[Request for Reconsideration of Relief for Former Navy Disbursing Officer]

B-226393, Apr 29, 1988, Office of General Counsel

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Liability - Statutes of limitation - Effective dates - Illegal/improper payments DIGEST: 1. The statute of limitations provision set forth in 31 U.S.C. Sec. 3526(c) begins to run when the agency's accounts are "substantially complete" and ready for audit. "Substantially complete" accounts refers to the time when all the documents necessary to raise a charge against the account are in the agency's possession, regardless of whether they have been properly documented or filed. 2. In cases where an agency cannot raise a charge against an account until it receives a notice of loss, such as a debit voucher from Treasury, the date of the receipt of the debit voucher begins the statute of limitations period. If the exact date of receipt is unknown, the date on the debit voucher will be used as the starting point for the calculation of the statute of limitations period. To the extent that GAO has in the past relied on the recordation date to begin the statute of limitations period, these cases (including 62 Comp.Gen. 91, 97-98 (1982), (B-201286), and B-213874, Sept. 6, 1984) are hereby modified. APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Liability restrictions - Statutes of limitation 3. Monies paid on debts that had been settled by operation of law prior to the payment being made should be refunded to the accountable officer who made the payment.

The Honorable Chase Untermeyer, Assistant Secretary, Department of the Navy:

This is in response to your letter of August 5, 1987, submitting additional information and requesting reconsideration of your relief request on behalf of Lt. W. J. Roberts, Supply Corps, former disbursing officer aboard the U.S.S. John Fitzgerald Kennedy (USS JFK) for five improper payments totaling $1,421.29 under the provisions of 31 U.S.C. Sec. 3527(c). We had previously determined that there was no need to grant relief to Lieutenant Roberts since his account had been settled by operation of law. B-226393, July 2, 1987.

You have asked that we reconsider this decision in view of two additional pieces of information. First, you have provided data that shows that three of the losses were recorded in Lieutenant Roberts' account sometime after the debit vouchers were received. (Two of the losses were recorded within 4 and 5 months of the receipt of the debit vouchers while in the other case the delay in recording was 4 years.) In all three instances, the recordation date was less than 3 years from the date of our prior decision. In view of this, you question whether the statute of limitations has run with respect to these losses. Second, your reconsideration request indicates that Lieutenant Roberts had restored the deficiency in his account by a payment of $1,421.29 made on August 25, 1986. You question whether any portion of Lieutenant Roberts' payment attributable to losses settled by operation of law prior to the payment may be refunded to him as erroneously collected. We will discuss each of these questions in turn.

Statute of Limitations

The losses in this case arose out of the fraudulent negotiation of five Treasury checks aboard the USS JFK. The dates of the checks, the debit voucher dates, the dates the checks were recorded and the amounts of the checks are as follows:

(TABLE OMITTED)

As stated above, in our previous decision we determined, based on the date of the debit vouchers, that the statute of limitations period had run on all five losses, settling the officer's account by operation of law. B-226393, supra. /1/

You question whether the debit voucher is the proper starting point for the calculation of the statutory period. You point out that in B-213874, Sept. 6, 1984, we held that the statute of limitations period begins when the loss is recorded in the officer's statement of accountability. It is your position that if the recordation date is used as the starting point for the statute of limitations period, that in three of the losses at issue here (checks #2, #3, and #5, listed above), the statute would not have run before our decision was issued. Therefore, you have asked that we determine if the statute of limitations period was properly applied.

As will be discussed below, we have reexamined the application of the statute of limitations in the instant case and conclude that the 3 year period begins to run when the debit voucher has been received by the agency, not when it is recorded in the accountable officer's statement of accountability. See B-220689, Sept. 24, 1986. Accordingly, we reaffirm our prior decision. However, to the extent that we have in the past relied on the recordation date as the start of the statute of limitations period, these cases are hereby modified. /2/

The statute of limitations provisions are set forth in 31 U.S.C. Sec. 3526(c) and provide:

"(c)(1) The Comptroller General shall settle an account of an accountable official within 3 years after the date the Comptroller General receives the account. A copy of the certificate of settlement shall be provided the official.

"(2) The settlement of an account is conclusive on the Comptroller General after 3 years after the account is received by the Comptroller General. However, an amount may be charged against the account after the 3-year period when the Government has or may have lost money because the official acted fraudulently or criminally."

As a result of changes in audit methods, the Comptroller General no longer physically receives accounts. Accounts are now retained by the various agencies where they are subject to audit and settlement by our Office. In view of these changes, we have determined that the statute of limitations period begins to run on the date when the agency's accounts are "substantially complete" and ready for audit. B-213720, Sept. 26, 1986.

In most cases, an agency has a "substantially complete account" when all the documents necessary to raise a charge against an account are in the agency's possession, regardless of whether they have been properly documented or filed. See B-213720, Sept. 26, 1986. Generally, this will mean that the statute of limitations period begins at the end of the accounting period covered by the account in which the erroneous or improper payment is made. At this point, the agency usually will have information in its possession to raise a charge against the account, if warranted.

However, the situation is different in cases where the agency cannot raise a charge against the account until it receives a notice of loss, such as a debit voucher from the Department of the Treasury. We note that under NAVCOMPT Manual, vol. 4, para. 042482(1):

"If a cashable instrument is dishonored due to an alleged forgery or alteration, the disbursing officer should receive a Debit Voucher. ... No other method of establishing the charge against the disbursing officer ... is authorized."

In these situations, the statute of limitations period begins upon the agency's receipt of the debit voucher, not when the loss is recorded in the finance officer's account. In our view, this position best implements the purpose of the statute of limitations-- to protect accountable officers from stale charges being raised against their accounts. In those cases when the exact date the agency received the debit voucher is not known, we will rely on the date of the debit voucher as the start of the statute of limitations period.

In the five losses at issue here, we relied on the debit voucher date to calculate the statute of limitations period. The fact that there were delays in recording the losses in three of the cases does not extend the statute of limitations period.

Restoration of Lieutenant Roberts' Account

According to your submission, Lieutenant Roberts restored the deficiency in his account on August 25, 1986, by a payment of $1,421.29. You asked if any of this amount can be refunded to him.

Unlike a case of physical loss, we are without authority to order the refund of amounts paid in respect to a deficiency resulting from an improper payment. B-223840, Nov. 5, 1986; compare subsections (a) and (b) with (c) of 31 U.S.C. Sec. 3527. The accountable officer is financially liable for these losses and payment settles the account.

As you noted, however, the statute of limitations had already run on three of the losses at issue here, before Lieutenant Roberts made his payment. Since the running of the statute settles the account by operation of law, Lieutenant Roberts was not personally responsible for any loss and did not owe any debt with regard to the items on which the statute had run. Therefore, monies paid on the following three debts were erroneously received by the United States and should be refunded to Lieutenant Roberts from the credited account. See 17 Comp.Gen. 859, 860 (1938); B-201385, May 29, 1981. (TABLE OMITTED)

/1/ At the time the decision was issued, we were not aware that Lieutenant Roberts had restored the deficiency in his account on August 5, 1986. When Lieutenant Roberts restored his account, his payment settled those losses on which the statute of limitations had not yet run (checks #3 and #5).

/2/ Cases modified include 62 Comp.Gen. 91, 97-98 (1982), (B-201286), (where we stated that the 3-year period begins to run when the Army Finance and Accounting Center received the disbursing officer's Statement of Accountability) and B-213874, Sept. 6, 1984 (which relied on 62 Comp.Gen 91 (1982)). The outcomes in these cases would not be affected by calculating the statute of limitations period from the date of the debit vouchers.