B-221452, MAR 27, 1986, OFFICE OF GENERAL COUNSEL

B-221452: Mar 27, 1986

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DISBURSING OFFICERS - RELIEF - ERRONEOUS PAYMENTS - NOT RESULT OF BAD FAITH OR NEGLIGENCE ARMY DISBURSING OFFICERS ARE RELIEVED OF LIABILITY FOR THE IMPROPER PAYMENT OF $1. RELIEF IS PROPER SINCE THE CASHIER FOLLOWED ALL PRESCRIBED PROCEDURES. RELIEF IS GRANTED. LTC BAER AND SP5 JONES ARE PERSONALLY LIABLE FOR DEFICIENCIES IN THEIR ACCOUNTS CAUSED BY ILLEGAL. THERE IS NO EVIDENCE OF BAD FAITH. DILIGENT EFFORTS HAVE BEEN MADE TO COLLECT THE OVERPAYMENT. 62 COMP.GEN. 91 (1982). WE HAVE GRANTED RELIEF TO THE SUPERVISOR UPON A SHOWING THAT HE ADEQUATELY SUPERVISED HIS SUBORDINATES BY MAINTAINING AN ADEQUATE SYSTEM OF PROCEDURES AND CONTROLS TO SAFEGUARD THE FUNDS. THAT LTC BAER ESTABLISHED AND SUSTAINED AN ADEQUATE SYSTEM OF CONTROLS TO SAFEGUARD THE FUNDS HE WAS ACCOUNTABLE FOR.

B-221452, MAR 27, 1986, OFFICE OF GENERAL COUNSEL

DISBURSING OFFICERS - RELIEF - ERRONEOUS PAYMENTS - NOT RESULT OF BAD FAITH OR NEGLIGENCE ARMY DISBURSING OFFICERS ARE RELIEVED OF LIABILITY FOR THE IMPROPER PAYMENT OF $1,302.49 PURSUANT TO 31 U.S.C. SEC. 3527(C) (1982). THE DEFICIENCY RESULTED FROM THE PAYMENT OF A FRAUDULENTLY ENDORSED CHECK. RELIEF IS PROPER SINCE THE CASHIER FOLLOWED ALL PRESCRIBED PROCEDURES, HIS SUPERVISOR ESTABLISHED AND MAINTAINED AN ADEQUATE SYSTEM OF CONTROLS AND THE LOSS RESULTED FROM CRIMINAL ACTIVITY OVER WHICH THE DISBURSING OFFICERS HAD NO CONTROL.

MR. CLYDE E. JEFFCOAT:

ACTING ASSISTANT COMPTROLLER FOR

FINANCE AND ACCOUNTING

U.S. ARMY FINANCE AND ACCOUNTING CENTER

INDIANAPOLIS, INDIANA 46249

THIS RESPONDS TO YOUR REQUEST OF DECEMBER 12, 1985, THAT WE GRANT RELIEF, PURSUANT TO 31 U.S.C. SEC. 3527(C), FOR THE IMPROPER PAYMENT OF $1,302.49 CHARGEABLE TO THE ACCOUNTS OF LIEUTENANT COLONEL (LTC) B. S. BAER, FINANCE CORPS, FINANCE AND ACCOUNTING OFFICER, 45TH AREA FINANCE SUPPORT CENTER, APO NEW YORK AND SPECIALIST FIVE (SP5) MICHAEL R. JONES, A CASHIER UNDER HIS SUPERVISION. FOR THE REASONS STATED BELOW, RELIEF IS GRANTED.

THE LOSS OCCURRED DUE TO PAYMENT BY SP5 JONES OF A FRAUDULENTLY ENDORSED CHECK PAYABLE TO MS. CINDYE L. MCLARY. THE CHECK REPRESENTED THE PAY OF MS. MCLARY WHO ASSERTS SHE DID NOT ENDORSE THE CHECK AND HAS FILED A CLAIM FOR REIMBURSEMENT.

AS DISBURSING OFFICERS, LTC BAER AND SP5 JONES ARE PERSONALLY LIABLE FOR DEFICIENCIES IN THEIR ACCOUNTS CAUSED BY ILLEGAL, IMPROPER OR INCORRECT PAYMENTS. HOWEVER, UNDER THE PROVISIONS OF 31 U.S.C. SEC. 3527(C) (1982) THIS OFFICE HAS AUTHORITY TO RELIEVE LIABILITY ARISING FROM IMPROPER OR INCORRECT PAYMENTS WHEN THE RECORD INDICATES THE DISBURSING OFFICERS ACTED WITHIN THE BOUNDS OF DUE CARE, THERE IS NO EVIDENCE OF BAD FAITH, AND DILIGENT EFFORTS HAVE BEEN MADE TO COLLECT THE OVERPAYMENT. 62 COMP.GEN. 91 (1982). IN CASES WHERE A SUBORDINATE ACTUALLY DISBURSED THE FUNDS IN QUESTION, WE HAVE GRANTED RELIEF TO THE SUPERVISOR UPON A SHOWING THAT HE ADEQUATELY SUPERVISED HIS SUBORDINATES BY MAINTAINING AN ADEQUATE SYSTEM OF PROCEDURES AND CONTROLS TO SAFEGUARD THE FUNDS. B-219124, JULY 15, 1985.

THE ARMY'S REPORT INDICATES THAT SP5 JONES FOLLOWED ALL THE PRESCRIBED PROCEDURES IN PERFORMING HIS DUTIES AS CASHIER AND FURTHER, THAT LTC BAER ESTABLISHED AND SUSTAINED AN ADEQUATE SYSTEM OF CONTROLS TO SAFEGUARD THE FUNDS HE WAS ACCOUNTABLE FOR. ALTHOUGH THE DISBURSING DIVISION DID DEVIATE FROM PRESCRIBED REGULATIONS BY FAILING TO SECURE IN A LOCKED RECEPTACLE CHECKS THAT HAD BEEN PREPARED FOR MAILING THE NEXT DAY, IT CANNOT BE DETERMINED THAT THIS FAILURE CAUSED OR CONTRIBUTED TO THE LOSS. FINALLY, THE ARMY NOTES THAT SINCE THE FORGER HAS NOT BEEN IDENTIFIED, COLLECTION ACTION HAS NOT BEEN POSSIBLE. THE ARMY INVESTIGATORS ANALYZED THE HANDWRITING OF THE FORGED ENDORSEMENT AND CONCLUDED THAT NEITHER MCLARY OR JONES HAD ENDORSED THE CHECK. THE ARMY STATES THAT IF THE FORGER IS IDENTIFIED, COLLECTION ACTION WILL BE DILIGENTLY UNDERTAKEN.

AFTER REVIEWING THE ARMY REPORT AND ACCOMPANYING INVESTIGATIVE FILE, WE MUST CONCLUDE THAT RELIEF IS PROPER SINCE THE LOSS OCCURRED AS A RESULT OF CRIMINAL ACTIVITY WHICH LTC BAER AND SP5 JONES HAD NO CONTROL OVER. SEE B-192558, DEC. 7, 1978. WE BELIEVE THERE WAS AN ADEQUATE SYSTEM OF CONTROLS OVER THE FUNDS IN QUESTION AND THERE IS NOTHING IN THE RECORD WHICH INDICATES EITHER OF THE DISBURSING OFFICERS FAILED TO SATISFY THE STANDARD OF DUE CARE OR ACTED IN BAD FAITH. ACCORDINGLY, RELIEF IS GRANTED AS REQUESTED.