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The Financial Management Service of the Department of the Treasury requested GAO to relieve an accountable officer both for the amount of an overpayment and for interest and penalties which have accrued on that amount. Accountable officers are only insurers of funds which were in the possession of the United States. Since interest and penalties accruing on amounts owed to the United States have never been in its possession. Accountable officers are not strictly liable for those amounts. Requests for GAO to relieve supervisory accountable officers must contain the evidence necessary for GAO to independently determine whether the the standards for relief have not met. The standards to grant relief are whether the officer maintained a system of controls to prevent the loss and took steps to ensure that the controls were implemented.

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B-235037, Sep 18, 1989

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Certifying officers - Relief - Illegal/improper payments - Overpayments DIGEST: 1. The Financial Management Service of the Department of the Treasury requested GAO to relieve an accountable officer both for the amount of an overpayment and for interest and penalties which have accrued on that amount. Accountable officers are only insurers of funds which were in the possession of the United States. Since interest and penalties accruing on amounts owed to the United States have never been in its possession, accountable officers are not strictly liable for those amounts. Therefore, the Financial Management Service did not need to seek relief for the interest and penalty charges. APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Certifying officers - Relief - Illegal/improper payments - Overpayments APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Relief - Account deficiency - GAO authority 2. Requests for GAO to relieve supervisory accountable officers must contain the evidence necessary for GAO to independently determine whether the the standards for relief have not met. For supervisory accountable officers, the standards to grant relief are whether the officer maintained a system of controls to prevent the loss and took steps to ensure that the controls were implemented. GAO cannot grant relief based upon an agency's unsubstantiated determination that these standards were met.

Mr. Gerald Murphy

Fiscal Assistant Secretary

U.S. Department of the Treasury:

This responds to your March 29, 1989 request that we relieve Robert L. Langdon (the Regional Director of the Philadelphia Financial Center, Financial Management Service, U.S. Department of the Treasury), of his personal responsibility for a $314.00 overpayment made out of his accounts. Your request is based on our authority to relieve disbursing officials under 31 U.S.C. Sec. 3527(c) (1982). You request us to grant relief to Mr. Langdon for the amount of the overpayment plus interest and penalties which have accrued to date. As discussed below, it is not necessary to request relief for the interest and penalties which accrue on the overpayment because Mr. Langdon is not liable to the United States for these amounts. As to the amount of the overpayment, we deny your request for relief because the record presented to us does not contain the evidence needed to show that Mr. Langdon maintained and enforced procedures designed to avoid this loss.

The overpayment in this case occurred on August 21, 1987, when a Treasury check for an income tax refund was issued to William and Vivian R. Goins in the amount of $645.00 rather than the proper amount of $331.00. The overpayment was discovered by the Electronics Operations Branch of the Philadelphia Financial Center and was reported to Mr. Langdon on October 26, 1987. This notification stated that the loss occurred during "the typing operation and proof reading process." On October 28, 1987, Mr. Langdon sent the payees a registered letter notifying them of the overpayment, requesting repayment, and stating that interest and late payment charges will begin to accrue if overpayment was not refunded. second registered letter was sent by Mr. Langdon on December 17, 1987, and a third letter was sent by the Financial Management Service in Washington, D.C. on August 26, 1988. The payees have not responded to any of these letters.

Your request asks us to relieve Mr. Langdon for both the $314.00 overpayment and the interest and penalties which have accrued because the payees have failed to repay the $314.00. In 64 Comp.Gen. 303 (1985), we discussed whether an accountable officer is liable for the interest which the United States would have received on the funds which the officer embezzled. We concluded that the officer's liability as an insurer of public funds did not extend to funds which the United States never had. Since the interest in that case was never actually in the custody of the accountable officer, the officer never became an insurer of those funds. In this case, the United States was never in possession of the accrued interest and penalties, and was only in possession of the $314.00 which was overpaid. Since it is only the $314.00 which was improperly paid out of Mr. Langdon's account, it is only $314.00 that he is strictly liable for as an accountable officer. Thus there is no need to request relief for Mr. Langdon for interest and late payment penalties.

The record submitted to our office in this case states that "the magnitude of disbursing operation (sic) precluded the physical inspection of 100 percent of all operations by the Regional Director, thus making it necessary to rely on the actions of subordinates. ..."

"The basic rule is that a disbursing agent, officially responsible for an account, is personally liable for the wrongful payments made by his subordinates. In such cases, we grant relief to the supervisor upon a showing that the disbursing officer properly supervised his employees. Proper supervision is demonstrated by evidence that the supervisor maintained an adequate system of procedures and controls to avoid errors and that appropriate steps were taken to ensure the system's implementations and effectiveness."

62 Comp.Gen. 476, 480 (1983).

"However, when a submission recommending that we grant relief does not contain the evidence necessary for this Office to independently determine whether adequate procedures were in place, we cannot grant relief based merely on the agency's unsubstantiated determination."

B-222392, November 12, 1986.

Our independent determinations are typically based upon evidence such as the applicable standard operating procedures or regulations, and statements of the supervisory and subordinate officials involved. Id.

The record in this case does not contain any of this type of evidence, or any other evidence which is comparable. The record contains a reference to procedures for check verification in a Procedures Manual, but no copy of the applicable portions of the Manual has been provided to us. The record also states that supervisors made periodic checks, but does not provide statements from the supervisors or the subordinates involved to verify this conclusory assertion. Thus, the record before us does not contain evidence adequate for us to independently determine whether Mr. Langdon maintained and enforced procedures and controls to avoid this type of error. Accordingly, we deny the request for relief. If such evidence is furnished to us, however, we would be willing to reconsider this decision.

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