Disbursing Officer's Liability

The comptroller of an agency requested a decision concerning the disbursing officer's liability for checks endorsed for a deceased payee. Under Treasury Department regulations disbursing officers are liable for the full amount of improper payments made under the recurring payments system. However, GAO may grant relief if they find that the officers were not personally negligent and could not, with reasonable diligence, have determined that the payments were improper, and the department has diligently pursued collection action. The bank's liability for such payments is limited. The bank will be liable for any payments received within 45 days after the event terminating the payee's entitlement (or the balance due to the Government, whichever is less) where the bank had no knowledge of the event and has followed appropriate procedures in handling the matter. The limitation of the financial organization's liability does not affect the liability of a disbursing officer for the entire amount of the improper payment. The Treasury regulations are a reasonable exercise of discretion. Although they limit the financial organization's liability, they do not limit the Government's ability to collect from whomever ultimately received the improper payments. The regulations do not affect the disbursing officer's liability or his right to relief.