B-233757, Jan 25, 1989, Office of General Counsel

B-233757, Jan 25, 1989, Office of General Counsel

APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Cashiers - Relief - Illegal/improper payments - Forgeries APPROPRIATIONS/FINANCIAL MANAGEMENT - Accountable Officers - Disbursing officers - Relief - Illegal/improper payments - Forgeries DIGEST: Under 31 U.S.C. Sec. 3527, we grant relief to a supervising officer who is liable for the fraudulent negotiation of a forged check, because the disbursing officer properly supervised his subordinates by maintaining an adequate system of procedures and controls to safeguard funds. We also grant relief to the cashier who negotiated the check, because she followed these procedures and otherwise acted reasonably.

Colonel D. W. Mikkelson

Chief of Staff, Finance and Accounting

U.S. Army Finance and Accounting Center

Department of the Army:

You have requested relief under 31 U.S.C. Sec. 3527(c) for Army Finance and Accounting officer Major M. L. Huston, and Cashier Specialist Four (SP4) Pamela J. Reives, for an improper payment of $500.00. For the reasons given below, your relief request is granted.

According to your letter, on November 20, 1985, SP4 Reives cashed a $500.00 personal check for a person claiming to be Sergeant Sheila F. Smith. The check was drawn, under Sergeant Smith's name, on the Texas American Bank, which subsequently returned the check for insufficient funds. The ensuing investigation revealed that the check was forged, and that Sergeant Smith's military identification and several of her checks had been stolen several days prior to the forgery. Sergeant Smith identified the check in question as one of those stolen checks.

As the disbursing officer, Major Huston is personally liable for deficiencies in his accounts caused by illegal, improper, or incorrect payments. However, the provisions of 31 U.S.C. Sec. 3527(c) authorize this Office to grant relief from liability when payment was not the result of bad faith or lack of reasonable care by the official. See generally 54 Comp.Gen. 112 (1974).

In cases arising from factual situations similar to the one you have presented, where a subordinate disbursed the funds, this Office has granted relief upon a showing that the disbursing officer properly supervised his subordinates by maintaining an adequate system of procedures and controls to safeguard funds, and took steps to ensure that the system is effective. See B-224079, October 28, 1986; see also 62 Comp.Gen. 476 (1983).

Your letter and supporting documents provide the showing required to grant Major Huston relief. The Standard Operating Procedures in effect at the time SP4 Reives cashed the forged check required cashiers to match the payee's endorsement with the identification signature, and also to observe that the person pictured in the identification was the payee.

The cashier, SP4 Reives, is also an accountable officer in this case. Like Major Huston, therefore, she is personally liable for deficiencies in her accounts caused by illegal, improper, or incorrect payments. The provisions of 31 U.S.C. Sec. 3527(c) also permit us to relieve a cashier when we find that the cashier complied with existing directives and acted with reasonable care. Bee, e.g., B-224079, supra. Your letter and supporting documents state that SP4 Reives complied with directives and acted with reasonable care. Although she does not recall the particular check in question, she says she would have cashed the check if the signature on the identification card matched the signature on the front and rear side of the check. Although the only statement in the file from SP4 Reives, a brief note from an investigator, does not directly state that she compared the payee with the picture on the identification, given the circumstances of the case, we are willing to conclude that the individual presenting the check sufficiently resembled the picture on the identification card not to arouse SP4 Reives' suspicion. There is no reason on this record to suggest that she should have discovered the forgery or the impostors or that she deviated from established operating procedures. Accordingly, we relieve SP4 Reives from liability.

Your letter and supporting documents provide the showing required to grant Major Huston relief. The Standard Operating Procedures in effect at the time BP4 Reives cashe the forged check required cashiers to match the payee's endorsement with the identification signature, and also to observe that the person pictured in the identification was the payee.

The cashier, SP4 Reives, is also an accountable officer in this case. Like Major Huston, therefore, she is personally liable for deficiencies in her accounts caused by illegal, improper, or incorrect payments. The provisions of 31 U.S.C. Sec. 3527(c) also permit us to relieve a cashier when we find that the cashier complied with existing directives and acted with reasonable care. Bee, e.g., B-224079, supra.

Your letter and supporting documents state that SP4 Reives complied with directives and acted with reasonable care. Although she does not recall the particular check in question, she says she would have cashed the check if the signature on the identification card matched the signature on the front and rear side of the check. Although the only statement in the file from SP4 Reives, a brief note from an investigator, does not directly state that she compared the payee with the picture on the identification, given the circumstances of the case, we are willing to conclude that the individual presenting the check sufficiently resembled the picture on the identification card not to arouse SP4 Reives' suspicion. There is no reason on this record to suggest that she should have discovered the forgery or the impostors or that she deviated from established operating procedures. Accordingly, we relieve SP4 Reives from liability.