B-234937, Nov 9, 1990, Office of General Counsel

B-234937: Nov 9, 1990

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APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Relief - Illegal/improper payments - Substitute checks DIGEST: Relief is granted Treasury disbursing official under 31 U.S.C. The disbursing official maintained and enforced an adequate system of procedures and controls to avoid errors and there was no indication of bad faith or a lack of due care. We may relieve a disbursing official from liability for an improper payment when the record shows that the payment was not the result of bad faith or a lack of due care. The good faith and due care of a supervisory disbursing official is shown by evidence that the supervisor maintained an adequate system of procedures and controls to avoid errors and that the supervisor took steps to ensure that system's effectiveness.

B-234937, Nov 9, 1990, Office of General Counsel

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Relief - Illegal/improper payments - Substitute checks DIGEST: Relief is granted Treasury disbursing official under 31 U.S.C. Sec. 3527(c) from liability for an erroneous payment resulting from the payee's negotiation of both the original and an inadvertently issued second check. The disbursing official maintained and enforced an adequate system of procedures and controls to avoid errors and there was no indication of bad faith or a lack of due care.

Gerald Murphy

Fiscal Assistant Secretary:

By letter dated March 22, 1989, you asked us to relieve Beverly Robinson, former Acting Regional Director of the Philadelphia Financial Center, Department of the Treasury, from personal liability for an overpayment of $656. /1/ For the reasons stated below, we grant relief.

The overpayment resulted when the financial center inadvertently issued two checks to Melvin George, each for $656. The financial center did not detect the error, and mailed both checks to Mr. George. Mr. George cashed them both. On July 25, 1986, the financial center entered notice of the overpayment into its accounts via journal voucher and, on the same day, initiated collection action. The financial center, however, has been unable to locate Mr. George.

Under 31 U.S.C. Sec. 3527(c), we may relieve a disbursing official from liability for an improper payment when the record shows that the payment was not the result of bad faith or a lack of due care. B-235036, Oct. 17, 1989. The good faith and due care of a supervisory disbursing official is shown by evidence that the supervisor maintained an adequate system of procedures and controls to avoid errors and that the supervisor took steps to ensure that system's effectiveness. See 62 Comp.Gen. 476, 480 (1983).

At the time of the loss at issue, the financial center was using very old check-printing equipment. These printers, according to the current Director of the financial center, had developed mechanical problems, which occasionally resulted in the printing of duplicate checks. The financial center was aware of this problem, and was working with the equipment manufacturer to resolve it, as well as exploring with vendors the possibility of designing new printers. In the meantime, supervisors and equipment operators were advised of the problem, and required to "riffle" through each batch of checks printed to try to spot duplicates; because of the large volume of checks (each operator processed approximately 30,000 checks per hour), it was not possible to catch every error. Since that time, the financial center has acquired new, more reliable equipment.

We conclude that under the circumstances, Ms. Robinson implemented and maintained adequate procedures to safeguard against erroneous payments. Accordingly, since there is no indication of bad faith or a lack of due care, we grant Ms. Robinson relief from liability for the loss.

On May 8, 1989, we suspended the running of the statute of limitations with regard to this matter, because the original submission did not provide sufficient information for us to grant relief. See 31 U.S.C. Sec. 3526(g). Various Department officials supplied the necessary information in several letters between September 1989 and April 1990, and in telephone conversations subsequent to those letters.