B-240553, Jan 23, 1991

B-240553: Jan 23, 1991

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APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Cashiers - Relief - Illegal/improper payments - Overpayments DIGEST: Relief is granted to three Army finance officers for improper payments because they maintained an adequate system of procedures and controls to avoid errors in their office and they supervised their subordinates to ensure that the system was followed. Foster: This is in response to your letter of July 19. Stewart was a soldier assigned to the 2nd Armored Division. He was removed from the Master Military Pay File and received a lump-sum disability severance payment of $5. Stewart's account was put back into the Army's pay system in the following manner: a Department of Defense form 4444-R.

B-240553, Jan 23, 1991

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Cashiers - Relief - Illegal/improper payments - Overpayments DIGEST: Relief is granted to three Army finance officers for improper payments because they maintained an adequate system of procedures and controls to avoid errors in their office and they supervised their subordinates to ensure that the system was followed.

Colonel Garry D. Foster:

This is in response to your letter of July 19, 1990, requesting that Major Charles McPherson, Captain James W. Rockwell and Major Fred A. Runnels, all finance officers for 502nd Finance Company, 2nd Armored Division, Fort Hood Texas, be relieved of liability for improper payments in the amount of $14,778.60. For the reasons given below, we grant relief.

The record reflects that Terrence L. Stewart was a soldier assigned to the 2nd Armored Division, Fort Hood, Texas, and that he received a medical discharge on April 17, 1987. At that time, he was removed from the Master Military Pay File and received a lump-sum disability severance payment of $5,495.74. However, on June 12, 1987, Mr. Stewart's account was put back into the Army's pay system in the following manner: a Department of Defense form 4444-R, Substantiating Document Worksheet, placed Mr. Stewarts' pay account back onto the system. This worksheet is locally produced and utilized to support adjustments or corrections of pay accounts. Army Regulation 37-104-3, 90703. The form is designed to provide an audit trail, to be forwarded to the United States Army Finance and Accounting Center, and to authenticate actions taken. Id.

According to the Army's investigation, the form was initiated by an unknown person, but was certified by Senior Pay Specialist Four Philip J. Dotson. The explanation on the form, written by persons unknown, stated "SM erroneously dropped from system, SM pay option never reinput." Mr. Dotson used DA Form 4444-R as justification for re establishing Stewart's account. The record reflects that at that time, the Army was separating soldiers 90 days in advance of their End of Tour Service dates. Due to errors, soldiers' accounts were inadvertently dropped from the system and DA Form 4444-R was being used to reactivate pay accounts back into the Military Pay System. Although Form 4444-R was ideally to be accompanied by substantiating documents, in some instances where substantiating documents were unavailable, the form itself was used as a source document. As a result, Mr. Stewart received full active duty pay for the period April 17, 1987 through July 31, 1988 /1/ even though he had been officially discharged almost a full month beforehand. The error was detected in July 1988, when an Army Finance computer identified Stewart's account as a "mismatch listing." The Fort Hood finance office was notified and finance officers discovered the overpayment. The case was immediately referred to both the Criminal Investigation Division (CID) and the Army's Debt Collection Division for collection action pursuant to the Federal Claims Collection Act. The Army's investigation concluded that the payments to Stewart were not made as a result of bad faith or lack of reasonable care on the part of the three accountable officers responsible during the time the overpayments were made.

Under 31 U.S.C. Sec. 3527(c), this Office has the authority to relieve accountable officers from liability for improper payments when the improper payment was not the result of bad faith or lack of reasonable care by the official. The good faith and reasonable care of a supervising official is shown by evidence that the supervisor maintained adequate procedures and controls to avoid errors and that appropriate steps were taken to ensure the system was effective. B-234815, Oct. 3, 1989. such a determination our Office typically considers the standard operating procedures in effect at the time and the statements of the personnel involved. B-228946, Jan. 15, 1988.

Your letter and supporting documents show that Major McPherson, Captain Rockwell and Major Rumels all had in place and maintained an adequate system of controls and supervision over their subordinates. There were several failures in the system that led to the incorrect payments, none of which is attributable to the accountable officers here. The record also reflects that six months before the discovery of the improper payments a Department of the Army Finance and Accounting Quality Assurance Team reviewed the Fort Hood Finance Group and found no serious or systemic deficiencies that would have caused the improper payment. Accordingly, relief is granted to Major McPherson, Captain Rockwell and Major Rumels.

/1/ The finance officers for whom relief is requested were responsible for the payments in question for the following time periods: Major McPherson: April 17, 1987 to February 15, 1988; Captain Rockwell: February 16, 1988 to July 21, 1988; Major Runnels, July 22, 1988 to July 31, 1988.