B-224079, OCT 28, 1986, OFFICE OF THE GENERAL COUNSEL

B-224079, OCT 28, 1986, OFFICE OF THE GENERAL COUNSEL

APPROPRIATIONS/FINANCIAL MANAGEMENT - ACCOUNTABLE OFFICERS - CASHIERS - RELIEF - ILLEGAL/IMPROPER PAYMENTS - FORGERIES APPROPRIATIONS/FINANCIAL MANAGEMENT - ACCOUNTABLE OFFICERS - DISBURSING OFFICERS - RELIEF - ILLEGAL/IMPROPER PAYMENTS - FORGERIES DIGEST: U.S. ARMY FINANCE AND ACCOUNTING OFFICER IS RELIEVED OF LIABILITY FOR IMPROPER PAYMENT MADE BY SUBORDINATE CASHIER BECAUSE HE MAINTAINED AND SUPERVISED AN ADEQUATE SYSTEM OF PROCEDURES TO PREVENT IMPROPER PAYMENTS. THE CASHIER IS ALSO RELIEVED BECAUSE SHE FOLLOWED ALL PRESCRIBED PROCEDURES FOR CASHING CHECKS NOTWITHSTANDING THAT THE PAYEE CIRCUMVENTED THOSE PROCEDURES THROUGH CRIMINAL ACTIVITY.

MR. CLYDE E. JEFFCOAT:

PRINCIPAL DEPUTY COMMANDER FOR FINANCE AND ACCOUNTING

U.S. ARMY FINANCE AND ACCOUNTING CENTER

DEPARTMENT OF THE ARMY

INDIANAPOLIS, INDIANA 46249-0160

YOU HAVE REQUESTED RELIEF UNDER 31 U.S.C. SEC. 3527(C) FOR ARMY FINANCE OFFICER, LIEUTENANT COLONEL (LTC) J. L. SMITH AND CASHIER SERGEANT (SGT) INA A. MCNEESE, 8TH AREA FINANCE SUPPORT CENTER, FOR AN IMPROPER PAYMENT OF $343.70. FOR THE REASONS GIVEN BELOW, YOUR RELIEF IS GRANTED.

YOUR SUBMISSION SAYS THAT IN MARCH 1982 SGT MCNEESE CASHED A TAX REFUND CHECK PAYABLE TO FORMER SOLDIER ANTHONY MCNATT FOR $343.70. THE INDIVIDUAL IN RECEIPT WAS AN IMPOSTER REPRESENTING HIMSELF TO BE MCNATT. IN NOVEMBER 1983 THE REAL ANTHONY MCNATT FILED A CLAIM WITH THE INTERNAL REVENUE SERVICE STATING HE HAD NOT RECEIVED HIS TAX REFUND CHECK, AT WHICH TIME A SECOND CHECK WAS ISSUED. THE DEPOSITING BANK ISSUED A DEBIT VOUCHER TO THE 8TH AREA FINANCE SUPPORT CENTER IN MARCH 1984, AT WHICH TIME THE LOSS WAS REFLECTED IN THE STATEMENT OF ACCOUNTABILITY.

AS THE DISBURSING OFFICER OFFICIALLY RESPONSIBLE FOR THE ACCOUNTS, LTC SMITH IS PERSONALLY LIABLE FOR DEFICIENCIES IN HIS ACCOUNTS CAUSED BY ANY IMPROPER PAYMENTS MADE BY HIS SUBORDINATE. THIS OFFICE IS AUTHORIZED TO GRANT RELIEF FROM LIABILITY UNDER 31 U.S.C. SEC. 3527(C) UPON A DETERMINATION THAT AN IMPROPER PAYMENT WAS NOT THE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE BY THE OFFICIAL. IN CASES WHERE SUBORDINATES OF THE OFFICIAL ACTUALLY DISBURSED THE FUNDS, WE HAVE GRANTED RELIEF UPON A SHOWING THAT THE FINANCE OFFICER PROPERLY SUPERVISED HIS SUBORDINATES BY MAINTAINING AN ADEQUATE SYSTEM OF PROCEDURES AND CONTROLS TO SAFEGUARD THE FUNDS AND TOOK STEPS TO ENSURE THE IMPLEMENTATION AND EFFECTIVENESS OF THE SYSTEM. SEE 62 COMP.GEN. 476 (1983).

ACCORDING TO YOUR LETTER AND SUPPORTING DOCUMENTS, LTC SMITH HAD ESTABLISHED AND MAINTAINED AN ADEQUATE SYSTEM OF CONTROLS TO SAFEGUARD THE FUNDS FOR WHICH HE WAS RESPONSIBLE. A COPY OF THE STANDARD OPERATING PROCEDURES IN EFFECT AT THE TIME THAT THE TRANSACTION OCCURRED INDICATE THAT CASHIERS WERE REQUIRED TO ASSURE THAT CHECKS AND MILITARY ID CARDS CONTAINED THE PAYEE'S NAME, SOCIAL SECURITY NUMBER AND ETS DATE. CASHIERS WERE ALSO REQUIRED TO VERIFY THE ENDORSEMENT WITH THE ID SIGNATURE. THE IMPROPER PAYMENT IN THIS CASE WAS, ACCORDING TO YOUR SUBMISSION, LARGELY THE RESULT OF CRIMINAL ACTIVITY OVER WHICH LTC SMITH HAD NO CONTROL. HAVE FREQUENTLY NOTED THAT EVEN THE MOST CAREFULLY ESTABLISHED AND EFFECTIVELY SUPERVISED SYSTEM CANNOT PREVENT EVERY CONCEIVABLE FORM OF CRIMINAL ACTIVITY. SEE, E.G., B-221395, MARCH 26, 1986. SINCE THERE IS NO INDICATION THAT THE PAYMENT MADE BY SGT MCNEESE WAS THE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE ON HIS PART, RELIEF IS GRANTED TO LTC SMITH.

THE CASHIER, SGT MCNEESE, IS ALSO AN ACCOUNTABLE OFFICER IN THIS CASE. WHERE A CASHIER APPEARS TO HAVE BEEN IN FULL COMPLIANCE WITH EXISTING DIRECTIVES AND NOTHING IN THE RECORD SUGGESTS A LACK OF DUE CARE, THIS OFFICE MAY GRANT RELIEF UNDER THE PROVISIONS OF 31 U.S.C. SEC. 3527(C). SEE, E.G., B-220737 AND B-220981, DECEMBER 10, 1985. HERE, SGT MCNEESE STATES THAT SHE FOLLOWED THE PRESCRIBED PROCEDURES FOR CASHING TREASURY CHECKS AND EXERCISED REASONABLE CARE IN EXAMINING THE VALIDITY OF THE CHECK AND ID PRESENTED. NOTHING IN THE RECORD SUGGESTS THAT SGT MCNEESE SHOULD HAVE BEEN SUSPICIOUS OF THE FRAUDULENT NATURE OF THE TRANSACTION.

ACCORDINGLY, WE CONCLUDE THAT THE IMPROPER PAYMENT WAS NOT THE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE ON THE PART OF SGT MCNEESE.

YOU INDICATE THAT THE IDENTITY OF THE FORGER HAS NOT BEEN ESTABLISHED AND THUS COLLECTION ACTION HAS NOT BEEN POSSIBLE.