B-214491, JUL 3, 1984, OFFICE OF GENERAL COUNSEL

B-214491, JUL 3, 1984, OFFICE OF GENERAL COUNSEL

ACCOUNTABLE OFFICER - RELIEF - ILLEGAL OR ERRONEOUS PAYMENTS - WITHOUT FAULT OR NEGLIGENCE DIGEST: U.S. ARMY FINANCE OFFICER IS RELIEVED OF LIABILITY FOR IMPROPER PAYMENT MADE BY SUBORDINATE CASHIER WHERE HE MAINTAINED ADEQUATE SYSTEM OF PROCEDURES DESIGNED TO PREVENT IMPROPER PAYMENT. CASHIER WAS INSTRUCTED ON THE PROCEDURES, AND THERE IS NO INDICATION THAT THE FINANCE OFFICER FAILED TO PROPERLY SUPERVISE HIS SUBORDINATES. FINANCE OFFICER PROPERLY RELIED ON HIS SUBORDINATE TO CHECK PAYEE'S IDENTITY BEFORE CASHING CHECK.

MR. CLYDE E. JEFFCOAT PRINCIPAL DEPUTY COMMANDER U.S. ARMY FINANCE AND ACCOUNTING CENTER INDIANAPOLIS, INDIANA 46249

DEAR MR. JEFFCOAT:

THIS IS IN RESPONSE TO YOUR REQUEST THAT RELIEF BE GRANTED UNDER 31 U.S.C. SEC. 3527(C) FOR AN IMPROPER PAYMENT OF $206, CHARGEABLE TO THE ACCOUNT OF CAPTAIN (CAPT.) VERNE B. HANSON, FINANCE OFFICER, 13TH FINANCE SECTION, NEW ULM, GERMANY. FOR THE FOLLOWING REASONS, THE REQUESTED RELIEF IS GRANTED.

THE IMPROPER PAYMENT RESULTED WHEN FORMER CASHIER, SPECIALIST 5 (SP5) SAMUEL C.A. CATALDI CASHED THE PAYCHECK OF THEN-E-1 CHARLES W. MADDEN ON OCTOBER 15, 1980. ON AUGUST 19, 1981, THE 13TH FINANCE SECTION RECEIVED A REFUND NOTICE FROM THE U.S. TREASURY FOR THE CHECK IN QUESTION. THE PAYEE CLAIMED HE DID NOT RECEIVE OR CASH THE CHECK. MR. MADDEN WAS SEPARATED FROM THE SERVICE ON OCTOBER 20, 1980.

YOU HAVE CONCLUDED THAT THE CHECK IN QUESTION WAS CASHED WITH A FRAUDULENT ENDORSEMENT AND THAT THE CASHING OF THE CHECK WAS DUE TO THE NEGLIGENCE OF SP5 CATALDI IN FAILING TO FOLLOW THE ESTABLISHED PROCEDURE FOR CASHING U.S. TREASURY CHECKS. THE ARMY INVESTIGATION REVEALED THAT THE RECIPIENT OF THE MONEY COULD NOT BE IDENTIFIED AND THE METHOD USED TO OBTAIN POSSESSION OF THE CHECK COULD NOT BE DETERMINED.

AS THE DISBURSING OFFICER OFFICIALLY RESPONSIBLE FOR THE ACCOUNT, CAPT. HANSON IS PERSONALLY LIABLE FOR DEFICIENCIES IN HIS ACCOUNTS CAUSED BY IMPROPER PAYMENTS MADE BY HIS SUBORDINATES. SEE 62 COMP.GEN. 476 (1983). HOWEVER, UNDER 31 U.S.C. SEC. 3527(C), THIS OFFICE IS AUTHORIZED TO GRANT RELIEF FROM LIABILITY UPON A DETERMINATION THAT THE PAYMENT WAS "NOT THE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE BY THE OFFICIAL." SEE GENERALLY 54 COMP.GEN. 112 (1974).

IN CASES WHERE A SUBORDINATE RATHER THAN THE DISBURSING OFFICER HIMSELF ACTUALLY DISBURSES FUNDS, WE HAVE GRANTED RELIEF UPON A SHOWING THAT THE DISBURSING OFFICER PROPERLY SUPERVISED HIS SUBORDINATES BY MAINTAINING AN ADEQUATE SYSTEM OF PROCEDURES AND CONTROLS TO SAFEGUARD THE FUNDS, AND TOOK STEPS TO ENSURE THE SYSTEM'S IMPLEMENTATION AND EFFECTIVENESS. SEE 62 COMP.GEN. 476, 483-4.

ACCORDING TO YOUR LETTER REQUESTING RELIEF, "THE IMPROPER PAYMENT WAS NOT THE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE ON THE PART OF THE FINANCE OFFICER AND PROPER SUPERVISORY CONTROLS WERE IN EFFECT AT THE TIME OF THE LOSS." THE RECORD INDICATES THAT AN ADEQUATE SYSTEM OF PROCEDURES WAS IN PLACE AND CASHIERS WERE INSTRUCTED ON THE PROCEDURES. THERE IS NO INDICATION THAT CAPT. HANSON FAILED TO SUPERVISE HIS SUBORDINATES. CAPT. HANSON PROPERLY RELIED ON HIS SUBORDINATES TO CHECK THE PAYEE'S IDENTITY OF CHECKS CASHED.

WE NOTE THAT YOU STATE THAT COLLECTION ACTION AGAINST SP5 CATALDI WILL BE PURSUED IN ACCORDANCE WITH THE FEDERAL CLAIMS COLLECTION ACT AND THE PROCEDURES OUTLINED IN OUR DECISION, 62 COMP.GEN. 476.

FINALLY, WE NOTE THAT YOUR REQUEST FOR RELIEF IS UNTIMELY. WE AGAIN REMIND YOU THAT YOUR AGENCY IS ASKED TO REPORT ANY FINANCIAL IRREGULARITIES TO OUR OFFICE WITHIN 2 YEARS FROM THE TIME THE LOSS IS REFLECTED IN A FINANCE AND ACCOUNTING OFFICER'S ACCOUNT. 7 GAO POLICY AND PROCEDURES MANUAL 28.14. THIS WILL AVOID ANY POTENTIAL STATUTE OF LIMITATION PROBLEMS.

FOR THE REASONS STATED ABOVE, WE GRANT RELIEF TO CAPT. HANSON FROM LIABILITY FOR THE IMPROPER PAYMENT OF $206.