B-247164, Mar 20, 1992, Office of General Counsel

B-247164: Mar 20, 1992

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Navy disbursing officer is relieved of liability for improper payment to individual who forged a receipt for the payment where the officer maintained and supervised an adequate system of procedures designed to prevent such improper payments. We are suspending the running of that period to allow the submission of additional information regarding the liability of the cashier for making improper payment or to initiate collection action against the cashier. Brillian of payroll that payroll was out of balance by $1. 300 payment was allegedly paid to Officer Toohey but his account had not been charged. Brillian that Officer Toohey was at that office complaining that he was in an overpaid status and stating that he never received the $1.

B-247164, Mar 20, 1992, Office of General Counsel

DIGEST: 1. Supervisory U.S. Navy disbursing officer is relieved of liability for improper payment to individual who forged a receipt for the payment where the officer maintained and supervised an adequate system of procedures designed to prevent such improper payments. The agency did not request relief of the subordinate cashier who made the improper payment. 2. Where the 3-year statute of limitations set forth in 31 U.S.C. Sec. 3526(c) has almost expired, we are suspending the running of that period to allow the submission of additional information regarding the liability of the cashier for making improper payment or to initiate collection action against the cashier.

Captain Dennis F. McCoy

Assistant Judge Advocate General:

This responds to your request, dated December 26, 1991, that we relieve Mr. John M. Brillian, Disbursing Officer, Personnel Support Activity, Cleveland, Ohio, from his personal liability for an improper payment of $1,300. For the reasons stated below, we grant the requested relief. advise, however, that the relief granted to Mr. Brillian does not extend to his agent cashier who actually disbursed the funds at issue.

Background

The improper payment occurred on November 10, 1988, when Mr. Brillian's cashier allegedly paid an individual purporting to be transient Naval officer LCDR P.T. Toohey $1,300 after the individual signed a receipt for the cash payment. About the end of December, 1988 or the first part of January 1989, an employee from Payroll Reconciliation, Navy Finance Center informed Mr. Brillian of payroll that payroll was out of balance by $1,300. Mr. Brillian discovered that a $1,300 payment was allegedly paid to Officer Toohey but his account had not been charged. Therefore, Mr. Brillian instructed the Payroll Reconciliation Office to charge Toohey's account. On April 4, 1989, the Disbursing Officer, Personnel Support Detachment, Little Creek, Virginia, informed Mr. Brillian that Officer Toohey was at that office complaining that he was in an overpaid status and stating that he never received the $1,300. Mr. Brillian notified the Commanding Officer, Personnel Support Activity, Cleveland and the Naval Investigative Service, Cleveland of a possible fraudulent payment on behalf of LCDR Toohey.

An investigation by the Naval Investigative Service failed to identify the individual purporting to be officer Toohey. Your office has informed us that the cashier, who is also an accountable officer, was suspected of embezzling the money and forging Toohey's signature. However, the Cleveland, Ohio Police Department examined a writing exemplar produced by the cashier and could not identify the cashier as having signed the receipt for Toohey's $1,300 check. Your office also has informed us that the cashier was separated from the Navy in November 1988, and has remained a civilian since that time. The identity of the person who committed the fraud has not been established and therefore no attempt has been made to take any collection action.

Discussion

In cases such as this one both the person in whose name the account is officially held, Mr. Brillian and the cashier who made the payment, Mr. Bailey, are liable as disbursing officers for the amount of the improper payment. /1/ B-240280, May 22, 1991. This Office has the authority under 31 U.S.C. Section 3527(c) to relieve a disbursing officer from liability for a deficiency resulting from an improper payment if we determine that the payment was not the result of bad faith or lack of reasonable care by the disbursing official, and that a diligent collection effort was made to collect the overpayment. 62 Comp.Gen. 91 (1982); B-239122, Feb. 21, 1991. The good faith and reasonable care of a supervisory disbursing official such as Mr. Brillian is shown by evidence that the official implemented and maintained adequate procedures and controls to avoid errors and safeguard public funds.

The supporting documents establish that Mr. Brillian implemented and maintained an adequate system of controls for paying transient personnel. These controls included requirements that the transient member present to the paying agent his/her personal financial record containing a leave and earning statement, original PCS/TAD orders, or leave papers and a valid Armed Forces identification card. The paying agent is also required to photocopy the individual's orders or leave payments as well as the Armed Forces identification card. The procedures also require the transient member to prepare and sign an index card which will note the member's last and next duty stations and the paying agent will enter the amount paid, payroll number and the date of the payment on the top of the index card. These procedures were properly maintained in that Mr. Brillian required the cashier to become familiar with them and training is provided to any new cashier in order to become familiar with the required procedures. Accordingly, since there is no indication of bad faith or a lack of due care on the part of Mr. Brillian, we grant him relief under 31 U.S.C. Sec. 3527(c) from liability for the loss.

Your request for relief did not ask us to relieve the agent cashier who made the improper payment. Until we relieve the agent cashier, he will remain liable for the amount of the improper payment. B-240440, Mar. 27, 1991. Our authority to grant relief expires "3 years after the date the Comptroller General receives the account," except when the loss is due to fraud or criminality by the accountable officer. 31 U.S.C. Sec. 3566(c). The settlement of an account is conclusive on the Comptroller General at that time. Where the loss is due to fraud, as is the case here, the 3- year period begins when the loss is discovered and reported to the appropriate agency officials. GAO, Policy and Procedures Manual for the Guidance of Federal Agencies, tit. 7, Sec. 8.7 (Feb. 12, 1990). The Navy became aware of the fraud on April 4, 1989, when the disbursing officer discovered that LCDR Toohey's signature had apparently been forged, consequently, the 3-year limitation period will expire in April 1992. order to relieve the cashier who actually made the payment, the record must show the good faith and reasonable care of the cashier by evidence that the individual complied with established procedures and that nothing occurred which should have made that person suspicious of any forgery or other criminal activity. B-239154, Nov. 30, 1990.

Since it appears that the 3-year period for settlement of the account has almost expired, we are suspending, under authority of 31 U.S.C. Sec. 3526(g), the running of that period as of the date of the letter to allow you to provide us with additional information regarding the liability of the agent cashier or to initiate collection action against the cashier. See B-239483.2, Jul. 8, 1991; B-240440, Mar. 27, 1991.