B-218799, JUN 7, 1985, OFFICE OF GENERAL COUNSEL

B-218799, JUN 7, 1985, OFFICE OF GENERAL COUNSEL

ACCOUNTABLE OFFICERS - RELIEF - DUPLICATE CHECKS ISSUED - IMPROPER PAYMENT DIGEST: RELIEF IS GRANTED ARMY DISBURSING OFFICIAL UNDER 31 U.S.C. SEC. 3527(C) FROM LIABILITY FOR IMPROPER PAYMENT RESULTING FROM PAYEE'S NEGOTIATION OF BOTH ORIGINAL AND SUBSTITUTE MILITARY CHECKS. PROPER PROCEDURES WERE FOLLOWED IN THE ISSUANCE OF THE SUBSTITUTE CHECK, THERE WAS NO INDICATION OF BAD FAITH ON THE PART OF THE DISBURSING OFFICIAL, AND SUBSEQUENT COLLECTION ATTEMPTS HAVE BEEN PURSUED. CONCERN OVER PRE DATING OF CHECKS BY ARMY IS EXPRESSED.

MR. CLYDE E. JEFFCOAT: PRINCIPAL DEPUTY COMMANDER U.S. ARMY FINANCE AND ACCOUNTING CENTER INDIANAPOLIS, INDIANA 46249

THIS RESPONDS TO YOUR REQUEST OF APRIL 24, 1985, THAT WE RELIEVE LIEUTENANT COLONEL (LTC) H.J. LOWE, FINANCE CORPS, FINANCE AND ACCOUNTING OFFICER, U.S. ARMY AIR DEFENSE ARTILLERY CENTER AND FORT BLISS, FORT BLISS, TEXAS, UNDER 31 U.S.C. SEC. 3527(C) FOR AN IMPROPER PAYMENT OF A $302 CHECK PAYABLE TO MR. GEORGE P. ATKINSON. FOR THE REASONS STATED BELOW, RELIEF IS GRANTED.

THE LOSS RESULTED WHEN THE PAYEE NEGOTIATED BOTH THE ORIGINAL AND A SUBSTITUTE CHECK. BOTH CHECKS WERE IN THE SAME AMOUNT. THE SUBSTITUTE CHECK WAS ISSUED ON THE BASIS OF THE PAYEE'S ALLEGATION THAT THE ORIGINAL CHECK HAD NOT BEEN RECEIVED AND A REQUEST FOR STOP PAYMENT HAD BEEN MADE. BOTH CHECKS WERE ISSUED BY THE ARMY UNDER AUTHORITY DELEGATED BY THE DEPARTMENT OF THE TREASURY. 31 C.F.R. SEC. 245.8.

THIS OFFICE HAS AUTHORITY UNDER 31 U.S.C. SEC. 3527(C) TO RELIEVE A DISBURSING OFFICER FROM LIABILITY WHEN THE RECORD INDICATES THAT THE DISBURSING OFFICER ACTED WITHIN THE BOUNDS OF DUE CARE AS ESTABLISHED BY APPLICABLE REGULATIONS, THAT THERE IS NO EVIDENCE OF BAD FAITH ON THE PART OF THE DISBURSING OFFICER AND THAT A DILIGENT EFFORT WAS MADE TO COLLECT THE OVERPAYMENT. 62 COMP.GEN. 91 (1982).

UNDER APPLICABLE ARMY REGULATIONS A SUBSTITUTE CHECK IS PROPERLY ISSUED WITHIN THE CONTINENTAL UNITED STATES IF THE STOP PAYMENT REQUEST IS MADE WITHIN 15 DAYS FROM THE ISSUE DATE OF THE ORIGINAL CHECK. AR 37-104, PARA. 4-164. HERE, ALTHOUGH THE ORIGINAL CHECK WAS DATED AUGUST 17, 1982, ITS ISSUE DATE WAS AUGUST 30, 1982. HENCE THE SEPTEMBER 8, 1982, STOP PAYMENT REQUEST WAS WITHIN THE PROPER TIMEFRAME FOR THE ISSUING OF THE SUBSTITUTE INSTRUMENT. THUS, IT APPEARS THAT THE REQUEST FOR STOP PAYMENT AND THE ISSUANCE OF A DUPLICATE PAYMENT IN THIS CASE WERE WITHIN THE BOUNDS OF DUE CARE AS ESTABLISHED BY ARMY REGULATIONS. ID. THERE WAS NO INDICATION OF BAD FAITH ON THE PART OF THE DISBURSING OFFICER AND ADEQUATE COLLECTION EFFORTS HAVE BEEN MADE. ACCORDINGLY, WE GRANT RELIEF.

HAVING GRANTED RELIEF IN THIS CASE, WE WOULD NEVERTHELESS LIKE TO EXPRESS OUR CONCERN WITH THE PAYMENT PROCEDURES EMPLOYED AT FORT BLISS. DUE TO THE LARGE NUMBERS OF INDIVIDUALS IN PROCESSING AT FORT BLISS, THE INSTALLATION DEVISED A METHOD TO REDUCE THE WORKLOAD FOR VOUCHERS REQUIRED TO BE PROCESSED AND DISBURSED FOR AN UPCOMING PAYDAY. UNDER THIS PROCEDURE, WHEN AN INDIVIDUAL IN PROCESSES TOO LATE TO RECEIVE AN END-OF- MONTH CHECK FROM THE ARMY FINANCE AND ACCOUNTING CENTER, A SUPPLEMENTAL VOUCHER IS IMMEDIATELY PREPARED AND PROCESSED. SINCE THE CHECK SIGNER AT FORT BLISS IS OF A TYPE THAT CANNOT SUPPRESS ITS DATING MECHANISM, THE CHECKS ARE PREPARED BEARING THE PROCESSING BUSINESS DATE RATHER THAN THE PAYMENT DATE. CHECKS ARE PREPARED DAILY AND ARE KEPT IN THE MAIN VAULT FOR SAFEKEEPING UNTIL PAYDAY.

OUR CONCERN WITH THIS PROCEDURE IS THAT THE CHECKS ARE DATED PRIOR TO THE ACTUAL PAYDAY. THE DATE ON A CHECK HAS BOTH LEGAL AND ACCOUNTING SIGNIFICANCE. THE GENERAL RULE IS THAT PAYMENT IS DEEMED TO BE MADE AS OF THE DATE ON THE CHECK. WHILE WE HAVE REACHED NO CONCLUSION HERE, PAYMENT HAS BEEN CONSIDERED TO OCCUR IN SOME CASES ON THE BUSINESS PROCESSING DATE RATHER THAN THE DATE THE PAYEE IS GIVEN THE CHECK.

FOR EXAMPLE IN B-214446, OCT. 29, 1984, CERTIFICATION OF A PURCHASE ORDER VOUCHER AND ISSUANCE OF A CHECK PRIOR TO SERVICES BEING PERFORMED WAS HELD TO CONSTITUTE AN ADVANCE PAYMENT EVEN THOUGH THE ISSUED CHECKS ARE HELD IN ESCROW UNDER THE GOVERNMENT'S CONTROL AND ARE NOT PROPERLY RELEASED UNTIL PERFORMANCE IS COMPLETE.

FROM AN AUDITING STANDPOINT, THIS PRACTICE OF ISSUING CHECKS WITH AN INCORRECT DATE MAY OBSCURE THE AUDIT TRAIL. IT MAY ALSO MAKE IT DIFFICULT IN THE FUTURE TO RECONCILE EARNING RECORDS OF THE SERVICE MEMBERS RECEIVING THESE CHECKS.

FINALLY, PREPARING AND DATING THE CHECKS MANY DAYS PRIOR TO THE PAYDATE INCREASES THE RISK THAT THE INSTRUMENTS COULD BE LOST OR STOLEN. WE, THEREFORE, RECOMMEND THAT YOU REVIEW THE FISCAL PROCEDURES AT FORT BLISS AND THAT CONSIDERATION BE GIVEN TO ENDING THE PRACTICE OF PRE-DATING CHECKS.