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B-187139 October 25, 1978

B-187139 Oct 25, 1978
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Bensinger: This is in reply to your letter requesting our Office to relieve Lillian B. An apparent discrepancy in the impress fund maintained by the New York Regional Office was reported to DEA headquarters An audit was performed and a shortage of $1. 610 was confirmed on May 19. The shortage was reported to the Treasury Department Disbursing Office in Philadelphia. You have made the required findings that the shortage occurred while Ms. Smith was discharging her official duties as cashier. That it was not the result of her fault or negligence. The Controller explained that in the New York Regional Office many transfers of funds were not documented on specific forms. Funds were not appropriately counted for each transaction.

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B-187139 October 25, 1978

Mr. Peter B. Bensinger, Administrator Drug Enforcement Administration Department of Justice

Dear Mr. Bensinger:

This is in reply to your letter requesting our Office to relieve Lillian B. Smith of liability for a shortage in public funds in her custody while she served as Imprest Fund Cashier of the New York Regional Office of the Drug Enforcement Administration (DEA).

During May of 1972, an apparent discrepancy in the impress fund maintained by the New York Regional Office was reported to DEA headquarters An audit was performed and a shortage of $1, 610 was confirmed on May 19, 1972. The shortage was reported to the Treasury Department Disbursing Office in Philadelphia, Pennsylvania, the United States Secret Service, and the Federal Bureau of Investigation (FBI). On November 4, 1974 the Washington disbursing officer replenished the $1,610, pending clearance of the loss by our Office.

Pursuant to 31 U.S.C. Sec. 82a-1 (1970), you have made the required findings that the shortage occurred while Ms. Smith was discharging her official duties as cashier, and that it was not the result of her fault or negligence. You attribute the loss to "a breakdown in the system" caused by the requirement for agents to be provided with funds for investigative purposes at all hours and (2) the failure of the cashier's supervisors to provide a physical environment conducive to the effective management of the imprest fund.

Generally, an unexplained loss of funds gives rise to a presumption that the accountable officer has been negligent. Since the information in the original request did not appear sufficient to rebut this presumption, we asked the Controller, DEA, to provide additional information. In response to our request, the Controller explained that in the New York Regional Office many transfers of funds were not documented on specific forms, funds were not appropriately counted for each transaction, and three alternate cashiers were acting as principal cashier, thereby creating an "* * * uncontrolled environment which was conducive to administrative errors and compromise the ability to isolate specific responsibility for the shortage. * * *"

Security precautions at the New York Regional Office required that imprest funds be maintained in a vault or safe under the exclusive control Of the Cashier or Alternate Cashier, and that specific documents be used to record imprest fund transactions. These documents were to be secured in the same manner as cash. The Controller reports that prescribed Security requirements were not followed and that imprest fund transactions were not always properly receipted.

Although relief is requested for a total of $1,610, there were apparently three separate shortages of $1, 500, $80, and $50. No evidence is offered which would establish any relationship among the three losses, We assume herein that they are separate and unrelated.

The $1,500 shortage is apparently assumed to have occurred in the latter part of April 1972 "when the principal cashier issued flash roll of $36, 800." On July 21, 1972, Cashier Smith intended to take annual leave during the afternoon. Because Alternate Cashier Tate would otherwise not have had sufficient cash for the needs of agents during Smith's absence, Cashier Smith counted out $36,800 and placed it in a sealed envelope. Smith left the envelope with Budget and Accounting Analyst Cantwell for delivery to Alternate Cashier Tate. Cantwell gave Smith a receipt for the envelope; only, since the funds were not courted at the time of this exchange. Cantwell delivered the envelope to Tate. Ultimately, Alternate Cashier Daner used the funds in the envelope (apparently received from Tate) to prepare a $112,000 "flash roll" for use by DEA agents.

However, there is no indication in the record that the $112,000 cash roll was not properly accounted for. The shortage was evidently discovered not at the time the flash roll was returned but during an audit of the imprest fund several weeks later.

In any event, whether or not the $1,500 loss was the result of the transaction described, it took place while Cashier Smith was accountable for the money and it is not attributed to fault on the part of a subordinate official or to any other known cause.

We concur with the view that the security arrangements and imprest fund transactions were loose, that irregularities in procedure took place, and that: such practices may have been part of the proximate cause of the loss. How ever, in granting relief under 31 U.S.C. Sec. 82a-1 this Office must concur with the determinations of the need of the department after consideration of the pertinent findings. In the instant case, we are unable to concur with the determination that the loss here involved occurred without fault or negligence or, the part of Cashier Smith.

A Government official charged with custody and handling of public moneys is expected to exercise the highest degree of care in the performance of his duty. and when funds disappear without explanation or evident reason the presumption arises that the responsible official we' derelict in some way. B-166519, October 6, 1969; 48 Comp. Gen. 566 (1969). This presumption must be rebutted if we are to grant relief under 31 U.S.C. Sec. 82a-1. The evidence required to overcome the presumption of negligence must be specific. complete, and convincing. Proper procedures not having been owed and in the absence of information rebutting the presumption of negligence, we find no basis for relief of Cashier Smith for this loss.

The $60 shortage occurred during the period September through December 1971 when an internal audit of cash was made for the second quarter in December. The $50 shortage was in the account of an Alternate cashier, and occurred in April 1972. The reasons for these shortages and the circumstances giving rise to them are not reported. No evidence is offered by DEA to rebut the presumption of negligence in either case, but we cannot tell whether these losses are chargeable to Cashier Smith. Since the $50 shortage was in the account of an Alternate Cashier, it should presumably be chargeable to the Alternate Cashier. The $60 shortage, it appears, may have been in the account of a subcashier.

Therefore, we lack sufficient basis in the record to act on the relief requests with regard to the $50 and $60 losses. While you are free to resubmit the requests, with regard to the $50 and $60 shortages with additional information, we would like to draw your attention to our letter of August 1, 1969 (B-161457) wherein we stated

"ADMINISTRATIVE RESOLUTION OF IRREGULARITIES

An irregularity arising from a single incident or series of similar incidents occurring about the same time amounting to less than $150 [increased to $500, effective August 14, 1974, by 54 Comp. Gen. 112 (1974) may be resolved by administrative action appropriate to the circumstances. Such cases will be properly documented and available for GAO review on a site audit basis. A central control record shall be maintained by each department and agency of all such actions."

Accordingly, you can handle the $50 and $60 shortages administratively without obtaining further concurrence from the GAO.

Sincerely yours,

MILTON SCOLAR For Paul G. Dembling General Counsel

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