B-226316, B-226318, B-226326, B-226385, APR 9, 1987, OFF. OF GEN. COUNSEL

B-226316, B-226318, B-226326, B-226385, APR 9, 1987, OFF. OF GEN. COUNSEL

APPROPRIATIONS/FINANCIAL MANAGEMENT - ACCOUNTABLE OFFICERS - DISBURSING OFFICERS - RELIEF - ILLEGAL/IMPROPER PAYMENTS - SUBSTITUTE CHECKS DIGEST: RELIEF IS GRANTED ARMY DISBURSING OFFICIAL AND HIS DEPUTY UNDER 31 U.S.C. SEC. 3527(C) FROM LIABILITY FOR FOUR IMPROPER PAYMENTS RESULTING IN EACH CASE FROM A PAYEE'S NEGOTIATION OF BOTH ORIGINAL AND RECERTIFIED MILITARY CHECKS. PROPER PROCEDURES WERE FOLLOWED IN THE ISSUANCE OF THE RECERTIFIED CHECKS, THERE WAS NO INDICATION OF BAD FAITH ON THE PART OF THE DISBURSING OFFICIAL AND HIS DEPUTY, AND SUBSEQUENT COLLECTION ATTEMPTS ARE BEING PURSUED. HOWEVER, WE SUGGEST THAT WHEN THERE IS A DELAY IN ISSUING A RECERTIFIED CHECK AND THE CREDIT INFORMATION RECEIVED FROM TREASURY IS NO LONGER CURRENT, THAT THE FINANCE OFFICER VERIFY THE STATUS OF THE ORIGINAL CHECK WITH TREASURY. FURTHER, FOR CASES INVOLVING NOTICES OF LOSSES RECEIVED AFTER JUNE 1, 1986, WHERE THE PAYEE HAS LEFT THE ARMY OR ITS EMPLOY, WE WILL DENY RELIEF IF ARMY DELAYS MORE THAN 3 MONTHS IN FORWARDING THE DEBT TO ARMY'S COLLECTION DIVISION.

BRIGADIER GENERAL B. W. HALL:

THIS RESPONDS TO FOUR SEPARATE REQUESTS THAT WE RELIEVE LIEUTENANT COLONEL (LTC) M. D. ERICKSON, FINANCE CORPS, DSSN 5577, FINANCE AND ACCOUNTING OFFICER, U.S. ARMY FINANCE AND ACCOUNTING CENTER, EUROPE, AND IN THREE OF THE CASES HIS DEPUTY MS. D. J. TURNER, UNDER 31 U.S.C. SEC. 3527(C) FOR FOUR IMPROPER PAYMENTS TOTALING $2,111.10. IN ONE CASE, $368.20 WAS OFFSET AGAINST THE DEBT, LEAVING A TOTAL REMAINING DEBT OF $1,742.90. WE HAVE CONSOLIDATED THESE REQUESTS BECAUSE THEY EACH INVOLVE A SUBSTANTIALLY IDENTICAL FACT SITUATION.

IN ALL FOUR CASES, THE LOSS RESULTED WHEN THE PAYEE NEGOTIATED BOTH THE ORIGINAL AND A RECERTIFIED CHECK. THE RECERTIFIED CHECKS WERE ISSUED IN THE SAME AMOUNT AS THE ORIGINAL INSTRUMENTS. IN EACH CASE, THE RECERTIFIED CHECK WAS ISSUED 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. THE CHECKS WERE ISSUED BY THE ARMY UNDER AUTHORITY DELEGATED BY THE DEPARTMENT OF THE TREASURY. 31 C.F.R. SEC. 245.8 AND TREASURY FISCAL REQUIREMENTS MANUAL FOR GUIDANCE OF DEPARTMENTS AND AGENCIES, BULLETIN NO. 83-28.

IT APPEARS THAT THE ISSUANCES OF THE RECERTIFIED CHECKS IN THESE CASES WERE WITHIN THE BOUNDS OF DUE CARE. ID. THERE WAS NO INDICATION OF BAD FAITH ON THE PART OF THE DISBURSING OFFICER AND HIS DEPUTY AND ADEQUATE COLLECTION EFFORTS ARE NOW BEING MADE. ACCORDINGLY, WE GRANT RELIEF IN THE FOLLOWING CASES: (TABLE OMITTED) /1/

ALTHOUGH WE HAVE GRANTED RELIEF TO THE DISBURSING OFFICER AND HIS DEPUTY IN THESE CASES, WE ARE CONCERNED THAT THE CHARGEBACKS FROM TREASURY ARE NOT BEING RECEIVED IN THE FINANCE OFFICES IN A TIMELY MANNER. IN ALL FOUR OF THE CASES, THE CHARGEBACKS WERE RECEIVED IN THE FINANCE OFFICE SEVERAL WEEKS AFTER THE DATE ON THE CHARGEBACKS. NOT ONLY DOES THIS EFFECT THE START OF COLLECTION ACTIVITY BUT WHERE THERE IS A DELAY IN ISSUING A RECERTIFIED CHECK, THE TIMELY PROCESSING OF A CHARGEBACK CAN, IN SOME CASES, AVOID A DUPLICATE PAYMENT BEING MADE.

IT IS OUR UNDERSTANDING THAT TREASURY SENDS THE CHARGEBACKS TO USAFAC FOR PROCESSING TO THE FINANCE OFFICES. WE ARE INFORMALLY ADVISED THAT THERE IS SOMETIMES A FOUR TO SIX WEEK BACKLOG OF CHARGEBACKS RECEIVED FROM TREASURY. ONCE RECEIVED, USAFAC PROCESSES THE CHARGEBACKS IN TWO SEPARATE AREAS. ONCE A WEEK, USAFAC MAILS THE CHARGEBACKS TO THE APPROPRIATE FINANCE OFFICES. (THE MAILING TIME TO THE FINANCE OFFICES IN EUROPE IS LONGER THAN FOR FINANCE OFFICES WITHIN THE CONTINENTAL UNITED STATES.) THERE IS A BACKLOG FROM TREASURY, USAFAC IS, ALSO, SLOWED DOWN.

IN TWO OF THE CASES AT ISSUE HERE, B-226316 AND B-226318, THE RECERTIFIED CHECKS WERE ISSUED AFTER THE DATE ON THE CHARGEBACK BUT BEFORE THE CHARGEBACKS WERE RECEIVED IN THE FINANCE OFFICE. IN FACT, IN BOTH OF THESE CASES, THE RECERTIFIED CHECKS WERE ISSUED AFTER THE CHARGEBACKS HAD BEEN PROCESSED BY USAFAC BUT PRIOR TO THE TIME USAFAC SENT THEM TO THE FINANCE OFFICE. IN OTHER WORDS, HAD THE FINANCE OFFICER VERIFIED THE STATUS OF THE ORIGINAL CHECK WITH EITHER TREASURY OR USAFAC HE WOULD HAVE BEEN TOLD THAT THE FIRST CHECK HAD BEEN NEGOTIATED AND THE RECERTIFIED CHECKS WOULD NOT HAVE BEEN ISSUED.

GENERALLY, THE ARMY ISSUES RECERTIFIED CHECKS FOR PAY INSTRUMENTS AT THE SAME TIME THE SF 1184 "UNAVAILABLE CHECK CANCELLATION" FORM IS SENT TO TREASURY. IN THESE TWO CASES, HOWEVER, THE FINANCE OFFICER DELAYED ISSUING THE RECERTIFIED CHECKS UNTIL AFTER CREDITS FROM TREASURY FOR THE ORIGINAL INSTRUMENTS HAD BEEN RECEIVED. THE CREDITS FROM TREASURY WERE RECEIVED IN THE FINANCE OFFICE ABOUT A MONTH AFTER BEING ISSUED BY TREASURY. ON THE BASIS THAT CREDIT WAS RECEIVED, THE FINANCE OFFICER PROPERLY ISSUED THE RECERTIFIED CHECKS.

AS STATED ABOVE, THE CHARGEBACKS WERE ISSUED BY TREASURY AND PROCESSED BY USAFAC BEFORE THE RECERTIFIED CHECKS WERE ISSUED. HOWEVER, THIS DID NOT STOP THE ISSUANCE OF THE RECERTIFIED CHECKS SINCE THE FINANCE OFFICE DID NOT HAVE THIS CHARGEBACK INFORMATION UNTIL AFTER THE FACT. TO AVOID THIS FROM HAPPENING AGAIN, WE SUGGEST THAT WHEN THERE IS A DELAY IN ISSUING THE RECERTIFIED CHECK AND THE CREDIT INFORMATION RECEIVED FROM TREASURY IS NO LONGER CURRENT, THAT THE FINANCE OFFICER, BY TELEPHONE, VERIFY THE STATUS OF THE ORIGINAL CHECK WITH TREASURY. IN THIS WAY, THE FINANCE OFFICER CAN ENSURE THAT THE ORIGINAL INSTRUMENT HAS NOT BEEN NEGOTIATED BEFORE ISSUING A RECERTIFIED CHECK.

WE ALSO SUGGEST THAT ARMY DETERMINE IF THERE IS ANY WAY TO PROCESS AND SEND THE CHARGEBACK INFORMATION FROM TREASURY TO THE FINANCE OFFICES IN A MORE TIMELY MANNER. IN THESE FOUR CASES, IT TOOK USAFAC ANYWHERE FROM SIX DAYS IN ONE CASE, TO TWENTY-SIX DAYS IN ANOTHER, TO SEND THE CHARGEBACK INFORMATION TO THE FINANCE OFFICE ONCE IT HAD BEEN PROCESSED. UNDERSTAND THAT WHEN USAFAC RECEIVES A BACKLOG OF CHARGEBACKS FROM TREASURY, THIS OVERLOADS THE SYSTEM, RESULTING IN FURTHER DELAYS UNTIL THE BACKLOG IS CLEARED UP. NEVERTHELESS, PERHAPS SOME IMPROVEMENT IN THE HANDLING OF THIS INFORMATION CAN BE MADE.

FINALLY, WHILE WE HAVE GRANTED RELIEF TO THE DISBURSING OFFICER AND HIS DEPUTY IN THESE CASES, WE DO NOT BELIEVE THAT THE ARMY'S COLLECTION PROCEDURES, TAKEN TOGETHER, MEET THE DILIGENT CLAIMS COLLECTION REQUIREMENT 31 U.S.C. SEC. 3527(C). ONCE THE CHARGEBACKS FROM TREASURY WERE RECEIVED BY THE FINANCE OFFICER, IT TOOK HIM ANYWHERE FROM 1 YEAR IN ONE CASE TO OVER 20 MONTHS IN ANOTHER TO REFER THESE LOSSES TO YOUR COLLECTION DIVISION. AS WE PREVIOUSLY INDICATED TO YOU, FOR CASES INVOLVING NOTICES OF LOSSES RECEIVED AFTER JUNE 1, 1986, WHERE THE PAYEE HAD 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 IN THESE CASES THE CHARGEBACKS FROM TREASURY WERE RECEIVED PRIOR TO THAT DATE, WE WILL NOT DENY RELIEF HERE.

/1/ THE ORIGINAL AND RECERTIFIED CHECKS WERE ISSUED IN THE AMOUNT OF $526.32. THIS AMOUNT WAS OFFSET BY $368.20 LEAVING A DEBT OF $158.12.