TITLE:  Coast Guard--Electronic Certification Procedures, B-302789, July 6, 2005
BNUMBER:  B-302789
DATE:  July 6, 2005
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   Decision

   Matter of: Coast Guard--Electronic Certification Procedures

   File: B-302789

   Date: July 6, 2005

   DIGEST

   1.  Under the Coast Guard Finance Center's electronic certification
system, the same certifying officer who approves the transmission of
schedules of vouchers to Treasury for disbursement may also have certified
individual vouchers included in the schedule.  The government's risk of
loss due to error, waste, or wrongful act is not jeopardized by a
certifying officer's confirmation of totals on the schedule of vouchers
that may include vouchers he or she individually certified.

   2.  A certifying officer who approves a schedule of payments transmitted
to Treasury for disbursement is responsible only for errors made in the
processing of the voucher schedule.

   DECISION

   The Commanding Officer of the U.S. Coast Guard Finance Center (Center) has
requested our decision regarding appropriate separation of duties for the
electronic certification procedures used by the Center for certifying and
transmitting vouchers to the Department of the Treasury for payment. 
Letter from Captain Loren P. Tschohl, Commanding Officer, U.S. Coast
Guard, Finance Center, to Tom Armstrong, U.S. Government Accountability
Office, March 16, 2004 (Tschohl Letter).  Currently, the Center transmits
a schedule of vouchers to Treasury for payment, and a Center certifying
officer confirms the total number of vouchers, and the total amount of
these vouchers, listed on the schedule.  Occasionally, that certifying
officer may also have certified individual vouchers listed in the
schedule.  We conclude that the Center is not required to separate the
function of certifying individual vouchers from the function of confirming
the total number of vouchers. As explained below, the former function is a
certification function to which pecuniary liability attaches.  The latter
is simply a check permitting Treasury disbursing officers to disburse
without having to examine each voucher*it is evidence that the
disbursement amounts processed by Treasury agree in summary with the
voucher amounts submitted by the Coast Guard.

   BACKGROUND

   The Coast Guard Finance Center (Center) certifies invoices and transmits
electronic files of those invoices to the Department of the Treasury for
payment.  Under the Center's procedures, numerous authorized certifying
officers (ACO) individually certify hundreds of invoices for payment
daily.  Tschohl Letter.  These certified invoices are entered into the
Coast Guard's core accounting system, Oracle Financials.  Id.  Each day a
person from the Center's Systems Division generates what the Coast Guard
calls a "payment file" from Oracle Financials based on invoice payment
dates.  Id.  The payment file lists certified vouchers scheduled for
payment on a given date.  The payment file is electronically transmitted
to Treasury on the day before the payment date.  Id.    

   Approximately 30 to 45 minutes following transmittal, Treasury sends to
the Center something it calls a pre-edit report.  Tschol Letter.  The
pre-edit report shows the total number of payments and the total dollar
amount of payments that Treasury received electronically from the Center. 
Letter from Loren P. Tschohl, Captain, U.S. Coast Guard, to Thomas H.
Armstrong, Assistant General Counsel for Appropriations Law, August 19,
2004 (Second Tschol Letter).  The Center checks Treasury's pre-edit report
totals against the totals sent by the Center.  Id.  If the pre-edit report
totals match the totals that the Center sent to Treasury, a Center
accounting technician enters the certified invoices that were listed in
the payment file into Treasury's electronic certification system (ECS).  A
certifying officer, who may have certified individual invoices, checks the
total number of invoices and the total payment amount as entered by the
accounting technician to be sure that these totals match the totals of the
Treasury pre-edit report.  The officer then approves transmission to
Treasury for disbursement.  Tschohl Letter; Second Tschohl Letter.

   The Coast Guard asks whether its process for making payments provides
appropriate separation of duties; under this process, an individual who
approved a payment file containing a list of invoices for transmission to
Treasury for payment may also have certified payment invoices contained
within the payment file he approves.  Tschohl Letter.

   ANALYSIS

   In a 1975 decision, we addressed a payment process, not unlike Coast
Guard's, involving two certifying officers and transmission to Treasury of
a schedule of vouchers rather than individual vouchers.  55 Comp. Gen. 388
(1975).  In that case, under an interagency agreement between the General
Services Administration (GSA) and the Occupational Safety and Health
Review Commission (Commission), GSA transmitted, on the Commission's
behalf, a schedule of the Commission's vouchers to Treasury for payment. 
The schedule was a summary of the vouchers individually certified by
Commission certifying officers; the schedule was signed by a GSA
certifying officer.  We said "that once there has been certification by an
authorized official, later administrative processing of vouchers does not
constitute certification for purposes of liability*"  Id.  at 390.[1]

   Although the payment process here involves two certifying officers from
the same agency (Coast Guard), rather from two different agencies as was
the case in the 1975 decision, the role of the Center's certifying officer
who approves the payment file is not materially different from the role of
the GSA certifying officer discussed in our earlier decision.  The
Center's certifying officer is not certifying the individual vouchers for
payment; he is verifying that the total dollar amount of the vouchers and
the total number of vouchers that Treasury said it received are equal to
the total dollar amount of the vouchers and the total number of vouchers
in the payment file that the Center sent.  The payment file is merely a
summary of the vouchers transmitted to Treasury.  The Center's certifying
officer has no ability to alter any information in the file or access any
of the underlying information, including the individual payment vouchers
themselves.  Second Tschohl Letter.  This approval, an element in the
Center's administrative processing of vouchers, is designed only to ensure
that summary totals in the data the Center sends and the data that
Treasury receives are the same. 

   Agency internal control procedures should provide for separation of duties
to reduce the risk of error, waste, and wrongful acts.  73 Comp. Gen. 97,
98, n. 5 (1994) (certifying activity should not normally originate the
supporting documentation used to certify payments).  The GAO Policy and
Procedures Manual for the Guidance of Federal Agencies explains the
separation of duties requirement as follows:

   "To the extent practicable, operations should be separated to reduce risk
of error, waste, and wrongful acts.  In automated systems, a separation of
duties should be achieved by the assignment of different responsibilities
by

   function. .  ."

   GAO, Policy and Procedures Manual for Guidance of Federal Agencies, title
7, chap. 6, Section 6.6.B.  (Washington, D.C.; May 18, 1993).

   The rationale underlying this requirement is that separating duties serves
to deter wrongful acts such as fraud because their successful execution
would require collusion between or among two or more persons.  See
generally, B-214446, Oct. 29, 1984.  Further, it places one person in the
payment process in position to detect any errors in the work of another
with responsibilities in the process.  In this regard, the GAO Standards
for Internal Control in the Federal Government states,

   "Key duties and responsibilities need to be divided or segregated among
different people to reduce the risk of error or fraud.  This should
include separating the responsibilities for authorizing transactions,
processing and recording them, reviewing the transactions, and handling
any related assets.  No one individual should control all key aspects of a
transaction of event."

   GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington D.C.: Nov. 1999).

   Coast Guard incurs no additional risk of error, waste, or wrongful act
when a Coast Guard certifying officer, who may have certified individual
vouchers listed in a payment file, confirms the totals in the payment file
transmitted to Treasury.  Significantly, the certifying officer is unable
to alter any information in the file or in any voucher listed in the
file.  The certifying officer's "approval" simply confirms, for Treasury,
that the total number of vouchers, and their amount, that Treasury
received matches what Coast Guard sent.  Consequently, because Coast
Guard's current process does not expose it to additional risk of error,
waste, or wrongful act, Coast Guard need not revise that process.[2]

   CONCLUSION

   Separating the duties of certifying individual vouchers from confirming
the summary totals of a schedule of vouchers is not necessary.  The former
function is a certification function to which pecuniary liability
attaches.  The latter function is nothing more than a check permitting
Treasury disbursing officers to disburse without having to examine each
individual voucher listed in the schedule.  When simply confirming for
Treasury the summary totals of a schedule of vouchers, the certifying
officer has no ability to alter any information in the individual payment
vouchers themselves.  Consequently, notwithstanding that the individual
who confirms the totals also may have certified one or more vouchers
listed in the schedule, separating responsibility for the two functions
would not reduce the government's risk of loss due to error, waste, or
wrongful act. 

   /signed/

   Anthony H. Gamboa

   General Counsel

   ------------------------

   [1] See also B-124380, Mar. 30, 1960.

   [2] In this regard, see 1 TFM 4-2040.10 (Feb. 1998) (addressing the
liability of a certifying officer who certifies a schedule of vouchers). 
Treasury officials have advised us informally that this section is in
accord with 55 Comp. Gen. 388 (1975).  Telephone conversation between
Margaret Marquette, Chief Counsel, FMS and Thomas Armstrong, Assistant
General Counsel, Government Accountability Office (May 15, 2005).