtle Beach Air Force Base ($1,000); and 1st Lt. Ann M. Kaup, AFO, Grissom Air Force Base ($620). You also request that we relieve from liability the subordinate officers, the cashiers, at these five Air Force bases who made the improper payments. For the reasons given below, we grant relief as you requested.

The improper payments occurred between November 15, 1989 and June 7, 1990, when Simmie L. Ford, Jr., a sergeant in the United States Army, presented requests for travel advances at the five Air Force bases identified above. (One of the documents you submitted indicates that the man was an impostor, purporting to be Sgt. Ford.) Sgt. Ford had an identification card and travel orders purported to have been issued by Headquarters, United States Army Recruiting, Fort Sheridan, Illinois. The orders were for travel from various locations to the Army's basic recruiter course at Fort Benjamin Harrison, Indiana. Mr. Ford, who is now separated from the Army, apparently used a 1985 travel order which he altered so as to appear valid. Since Mr. Ford has not been apprehended, no collection action has been taken.

In cases such as this, both the persons who made the improper payments (the cashiers) and the persons in whose names the accounts are officially held (the AFOs) are liable as disbursing officers for the amounts of the improper payments. See, e.q., 62 Comp.Gen. 476 479-80 (1983); B-240280, May 22, 1991. This Office has authority under 31 U.S.C. Sec. 3527 (c) to relieve a disbursing officer from liability for an improper payment if we determine that the payment was not the result of bad faith on lack of reasonable care. B-240654, Feb. 6, 1991, B-229827, Jan. 14, 1988. Where subordinates of the finance officer actually disbursed the funds, as is the case here, we relieve the finance officer upon a showing that he properly supervised his subordinates, maintained an adequate system of procedures and controls to safeguard the funds, and took steps to ensure the system's implementation and effectiveness. B-246418, Feb. 3, 1992, B-228859, Sept. 11, 1987. The good faith and reasonable care of the cashier who made the payment can be shown by evidence that the cashier complied with these procedures, and that nothing occurred which should have made the cashier suspicious of fraud. B-229827, Jan. 14, 1988.

Your submission documents that these finance officers had instituted adequate systems of procedures and controls to safeguard the funds in their care, and that the subordinates followed these procedures. In this regard, the finance officers had instituted existing Air Force procedures with respect to travel (TDY) advances. AFR 177-103(3), Para. 31-3 (Nov. 15, 1989). Furthermore, the cashiers complied with these procedures. Moreover, nothing in the record suggests that the cashiers should have been suspicious of the fraudulent nature of the transactions. Indeed, the improper payments were apparently the result of skillfully executed criminal activity that even an adequate and effectively supervised system cannot always prevent. e.g., B-241880, Aug. 14, 1991, B-232575, Nov. 8, 1992. Accordingly, since there is no indication of bad faith or lack of reasonable care on their parts, relief is granted to the finance officers and to their subordinate officials as requested.

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