B-205587 L/M, JUN 1, 1982, OFFICE OF GENERAL COUNSEL

B-205587 L/M, JUN 1, 1982, OFFICE OF GENERAL COUNSEL

DIGEST: ACCOUNTABLE OFFICER'S ACCOUNT IS DEEMED SETTLED 3 YEARS AFTER DATE OF RECEIPT BY AGENCY OF SUBSTANTIALLY COMPLETE ACCOUNTS OR, WHERE ACCOUNTS ARE RETAINED AT SITE, 3 YEARS AFTER END OF PERIOD COVERED BY ACCOUNT. CONSEQUENTLY, RELIEF REQUEST, WHERE IMPROPER PAYMENT WAS DISCOVERED IN 1976, MAY NOT NOW BE CONSIDERED BY GAO.

PAUL H. TAYLOR, DEPARTMENT OF THE TREASURY:

THIS RESPONDS TO YOUR LETTER REQUESTING THAT RELIEF BE GRANTED UNDER 31 U.S.C. SEC. 82A-2 IN THE AMOUNT OF $581.18 TO MR. EUGENE P. MULCAHY, DIRECTOR OF THE CHICAGO DISBURSING CENTER, DEPARTMENT OF THE TREASURY. SHORTAGE WAS CAUSED BECAUSE THE CENTER, UNDER MR. MULCAHY'S DIRECTION, ERRONEOUSLY MADE DUPLICATE WORKMAN'S COMPENSATION PAYMENTS TO MS. MARY PEAVY. BECAUSE THE SHORTAGE WAS DISCOVERED IN 1976 AND NEVER REPORTED TO THIS OFFICE UNTIL NOVEMBER 1981, MR. MULCAHY'S ACCOUNT MUST BE REGARDED AS SETTLED. SEE 31 U.S.C. 82I. THERE IS THUS NO NEED TO CLEAR HIS ACCOUNT AND THEREFORE NO NEED TO CONSIDER RELIEVING HIM OF LIABILITY FOR THE SHORTAGE.

ON JUNE 9, 1976, THE OFFICE OF WORKERS COMPENSATION, DEPARTMENT OF LABOR, SUBMITTED SCHEDULE NOS. 01-10-6-32-42-44-45 AND 47 TO THE DISBURSING CENTER FOR PROCESSING. ON JUNE 16, 1976, AFTER RECEIVING COMPLAINTS OF NON-RECEIPT OF CHECKS, THE OFFICE OF WORKERS COMPENSATION INQUIRED WITH THE CHICAGO DISBURSING CENTER AS TO WHETHER THE SCHEDULES HAD BEEN PAID. BEING UNABLE TO LOCATE THE ORIGINAL SCHEDULES, THE DISBURSING CENTER REQUESTED DUPLICATE SCHEDULES WHICH IT PROCESSED ON JUNE 25, 1976. ACTUALLY, THE ORIGINAL SCHEDULES HAD BEEN PROCESSED ON JUNE 21, 1976, RESULTING IN DUPLICATE PAYMENTS TO MARY PEAVY AND TO OTHERS. THE DISBURSING CENTER LEARNED OF THE DUPLICATE PAYMENTS ON JUNE 28, 1976.

ON JULY 16, 1976, A LETTER WAS SENT TO MS. PEAVY REQUESTING REPAYMENT. ADDITIONAL LETTERS WERE SENT ON AUGUST 31, 1976, APRIL 22, 1977, AND JANUARY 5, 1978. MS. PEAVY HAS NEVER RESPONDED TO ANY OF THE DEMAND LETTERS.

OUR AUTHORITY TO SETTLE THE ACCOUNTS OF ACCOUNTABLE OFFICERS, AND THEREBY GRANT OR DENY RELIEF, IS LIMITED TO A 3-YEAR PERIOD BY 31 U.S.C. SEC. 82I (EXCEPT WHEN A LOSS IS DUE TO FRAUD OR CRIMINALITY OF THE ACCOUNTABLE OFFICER). UNDER THE STATUTE, THE 3-YEAR PERIOD BEGINS TO RUN WHEN THE OFFICER'S ACCOUNT IS RECEIVED BY THIS OFFICE. HOWEVER, SUBSEQUENT TO THE ENACTMENT OF THE PROVISION OUR PROCEDURES WERE ALTERED. IT IS NO LONGER REQUIRED THAT ACCOUNTS OF ACCOUNTABLE OFFICERS BE PHYSICALLY TRANSMITTED TO THIS OFFICE. RATHER, THEY ARE RETAINED BY THE VARIOUS AGENCIES WHERE THEY ARE SUBJECT TO AUDIT AND SETTLEMENT BY GAO. ACCORDINGLY, WE CONSIDER THE DATE OF RECEIPT BY THE AGENCY OF SUBSTANTIALLY COMPLETE ACCOUNTS, OR WHERE ACCOUNTS ARE RETAINED AT THE SITE, THE END OF THE PERIOD COVERED BY THE ACCOUNT, AS THE POINT FROM WHICH THE 3-YEAR PERIOD ESTABLISHED BY 31 U.S.C. SEC. 82I BEGINS TO RUN. B-199542, NOVEMBER 7, 1980; B-181466, JULY 10, 1974; 3 GAO POLICY AND PROCEDURES MANUAL FOR THE GUIDANCE OF FEDERAL AGENCIES SEC. 69.1, FOOTNOTE 1.

IN THIS CASE, SINCE WE FIND NO EVIDENCE OF FRAUD OR CRIMINALITY BY THE DISBURSING OFFICER, AND SINCE THE OVERPAYMENT WAS DISCOVERED IN 1976, THE STATUTE (31 U.S.C. SEC. 82I) REQUIRES THAT EUGENE P. MULCAHY'S ACCOUNT BE REGARDED AS SETTLED. NO FURTHER CHARGES CAN BE RAISED AGAINST HIM, AND NO FURTHER ADJUSTMENTS TO HIS ACCOUNT NEED BE MADE. THEREFORE, THERE IS NO FINANCIAL RESPONSIBILITY WITH RESPECT TO HIS 1976 OVERPAYMENTS, FOR WHICH HE REQUIRES RELIEF. (CF. B-202037, AUGUST 31, 1981, IN WHICH WE DISTINGUISHED REQUESTS FOR RELIEF FROM RESPONSIBILITY FOR PHYSICAL LOSSES UNDER 31 U.S.C. SEC. 82A-1 FROM RELIEF FOR IMPROPER PAYMENTS UNDER 31 U.S.C. SEC. 82A-2.)

TO AVOID THIS KIND OF PROBLEM, THE GAO POLICY AND PROCEDURES MANUAL FOR THE GUIDANCE OF FEDERAL AGENCIES CALLS FOR PROMPT REPORTS OF FINANCIAL IRREGULARITIES, BOTH TO AVOID THE RUNNING OF THE 3-YEAR LIMITATION PERIOD AND TO DETERMINE MORE QUICKLY WHETHER RELIEF SHOULD BE GRANTED OR DENIED. THUS, WE REQUIRE A REPORT OF IRREGULARITIES (WHICH HAVE NOT BEEN RESOLVED ADMINISTRATIVELY) WITHIN 2 YEARS AFTER THE ACCOUNTS ARE MADE AVAILABLE TO THIS OFFICE FOR AUDIT. 7 GAO POLICY AND PROCEDURES MANUAL FOR THE GUIDANCE OF FEDERAL AGENCIES SEC. 28.14(2); SEE B-199542, NOVEMBER 7, 1980. FRAUD OR OTHER SERIOUS IRREGULARITIES OF SUBSTANTIAL AMOUNT OR SIGNIFICANCE MUST BE REPORTED AS SOON AS POSSIBLE.

THE DEPARTMENT SHOULD ALSO NOTE THAT 31 U.S.C. SEC. 82A-2(B) PROVIDES:

"NOTHING CONTAINED IN THIS SECTION SHALL (1) AFFECT THE LIABILITY, OR AUTHORIZE INCORRECT PAYMENT, OR (2) RELIEVE ANY SUCH DISBURSING OFFICER, THE HEAD OF ANY DEPARTMENT, AGENCY, OR ESTABLISHMENT, OR THE COMPTROLLER GENERAL OF RESPONSIBILITY TO PURSUE COLLECTION ACTION AGAINST ANY SUCH PAYEE, BENEFICIARY, OR RECIPIENT. ***"

IN OTHER WORDS, REGARDLESS OF WHETHER RELIEF IS GRANTED TO AN ACCOUNTABLE OFFICER FOR AN IMPROPER PAYMENT, THE OFFICER AND THE AGENCY STILL HAS AN AFFIRMATIVE DUTY TO PURSUE AGGRESSIVELY COLLECTION OF THE ERRONEOUS PAYMENT FROM THE RECIPIENT. THE FEDERAL CLAIMS COLLECTION STANDARDS CONTAINED IN CHAPTER II OF TITLE 4 OF THE CODE OF FEDERAL REGULATIONS SETS FORTH THE STEPS WHICH FEDERAL AGENCIES MUST TAKE IN COLLECTING DEBTS OWED THE UNITED STATES. ASIDE FROM SENDING DEMAND LETTERS OVER AN EXTENDED PERIOD OF TIME, AND DETERMINING THAT MS. PEAVY HAD NO FURTHER ENTITLEMENT TO WORKERS COMPENSATION BENEFITS AGAINST WHICH HER DEBTS COULD BE SET OFF, THE DEPARTMENT OF THE TREASURY HAS NOT TAKEN ANY OF THE REQUIRED COLLECTION ACTION AGAINST MS. PEAVY, NOR HAS THE DEPARTMENT OFFICIALLY TERMINATED COLLECTION ACTION UNDER THE STANDARDS OF 4 C.F.R. PART 104.