A-94350, MAY 26, 1938, 17 COMP. GEN. 1001

A-94350, MAY 26, 1938, 17 COMP. GEN. 1001

EXCHANGE - LOSS BY - OFFICERS AND EMPLOYEES IN FOREIGN COUNTRIES - SALARY CONVERSIONS IN A TRAVEL STATUS - PRO RATA VERSUS CHRONOLOGICAL METHOD FOR COMPUTATION OF LOSS EXCHANGE LOSSES ON SALARY PAYMENTS CONVERTED FOR EXPENDITURE ABROAD BY EMPLOYEES TRAVELING BUT NOT STATIONED IN FOREIGN COUNTRIES ARE FOR COMPUTATION ON THE BASIS OF THE PRO-RATA LOSS ON EACH OF THE CONVERSIONS RATHER THAN ON THE BASIS OF THE CHRONOLOGICAL METHOD, THE PRO-RATA LOSS DURING THE PERIOD OF THE SALARY PAYMENTS ON WHICH EXCHANGE LOSSES ARE CLAIMED TO BE DETERMINED BY DEDUCTION OF THE ENTIRE PER DIEM AND EXCHANGE LOSSES THEREON ACCRUING FOR THE PERIOD OF THE CLAIM, IRRESPECTIVE OF WHEN PAID, FROM THE ENTIRE AMOUNT CONVERTED DURING THAT PERIOD, AND THE SAID PRO-RATA LOSS BEING THE RELATION OF THE AGGREGATE LOSSES ON THE TOTAL CONVERSIONS TO THE SALARY CONVERSIONS SO ASCERTAINED, OR THAT FRACTION ON THE AGGREGATE LOSSES ON THE TOTAL CONVERSIONS RESULTING FROM THE APPLICATION OF THE ASCERTAINED SALARY AS THE NUMERATOR AND THE SUM OF THE AGGREGATE CONVERSIONS AS THE DENOMINATOR.

ACTING COMPTROLLER GENERAL ELLIOTT TO C. M. P. CROSS, DISTRICT ACCOUNTING AND DISBURSING OFFICER, MAY 26, 1938:

IN CONNECTION WITH PAYMENT ON VOUCHER 872, YOUR APRIL 1937 ACCOUNT,TO ALVIN F. SHARFF, ACTING TREASURY REPRESENTATIVE, ON ACCOUNT OF CURRENCY APPRECIATION LOSSES UPON SALARY FOR THE PERIOD FEBRUARY 18 TO MARCH 31, 1937, WHILE TRAVELING IN FOREIGN COUNTRIES BUT NOT EMPLOYED IN OR ON ASSIGNMENT OR DETAIL TO A POST OF DUTY IN A FOREIGN COUNTRY, YOUR REPLY ON FORM NO. 2085, DATED JANUARY 19, 1938, TO NOTICE OF EXCEPTION OF JANUARY 6, 1938, IS AS FOLLOWS:

IT IS RESPECTFULLY INQUIRED WHETHER THE LEGAL DIVISION HAS ESTABLISHED THIS PRORATION METHOD OF COMPUTATION AS THE ONLY PERMISSIBLE METHOD. SO A COPY OF THE RULING IS DESIRED FOR FUTURE GUIDANCE AND AN INDICATION IS DESIRED OF THE EFFECTIVE DATE.

IN THIS PARTICULAR INSTANCE THE PRO-RATIO METHOD HAS PROVED MORE ADVANTAGEOUS TO THE GOVERNMENT THAN THE CHRONOLOGICAL METHOD WHICH IS MORE LOGICAL AND IN CLOSER CONFORMITY WITH THE METHOD OF PAYING PER DIEM ON THE BASIS OF THE COUNTRIES VISITED. MOREOVER IN APPROXIMATELY HALF THE NUMBER OF CASES THE CHRONOLOGICAL METHOD WILL BE FOUND TO BE TO THE ADVANTAGE OF THE GOVERNMENT.

IT IS NOT DESIRED TO ADOPT THE PRO-RATIO METHOD, IF THE EXCEPTION IN QUESTION IS TO MERELY RELATE TO THIS PARTICULAR CASE AND IF THE RULING IS TO BE REVERSED AND THE CHRONOLOGICAL METHOD INSISTED UPON IN THOSE INSTANCES WHEN IT PROVES TO THE ADVANTAGE OF THE GOVERNMENT.

THE AMOUNTS OF UNITED STATES CURRENCY CONVERTED BY THE EMPLOYEE INTO FOREIGN CURRENCIES, AS SHOWN BY THE RECORD, FOR EXPENDITURE ABROAD, AND THE DIFFERENCE, IN THE UNITED STATES CURRENCY, BETWEEN THE NUMBER OF UNITS OF FOREIGN CURRENCY HE COULD HAVE PURCHASED WITH THE UNITED STATES CURRENCY CONVERTED AT THE BASIC RATES AND THE RATES PREVAILING ON THE DATES OF CONVERSION, ARE STATED IN THE FOLLOWING TABULATION:

CHART

DATE DOLLARS FOREIGN CURRENCY CONVERSION BASIC RATE DOLLAR

CONVERTED RATE DIFFERENCE

3/1/37 100.00 FRENCH FRANCS 2,140.00 21.40 25.5100204 19.21

3/5/37 40.00 FRENCH FRANCS 854.00 21.35 25.5100204 7.79

3/6/37 20.00 DUTCH FLORINS 35.60 1.78 2.4863252 7.94

3/7/37 40.00 DUTCH FLORINS 71.20 1.78 2.4863252 15.87

3/9/37 20.00 BELGIAN FRANCS 580.00 29.00 35.91954 4.77 3/10/37 5.00 BELGIAN FRANCS 145.00 29.00 35.91954 1.20 3/16/37 120.00 FRENCH FRANCS 2,502.0021.85 25.5100204 20.10 3/17/37 100.00 FRENCH FRANCS 2,160.00 21.60 25.5100204 18.10 3/31/37 200.00 FRENCH FRANCS 4,326.00 21.63 25.5100204 35.88 3/31/37 169.05FRENCH FRANCS 3,665.00 21.68 25.5100204 29.87

814.05 160.73

DURING THE MONTH OF MARCH 1937 THE EMPLOYEE CONVERTED AN AGGREGATE SUM OF $814.05, ON WHICH HE INCURRED EXCHANGE LOSSES AGGREGATING $160.73, AND ON VOUCHER 872, HEREINBEFORE MENTIONED, WAS PAID EXCHANGE LOSSES OF $107.20 ON SALARY FOR THE PERIOD FEBRUARY 18 TO MARCH 31, 1937, COMPUTED ON UNITED STATES DOLLARS CONVERTED IN CHRONOLOGICAL ORDER OF DATES OF CONVERSION; THAT IS, WHILE THERE HAD BEEN EARNED SALARY IN THE AMOUNT OF $529.15 DURING SUCH PERIOD, THE SUM OF THE PER DIEM AND EXCHANGE LOSSES THEREON, $300.95, ACCRUED TO THE EMPLOYEE DURING THE SAME PERIOD WAS DEDUCTED FROM THE AGGREGATE CONVERSIONS, $814.05, LEAVING $513.10 AS THE AMOUNT CONSTITUTING SALARY FOR PURPOSES OF EXCHANGE LOSSES, AND UPON SUCH DETERMINATION OF THE PORTION OF SALARY CONVERTED FOR EXPENDITURE ABROAD THERE WAS COMPUTED THE EXCHANGE LOSS ON EACH CONVERSION, AT THE RATE IN EFFECT ON THE DATE OF SUCH CONVERSION, IN CHRONOLOGICAL ORDER UNTIL THE AMOUNT EQUALLED $513.10, THE REMAINING PORTION OF THE TOTAL SUM CONVERTED HAVING BEEN DISREGARDED.

IT HAS BEEN HELD THAT THE COMPUTATION OF EXCHANGE LOSSES UPON CONVERSION OF SALARY PAYMENTS FOR EXPENDITURE ABROAD IN THE CASE OF OFFICERS AND EMPLOYEES TRAVELING BUT NOT STATIONED IN FOREIGN COUNTRIES SHOULD BE ON THE BASIC RATE APPLICABLE TO THE COUNTRY IN WHICH THE CONVERSION IS ACTUALLY MADE (16 COMP. GEN. 509), AND THAT REIMBURSEMENT THEREOF MUST BE AT THE RATE AT WHICH CONVERSION WAS EFFECTED. 14 COMP. GEN. 857. THESE DECISIONS, COUPLED WITH THE WELL SETTLED RULE (16 COMP. GEN. 509; ID. 1016), THAT TO DETERMINE WHAT PART OF THE TOTAL AMOUNTS CONVERTED FOR EXPENDITURE ABROAD IN THE CASE OF EMPLOYEES TRAVELING BUT NOT STATIONED IN A FOREIGN COUNTRY CONSTITUTES SALARY FOR PURPOSES OF EXCHANGE LOSSES THERE SHOULD BE DEDUCTED THE PER DIEM IN LIEU OF SUBSISTENCE AND EXCHANGE LOSSES THEREON, INFER THE PRINCIPLES ENUNCIATED THEREIN ARE FOR APPLICATION TO THE AGGREGATE CONVERSIONS FOR EXPENDITURE ABROAD DURING THE PERIOD OF THE SALARY PAYMENTS ON WHICH EXCHANGE LOSSES ARE CLAIMED AND THE TOTAL PER DIEM AND EXCHANGE LOSSES THEREON WHICH ACCRUED TO THE EMPLOYEE DURING THE SAME PERIOD IRRESPECTIVE OF WHEN THE PER DIEM AND EXCHANGE LOSSES THEREON WERE PAID; THAT IS, WHEN THE CLAIMANT SHOWS CONVERSIONS OF VARIOUS AMOUNTS IN ONE CLAIM FOR SALARY EXCHANGE LOSSES THE ENTIRE PER DIEM AND EXCHANGE LOSSES THEREON ACCRUING FOR THE PERIOD OF THE CLAIM ARE TO BE DEDUCTED FROM THE ENTIRE AMOUNT CONVERTED DURING THAT PERIOD.

IT FOLLOWS FROM THE ABOVE THAT WHEN THAT PART OF THE TOTAL CONVERSIONS CONSTITUTING SALARY FOR EXCHANGE-LOSS PURPOSES HAS BEEN ASCERTAINED THERE IS FOR CONSIDERATION THE PRO-RATA LOSS ON EACH OF THE CONVERSIONS ON THE BASIS OF THE RELATION OF THE AGGREGATE LOSSES ON THE TOTAL CONVERSIONS TO THE ASCERTAINED SALARY AND THE TOTAL CONVERSIONS; THAT IS, THE EXCHANGE LOSS ON THE ASCERTAINED SALARY IS THAT FRACTION OF THE AGGREGATE LOSSES ON THE TOTAL CONVERSIONS RESULTING FROM THE APPLICATION OF THE ASCERTAINED SALARY AS THE NUMERATOR AND THE SUM OF THE AGGREGATE CONVERSIONS AS THE DENOMINATOR. IN THE CASE HERE INVOLVED THE AGGREGATE EXCHANGE LOSSES ON THE TOTAL CONVERSIONS AMOUNTED TO $160.73, THE AGGREGATE CONVERSIONS $814.05, AND THE ASCERTAINED SALARY FOR EXCHANGE-LOSS PURPOSES $513.10; HENCE, THE EXCHANGE LOSS ON SALARY IS 513.10/814.05 OF $160.73, OR $101.31.

ACCORDINGLY, IN THE CASE OF EMPLOYEES TRAVELING BUT NOT STATIONED IN A FOREIGN COUNTRY AND CONVERTING UNITED STATES CURRENCY AT VARIOUS TIMES DURING THE PERIOD OF THE SALARY PAYMENT FOR EXPENDITURE ABROAD, THE PROPER COMPUTATION IS ON THE BASIS OF THE PRO-RATA METHOD, AND THE AUDIT ACTION IN BASING THE COMPUTATION UPON SUCH METHOD WAS CORRECT.

THE CIRCUMSTANCES DO NOT APPEAR TO BE SUCH AS WOULD JUSTIFY POSTPONING THE EFFECTIVE DATE OF THE HOLDING HEREIN, INASMUCH AS SUCH RULING DOES NOT MAKE A NEW OR CHANGE A PRIOR INTERPRETATION OF THE ACT OF MARCH 26, 1934, 48 STAT. 466 AND THE EXECUTIVE ORDERS ISSUED THERETO, AND THERE WAS NO PRECEDENT FOR THE CHRONOLOGICAL METHOD OF COMPUTATION, THE PROPRIETY OF WHICH WAS QUESTIONED AS SOON AS IT WAS DISCLOSED IN THE AUDIT. ACCORDINGLY, CREDIT WILL BE DISALLOWED IN YOUR ACCOUNTS, AND THE OVERPAYMENT OF $5.89 SHOULD BE PROMPTLY DEPOSITED.