B-220836, NOV 29, 1985, OFFICE OF GENERAL COUNSEL

B-220836, NOV 29, 1985, OFFICE OF GENERAL COUNSEL

ACCOUNTABLE OFFICERS - RELIEF - DEBT COLLECTION DIGEST: THE GENERAL ACCOUNTING OFFICE WILL DENY RELIEF UNDER THE DILIGENT CLAIMS COLLECTION STANDARD OF 31 U.S.C. SEC. 3527(C) IN CASES INVOLVING TREASURY DEBIT VOUCHERS DATED AFTER JANUARY 15, 1985, IF ARMY'S DESIGNATED COLLECTION REPRESENTATIVE DOES NOT BEGIN COLLECTION ACTION WITHIN 3 MONTHS FROM THE TIME NOTICE OF A LOSS IS RECEIVED.

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

WE MET RECENTLY WITH YOUR STAFF SUPERVISORY ATTORNEY ADVISOR, STEVE CAMPBELL, TO DISCUSS THE ARMY'S COLLECTION PROCESS IN DUPLICATE CHECK CASES. WE APPRECIATED MR. CAMPBELL'S VISIT BECAUSE IT GAVE US THE OPPORTUNITY TO SPECIFICALLY DEFINE THE PROBLEMS WE HAVE IDENTIFIED IN CURRENT COLLECTION PROCEDURES.

WE RECOGNIZE THAT IN DUPLICATE CHECK CASES, TREASURY OFTEN PROVIDES NOTICE OF A LOSS LONG AFTER THE SECOND CHECK HAS BEEN CASHED AND THAT THIS HAMPERS EFFECTIVE COLLECTION EFFORTS. HOWEVER, ONCE THIS NOTICE IS RECEIVED BY THE ARMY, THERE IS OFTEN A DELAY OF SEVERAL MONTHS, IN SOME CASES YEARS, BEFORE THE MATTER IS REFERRED TO THE OFFICE SPECIFICALLY CHARGED WITH THE COLLECTION OF DEBTS.

AS WE DISCUSSED WITH MR. CAMPBELL, WE THINK THAT A MORE EXPEDITIOUS COLLECTION PROCESS SHOULD BE IMPLEMENTED. WE THINK THAT IT SHOULD TAKE NO MORE THAN 3 MONTHS TO PROCESS THE DEBIT VOUCHER FROM THE TIME IT IS RECEIVED BY THE FINANCE OFFICER TO THE TIME IT IS REFERRED TO THE ARMY'S DEBT COLLECTION OFFICE, AND THAT UNIFORM COLLECTION PROCEDURES SHOULD BE IMPLEMENTED IN EACH LOCAL FINANCE AND ACCOUNTING OFFICE. WE MUST POINT OUT THAT UNDER 31 U.S.C. SEC. 3527(C), RELIEF MAY BE DENIED DISBURSING OFFICIALS RESPONSIBLE FOR DUPLICATE CHECKS IF DILIGENT COLLECTION ACTIONS ARE NOT UNDERTAKEN TO RECOVER THE AMOUNT OF ANY ILLEGALLY CASHED CHECK. IN THE PAST, WE HAVE GRANTED RELIEF EVEN WHEN THERE HAS BEEN A DELAY IN ARMY'S COLLECTION PROCESS, IF EFFECTIVE COLLECTION WAS BEING PURSUED AT THE TIME WE RECEIVED THE RELIEF REQUEST. NOW THAT WE ARE MORE FAMILIAR WITH YOUR PROCEDURES, WE THINK EFFECTIVE COLLECTION ACTION BY YOUR COLLECTION REPRESENTATIVE SHOULD BEGIN WITHIN 3 MONTHS FROM THE TIME ARMY RECEIVES NOTICE OF THE LOSS.

WE RECOGNIZE THAT THE MODIFICATION OF YOUR COLLECTION PROCESS, PARTICULARLY THE INSTITUTION OF THE UNIFORM COLLECTION PROCEDURES IN THE LOCAL OFFICES, WILL TAKE TIME. HOWEVER, WE THINK THAT AS A FIRST STEP, YOU SHOULD BE ABLE TO ALTER YOUR COLLECTION SYSTEM SO THAT ARMY'S COLLECTION DIVISION IS NOTIFIED OF THE LOSS AT THE BEGINNING OF THE COLLECTION PROCESS WHEN TREASURY SENDS NOTIFICATION OF THE LOSS RATHER THAN MONTHS OR YEARS LATER. THEREFORE, THIS LETTER WILL SERVE AS NOTICE THAT FOR FUTURE CASES INVOLVING DEBIT VOUCHERS DATED AFTER JANUARY 15, 1985, RELIEF WILL BE DENIED IF THERE HAS BEEN MORE THAN A 3 MONTH DELAY IN NOTIFYING ARMY'S COLLECTION REPRESENTATIVE OF THE LOSS.

WE HAVE BEEN ADVISED BY MR. CAMPBELL THAT YOUR CURRENT COLLECTION PROCESS IS AS FOLLOWS: ONCE THE NOTICE OF LOSS IS RECEIVED FROM TREASURY IT IS RECORDED AS A LOSS IN THE FINANCE OFFICER'S STATEMENT OF ACCOUNTABILITY. THE FINANCE OFFICER IS THEN RESPONSIBLE FOR CHECKING THE STATUS OF THE DEBTOR TO SEE IF HE OR SHE IS ON ACTIVE DUTY WITH THE ARMY, IN THE ARMY RESERVES, ON THE ARMY RETIRED ROLLS, OR IF HE OR SHE IS CURRENTLY AN ARMY CIVILIAN EMPLOYEE. IT IS ALSO THE FINANCE OFFICER'S JOB TO TRY TO LOCATE THE DEBTOR AND SEND OUT COLLECTION LETTERS. IF COLLECTION PROVES FUTILE, THE CASE IS THEN SENT TO THE U.S. ARMY FINANCE AND ACCOUNTING CENTER (USAFAC). AFTER REVIEWING THE MATTER AND AGAIN CHECKING THE PAY STATUS OF THE DEBTOR, USAFAC REFERS THE CASE TO THE ARMY'S COLLECTION DIVISION AND PREPARES THE REQUEST FOR RELIEF.

WE FOUND, IN REVIEWING APPROXIMATELY 75 ACCOUNTABLE OFFICER CASES DATING BACK TO OUR DECISION OF JUNE 20, 1983, 62 COMP.GEN. 476 (1983), INVOLVING DUPLICATE CHECK INCIDENTS, THAT THE LAPSE OF TIME FROM WHEN NOTICE WAS RECEIVED BY THE FINANCE OFFICER UNTIL ARMY'S COLLECTION REPRESENTATIVE WAS INFORMED OF THE LOSS WAS, ON THE AVERAGE, SLIGHTLY MORE THAN A YEAR. (THE RANGE OF TIME WAS FROM 1 MONTH, 14 DAYS, B-215434, JULY 23, 1984, TO 2 YEARS, 8 MONTHS, B-215170, OCTOBER 28, 1984.)

OUR REVIEW UNCOVERED FOUR POINTS IN YOUR COLLECTION PROCESS WHERE WE HAD OBSERVED DELAYS. FIRST, WE FOUND CASES WHERE THERE WAS A DELAY IN RECORDING THE LOSS IN THE FINANCE OFFICER'S ACCOUNT. FOR EXAMPLE, IN B-212576, JANUARY 2, 1983, IT TOOK 1 YEAR FROM THE DATE THE DEBIT VOUCHER WAS RECEIVED UNTIL IT WAS REFLECTED IN THE FINANCE OFFICER'S ACCOUNT. SEE ALSO, B-214836, MAY 3, 1984.

NEXT, WE FOUND SEVERAL INSTANCES WHERE THE FINANCE OFFICER FAILED TO TAKE IMMEDIATE COLLECTION ACTION AGAINST THE DEBTOR AFTER THE LOSS WAS RECORDED IN HIS ACCOUNT. FOR EXAMPLE, IN B-215767, AUGUST 14, 1984, THE LOSS WAS REFLECTED IN THE FINANCE OFFICER'S ACCOUNT ON DECEMBER 17, 1982. HOWEVER, THE FINANCE OFFICER DID NOT REQUEST THE DEBTOR'S ADDRESS UNTIL JULY 26, 1983. SINCE SALARY OFFSET IS AN EXPEDITIOUS METHOD OF DEBT RECOVERY THAT MAY BE USED BY THE ARMY IF THE DEBTOR IS ON THE ARMY PAYROLL IT IS IMPORTANT THAT THE FINANCE OFFICER PROMPTLY BEGIN COLLECTION ACTIVITY. SEE 4 C.F.R. SEC. 102.3(B)(5). THERE HAVE BEEN INSTANCES WHERE THE DEBTOR WAS STILL IN THE ARMY WHEN THE NOTICE OF THE LOSS WAS RECEIVED, BUT HAD BEEN DISCHARGED OR SEPARATED BY THE TIME COLLECTION EFFORTS HAD BEGUN. WE STATED IN B-218843, JULY 8, 1985, WE MAY DENY RELIEF IN SUCH CASES IF IT APPEARS THAT THE FINANCE OFFICER'S DELAY IN INSTITUTING COLLECTION ACTIVITY WAS RESPONSIBLE FOR THE ARMY NOT BEING ABLE TO EMPLOY SALARY OFFSET AS A RECOVERY METHOD.

THE THIRD AREA OF DELAY WE FOUND WAS IN SENDING THE CASES TO USAFAC AFTER THE INITIAL COLLECTION EFFORTS OF THE FINANCE OFFICER PROVE TO BE UNSUCCESSFUL. FOR EXAMPLE, IN B-217798, MARCH 18, 1985 THE FIRST COLLECTION LETTER WAS DATED FEBRUARY 2, 1982, BUT USAFAC DID NOT RECEIVE THE CASE UNTIL MARCH 16, 1984. SEE ALSO B-215299, JUNE 20, 1984.

FINALLY, WE FOUND THAT THE MOST CONSISTENT DELAY WAS THE TIME IT TOOK USAFAC TO REFER THE CASE TO THE COLLECTION REPRESENTATIVE AFTER IT WAS FORWARDED BY THE FINANCE OFFICER. FOR EXAMPLE, IN B-217798, SUPRA, USAFAC RECEIVED THE CASE ON MARCH 16, 1984, BUT DID NOT REFER IT TO ARMY'S COLLECTION AGENT UNTIL FEBRUARY 13, 1985. SEE ALSO, B-219203, AUGUST 14, 1985.

WHILE THE METHOD YOU CHOOSE TO MODIFY YOUR COLLECTION PROCEDURES IS A MATTER FOR ARMY TO DETERMINE, WE BELIEVE THESE FOUR AREAS OF DELAYS SHOULD BE ADDRESSED. WE SUGGEST THREE IMPROVEMENTS. FIRST, ONCE THE DEBIT VOUCHER IS RECEIVED FROM TREASURY, IT SHOULD BE IMMEDIATELY REFLECTED IN THE OFFICER'S ACCOUNT. SECOND, UNIFORM COLLECTION PROCEDURES SHOULD BE ESTABLISHED IN EACH FINANCE OFFICE. THESE SHOULD INCLUDE IMMEDIATELY VERIFYING THE DEBTOR'S PAY STATUS ONCE THE LOSS IS RECORDED IN THE FINANCE OFFICER'S ACCOUNT TO DETERMINE IF A SALARY SET OFF IS POSSIBLE AND ESTABLISHING A TIMETABLE FOR SENDING OUT COLLECTION LETTERS. FINALLY, YOUR COLLECTION REPRESENTATIVE SHOULD BE INFORMED OF THE LOSS AS SOON AS POSSIBLE. PERHAPS INSTEAD OF WAITING UNTIL USAFAC PROCESSES THE CASE AND THEN REFERS IT TO ARMY'S COLLECTION REPRESENTATIVE, THE FINANCE OFFICER COULD REFER THE MATTER TO THE COLLECTION DIVISION AS SOON AS THE DEBTOR'S PAY STATUS AND ADDRESS HAVE BEEN ASCERTAINED OR AS SOON AS THE FINANCE OFFICER DETERMINES THAT RECOVERY OF THE DEBT CANNOT BE MADE.

PLEASE KEEP US INFORMED OF YOUR PROGRESS IN REVAMPING YOUR COLLECTION PROCESS. EITHER MR. RICHARD K. PARSONS, A SENIOR ATTORNEY ON MY STAFF, OR MRS. MINDI WEISENBLOOM WILL BE AVAILABLE FOR ANY FURTHER ASSISTANCE YOU MAY NEED. THEY CAN BE REACHED ON FTS 275-5544.