B-227548, Jul 22, 1987, Office of General Counsel

B-227548: Jul 22, 1987

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APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Relief - Illegal/improper payments - Substitute checks DIGEST: Relief is granted Army disbursing official under 31 U.S.C. Proper procedures were followed in the issuance of the substitute check. There was no indication of bad faith on the part of the disbursing official and subsequent collection attempts are being pursued. 1986 we will deny relief if Army delays more than 3 months in forwarding debt to its Collection Division. Relief is granted. Both checks were in the same amount. The substitute check was issued by the Army on the basis of the payee's allegation that the original check had not been received and a request for stop payment had been made.

B-227548, Jul 22, 1987, Office of General Counsel

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Relief - Illegal/improper payments - Substitute checks DIGEST: Relief is granted Army disbursing official under 31 U.S.C. Sec. 3527(c) from liability for improper payment resulting from payee's negotiation of both original and substitute checks. Proper procedures were followed in the issuance of the substitute check, there was no indication of bad faith on the part of the disbursing official and subsequent collection attempts are being pursued. However, for cases involving notices of loss received after June 1, 1986 we will deny relief if Army delays more than 3 months in forwarding debt to its Collection Division. We also remind the Army of the requirement to promptly report financial irregularities in order to avoid any statute of limitations problems.

Brigadier General B. W. Hall:

This responds to your request of June 18, 1987, that we believe Captain (Capt.) B. T. Tyson, DSSN 6520, Finance Corps, Finance and Accounting Officer, New Cumberland Army Depot, Pennsylvania, under 31 U.S.C. Sec. 3527(c) for an improper payment of a $66.85 check payable to Mr. Ewart S. Scales. For the reasons stated below, relief is granted.

The loss resulted when the payee negotiated both the original and a substitute check. Both checks were in the same amount. The substitute check was issued by the Army on the basis of the payee's allegation that the original check had not been received and a request for stop payment had been made. Both checks were issued by the Army under authority delegated by the Department of the Treasury. 31 C.F.R. Sec. 245.8.

It appears that the request for stop payment and the issuance of a substitute check in this case were within the bounds of due care as established by Army Regulations. See AR-37-103, Paras. 4-161, 4-162, and 4-164. There was no indication of bad faith on the part of the disbursing officer and it appears the adequate collection efforts are now being made. Accordingly, we grant relief.

Although we have granted relief to the disbursing officer in this case, we do not believe that the Army's collection procedures, taken together, meet the diligent claims collection requirement of 31 U.S.C. Sec. 3527(c). Once the debit voucher dated August 16, 1984, was received from Treasury, it took Army over 33 months to refer the loss to your Collection Division. As we stated on numerous occasions, for cases involving notices of loss received after June 1, 1986, where the payee has left the army or its employ, we will no longer grant relief if Army delays more than 3 months in forwarding the debt to your Collection Division. However, since the debit voucher was received prior to that date, we will not deny relief here.

Finally, we note that your request for relief was submitted only two months before the 3-year statute of limitations period was to expire. remind you that the GAO Policy and Procedures Manual requires prompt reports of financial irregularities, not more than 2 years after the date the agency has substantially complete accounts, in order to avoid any statute of limitations problems. 7 GAO Policy and Procedures Manual Sec. 28.14.

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