B-230118, Mar 1, 1988, Office of General Counsel

B-230118, Mar 1, 1988, Office of General Counsel

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing Officers - Relief - Illegal/Improper Payments - Fraud DIGEST: U.S. Army Finance and Accounting Officer is relieved of liability for an improper payment made by an unidentified Class A agent officer in cashing a fraudulently endorsed check. It appears that the standard operating procedures in effect at the time of the loss were adequate to prevent losses of this type from occurring. The loss in this case was the result of criminal activity outside the control of the finance and accounting officer.

Colonel John P. Barrow, Chief of Staff, Finance Corps:

This is in response to your January 22, 1988, request that relief be granted under 31 U.S.C. Sec. 3527(c) for an improper payment of $261 chargeable to the account of Maj. L. L. Greisz, Finance Corps, DSSN 6342, U.S. Army Garrison (Panama), APO Miami. For the reasons stated below, relief is granted. /1/

The loss in this case occurred sometime after October 31, 1984, when United States Treasury check number 29238919, dated October 31, 1984, representing the end of month pay of Specialist Four Ricky D. Carpenter, was cashed with a fraudulent endorsement. The Finance and Accounting Officer (FAO) was made aware of the fraudulent transaction when a Debit Voucher, dated August 30, 1985, was received from the Chase Manhattan Bank, the FAO's authorized depository.

According to your submission, neither the identity of the Class A agent officer who cashed the check nor a copy of the officer's standard operating procedures in effect at the time of the questioned transaction are available.

As the disbursing officer officially responsible for the account, Major Greisz is personally liable for deficiencies in his accounts caused by improper payments made by his subordinates. See 62 Comp.Gen. at 476. In order for us to grant him relief, we must find that he properly supervised his subordinate by maintaining an adequate system of procedures and controls to safeguard the funds and took steps to insure the system's implementation and effectiveness. E.g., 62 Comp.Gen. at 480.

Although a copy of standard operating procedures in effect at the time of the loss could not be found, Lt. Col. D. A. wright, the current FAO, has provided a statement that indicates that Class A agent officer instructions were available when the improper payment was made and that those instructions were basically the same as those currently in effect. Under current requirements Class A agents are responsible for establishing positive identification of each payee before making payment. This includes comparing the payee's identification (ID) card with the check to ensure that the name, social security number, and signatures match. addition, the appearance of the payee should correspond to the photograph on the ID card. On the basis of this statement, you have determined that the improper payment was not caused by bad faith or lack of reasonable care on the part of Major Greisz and recommend relief be granted.

Although we are concerned that the identity of the cashier could not be determined and that a copy of the SOP's in effect at the time of the loss could not be located; it appears from reviewing the current SOP's and Lt. Col. D. A. Wright's statement that the procedures in effect at the time of the loss were adequate to safeguard the funds and were properly maintained. The improper payment here was the result of criminal activity -- the apparent presentation of false identification and a fraudulently endorsed check-- over which Major Greisz had no control. Even the most carefully established and effectively supervised system cannot prevent every conceivable form of criminal activity. B-219124, July 15, 1985. Under these circumstances, we grant relief as requested.

Finally, collection action has not been attempted in this case because the identity of the individual who perpetrated the fraud has not been established. Of course, if in the future the Army identifies this individual, it should diligently pursue collection. 31 U.S.C. Sec. 3527(c).

/1/ You also requested relief for Fort Davis Atlantic Community Class B Agent Officer, Captain Randy B. Lawrence. Since the account was not held in Captain Lawrence's name and he did not make the improper payment at issue here, Captain Lawrence would not be pecuniarily liable for the loss. Therefore, there is no need for us to relieve him.