A-89229, JANUARY 14, 1938, 17 COMP. GEN. 571

A-89229, JANUARY 14, 1938, 17 COMP. GEN. 571

LEAVES OF ABSENCE - TRANSFERS OF FUNDS TO COVER ACCRUED LEAVE OF EMPLOYEES LOANED OR DETAILED IN ADJUSTING THE COST BETWEEN FEDERAL AGENCIES FOR SERVICES RENDERED BY THE PERSONNEL OF ONE AGENCY FOR ANOTHER AGENCY, PURSUANT TO THE PROCEDURE AUTHORIZED BY SECTION 601 OF THE ACT OF JUNE 30, 1932, 47 STAT. 417, THE VALUE OF CREDIT FOR LEAVE WITH PAY AS IT ACCRUES IS FOR INCLUSION AS AN ITEM OF COST, LEAVE WITH PAY NOW BEING A MATTER OF RIGHT UNDER ANNUAL AND SICK LEAVE ACTS, MARCH 14, 1936, 49 STAT. 1161, AND 1162. 14 COMP. GEN. 452, AMPLIFIED, AND 17 COMP. GEN. 315, MODIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, TENNESSEE VALLEY AUTHORITY, JANUARY 14, 938:

YOUR LETTER OF OCTOBER 19, 1937, IS AS FOLLOWS:

YOUR LETTER OF OCTOBER 7, CONCERNING A LETTER DATED SEPTEMBER 16, 1937, FROM THE COMPTROLLER OF TENNESSEE VALLEY AUTHORITY REGARDING THE PREAUDIT EXCEPTION TAKEN BY YOUR OFFICE AGAINST A VOUCHER OF THE PUERTO RICO RECONSTRUCTION ADMINISTRATION PAYABLE TO THE AUTHORITY, HAS BEEN RECEIVED. WHILE THE AUTHORITY IS BARRED FROM APPEALING THE ACTION YOU HAVE TAKEN BECAUSE OF THE FACT THAT PAYMENTS MADE BY THE PUERTO RICO RECONSTRUCTION ADMINISTRATION ARE PREAUDITED BY YOU PRIOR TO PAYMENT, THE POINT INVOLVED IS ONE OF ACCOUNTING PRINCIPLE WHICH WE BELIEVE TO BE VITAL.

YOUR DECISION IS BASED ON A LEGALISTIC PREMISE STATED BY YOU AS FOLLOWS: "IT HAS BEEN HELD THAT AUTHORIZED LEAVE IS SYNONYMOUS WITH WORK.' OBVIOUSLY, LEAVE IS NOT A SYNONYM OF WORK. LEAVE IS SIMPLY A PART OF THE COMPENSATION FOR WORK PERFORMED, AND, THEREFORE, IS AS MUCH AN ELEMENT OF COST AS SALARIES. STATING IT DIFFERENTLY, AN ANNUAL RATED EMPLOYEE IS PAID FOR 365 DAYS A YEAR; BUT HE WORKS SOMETHING LESS THAN THAT BECAUSE OF SUNDAYS, HOLIDAYS, SICKNESS, AND ANNUAL LEAVE. THEREFORE, THE PRODUCTIVE TIME (ACTUAL DAYS OF WORK) MUST BE CHARGED TO THE COST OF WORK PERFORMED AT A RATE HIGHER THAN 1/365 OF THE ANNUAL SALARY FOR EACH DAY'S ACTUAL WORK, IN ORDER TO ACCOUNT FOR THE FULL SALARY PAID.

FOR EXAMPLE: ASSUME THAT AN EMPLOYEE OF THE AUTHORITY EARNING $5,200 PER ANNUM IS LOANED TO THE PUERTO RICO RECONSTRUCTION ADMINISTRATION FOR SIX MONTHS. AFTER RETURNING, HE WORKS ONE WEEK ON PICKWICK LANDING DAM, THEN TAKES THE ANNUAL LEAVE EARNED DURING THESE TWO PERIODS OF EMPLOYMENTS, AND RESIGNS. THE AUTHORITY, UNDER ITS METHOD OF ACCOUNTING, WOULD DISTRIBUTE THE SALARY PAID AS FOLLOWS:

CHART

CREDIT

APPROPRIATION LEAVE

RESERVE

TO PUERTO RICO RECONSTRUCTION ADMINISTRATION:

6 MONTHS' SALARY ------------------------------ $2,600 ---- --

ANNUAL LEAVE EARNED DURING PERIOD OF LOAN

(APPROXIMATELY 1/2 MONTH) ------------------- ------ $216

TOTAL, $2,816 ------------------------------- 2,600 216

TO PICKWICK LANDING DAM:

1 WEEK'S SALARY ------------------------------- 100 ---- --

1/2 DAY LEAVE EARNED (APPROXIMATE) ------------ ------ 10

TOTAL, $110 --------------------------------- 100 10

TO RESERVE FOR ANNUAL LEAVE --------------------- 226 (DEBIT)

226

TOTAL SALARY -------------------------------- 2,926 ---- --

(ACTUALLY TIME DISTRIBUTIONS ARE MADE AT AN HOURLY RATE AND THE LEAVE PROVISION IS EXPRESSED AS A PERCENTAGE, 13 PERCENT INCLUDING BOTH ANNUAL AND SICK LEAVE, WHICH IS ADDED TO THE AMOUNTS RESULTING AFTER APPLYING THE HOURLY RATE TO THE HOURS WORKED. HOWEVER, THE ABOVE ILLUSTRATION IS THE SAME IN PRINCIPLE.)

FOLLOWING THE PRINCIPLE EXPRESSED IN YOUR LETTER, THE DISTRIBUTION WOULD BE AS FOLLOWS:

CHART

TO PUERTO RICO RECONSTRUCTION ADMINISTRATION:

6 MONTHS' SALARY --------------------------------- (CREDIT

APPROPRIATION.)

$2,600

TO PICKWICK LANDING DAM:

1 WEEK'S SALARY -------------------------- $100

LEAVE TAKEN ------------------------------ 226

---- (CREDIT

APPROPRIATION.)

326

TOTAL SALARY ----------------------------------- 2,926

THE EFFECT OF THIS METHOD IS THAT PICKWICK LANDING DAM IS CHARGED $326 FOR ONE WEEK'S SERVICES OF A $5,200 PER ANNUM EMPLOYEE, AND PUERTO RICO RECONSTRUCTION ADMINISTRATION HAS CORRESPONDINGLY BENEFITED--- OBVIOUSLY AN UNREASONABLE SITUATION.

THE AUTHORITY, TO THE BEST OF ITS ABILITY, IS KEEPING ITS ACCOUNTS IN A WAY THAT IT CAN REPORT THE COSTS OF EACH INDIVIDUAL FEATURE OF ITS VARIED PROGRAM. ITS ACCOUNTING IS NOW AND WILL INCREASINGLY BECOME A POINT AT WHICH INTERESTS HOSTILE TO THE AUTHORITY WILL ENDEAVOR TO WEAKEN ITS STANDING WITH THE PUBLIC. THEREFORE, WE ARE PARTICULARLY CONCERNED WHEN DECISIONS OF YOUR OFFICE ACT TO FORCE US INTO RECORDING TRANSACTIONS IN A MANNER WHICH IS NOT CONSISTENT WITH ADVANCED ACCOUNTING PRINCIPLES.

THE QUESTION WHICH WE HAVE SUBMITTED TO YOU IS ONE OF ACCOUNTING, AND WE ASK THAT IT BE CONSIDERED IN THAT LIGHT.

THE DECISION OF OCTOBER 7, 1937, 17 COMP. GEN. 315, OF WHICH RECONSIDERATION HAS BEEN REQUESTED, SUSTAINED AUDIT ACTION IN DEDUCTING $43.63 FROM THE TOTAL BILL OF THE TENNESSEE VALLEY AUTHORITY IN THE AMOUNT OF $379.28 AGAINST THE PUERTO RICO RECONSTRUCTION ADMINISTRATION FOR LOAN OF PERSONNEL OF THE AUTHORITY, THE AMOUNT OF THE DEDUCTION REPRESENTING THE VALUE OF LEAVE CREDIT WHICH ACCRUED TO THE PERSONNEL DURING THE PERIOD OF LOAN. IN ARRIVING AT THE CONCLUSION THAT THE PUERTO RICO RECONSTRUCTION ADMINISTRATION COULD NOT BE CHARGED THE VALUE OF SUCH LEAVE CREDIT THERE WAS APPLIED THE RULE STATED IN DECISION OF JUNE 28, 1937, 16 COMP. GEN. 1122, CONTROLLING IN CASES OF EMPLOYEES PERMANENTLY TRANSFERRED FROM ONE FEDERAL AGENCY TO ANOTHER, THAT TRANSFER OF APPROPRIATIONS COVERING VALUE OF LEAVE CREDIT AT DATE OF TRANSFER WAS NOT AUTHORIZED. IS BELIEVED, HOWEVER, UPON FURTHER CONSIDERATION OF THE MATTER IN THE LIGHT OF YOUR PRESENT SUBMISSION, THE CONTROLLING STATUTES, AND THE COST ACCOUNTING REQUIREMENTS INVOLVED, THAT THE RULE APPLIED IN THE CASE OF PERMANENT TRANSFER OF EMPLOYEES BETWEEN AGENCIES IS NOT FOR APPLICATION WHERE THERE IS REQUIRED IN ANY EVENT A TRANSFER OF APPROPRIATIONS FOR COST OF PERSONAL SERVICES RENDERED BETWEEN DEPARTMENTS AND ESTABLISHMENTS OF THE GOVERNMENT EITHER THROUGH THE LOAN OF EMPLOYEES OR OTHERWISE.

IN DECISION OF DECEMBER 11, 1934, 14 COMP. GEN. 452, WHEREIN WAS QUOTED SECTION 601 (A) OF THE ACT OF JUNE 30, 1932, 47 STAT. 417, AUTHORIZING SERVICES BETWEEN DEPARTMENTS AND ESTABLISHMENTS OF THE GOVERNMENT AND REIMBURSEMENT OF APPROPRIATIONS THEREFOR, IT WAS HELD (QUOTING FROM THE SYLLABUS):

AS THE ACTUAL COST OF AN EMPLOYEE'S SERVICES WHEN ON AN ANNUAL BASIS INCLUDES COMPENSATION FOR SUNDAYS AND HOLIDAYS, WHEN ADJUSTING THE COST BETWEEN DEPARTMENTS FOR SERVICES RENDERED BY SUCH AN EMPLOYEE, IT IS PROPER TO DIVIDE THE ANNUAL SALARY RATE BY THE ACTUAL NUMBER OF WORKING DAYS IN THE YEAR TO OBTAIN THE COST OF EACH DAY'S SERVICE IN ACCORDANCE WITH SECTION 601 OF THE ACT OF JUNE 30, 1932, 47 STAT. 417.

IT IS UNDERSTOOD THE PROCEDURE NOW EMPLOYED BY THE TENNESSEE VALLEY AUTHORITY FOLLOWS THAT PRESCRIBED IN THE QUOTED DECISION TO THE EXTENT THAT THE RATE CHARGED PER DAY OR PER HOUR IS BASED UPON THE ACTUAL NUMBER OF PRODUCTIVE DAYS DURING A GIVEN PERIOD (22 DAYS PER MONTH) RATHER THAN ON THE ACTUAL NUMBER OF DAYS WITHIN SUCH PERIOD ON AN ANNUAL SALARY BASIS (30 DAYS PER MONTH). SUCH PROCEDURE WAS DESIGNED TO AUTOMATICALLY ELIMINATE, AND INSURE REIMBURSEMENT FOR THE NONPRODUCTIVE DAYS, VIZ, SATURDAYS, SUNDAYS, AND HOLIDAYS. ALSO, THAT THERE IS NOW INCLUDED IN THE CHARGE AN ADDITIONAL 13 PERCENT TO COVER NONPRODUCTIVE DAYS OF ACCRUED ANNUAL, SICK, AND MILITARY LEAVE, WHICH ELEMENTS WERE STATED IN THE AGREEMENT WITH THE PUERTO RICO RECONSTRUCTION ADMINISTRATION.

AS LEAVE WITH PAY IS NOW A MATTER OF RIGHT BY STATUTE (ACTS OF MARCH 14, 1936, 49 STAT. 1161 AND 1162), IT IS PROPER TO EXTEND THE RULE STATED IN DECISION OF DECEMBER 11, 1934, SUPRA, TO AUTHORIZE THE VALUE OF SUCH LEAVE CREDIT AS IT ACCRUES TO BE INCLUDED AS AN ITEM OF COST WHEN ADJUSTING THE COST BETWEEN FEDERAL AGENCIES FOR SERVICES RENDERED BY THE PERSONNEL OF ONE AGENCY FOR ANOTHER AGENCY REQUIRING THE REIMBURSEMENT OF APPROPRIATIONS, PURSUANT TO THE PROCEDURE AUTHORIZED BY SECTION 601 OF THE ACT OF JUNE 30, 1932, SUPRA.

THE DECISION OF OCTOBER 7, 1937, 17 COMP. GEN. 315, IS MODIFIED ACCORDINGLY, AND THERE WILL NOW BE CERTIFIED FOR PAYMENT IN FAVOR OF THE TENNESSEE VALLEY AUTHORITY THE AMOUNT OF $43.63 PREVIOUSLY DEDUCTED IN THE AUDIT FROM THE TOTAL BILL AGAINST THE PUERTO RICO RECONSTRUCTION ADMINISTRATION.

THERE WILL BE FOR FURTHER CONSIDERATION BY THIS OFFICE THE CORRECTNESS OF THE PERCENTAGES ADDED FOR ACCRUED LEAVE AS ITEMS OF COST OF PERSONAL SERVICES PERFORMED BY ONE FEDERAL AGENCY FOR ANOTHER, AND THE PROMULGATION OF GENERAL REGULATIONS FOR THE GUIDANCE OF ALL DEPARTMENTS AND ESTABLISHMENTS CONCERNED.