Treasury Orders and Directives

TREASURY DIRECTIVE: 32-04

Date: February 16, 2007

SUBJECT: Settlement of Accounts and Relief of Accountable Officers

1. PURPOSE. This Directive establishes policy for the settlement of irregularities in the accounts of accountable officers relating to public funds and for providing advance decisions for certain accountable officers. This Directive advises accountable officers that an opinion of the Comptroller General cannot itself absolve such officers from liability for the loss or improper payment of funds for which they are accountable.

2. BACKGROUND. Sections 3527, 3528 and 3529 of title 31 of the United States Code authorize the Comptroller General (CG) to: relieve certifying officials and disbursing officials from liability for illegal or improper payments; relieve accountable officials or agents for a loss or deficiency of public money; and issue advance decisions. However, the Department of Justice’s Office of Legal Counsel (OLC) has opined that “the statutory mechanism is unconstitutional insofar as it purports to empower the Comptroller General to relieve executive branch officials from liability.” Accordingly, it is not appropriate for the Department of the Treasury or any of its officers or employees to request advance decisions or seek relief from the CG.

3. SCOPE. This Directive applies to the Departmental Offices, and all bureaus and offices, including, for the purposes of reporting shortages and granting relief to accountable officers as described in this directive, the Treasury Office of Inspector General (OIG) and the Treasury Inspector General for Tax Administration (TIGTA). The authority of the Inspector(s) General is set forth in Section 3 of the Inspector General Act and the Internal Revenue Service Restructuring and Reform Act, and defined in Treasury Order 114-01 (OIG) and Treasury Order 115-01 (TIGTA), or successor orders. The provisions of this directive shall not be construed to interfere with that authority.

4. POLICY.

a. Accountable officers shall assure the legality, propriety, and correctness of collections and disbursements of public funds consistent with applicable law. An accountable officer is responsible for the handling of public funds, and may be held personally liable or subject to disciplinary action for the loss or improper payment of the funds for which the officer is accountable.

b. Bureaus shall follow the procedures described below when an accountable officer requests an advance decision regarding a payment or a voucher presented for certification; or there is a loss of public funds in an account of an accountable officer. Neither the Department nor a bureau will seek to recover a payment or loss from an accountable officer if that officer has obtained a favorable advance decision or relief for the loss from an official exercising authority under this Directive.

c. Section 3333 of title 31 of the United States Code pertains to relief of the Secretary of the Treasury for certain losses due to checks, drafts, warrants, electronic payments and debt obligations. Irregularities in such cases shall be processed under the procedures in this directive.

d. The authority for resolving claims pertaining to employee compensation, travel, and relocation is vested in other Executive Branch agencies. See the reference in paragraph 12.c below.

5. DEFINITIONS.

a. Accountable Officer or Agent (Accountable Officer). A certifying officer, disbursing officer, collecting official, cashier, and any other officer or employee who is responsible for or has custody of public funds.

b. Improper or Erroneous Payment: A disbursement of public funds by a disbursing officer or subordinate that is found by an appropriate authority to be illegal, improper, or incorrect. This includes a disbursement that is made as the result of fraud, forgery, alteration of vouchers, improper certifications, and other improper practices, or due to an unintentional mistake, including human and/or mechanical error during the payment process. Notwithstanding the preceding sentences, an improper or erroneous payment does not include a payment made by a disbursing officer or subordinate who, in accordance with 31 U.S.C. § 3325(a), pays a facially valid voucher certified by a certifying officer, which voucher is later determined to be erroneous. Further, an Internal Revenue Service (IRS) certifying officer incurs no liability for certifying payment of a tax refund when, at the time of payment, the tax refund is in accordance with the Internal Revenue Code and IRS policy. This applies if the tax refund is later found by the IRS or the courts to have been erroneous.

c. Irregularity. A physical loss or deficiency, or erroneous or improper payment.

d. Major loss. A major loss is any loss of public funds that does not qualify as a minor loss.

e. Minor loss. A minor loss is any one of the following:

(1) physical loss or deficiency of funds under $10,000. The $10,000 limitation applies to single incidents, or the total of similar incidents, which occur about the same time, and involve the same accountable officer;

(2) certain check and electronic payment losses under $10,000 (other than those listed in paragraph 5.e (4) below);

(3) other improper or erroneous payments of $1,000 or less;

(4) check and electronic payment losses under $1,000,000 by the Financial Management Service’s (FMS) Chief Disbursing Officer, Regional Financial Center Directors, and accountable officers in FMS’ Check Claims Office.

f. Physical Loss or Deficiency. A shortage of public funds in an account, including imprest or similar funds, resulting from such things as: theft; loss in shipment; or destruction by fire, accident, or natural disaster. An unexplained shortage of funds with no apparent reason or explanation is treated as a physical loss.

g. Public Funds. Appropriated funds, receipts and collections by a Federal agency, whether held in trust or otherwise. This includes imprest fund cash held at personal risk.

h. Relief. A decision made by an authorized official that absolves the accountable officer from liability for a loss.

6. RESPONSIBILITIES.

a. The Deputy Assistant Secretary for Headquarters Operations at Departmental Offices, Heads of Bureaus, the Inspector General and the TIGTA, as it relates to their respective bureaus, shall:

(1) maintain appropriate accounting and internal controls over assets;

(2) require periodic assessments of and reports on the adequacy of internal controls and accounting systems;

(3) ensure that accountable officers can rely on financial and accounting systems to minimize the number of improper payments. Recurring problems with improper payments attributable to system errors must be addressed;

(4) review reports on irregularities that affect the accounts of accountable officers. Irregularities include those disclosed by examinations of collections and disbursements and other internal reviews;

(5) establish central control records for all cases resolved under this directive, whether in headquarters or in the field;

(6) report any shortages. All bureaus other than the TIGTA and the IRS shall report shortages to the OIG. The IRS shall report shortages to the TIGTA. In the case of OIG and TIGTA, both shall report their respective shortages to the Deputy Chief Financial Officer (DCFO); and,

(7) take action to enforce collection of the improper or erroneous payment or the physical loss or deficiency from the recipient before processing a request for relief for the accountable officer.

b. The OIG, or, with respect to IRS and TIGTA matters, the TIGTA, shall review all reports of losses and conduct any appropriate investigation. In the case of OIG and TIGTA, the Departmental DCFO shall determine the appropriate sources/means to conduct an investigation of reported losses.

7. RIGHT TO AN ADVANCE DECISION.

a. Certifying and disbursing officers may protect themselves against liability for the certification and payment of illegal or improper vouchers by obtaining an advance decision pertaining to the voucher item(s) presented to them for certification or payment.

b. When the amount involved would constitute a minor loss, an accountable officer may submit a request for an advance decision on a specific voucher for certification, or on a payment, to the bureau official designated to make such determinations (see paragraph 8.a). For an amount that would qualify as a major loss, the request must be submitted to the bureau head or that head’s designee for processing under paragraph 9. Bureaus may establish further procedures for making such requests.

8. DELEGATION RELATING TO MATTERS IN WHICH RELIEF CAN BE GRANTED OR AN ADVANCE DECISION ISSUED.

a. The Deputy Assistant Secretary for Headquarters Operations at Departmental Offices, Heads of Bureaus, the Inspector General and the TIGTA, as it relates to their respective bureaus, are delegated the authority to resolve cases involving minor losses.

b. The authority in paragraph 8.a. may be redelegated in writing, except in the case of a minor loss described in paragraph 5.e(4) in which case the authority in paragraph 8.a may only be redelegated with the prior written approval of the Fiscal Assistant Secretary. Where a redelegation is made, the delegating official must ensure that the official designated to resolve these cases is both organizationally independent of the accountable officer and impartial to the outcome of the decision.

c. In a case, which is recognized to involve novel or difficult issues, or where an external regulation requires the participation of legal counsel, the official exercising the authority shall consult with the appropriate legal counsel. A decision in a case, which requires an interpretation of statute or regulation, shall be issued with the concurrence of legal counsel. Bureaus may promulgate additional procedures and may require consultation or approval by counsel for any category or for all decisions.

d. Irregularities resolved under this paragraph shall be documented. Central control records shall be maintained for all resolutions to facilitate review by management or auditors.

9. MATTERS WHICH MUST BE REFERRED TO THE DEPUTY CHIEF FINANCIAL OFFICER OR THE FISCAL ASSISTANT SECRETARY FOR RESOLUTION. This paragraph covers any request for relief or an advance decision in a matter involving an amount that would constitute a major loss.

a. A request for relief or an advance decision shall be signed by the head of the bureau or an official with delegated authority and shall be addressed to the DCFO, Departmental Offices, Department of the Treasury, except those addressed to the Fiscal Assistant Secretary under paragraph 9.b.

b. A request for relief or an advance decision of a Financial Management Service accountable officer who has Government-wide fiscal responsibilities or a Bureau of the Public Debt accountable officer who has Government-wide fiscal responsibilities, and which relates to actions in that capacity, shall be addressed to the Fiscal Assistant Secretary.

c. A request for relief or advance decision shall be properly documented. A report shall accompany the request and will include, as a minimum, the documentation that would be required in Title 7 of the GAO Policies and Procedures Manual, Chapter 8.

d. In the course of granting relief or making an advance decision, the DCFO shall consult with the Assistant General Counsel for General Law and Ethics or the Fiscal Assistant Secretary shall consult with the Assistant General Counsel for Banking and Finance, as the case may be. In a case arising in a bureau that is referred to the DCFO for resolution, bureau legal counsel shall render an initial written legal recommendation for review and concurrence by the Assistant General Counsel for General Law and Ethics; in a case arising in a bureau that is referred to the Fiscal Assistant Secretary for resolution, bureau legal counsel shall render an initial written legal recommendation for review and concurrence by the Assistant General Counsel for Banking and Finance. In a case that requires an interpretation of a statute or regulation, a decision by the DCFO shall be issued with the concurrence of the Assistant General Counsel for General Law and Ethics or a decision by the Fiscal Assistant Secretary shall be issued with the concurrence of the Assistant General Counsel for Banking and Finance, as the case may be.

e. All bureaus other than the IRS and TIGTA shall send copies of requests for relief or an advance decision under this paragraph to the OIG. The IRS shall send copies to the TIGTA. The OIG and TIGTA shall send their copies of requests for relief or an advance decision to Departmental Offices DCFO.

10. BASIS FOR RELIEF. An official deciding a matter under paragraph 8 or 9, and the legal counsel involved, may consult appropriate sources, including decisions of the CG. While an opinion by the CG may have persuasive value, it is not a binding precedent on the Department.

In the event of a conflict between an opinion of OLC and the CG, the Department would be bound by the OLC opinion.

11. REPORTING REQUIREMENTS.

If a shortage may be the result of an illegal act, a bureau shall notify the Department's DCFO and other appropriate officials immediately. Bureaus other than the IRS and TIGTA also shall notify the OIG. The IRS also shall notify the TIGTA.

An official deciding a matter under paragraph 8 or 9 shall submit a copy of each decision on a request for relief involving a loss or improper payment (whether major or minor) to the Chief Disbursing Officer, Financial Management Service, within 10 days after issuance of a decision.

Each designated official cited in paragraph 8.a. shall prepare a consolidated annual report to its bureau head or designee within 45 days after the close of each fiscal year. The report shall contain: the name, title and location of the accountable officer; the date, amount and reason for the irregularity; and the nature and date of the resolution.

Bureaus shall send copies of the consolidated annual report to the Department’s DCFO within 60 days after the close of the fiscal year. All bureaus except the IRS and TIGTA also shall send the report to the OIG. The IRS also shall send its report to the TIGTA.

12. AUTHORITY.

a. 31 U.S.C. 3333, 3526, 3527, 3528, and 3529.

b. 15 Op. O.L.C. 80 (August 5, 1991).

c. CG decision B-275605 (March 17, 1997), which describes the disposition of those functions transferred from the CG to the Office of Management and Budget by Public Laws 104-53 and 104-316.

13. REFERENCES. These references are for guidance and are not to be construed to authorize the CG to exercise binding authority over the Department.

a. Title 7 of GAO’s Policy and Procedures Manual for Guidance of Federal Agencies, Chapter 8, "Settlement of Accounts and Relief of Accountable Officers." (Available on GAO website).

14. CANCELLATION. TD 32-04, "Settlement of Accounts and Relief of Accountable Officers," dated January 11, 1993, is superseded.

15. OFFICE OF PRIMARY INTEREST. Office of Accounting and Internal Controls, Office of the Deputy Chief Financial Officer, and the Office of the Assistant Secretary for Management and Chief Financial Officer.

/s/

Wesley T. Foster
Acting, Assistant Secretary for Management