B-123429, APR 1, 1955

B-123429: Apr 1, 1955

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REQUESTS A DECISION ON TWO QUESTIONS WHICH HAVE ARISEN IN THE DRAFTING OF A JOINT REGULATION PROPOSED TO BE ISSUED UNDER THE AUTHORITY OF SECTION 115 OF THE BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950. THE FIRST QUESTION IS WHETHER THE TREASURER WOULD BECOME LIABLE TO THE UNITED STATES BY PAYING A CHECK IN AN AMOUNT GREATER THAN THE AMOUNT PROPERLY AVAILABLE FOR DISBURSEMENT BY THE SIGNATORY DISBURSING OFFICER. 000 WERE PAID INTO THE REGISTRY OF A DESIGNATED FEDERAL COURT AND DEPOSITED BY THE CLERK OF SUCH COURT WITH THE TREASURER. IT IS ASKED WHETHER WE WOULD DECIDE THAT THE CHECK "WAS ENTIRELY PAID OUT OF THE FUNDS OF THE UNITED STATES. PROVISION IS MADE FOR CHECKS TO BE DRAWN AGAINST THE GENERAL ACCOUNT OF THE TREASURER OF THE UNITED STATES.

B-123429, APR 1, 1955

PRECIS-UNAVAILABLE

MR. SECRETARY:

LETTER OF MARCH 25, 1955, FROM THE ACTING SECRETARY OF THE TREASURY, REQUESTS A DECISION ON TWO QUESTIONS WHICH HAVE ARISEN IN THE DRAFTING OF A JOINT REGULATION PROPOSED TO BE ISSUED UNDER THE AUTHORITY OF SECTION 115 OF THE BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950, PUBLIC LAW 784, APPROVED SEPTEMBER 12, 1950, 64 STAT. 832. THE PROPOSED REGULATION WOULD PROVIDE FOR THE PAYMENT OF VOUCHERS BY AUTHORIZED DISBURSING OFFICERS BY MEANS OF CHECKS ISSUED AGAINST THE GENERAL ACCOUNT OF THE TREASURER OF THE UNITED STATES.

THE TWO QUESTIONS PRESENTED FOR DECISION CONCERN THE LIABILITY OF THE TREASURER UNDER THE PROVISIONS OF SECTION 3 OF THE ACT OF AUGUST 4, 1947, 61 STAT. 730, WHICH PROVIDES THAT THE TREASURER SHALL NOT BE LIABLE FOR THE PAYMENT OF CHECKS IN DUE COURSE AND WITHOUT NEGLIGENCE. THE FIRST QUESTION IS WHETHER THE TREASURER WOULD BECOME LIABLE TO THE UNITED STATES BY PAYING A CHECK IN AN AMOUNT GREATER THAN THE AMOUNT PROPERLY AVAILABLE FOR DISBURSEMENT BY THE SIGNATORY DISBURSING OFFICER. THE SECOND QUESTION INVOLVES A HYPOTHETICAL CASE WHERE FUNDS IN THE AMOUNT OF $10,000 WERE PAID INTO THE REGISTRY OF A DESIGNATED FEDERAL COURT AND DEPOSITED BY THE CLERK OF SUCH COURT WITH THE TREASURER. THAN THE CLERK, INTENDING TO ABSCOND, DRAWS AND SECURES THE PAYMENT OF A CHECK IN THE AMOUNT OF $11,000. IT IS ASKED WHETHER WE WOULD DECIDE THAT THE CHECK "WAS ENTIRELY PAID OUT OF THE FUNDS OF THE UNITED STATES, AND DID NOT DEPLETE THE REGISTRY FUNDS IN QUESTION."

SUBSECTION 115(B) OF THE BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950 PROVIDES AS FOLLOWS:

"SUCH REGULATIONS MAY FURTHER PROVIDE FOR THE PAYMENT OF VOUCHERS BY AUTHORIZED DISBURSING OFFICERS BY MEANS OF CHECKS ISSUED AGAINST THE GENERAL ACCOUNT OF THE TREASURER OF THE UNITED STATES: PROVIDED, THAT IN SUCH CASE THE REGULATIONS SHALL PROVIDE FOR APPROPRIATE ACTION IN THE EVENT OF DELINQUENCY BY DISBURSING OFFICERS IN THE RENDITION OF THEIR ACCOUNTS OR FOR OTHER REASONS ARISING OUT OF THE CONDITION OF THE OFFICERS' ACCOUNTS, INCLUDING UNDER NECESSARY CIRCUMSTANCES, THE SUSPENSION OR WITHDRAWAL OF AUTHORITY TO DISBURSE."

THIS PROVISION OF LAW SPECIFICALLY AUTHORIZES THE SECRETARY OF THE TREASURY AND THE COMPTROLLER GENERAL, WHEN THEY DETERMINE THAT EXISTING PROCEDURES CAN BE MODIFIED IN THE INTEREST OF SIMPLIFICATION, IMPROVEMENT, OR ECONOMY, WITH SUFFICIENT SAFEGUARDS OVER THE CONTROL AND ACCOUNTING FOR THE PUBLIC FUNDS, TO ISSUE JOINT REGULATIONS PROVIDING FOR THE PAYMENT OF VOUCHERS BY AUTHORIZED DISBURSING OFFICERS BY MEANS OF CHECKS ISSUED AGAINST THE GENERAL ACCOUNT OF THE TREASURER OF THE UNITED STATES. ONCE THIS JOINT DETERMINATION HAS BEEN MADE, WE SEE NO LEGAL LIMITATION ON THE EXTENT TO WHICH THE PROVISIONS OF SECTION 115(B), BY JOINT REGULATION, CAN BE MADE APPLICABLE TO ANY CHECKING ACCOUNT ON THE TREASURER'S BOOKS, INCLUDING THOSE MAINTAINED FOR THE LEGISLATIVE AND JUDICIAL BRANCHES OF THE GOVERNMENT, THE DISTRICT OF COLUMBIA, AND GOVERNMENT CORPORATIONS.

WHERE, PURSUANT TO SUCH A JOINT REGULATION, PROVISION IS MADE FOR CHECKS TO BE DRAWN AGAINST THE GENERAL ACCOUNT OF THE TREASURER OF THE UNITED STATES, THE TREASURER OBVIOUSLY WOULD HAVE NO AVAILABLE MEANS TO DETERMINE THE SUFFICIENCY OF BALANCES AS A FACTOR IN THE PAYMENT OF CHECKS. FOLLOWS THAT THE TREASURER WOULD HAVE NO LIABILITY SOLELY DUE TO THE PAYMENT OF A CHECK IN AN AMOUNT GREATER THAN THE AMOUNT PROPERLY AVAILABLE FOR DISBURSEMENT BY THE AUTHORIZED SIGNATORY DISBURSING OFFICER. YOUR FIRST QUESTION IS ANSWERED ACCORDINGLY. LIKEWISE, IN THE HYPOTHETICAL CASE, SINCE THE CHECK IN THE AMOUNT OF $11,000 WOULD HAVE BEEN DRAWN AGAINST THE GENERAL ACCOUNT OF THE TREASURER, THE TREASURER WOULD HAVE INCURRED NO LIABILITY REGARDLESS OF WHETHER THE REGISTRY FUNDS, IN THE PARTICULAR CIRCUMSTANCES, WERE DEPLETED.

THE ACTING SECRETARY'S LETTER INDICATES THAT THE JOINT REGULATION WOULD PROVIDE THAT THE USE OF FUNDED CHECKING ACCOUNTS IN THE ISSUANCE AND PAYMENT OF CHECKS DRAWN ON THE TREASURER OF THE UNITED STATES WOULD BE DISCONTINUED EXCEPT WHERE THE SECRETARY OF THE TREASURY MAY DETERMINE THAT FUNDED CHECKING ACCOUNTS ARE ESSENTIAL FOR ADMINISTRATIVE NEEDS OF THE TREASURY IN CONNECTION WITH PARTICULAR FUNDS OR ACTIVITIES. SUCH EXCEPTION WOULD TEND TO THROW SOME DOUBT UPON THE JOINT DETERMINATION REQUIRED BY SECTION 115(B), QUOTED ABOVE. IT THEREFORE SEEMS PREFERABLE TO US TO DETERMINE AT THIS TIME WHICH FUNDED CHECKING ACCOUNTS ARE ESSENTIAL FOR ADMINISTRATIVE NEEDS OF THE TREASURY AND TO EXCLUDE THEM FROM THE PROVISIONS OF THE JOINT REGULATION. AS SOON AS IT CAN BE JOINTLY DETERMINED THAT THE CHECKING ACCOUNTS SO EXCLUDED CAN BE ELIMINATED, THE JOINT REGULATION MAY BE AMENDED ACCORDINGLY.

THE PROPOSALS DEVELOPED BY OUR STAFFS IN CONNECTION WITH THIS ENTIRE MATTER AFFORD AN OPPORTUNITY FOR CONSIDERABLE SIMPLIFICATION OF PROCEDURES WITHOUT LOSS OF ESSENTIAL SAFEGUARDS OVER THE CONTROL AND ACCOUNTING FOR PUBLIC FUNDS. THE ANALYZES OF ACTUAL EXPERIENCE UNDER PRESENT PROCEDURES, MADE IN CONNECTION WITH THE DEVELOPMENT OF THESE PROPOSALS, SEEM TO ME TO CONFIRM THE GENERAL PROPOSITION ON WHICH THE PROPOSALS ARE BASED THAT THE MAINTENANCE OF FUNDED CHECKING ACCOUNTS ON THE TREASURER'S RECORDS DO NOT IN FACT CONTRIBUTE TO EFFECTIVE CONTROL OVER THE DISBURSEMENT OF PUBLIC FUNDS WITHIN AVAILABLE LIMITS OR FOR LEGALLY AUTHORIZED PURPOSES. THE REAL POINTS OF CONTROL FOR THIS PURPOSE MUST BE RECOGNIZED AS BEING IN THE PROCEDURES AND SAFEGUARDS ESTABLISHED PRIOR TO THE ISSUANCE OF CHECKS AND THE PROPOSALS WHICH HAVE BEEN DEVELOPED WILL FURTHER SHARPEN UP THIS CONCEPT.

IT SEEMS CLEAR, THEREFORE, THAT WE JOINTLY HAVE A REAL OPPORTUNITY TO BRING ABOUT FURTHER SIMPLIFICATION AND IMPROVEMENT IN THE GOVERNMENT'S ACCOUNTING PROCEDURES THROUGH THE ISSUANCE OF THE JOINT REGULATIONS CONTEMPLATED, AND I HOPE THAT WE CAN PROCEED AS SOON AS POSSIBLE. WITH A VIEW OF ESTABLISHING AN ORDERLY PROGRAM OF IMPLEMENTATION OF THE PROPOSALS, I WOULD LIKE TO SUGGEST THAT WE PROCEED IMMEDIATELY TO MAKE THE PROPOSED JOINT REGULATIONS EFFECTIVE FOR ALL CHECKING ACCOUNTS ESTABLISHED FOR AUTHORIZED DISBURSING OFFICERS IN THE DEPARTMENT OF DEFENSE AND THE TREASURY'S DIVISION OF DISBURSEMENT. THIS COURSE OF ACTION WOULD ENABLE US AT ONCE TO REALIZE ON THE SIMPLIFICATIONS AND IMPROVEMENTS IN BY FAR THE BIGGEST AREA OF GOVERNMENT OPERATIONS AND ENABLE US TO DEAL LATER WITH THE DEVELOPMENT OF A PLAN OF ACTION FOR THE VARIETY OF OTHER CHECKING ACCOUNTS INVOLVED, INCLUDING CONSIDERATION OF ANY SPECIALIZED PROBLEMS IN CONNECTION WITH SUCH ACCOUNTS.

PLEASE BE ASSURED OF OUR DESIRE TO COOPERATE WITH THE TREASURY IN THE FURTHER DEVELOPMENT OF THESE PROPOSALS IN EVERY POSSIBLE WAY.