B-236214, Sep 5, 1989, Office of General Counsel

B-236214, Sep 5, 1989, Office of General Counsel

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Relief - Illegal/improper payments - Fraud DIGEST: Relief granted accountable officer pursuant to 31 U.S.C. Sec. 3527(c) where improper payment resulted from fraudulent activities of payee and record establishes that accountable officer properly supervised her subordinates.

Mr. David H. Parrish

Colonel, Finance Corps

U.S. Army Finance and Accounting Center:

This letter is in response to your request that we relieve Major Judith E. Rand, finance and accounting officer, for liability for an improper payment in the amount of $700.00. Your request indicates that the improper payment was not the result of either bad faith or a lack of reasonable care on the part of Major Rand. Furthermore, you note that the improper payment occurred because of criminal activity over which Major Rand had no control. For the reasons discussed below, we grant the requested relief.

The improper payment occurred on May 31, 1988, when one of Major Rand's agent officers cashed a fraudulently drawn and endorsed personal check for an unidentified individual. The individual falsely represented himself as Specialist Four (SP4) Reinaldo R. Harnett by drawing a check for $700.00 on SP4 Harnett's account. SP4 Harnett had lost his checkbook and military identification card on April 10, 1988. Nine other checks belonging to SP4 Harnett were also illegally cashed at various locations; however, only the $700.00 check dated May 31, 1988 is at issue here.

A disbursing officer is personally liable for deficiencies in his/her accounts caused by illegal, improper, or incorrect payment. However, pursuant to 31 U.S.C. Sec. 3527(c) this Office may grant relief from liability where the payment was not the result of bad faith or lack of due care by the official. See 54 Comp.Gen. 112 (1974). If a subordinate, rather than the officer herself, has made the erroneous payment, relief may be granted upon a showing that the officer properly supervised her subordinates by maintaining an adequate system of procedures to avoid errors and by taking appropriate measures to ensure its implementation and effectiveness. 62 Comp.Gen. 476 (1983).

The record indicates that each agent officer under Major Rand's supervision received a notebook containing a description of his/her duties and liabilities. In addition, attendance at an agents briefing was mandatory prior to duty. Special instructions for personal check cashing required all agents to compare an individual's ID card with the check to ensure that the names, social security numbers, and signatures matched. Furthermore, each agent officer was directed to initial the top left corner of every check cashed. In this case, the illegibility of the initials prevented identification of the agent officer.

The Army concludes that the payee presented SP4 Harnett's check and ID card to the agent officer, who noticed no significant difference between the two signatures or between the payee and the picture on the ID card. Neither the agent officer nor the individual who received the proceeds from the fraudulently cashed checks have been identified, so no collection action against them can be taken.

We think the record shows that Major Rand properly supervised the disbursement of funds for which she was accountable. She maintained suitable procedures for her agent officers to follow in cashing checks. After being unable to identify the agent officer responsible for cashing the forged check in this case, Major Rand took corrective action by insisting that all agents number the personal checks which they cash with a number assigned to them.

The facts in this case demonstrate that Major Rand was exercising due care in her supervisory responsibilities when the improper payment was made. There is no evidence of bad faith. In similar cases, particularly in those instances where a criminal act caused the improper payment, we have relieved the accountable officer. B-212603, December 12, 1984; B-194877, July 12, 1979; B-192558, December 7, 1978. Accordingly, we relieve Major Judith Rand from liability for the improper payment of $700.00.