B-228851, Oct 13, 1987, Office of General Counsel

B-228851, Oct 13, 1987, Office of 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: Army disbursing officers are relieved of liability for nine improper payments totaling $1,800.00 pursuant to 31 U.S.C. Sec. 3527(c). Relief is proper since the cashier followed all prescribed procedures, her supervisor established and maintained an adequate system of controls and the loss resulted from criminal activity over which the disbursing officers had no control.

General Hall:

This responds to your request of August 11, 1987, that we relieve Lt. Col. G.J. Ross, Finance Corps, DSSN 6458, 5th Corps Finance Group, APO New York, and his cashier, Ms. Marie Henderson, under 31 U.S.C. Sec. 3527(c) for nine improper payments totaling $1,800.00 chargeable to his account. For the reasons stated below, relief is granted to both Lieutenant Colonel Ross and Ms. Henderson.

The improper payment occurred during the period June 5, through June 18, 1986, when an individual claiming to be Sgt. Scott H. Foreman cashed nine personal checks for $200 each. The checks were later returned to the finance office because of insufficient funds. Subsequently, it was discovered that the checks had been fraudulently negotiated.

The investigation revealed that an unidentified male using false identification opened a checking account at the Hanau American Express International Bank Corporation. This individual also obtained an Army identification card in the name of Scott H. Foreman issued by the 574th Personnel Service Center, on June 4, 1986.

Ms. Henderson, as the one who actually cashed the checks, and Lieutenant Colonel Ross, as the supervisory accountable officer, are liable for the improper payments. However, this Office is authorized to grant relief upon a showing that the improper payments were not the result of bad faith or lack of due care on the part of the disbursing officers. 31 U.S.C. Sec. 3527(c). Where a subordinate actually disburses funds rather than the supervisory disbursing officer, we have granted relief upon a showing that the financial officer properly supervised his subordinates by maintaining an adequate system of procedures and controls to safeguard the funds, and took steps to see that the policy was effectively being followed. B-221452, March 27, 1986.

It appears from the Army report and accompanying investigative files that Ms. Henderson followed all the prescribed procedures in performing her duty as cashier and further that Lieutenant Colonel Ross established and maintained an adequate system of controls to safeguard the funds he was accountable for. There is nothing in the record which indicates that either of the disbursing officers failed to satisfy the standard of due care or acted in bad faith. Accordingly, relief is granted since the loss occurred as a result of criminal activity over which Lieutenant Colonel Ross and Ms. Henderson had no control.

You indicate that collection action has not been possible as the identity of the person who executed the fraud has not been established. However, if the forger is identified, diligent collection activity should be pursued.