TITLE:  Disbursing Officer Liability for Loss of Funds, B-303671, December 3, 2004
BNUMBER:  B-303671
DATE:  December 3, 2004
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   B-303671

   December 3, 2004

   Mr. Selwyn J. Crews

   4005 Woodland Creek Dr. SE, #301

   Kentwood, MI  49512

   Dear Mr. Crews: Disbursing Officer Liability for Loss of Funds

   This letter responds to your July 12, 2004, letter appealing the adverse
determination of liability by the Defense Finance and Accounting Service
(DFAS) for the loss of $218,460, which occurred while you were Disbursing
Officer at Personnel Support Detachment (PSD), Naples, Italy.  In
accordance with section 8.10 of title 7 of GAO's Policy and Procedures
Manual for Guidance of Federal Agencies (copy enclosed),[1] GAO does not
review military disbursing officer physical loss relief requests on a
case-by-case basis.  GAO has advised the Secretary of Defense that the
availability of relief is to be determined by the Secretary of Defense or
the secretary of the military department incurring the loss.  B-198451,
Feb. 5, 1981.  The Secretary declined relief in your case based on a
finding of negligence, and we defer to the Secretary's decision.[2]

   According to enclosures to your July 12 letter, in September 1995 you
attempted to deposit, by mail, $218,460 with the Federal Reserve Bank of
New York, deposit ticket number 368664.  The Federal Reserve Bank never
confirmed receipt of the deposit, however, and the deposit was never
located, resulting in a physical loss to your account.  DFAS found that
the cause of the loss was your negligent failure to comply with Department
of Defense Financial Management Regulations (DODFMR).  Bitz Letter. 
Specifically, DFAS found a violation of DODFMR paragraph 050403, which
requires disbursing officers to initiate follow-up action with a
depositary if the disbursing officer has not received confirmation of a
deposit from the depositary within a reasonable period of time, but no
later than 45 days from the date the deposit was mailed.  Id.  DFAS,
accordingly, denied relief.  Id.

   Relief of military disbursing officers for physical losses is governed by
31 U.S.C.

   S 3527(b).  Section 3527(b) requires that the Secretary of Defense or the
appropriate secretary of the military department determine that the loss
(1) occurred in the line of duty, (2) without fault or negligence on the
part of the disbursing officer, and

   (3) was not the result of an improper payment.  In military physical loss
relief requests in which these administrative determinations are made in
the affirmative, the granting of relief follows automatically.  B-271859,
Sept. 26, 1996.  Where the Secretary, or DFAS in his behalf, is unable to
agree with any one of the three considerations, relief is not available. 
In your case, DFAS was unable to find that your loss occurred without
fault or negligence.  GAO does not review requests for relief of liability
from military disbursing officers where the determinations and the
subsequent decision to grant or deny relief appear to be properly
considered.  Your submission provides no basis to suggest that DFAS's
decision was improper.

   Consequently, we decline to review the decision of the Secretary of
Defense denying you relief from liability.

   Sincerely yours,

   Susan A. Poling

   Managing Associate General Counsel

   Enclosure

   cc:       Mr. Robert P. McNamara

               Director for Accounting

               Defense Finance and Accounting Service

               Ms. Jean E. Smallin

               Claims Appeal Board

               Defense Office of Hearings and Appeals

   DIGEST

   GAO does not review military disbursing officer physical loss relief
requests on a case-by-case basis.  GAO, Policy and Procedures Manual for
Guidance of Federal Agencies, title 7, S 8.10 (May 1993).  Where the
Secretary of Defense, or the official to whom the Secretary has delegated
relief authority, makes certain determinations required by 31 U.S.C. S
3527(b), relief is automatic; if the Secretary is unable to make these
determinations, relief is not available.  GAO will not review requests for
relief of liability from military disbursing officers where the
determinations and the subsequent decision to grant or deny relief appear
to be properly considered.

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

   [1] Title 7 of the Policy and Procedures Manual is available at GAO's web
site, www.gao.gov.

   [2] The Secretary has delegated relief authority to DFAS.  Letter from
Gregory B. Bitz, Director of Finance, DFAS, to Selwyn J. Crews, Apr. 6,
2000 (citing DFAS Regulation No. 005, enclosure 11) (Bitz Letter).
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