A-78657, OCTOBER 24, 1936, 16 COMP. GEN. 417

A-78657: Oct 24, 1936

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FRACTIONS - COMPUTATION - GOVERNMENT TRANSACTIONS THE COMPUTATION OF FRACTIONAL CENTS IN GOVERNMENT TRANSACTIONS ON A BASIS OTHER THAN IN ACCORDANCE WITH THE COMMERCIAL RULE IS NOT OBJECTIONABLE. AS FOLLOWS: THIS DEPARTMENT IS IN RECEIPT OF A LETTER FROM THE ATLANTIC REFINING COMPANY. WITH WHICH WAS ENCLOSED A COPY OF YOUR LETTER OF AUGUST 24 (A- 78657) RELATIVE TO COMPUTATIONS INVOLVING FRACTIONAL PARTS OF A CENT. COPIES OF SUCH LETTERS ARE ENCLOSED FOR YOUR CONVENIENT REFERENCE. THE DEPARTMENT UNDERSTOOD THAT THIS WAS THE PROPER METHOD TO BE FOLLOWED. IN VIEW OF THE FACT THAT THERE IS INVOLVED A QUESTION OF THE PROPER BASIS UPON WHICH PAYMENT SHOULD BE MADE BY TREASURY DISBURSING OFFICERS.

A-78657, OCTOBER 24, 1936, 16 COMP. GEN. 417

FRACTIONS - COMPUTATION - GOVERNMENT TRANSACTIONS THE COMPUTATION OF FRACTIONAL CENTS IN GOVERNMENT TRANSACTIONS ON A BASIS OTHER THAN IN ACCORDANCE WITH THE COMMERCIAL RULE IS NOT OBJECTIONABLE, BUT, ALL THINGS CONSIDERED, IT WOULD APPEAR PREFERABLE THAT THE COMMERCIAL PRACTICE BE UNIFORMLY APPLIED THROUGHOUT THE GOVERNMENT SERVICE IN TRANSACTIONS WITH THE PUBLIC GENERALLY.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, OCTOBER 24, 1936:

THERE HAS BEEN CONSIDERED YOUR LETTER OF SEPTEMBER 24, 1936, AS FOLLOWS:

THIS DEPARTMENT IS IN RECEIPT OF A LETTER FROM THE ATLANTIC REFINING COMPANY, 260 SOUTH BROAD STREET, PHILADELPHIA, PENNSYLVANIA, DATED AUGUST 31, 1936, WITH WHICH WAS ENCLOSED A COPY OF YOUR LETTER OF AUGUST 24 (A- 78657) RELATIVE TO COMPUTATIONS INVOLVING FRACTIONAL PARTS OF A CENT. COPIES OF SUCH LETTERS ARE ENCLOSED FOR YOUR CONVENIENT REFERENCE.

IN CONNECTION WITH THIS MATTER, I AM ALSO ENCLOSING A COPY OF ADMINISTRATIVE INSTRUCTIONS ISSUED BY THE COMMISSIONER OF ACCOUNTS AND DEPOSITS PURSUANT TO EXECUTIVE ORDER 7034, DATED MAY 6, 1935, OUTLINING THE METHOD TO BE FOLLOWED IN TREASURY ACCOUNTS OFFICES IN CONNECTION WITH THE ADMINISTRATIVE EXAMINATION OF VOUCHERS. THE DEPARTMENT UNDERSTOOD THAT THIS WAS THE PROPER METHOD TO BE FOLLOWED. SINCE IT DOES NOT APPEAR, HOWEVER, THAT THE QUESTION HAS BEEN DECIDED BY THE COMPTROLLER GENERAL OF THE UNITED STATES, AND IN VIEW OF THE FACT THAT THERE IS INVOLVED A QUESTION OF THE PROPER BASIS UPON WHICH PAYMENT SHOULD BE MADE BY TREASURY DISBURSING OFFICERS, IT WOULD BE APPRECIATED IF YOU WOULD ADVISE THIS DEPARTMENT WITH RESPECT TO THE PROPER METHOD TO BE USED.

FIELD OFFICE MEMORANDUM NO. 224, ISSUED FEBRUARY 4, 1936, BY THE COMMISSIONER OF ACCOUNTS AND DEPOSITS, IN CONNECTION WITH THE ADMINISTRATIVE EXAMINATION OF VOUCHERS, PROVIDES IN MATERIAL ART:

1. THE FOLLOWING METHOD IS GENERALLY PRESCRIBED FOR COMPUTING FRACTIONAL PARTS OF ONE CENT IN THE DETERMINATION OF VOUCHER PAYMENTS:

CHART

COMPUTED AMOUNT TO BE

AMOUNT CERTIFIED

$1.014 $1.01

1.015 1.01

1.016 1.02

2. WHEN AN INVOICE REPRESENTING A SINGLE TRANSACTION INCLUDES A NUMBER OF ITEMS INVOLVING FRACTIONAL EXTENSIONS, THE FRACTIONAL RULE SHOULD BE APPLIED TO THE TOTAL AMOUNT OF THE INVOICE, AS IN THE EXAMPLE BELOW, AND NOT TO THE FRACTIONAL EXTENSIONS OF THE COMPONENT ITEMS.

CHART

MATHEMATICAL APPROVED TOTAL

QUANTITY UNIT PRICE EXTENSION AMOUNT OF INVOICE 7 QUARTS OF OIL ----- 0.25 1/2 1.78 1/2 ----------------- 5 GALLONS OF GAS ---- .18 1/2 .92 1/2 ---------------- 9 SPARK PLUGS ------- .37 1/2 3.37 1/2 -----------------

TOTAL -------------------- 6.08 1/2 $6.08

3. WHEN AN INVOICE COVERS A NUMBER OF ITEMS CONSTITUTING A SERIES OF INDEPENDENT TRANSACTIONS, THE COMPUTATION OF WHICH IS PREDICATED ON DISSIMILAR UNIT PRICES RESULTING IN FRACTIONAL EXTENSIONS FOR EVERY ITEM, THE FRACTIONAL RULE SHOULD BE APPLIED TO EACH INDIVIDUAL TRANSACTION AND NOT TO THE AGGREGATE AMOUNT. THE FOLLOWING ILLUSTRATION OF A SERIES OF GASOLINE TRANSACTIONS DISCLOSES THE METHOD OF COMPUTING INVOICES OF THIS TYPE:

CHART

APPROVED

MATHEMATICAL METHOD OF

QUANTITY UNIT PRICE EXTENSION COMPUTATION 5 GALLONS (1) ------- $0.19 1/2 $0.97 1/2 -------------- 3 GALLONS --- ------- .19 1/2 .58 1/2

$1.56 7 GALLONS ----------- .17 1/2 1.22 1/2 1.22 9 GALLONS ----------- .18 1/2 1.66 1/2 1.66

TOTAL ---------------------- 4.45 4.44

(1)SINCE THE 2 INDEPENDENT TRANSACTIONS OF 5 AND 3 GALLONS, RESPECTIVELY, WERE MADE AT THE SAME UNIT PRICE, THE COMPUTATION IS OBTAINED BY MULTIPLYING THE TOTAL NUMBER OF GALLONS THUS PURCHASED BY THE UNIT PRICE OF 19 1/2 CENTS.

4. IN COMPUTING FRACTIONAL CHARGES RENDERED BY TELEGRAPH, CABLE, AND RADIO COMPANIES FOR GOVERNMENT MESSAGES, IT WILL BE NECESSARY TO FOLLOW THE PROCEDURE PRESCRIBED IN SECTION 66 OF THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS, AS AMENDED:

"IN CASES WHERE THE CHARGE FOR A GOVERNMENT MESSAGE, DETERMINED AS HEREIN PROVIDED, SHALL INCLUDE A FRACTION OF A CENT, SUCH FRACTION, IF LESS THAN ONE-HALF, IS TO BE DISREGARDED; IF ONE-HALF OR MORE, IT IS TO BE COUNTED AS ONE CENT.'

5. WHERE THE FRACTIONAL CALCULATIONS ON A VOUCHER SUBMITTED BY AN AGENCY OR DEPARTMENT OF THE UNITED STATES GOVERNMENT CONFORM TO SPECIFIC ADMINISTRATIVE INSTRUCTIONS PROMULGATED PURSUANT TO EXPRESS STATUTORY AUTHORITY, THE APPLICABLE DEPARTMENTAL REGULATIONS GOVERN THE METHOD OF COMPUTATION. AN EXAMPLE THEREOF IS FOUND IN THE ADMINISTRATIVE PROCEDURE OF THE NAVY DEPARTMENT IN COMPUTING NAVAL REIMBURSEMENT VOUCHERS COVERING MATERIAL EXPENDED FROM THE NAVAL SUPPLY ACCOUNT AT THE NEXT HIGHEST CENT IN THE CASE OF FRACTIONAL EXTENSIONS RANGING FROM FIVE MILLS TO NINE MILLS (ARTICLE 1146 OF THE BUREAU OF SUPPLIES AND ACCOUNTS MANUAL, 1929, NAVY DEPARTMENT). THE SAID ADMINISTRATIVE INSTRUCTIONS WERE ISSUED BY THE PAYMASTER GENERAL OF THE NAVY AND WERE APPROVED BY THE SECRETARY OF THE NAVY, IN ACCORDANCE WITH THE ACT OF MARCH 1, 1921, 41 STAT. 1170.

6. IN THE CASE OF GOVERNMENT PAY ROLLS, ALL FRACTIONAL PAYMENTS ARE DISREGARDED. IN THIS CONNECTION, YOUR ATTENTION IS DIRECTED TO FIELD OFFICE MEMORANDUM NO. 39, AND INSTRUCTIONS BEARING JOB NUMBER 78, ISSUED BY THE OFFICE OF THE COMMISSIONER OF ACCOUNTS AND DEPOSITS, AND ENTITLED ,EXTRACTS FROM GENERAL ACCOUNTING OFFICE--- GOVERNMENT SALARY TABLES SHOWING BASIC SALARIES, LESS THREE AND ONE-HALF PERCENT CIVIL SERVICE RETIREMENT REDUCTIONS AND NET AMOUNT TO BE PAID.'

THE MATTER OF COMPUTING FRACTIONAL CENTS IS NOT SPECIFICALLY COVERED BY STATUTE, ALTHOUGH THE COMMON PRACTICE IN DEALING WITH THE PUBLIC GENERALLY HAS BEEN TO FOLLOW THE COMMERCIAL RULE. SUCH PRACTICE IS RECOGNIZED BY THE CONGRESS IN THE MATTER OF COLLECTING TAXES. SEE SECTION 56 (G), ACT OF MAY 10, 1934, 48 STAT. 699, AND SECTION 8 (D), ACT OF AUGUST 29, 1935, 49 ID. 976. WHILE THERE APPEARS TO BE NO LEGAL OBJECTION TO THE TREASURY DEPARTMENT ISSUING INSTRUCTIONS TO ITS ACCOUNTS OFFICES IN CONNECTION WITH THE DUTIES IMPOSED UNDER EXECUTIVE ORDER NO. 7034, DATED MAY 6, 1935, TO FOLLOW A MORE STRICT PRACTICE IN THE INTEREST OF THE GOVERNMENT, THERE MAY BE FOR ADMINISTRATIVE CONSIDERATION WHETHER A DEPARTURE FROM THE GENERALLY ACCEPTED COMMERCIAL PRACTICE OF COMPUTING FRACTIONAL CENTS, PARTICULARLY AS SET FORTH IN THE FIRST AND THIRD ILLUSTRATION AND IN THE DROPPING OF THE HALF CENT IN THE TOTAL IN THE SECOND ILLUSTRATION OF THE ABOVE-QUOTED FIELD OFFICE MEMORANDUM, WILL RESULT IN ANY APPRECIABLE DEGREE OF SAVINGS TO THE GOVERNMENT. IT WOULD APPEAR FROM A BROAD ACCOUNTING VIEWPOINT THAT THE UNIFORM APPLICATION OF THE COMMERCIAL PRACTICE THROUGHOUT THE GOVERNMENT SERVICE IN DEALING WITH THE PUBLIC GENERALLY IS PREFERABLE, SINCE SUCH A PRACTICE MAKES FOR UNIFORMITY IN THE HANDLING OF ACCOUNTS, ELIMINATES EXTRA ACCOUNTING DETAIL, AND TENDS TO SIMPLIFY FISCAL RELATIONS WITH THE PUBLIC.