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The Army requested a decision regarding whether a reinstated civilian employee could retain a lump-sum payment she received for accrued annual leave when she separated from the Army. The Army advised that: (1) under a settlement agreement, the Army agreed to reinstate the employee retroactively with backpay; and (2) although the settlement agreement did not address the repayment of the lump-sum amount, the employee stated her willingness to relinquish her entitlement to the leave, since repayment would impose a financial hardship on her. GAO held that no authority existed to permit: (1) the erroneously separated employee to retain the payment and cancel her leave; and (2) waiver of the debt, since deduction of the payment from the employee's backpay would not result in her indebtedness to the government. Accordingly, waiver was denied.

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