B-239802, Apr 3, 1991, Office of General Counsel

B-239802, Apr 3, 1991, Office of General Counsel

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Illegal/improper payments - Liability restrictions - Statutes of limitation DIGEST: Request for relief received after the running of the 3-year statute of limitations, 31 U.S.C. Sec. 3526(c), cannot be considered by our Office as the accountable officer's account is settled by operation of law and the officer is no longer liable for any deficiency in the account.

Colonel R. M. McBride

Deputy Assistant Judge Advocate General:

This responds to your request, dated May 11, 1990, that we relieve Mr. L. R. Bond, disbursing officer, Personnel Support Activity, Norfolk, Virginia, from liability for an improper payment of $415. For the reasons stated below, we conclude that Mr. Bond's liability has been settled by operation of law because the applicable statute of limitations has expired.

The improper payment resulted when Personnelman Second Class (PN2) Leonard E. Malloy reported to the Norfolk Personnel Support Activity on February 13, 1984, and requested an advance to help defray the cost of living off station. Unbeknownst to the disbursing staff, PN2 Malloy had been terminated by his Reserve unit a week prior to his arrival at Norfolk, and was no longer entitled to receive pay. Nevertheless, on February 15, the disbursing staff, based on orders that they later discovered to be invalid, issued a check to PN2 Malloy for $415. Upon discovering the fraud, the disbursing staff referred the matter to the Naval Investigative Service (NIS) which apprehended PN2 Malloy before he could collect any further payments.

However, NIS was forced to release Mr. Malloy since he was a civilian. The disbursing office then initiated collection action against Mr. Malloy, but the demand letters, which were sent to his last known address, were all returned without being delivered. After realizing that collection was not likely, the Navy referred the matter to the U.S. Attorney's Office for criminal prosecution, but the U.S. Attorney declined to prosecute.

As an accountable officer, Mr. Bond is strictly liable for the $415 deficiency in his account resulting from the improper payment. Comp.Gen. 476, 479-80 (1983). Under 31 U.S.C. Sec. 3527(c), we may relieve a disbursing official from liability for a deficiency resulting from an improper payment if we determine that the payment was not the result of bad faith or lack of reasonable care by the disbursing official, and that diligent collection efforts were made. B-239122, Feb. 21, 1991. However, our authority to grant relief expires "3 years after the date the Comptroller General receives the account," except when the loss is due to fraud or criminality by the accountable officer. 31 U.S.C. Sec. 3526(c). The settlement of an account is conclusive on the Comptroller General at that time. Id.

We consider the Comptroller General to have "received" the account at the end of the period of accountability when the agency's accounts are substantially complete for audit purposes, i.e., when the various documents supporting the applicable statement of accountability are available to the agency and GAO for audit. B-235401, Dec. 6, 1989. the loss is due to fraud, as is the case here, the 3-year period begins when the loss is discovered and reported to the appropriate agency officials. GAO, Policy and Procedures Manual for the Guidance of Federal Agencies, tit. 7, Sec. 8.7 (Feb. 12, 1990).

The Navy became aware of the fraud, here, on February 16, 1984, when the disbursing staff discovered that Mr. Malloy's orders had been forged; consequently, the 3-year limitation period expired in February 1987. Thus, since we find no evidence of fraud or criminality by Mr. Bond, his accounts are settled by operation of law and he is not responsible for the improper payment.