B-141106, DECEMBER 14, 1959, 39 COMP. GEN. 440

B-141106: Dec 14, 1959

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WHEN SUCH LOSS OR DAMAGE CLAIMS ARE LESS THAN $10 AND THE COLLECTION PROCEDURE MIGHT RESULT IN COSTS GREATER THAN THE AMOUNT OF THE CLAIM. IN ACCORDANCE WITH THE AGENCIES' RESPONSIBILITY FOR GOVERNMENT PROPERTY AND SINCE MOST OF THE EVALUATION COSTS ARE INCURRED IN THE DETERMINATION THAT THE LOSS OR DAMAGE AMOUNT IS $10 OR LESS. IS AUTHORIZED AND REQUIRED UNDER 31 U.S.C. 66A (A) TO ESTABLISH AND MAINTAIN SYSTEMS OF ACCOUNTING AND INTERNAL CONTROL DESIGNED AMONG OTHER THINGS TO PROVIDE " (3) EFFECTIVE CONTROL OVER AND ACCOUNTABILITY FOR ALL FUNDS. OTHER ASSETS FOR WHICH THE AGENCY IS RESPONSIBLE * * *.'. RETURNS OF PUBLIC PROPERTY ENTRUSTED TO THE POSSESSION OF OFFICERS AND AGENTS OF THE UNITED STATES ARE NOT FORWARDED TO THE GENERAL ACCOUNTING OFFICE.

B-141106, DECEMBER 14, 1959, 39 COMP. GEN. 440

TRANSPORTATION - PROPERTY DAMAGE, LOSS, ETC. - DEBT COLLECTION - SMALL AMOUNTS TO PERMIT OR REQUIRE GOVERNMENT AGENCIES NOT TO REPORT LOSS OR DAMAGE TO GOVERNMENT PROPERTY WHILE IN THE POSSESSION OF CARRIERS AS REQUIRED ON THE GOVERNMENT BILL OF LADING FORM, WHEN SUCH LOSS OR DAMAGE CLAIMS ARE LESS THAN $10 AND THE COLLECTION PROCEDURE MIGHT RESULT IN COSTS GREATER THAN THE AMOUNT OF THE CLAIM, WOULD BE TANTAMOUNT TO REQUIRING GOVERNMENT AGENTS TO MAKE FALSE CERTIFICATIONS CONCERNING GOVERNMENT PROPERTY WHICH MAY NOT BE LEGALLY PERMITTED; THEREFORE, IN ACCORDANCE WITH THE AGENCIES' RESPONSIBILITY FOR GOVERNMENT PROPERTY AND SINCE MOST OF THE EVALUATION COSTS ARE INCURRED IN THE DETERMINATION THAT THE LOSS OR DAMAGE AMOUNT IS $10 OR LESS, LOSS OR DAMAGE REPORTS MUST CONTINUE TO BE MADE AND COLLECTION OF THE AMOUNTS DUE MUST BE MADE BY DEDUCTION FROM THE CARRIER'S BILL.

TO THE CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION, DECEMBER 14, 1959:

LETTER DATED OCTOBER 24, 1959, WITH ENCLOSURES, FROM THE GENERAL MANAGER, UNITED STATES ATOMIC ENERGY COMMISSION, CONCERNS EXISTING PRACTICES AND PROCEDURES FOR FILING CLAIMS WITH CARRIERS FOR SMALL AMOUNTS OF LOSS OR DAMAGE TO SHIPMENTS FOR THE ACCOUNT OF THE GOVERNMENT, AND REQUESTS THAT THE COMMISSION BE GRANTED AUTHORITY TO WAIVE LOSS AND/OR DAMAGE CLAIMS AGAINST COMMERCIAL CARRIERS FOR AMOUNTS LESS THAN $10 BECAUSE THE EFFORTS TO ASSERT AND FOLLOW CLAIMS FOR SMALL AMOUNTS COULD EASILY RESULT IN COSTS GREATER THAN THE AMOUNT OF THE CLAIM.

IN THE PERFORMANCE OF HIS FUNCTIONS, THE CHAIRMAN, ATOMIC ENERGY COMMISSION, IN COMMON WITH THE HEADS OF OTHER EXECUTIVE AGENCIES AS DEFINED IN 31 U.S.C. 65A, IS AUTHORIZED AND REQUIRED UNDER 31 U.S.C. 66A (A) TO ESTABLISH AND MAINTAIN SYSTEMS OF ACCOUNTING AND INTERNAL CONTROL DESIGNED AMONG OTHER THINGS TO PROVIDE " (3) EFFECTIVE CONTROL OVER AND ACCOUNTABILITY FOR ALL FUNDS, PROPERTY, AND OTHER ASSETS FOR WHICH THE AGENCY IS RESPONSIBLE * * *.' RETURNS OF PUBLIC PROPERTY ENTRUSTED TO THE POSSESSION OF OFFICERS AND AGENTS OF THE UNITED STATES ARE NOT FORWARDED TO THE GENERAL ACCOUNTING OFFICE. THE QUARTERMASTER GENERAL, OR OTHER LIKE CHIEF OFFICERS IN ANY DEPARTMENT, BY, THROUGH, OR UNDER WHOM STORES, SUPPLIES AND OTHER PUBLIC PROPERTY ARE RECEIVED FOR DISTRIBUTION, OR WHOSE DUTY IT IS TO RECEIVE OR EXAMINE RETURNS OF SUCH PROPERTY, CERTIFY TO THE GENERAL ACCOUNTING OFFICE, FOR DEBITING ON THE PROPER ACCOUNT, ANY CHARGE AGAINST ANY OFFICER OR AGENT ENTRUSTED WITH PUBLIC PROPERTY, ARISING FROM ANY LOSS, ACCRUING BY HIS FAULT, TO THE GOVERNMENT AS TO THE PROPERTY ENTRUSTED TO HIM. SEE 31 U.S.C. 89. THE HEADS OF THE SEVERAL DEPARTMENTS ARE EMPOWERED TO MAKE AND ENFORCE REGULATIONS TO CARRY OUT THE ABOVE PROVISIONS. SEE 31 U.S.C. 92. ALSO, THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 377, IN SECTION 205, PAGE 389, 390, 40 U.S.C. 486, PROVIDES:

(A) THE PRESIDENT MAY PRESCRIBE SUCH POLICIES AND DIRECTIONS, NOT INCONSISTENT WITH THE PROVISIONS OF THIS ACT, AS HE SHALL DEEM NECESSARY TO EFFECTUATE THE PROVISIONS OF THIS ACT, WHICH POLICIES AND DIRECTIONS SHALL GOVERN THE ADMINISTRATOR AND EXECUTIVE AGENCIES IN CARRYING OUT THEIR RESPECTIVE FUNCTIONS HEREUNDER.

(B) THE COMPTROLLER GENERAL AFTER CONSIDERING THE NEEDS AND REQUIREMENTS OF THE EXECUTIVE AGENCIES SHALL PRESCRIBE PRINCIPLES AND STANDARDS OF ACCOUNTING FOR PROPERTY, COOPERATE WITH THE ADMINISTRATOR AND WITH THE EXECUTIVE AGENCIES IN THE DEVELOPMENT OF PROPERTY ACCOUNTING SYSTEMS, AND APPROVE SUCH SYSTEMS WHEN DEEMED TO BE ADEQUATE AND IN CONFORMITY WITH PRESCRIBED PRINCIPLES AND STANDARDS. FROM TIME TO TIME THE GENERAL ACCOUNTING OFFICE SHALL EXAMINE SUCH PROPERTY ACCOUNTING SYSTEMS AS ARE ESTABLISHED BY THE EXECUTIVE AGENCIES TO DETERMINE THE EXTENT OF COMPLIANCE WITH PRESCRIBED PRINCIPLES AND STANDARDS AND APPROVED SYSTEMS, AND THE COMPTROLLER GENERAL SHALL REPORT TO THE CONGRESS ANY FAILURE TO COMPLY WITH SUCH PRINCIPLES AND STANDARDS OR TO ADEQUATELY ACCOUNT FOR PROPERTY.

(C) THE ADMINISTRATOR SHALL PRESCRIBE SUCH REGULATIONS AS HE DEEMS NECESSARY TO EFFECTUATE HIS FUNCTIONS UNDER THE ACT, AND THE HEAD OF EACH EXECUTIVE AGENCY SHALL CAUSE TO BE ISSUED SUCH ORDERS AND DIRECTIVES AS SUCH HEAD DEEMS NECESSARY TO CARRY OUT SUCH REGULATIONS.

THE U.S. GOVERNMENT BILL OF LADING, STANDARD FORM NO. 1103, IS PRESCRIBED BY TITLE 5 OF G.A.O. MANUAL (5 GAO 3015.10), FOR GENERAL USE THROUGHOUT THE U.S. GOVERNMENT SERVICE TO ACCOMPLISH THE SHIPMENT, TRANSPORTATION, AND DELIVERY OF GOVERNMENT PROPERTY BY TRANSPORTATION COMPANIES. THERE IS PRINTED IN THE CONSIGNEE'S CERTIFICATE OF DELIVERY AT THE BOTTOM OF THE GOVERNMENT BILL OF LADING THE FOLLOWING STATEMENT:

I CERTIFY THAT I HAVE THIS DAY-------------------------------------

( DATE OF DELIVERY) RECEIVED FROM--------------------- ------------------ --------AT

( NAME OF TRANSPORTATION COMPANY) -------------------------------- -THE PROPERTY DESCRIBED IN THIS BILL OF

( ACTUAL POINT OF DELIVERY) LADING IN APPARENT GOOD ORDER AND CONDITION, EXCEPT AS NOTED ON REVERSE HEREOF. * * *

( SIGNATURE OF CONSIGNEE OR AUTHORIZED AGENT)

THERE IS PROVIDED ON THE REVERSE SIDE OF THE BILL OF LADING A SPACE FOR " REPORT OF LOSS, DAMAGE, OR SHRINKAGE," AND WITH RESPECT TO MATTERS CONCERNING LOSS OR DAMAGE TO PROPERTY WHILE IN POSSESSION OF THE CARRIER, PARAGRAPH 6, UNDER INSTRUCTIONS, ON THE REVERSE SIDE OF THIS DOCUMENT PROVIDES AS FOLLOWS:

IN CASE OF DAMAGE TO PROPERTY WHILE IN THE POSSESSION OF THE CARRIER, SUCH LOSS OR DAMAGE SHALL, WHEN PRACTICABLE, BE NOTED ON THE BILL OF LADING OR CERTIFICATE IN LIEU THEREOF, AS THE CASE MAY BE, BEFORE ITS ACCOMPLISHMENT. SHOULD THE LOSS OR DAMAGE NOT BE DISCOVERED UNTIL AFTER THE BILL OF LADING OR CERTIFICATE HAS BEEN ACCOMPLISHED, THE PROPER OFFICER SHALL BE NOTIFIED AS SOON AS THE LOSS OR DAMAGE IS DISCOVERED, AND THE AGENT OF THE CARRIER ADVISED IMMEDIATELY OF SUCH LOSS OR DAMAGE AND EXTENDED PRIVILEGE OF EXAMINING SHIPMENT. THE ADMINISTRATIVE AGENCY SHOULD COLLECT FROM THE RESPONSIBLE CARRIERS THE VALUE OF PROPERTY LOST OR THE COST OF REPAIRS TO PROPERTY DAMAGED IN SHIPPING. THIS MAY BE ACCOMPLISHED BY MAKING DEDUCTION IN SETTLEMENT FOR THE SERVICE OR FROM OTHER UNPAID BILLS OR THROUGH SUCH OTHER MEANS AS MAY BE AVAILABLE.

THE RECORD SHOWS THAT THE GOVERNMENT BILL OF LADING, AND THE INCLUSION THEREIN OF PROVISIONS SIMILAR TO THOSE QUOTED ABOVE, WERE PRESCRIBED BY THE TREASURY DEPARTMENT, OFFICE OF COMPTROLLER, IN OCTOBER 1907," TO CARRY INTO EFFECT THE INSTRUCTIONS OF THE PRESIDENT, BASED UPON A REPORT MADE TO HIM BY THE COMMITTEE ON DEPARTMENT METHODS, DATED DECEMBER 6, 1906.' SEE 14 COMP. DEC. 967.

THE CONSIGNEES IN THE ADMINISTRATIVE AGENCIES THUS ARE REQUIRED BY THE STATED PROVISIONS OF THE GOVERNMENT BILL OF LADING TO ANNOTATE ITEMS OF AND DAMAGE. TO PERMIT OR REQUIRE CONSIGNEES NOT TO NOTE ON BILLS OF LADING KNOWN ITEMS OF LOSS OR DAMAGE WOULD IN EFFECT PERMIT OR REQUIRE THEM TO MAKE FALSE CERTIFICATIONS AND MAY NOT BE LEGALLY PERMITTED. ALSO, IT IS OUR OPINION THAT, WHERE LOSS OR DAMAGE IS NOTED AT TIME OF RECEIPT OF THE GOODS AND THE AMOUNT DUE CAN BE READILY DETERMINED, SUCH AMOUNT SHOULD, IF OTHERWISE PROPER, BE DEDUCTED FROM THE CARRIER'S BILL REGARDLESS OF THE AMOUNT INVOLVED.

HOWEVER, WE RECOGNIZE, THERE MAY BE AND NO DOUBT ARE INSTANCES WHEN THE FURTHER PROCESSING OF CLAIMS AGAINST THE CARRIERS FOR LOST OR DAMAGED ITEMS NOTED ON THE BILL OF LADING OR COMPARABLE OUTTURN REPORTS MAY BE FOUND UNECONOMICAL. THE QUESTION ARISES AS TO JUST WHEN THIS POINT IS REACHED AND CAN BE DETERMINED. THERE ARE MANY INSTANCES WHERE SHIPMENTS ARRIVE AT DESTINATION IN A DAMAGED CONDITION, OR A SHORTAGE EXISTS, AND THE CONSIGNEE HAS NO KNOWLEDGE OF OR PROPER BASIS FOR DETERMINING THE ACTUAL VALUE OF THE LOSS AND/OR DAMAGE. THE VALUE MAY BE $10 OR LESS, OR MUCH MORE THAN $10, BUT DEFINITE INFORMATION IN THIS REGARD CAN BE ASCERTAINED ONLY THROUGH APPROPRIATE INVESTIGATIVE CHANNELS. THUS, IT APPEARS GENERALLY WHEN A DETERMINATION THAT THE LOSS IS LESS THAN $10 HAS BEEN MADE BY THOSE CAPABLE OF PROPERLY EVALUATING THE LOSS OR DAMAGE, A CONSIDERABLE PART OF THE SO-CALLED PROCESSING COST ALREADY WILL HAVE BEEN INCURRED. IF THE PROCESSING WERE TO STOP AT THAT POINT THE GOVERNMENT WOULD BE LEFT WITH A COST FACTOR WITHOUT ANY RECOVERY, YET THE ADDITIONAL EFFORT NECESSARY TO EFFECT RECOVERY BY REFUND OR OFFSET MIGHT BE RELATIVELY INSIGNIFICANT.

IT IS STATED IN 5 GAO 5040.55 THAT TRANSPORTATION DEBTS OF LESS THAN $10 WHICH ARE ADMINISTRATIVELY DETERMINED TO BE UNCOLLECTIBLE, MAY BE REMOVED FROM THE ACTIVE ACCOUNTS OF AN AGENCY. HOWEVER, THERE IS NO INFORMATION OR SHOWING THAT THESE ITEMS GENERALLY MAY BE SO CLASSIFIED AND THERE IS SERIOUS DOUBT THAT ANY MATERIAL PERCENTAGE WOULD FALL IN THAT CATEGORY.

THUS, IT IS OUR VIEW THAT THE ANNOTATIONS ON GOVERNMENT BILLS OF LADING OR OUTTURN REPORTS PROPERLY MAY NOT BE DISCONTINUED; THAT WHERE A DETERMINATION IS MADE THAT SUCH A LOSS AMOUNTS TO $10 OR LESS A CONSIDERABLE PORTION OF THE SO-CALLED PROCESSING COSTS WILL ALREADY HAVE BEEN INCURRED; THAT ADMINISTRATIVE COSTS SHOULD NOT BE INCREASED BY COSTLY SURVEY PROCEDURES ONCE A DETERMINATION HAS BEEN MADE THAT THE LOSS OR DAMAGE IS $10 OR LESS AND AS TO THE AMOUNT OF SUCH LOSS; AND THAT SUCH SMALL LOSSES ARE NOT USUALLY UNCOLLECTIBLE AND COLLECTION OF THE AMOUNT ADMINISTRATIVELY DETERMINED TO BE DUE SHOULD BE EFFECTED, IF OTHERWISE PROPER, BY DEDUCTION FROM THE CARRIER'S BILL FOR FREIGHT OR OTHERWISE. HOWEVER, SINCE YOU ARE EMPOWERED TO MAKE AND ENFORCE REGULATIONS FOR THE AUDITING OF PROPERTY ACCOUNTING AND PROTECTION OF PROPERTY OF THE UNITED STATES ENTRUSTED TO YOUR CARE, IT IS BELIEVED YOU MAY DESIRE TO GIVE CONSIDERATION TO THE QUESTION RAISED BY YOUR GENERAL MANAGER.