B-243749, October 1991 Decision of Socolar B-243749 October 1991

B-243749: Oct 1, 1991

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DECISION OF SOCOLAR HEADNOTES: (*1) Limitation on physical losses by accountable officers which agencies may resolve administratively without need to submit relief request to GAO is increased to $3. 000 limit is extended to two categories of improper payment: (1) losses resulting from mechanical or clerical error in check issuance process. The losses for which relief authority is requested result from mechanical or clerical errors during the check issuance process or from the issuance of a second check to a payee based on the payee's signed statement that the original (*2) check had not been received. The losses occur when a check containing an erroneous amount is negotiated or when both the original and duplicate check are negotiated and paid.

B-243749, October 1991 Decision of Socolar B-243749 October 1991

DECISION OF SOCOLAR HEADNOTES: (*1) Limitation on physical losses by accountable officers which agencies may resolve administratively without need to submit relief request to GAO is increased to $3,000. In addition, authorization for administrative resolution up to $ 3,000 limit is extended to two categories of improper payment: (1) losses resulting from mechanical or clerical error in check issuance process, and (2) duplicate check losses (issuance of replacement or substitute check where payee claims nonreceipt of original check).

Mr. Russell D. Morris Commissioner, Financial Management Service Department of the Treasury

Dear Mr. Morris:

By letter dated February 22, 1991, you asked that we delegate to the Financial Management Service (FMS), Department of the Treasury, the authority to relieve accountable officers from liability for losses resulting from certain types of overpayments. We received a similar request from the Comptroller, Department of the Defense, on July 29, 1991.

The losses for which relief authority is requested result from mechanical or clerical errors during the check issuance process or from the issuance of a second check to a payee based on the payee's signed statement that the original (*2) check had not been received. The losses occur when a check containing an erroneous amount is negotiated or when both the original and duplicate check are negotiated and paid. In such cases, we routinely grant relief since fraud, bad faith, or lack of due care by the accountable officers have not been the cause of the loss. See, e.g., B-235036, Oct. 17, 1989; B-236229, Oct. 31, 1989.

In your letter, you suggest that a favorable response to your request would avoid the cost and delay associated with having each request for relief processed and approved by your office, then considered again by our Office. You also correctly note that to the best of your knowledge, we have always granted relief in these classes of cases. Finally, you point our that we have previously delegated authority to agencies to grant relief in physical loss cases generally. Accordingly, you ask that we grant authority to relieve accountable officers from losses arising (1) from mechanical or clerical errors or (2) duplicate check issuances up to a ceiling amount anywhere in a range from $ 3,000 to $ 10,000, with losses in excess of that amount to be submitted to this Office.

As noted, we have delegated (*3) authority to civilian agencies to grant relief to accountable officers for physical losses in his or her account in amounts not to exceed $ 1,000 for a single incident. The authority to relieve accountable officers in such cases is to be exercised in accordance with the statutory standards and consistent with prior decisions of this Office. See GAO, Policy and Procedures Manual for Guidance of Federal. Agencies, Title 7, sec. 8.9C(TS 7-42, Feb. 12, 1990) (7 GAO-PPM). See also B-161457, Aug. 14, 1974; 54 Comp Gen 112, B-161457, Aug. 1, 1969. We also have delegated to the Secretary of the Army authority to relieve Army disbursing officers in duplicate check cases in amounts not to exceed $ 750. B-214372, Oct. 9, 1987, superseded by decision of today, B-244972, Oct. 22, 1991.

For the reasons you have identified, we agree with your request. Thus, effective immediately, your office need no longer submit to our Office for relief action (1) overpayment cases resulting from mechanical and/or clerical errors or (2) duplicate check cases, except in those instances where relief would not be appropriate or where the amount involved exceeds $ 3,000. FMS should (*4) continue to review overpayment and duplicate check cases in accordance with the statutory standards set forth in 31 U.S.C. Sec. 3527(c) or 3528(b) (recertified checks), 7 GAO-PPM, and applicable Comptroller General decisions. To the extent that FMS has doubts concerning the standards or their application in any given case, you should expeditiously refer such cases to our Office for resolution.

The exercise of the authority contained herein requires that FMS insure the independence of the organizational entity or officer reviewing the propriety of the cases for relief. Also, FMS should document and maintain the administrative record supporting relief and periodically review the exercise of this authority to insure its appropriate use. Similarly, such records will provide our Office a basis upon which to periodically assess compliance with the authority contained herein.

Also, consistent with this request, we are raising the threshold amount for physical loss cases specified in 7 GAO-PPM Sec. 8.9C from $ 1,000 to $ 3,000. We are currently revising Title 7, GAO-PPM, and will incorporate and provide additional guidance concerning these changes in the revised Title 7. Any comments (*5) that you or your staff May have with respect to these matters would be welcome. Please submit such comments to Mr. Gordon Filler, Accounting and Financial Management Division, U.S. General Accounting Office, Room 6025, 441 G Street, N.W., Washington, D.C. 20548.