LOSSES OF FUNDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-04722A000200020018-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 9, 2016
• Document Release Date: September 4, 2000
• Sequence Number: 18
• Publication Date: May 6, 1971
• Content Type: MEMO

E 1 H *OGC Has Reviewed*
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OGG 71-0655
6 May 1971
MEMORANDUM FOR: Director of Finance
t SUBJECT: Losses of Funds
1. You have informally requested that we reconsider our
earlier advice that claims involving the loss of funds advanced for
official travel or.employee living allowances are matters within the
jurisdiction of -,the Board of Review.
2.{.,. Under - the function of the Board of Review is to
consider and recommend action for settlement of accounts of Agency
personnel referred?.to it. 'It provides that personnel charged with a
shortage of Agency,funds may be relieved off' responsibility whenever
it is determined that the shortage occurred (a) while the responsible
individual was acting in the discharge of 'his official. duties or because
of the act or omission of a subordinate; and (b) without fault or negli-
gence on the part of the responsible individual. A shortage is defined
to mean a deficiency of Agency funds, however caused, including loss,
disappearance or theft. In terms of these provisions, you question
whether a loss, disappearance or theft of funds advanced to Agency
personnel under the provisions of the Travel Expense Act or the Over-
seas Differentials and Allowances Act can be considered to be a case
involving a shortage of Agency funds.
3. The procedure for relief set out in is based on the
Act of August 1, 1947, 61 Stat. 720, as amended (31 U. S. C. A. 82a-1).
This provides that the General Accounting Office is authorized to relieve
any disbursing or other accountable officer or agent charged with respon-
sibility on account of physical loss or deficiency in Government funds,
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vouchers, records, checks, securities or papers in his charge, if it
concurs with the determination of the head of the department that
(a) the loss or deficiency occurred while such officer or agent was
acting in the discharge of his official duties or that it was occasioned
by reason of the act or omission of a subordinate and (b) the loss or
deficiency occurred without the officer's or agent's fault or negligence.
4. The history of this legislation shows that it was initiated
at the request of the Secretary of the Treasury for the sole purpose
of providing, through the Comptroller General, a channel of relief for
present and former disbursing personnel of the Treasury Department
who were under liability on account of physical loss or deficiency in
Government funds, vouchers, records or papers. The Secretary's
justification was that the kind of relief proposed could at that time be
granted only through the passage of a special relief bill by the Congress
or by the responsible individual filing suit in the Court of Claims at his
own expense. 1 The Committee noted that both methods were costly and
time consuming. It also observed that for many years the disbursing
officers of the military departments had had similar relief legislation. 2
While in Committee, the bill was expanded to include not only all Govern-
ment disbursing 'officers, but accountable officers as well., the intention
being to include those agents who may not disburse but yet are held
respon.sibll far funds, vouchers, records, checks, securities or
papers entrusted . b. their charge. S. Rep. No. '379, 80th Cong. ,
1st Sess. (1947)
5. At the time the bill was under consideration' in. the Congress,
the responsibilities of a disbursing officer were (a) disburse moneys
IUnder 28 U.S.C.A. 1496, the Court has jurisdiction to render
judgment upon a claim by a disbursing officer for relief from respon-
sibility for the loss of Government funds, vouchers, records or other
papers in his charge. Under 28 U. S. C, A,. 2512, the Court's judgment
that the loss occurred without fault or negligence is made binding on
the General Accounting Office.
2 Under 41 Stat. 132 and 58 Stat. 800, applicable to Navy and
Army disbursing officers, respectively, the General Accounting Office
must relieve the officer of responsibility for a loss or deficiency in
Government funds, vouchers, records or papers, if the head of his
department should determine that the loss or deficiency occurred
without fault or negligence..
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only upon vouchers duly certified, (b) examine vouchers as to proper
form, (c) be held. accountable accordingly. Act of December 29, 1941,
31 U. S. C. A. 82c. Since the term "disbursing officer" is understood
to mean an officer authorized to disburse funds of the United States
(Romney v. United States, 167 F. 2d 521 (1948)) and "accountable
officer" is defined as being an authorized disbursing officer, certifying
officer, or collecting officer (7 GAO Policy and Procedures Manual
28.3(1)), it is apparent that the basic statute is not for the relief of
Government employees generally. Given the limited scope of the
statute together with the meaning of the word "advance" as used in
monetary transactions, coupled with the remedy for the recovery of
funds with which the Government has armed itself, we now conclude
that a loss of funds advanced for official travel and living allowances
are not for settlement under Upon reconsideration, we
believe the loss of such funds must be considered to be the loss of
personal property and, consequently, a matter beyond the jurisdiction
of the Board of Review.
6. The authority to advance sums for travel and living expenses
and the procedures for recovery of amounts not fully accounted for are
set out in section 5 of the Travel and Expense Act of 1949 and section
202 of t13e..Overseas*Differenti.als and Allowances Act, respectively.
In this connection,; section 5 reads:
"The departments and establishments may advance,
through the proper disbursing officers, to any person entitled
to per diem or mileage allowances under this Act, such sums
as may be deemed advisable considering the character and
probable duration of the travel to be performed. Any sums
so advanced and not.usedd for allowable travel expense shall
be recoverable by set-off of salary due, retirement credit,
or otherwise, from the person to whom advanced, or his
estate. by deduction from any amount due from the United
States, or by such other legal method of recovery as may
be necessary. "
Section 202 provides:
"Allowances granted under this title may be paid in
advance, or advance of funds may be made therefor, through
the proper disbursing officer in such amounts as may be
deemed advisable in consideration of the need and period of
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time during which expenditures must be made in advance
by the employee or employees. Any advance of funds not
subsequently covered by allowances accrued to the employee
or employees under this title shall be recoverable by the
Government by set-off against accrued salary, pay, com-
pensation, amount of retirement credit, or other amount due
from the Government to such employee or employees and by
such other method as may be provided by law for the recovery
of amounts owing to the Government." 3
7. As applied to money transactions the term "advance" means
money paid before it is due or prior to the proper time. -It implies
that the parties look forward to the time when the money will be due
the recipient. Gihon v. Stanton, .9 N. Y. 476 (1854) Thus, it has been
held to mean to supply beforehand, to furnish on credit, to pay money
.before it is due, to prepay on account of an anticipated debt with money
or its equivalent to be thereafter returned. Washington National Insur-
ance Co. v. Employment Security Commission, 61 Ariz. 112 (1944)
8. U?ed in the sense of being a disbursement of funds in antici-
pation of an amount to be due, an advance is a loan... While the loan
always implies a promise Of, repayment, it is, none the less a loan
although; repayment is made dependent upon a ,contingency. 4 Island
Petroleum Co.' v. -Commissioner of Internal Revenue, 57 F. 2d 992
(1932), cert. denied Z87 U. S. 646. It is also immaterial that as a
protective m.easure~ the lender may have restricted the purposes for
which the advance may be used. Such action does not in any way
detract from the advance any of its qualities as a.loan. Whittemore
Homes, Inc. v. Fleishman, 190 Cal. App. 2d 554 (1961)
9. A loan may be characterized as being either a loan for use
or a loan for consumption, the distinction being dependent upon which
3Under Title II advances may be made for (a) quarters
allowance, (b) post allowance, (c) transfer allowance, (d) separate
maintenance allowance, and (e) education allowance.
4Repayment of advances for travel and living allowances
are likewise made contingent upon their not having been used for
allowable expenses.
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party has the proprietary interest. When the lender retains his pro-
prietary interest in the article, the transaction is a loan for use.
However, when an article, such as money, is loaned for consumption,
title to the funds transferred becomes vested in the borrower. Hersh-
field v. Howard, Civ. App. Tex., 59 S. W. 55, (1900) Thus, it has been
held that where a loan in the form of an advance was to, be charged to
the recipient's account, the funds became his property, a part of his
estate and liable for the claims of his creditors. The Laflin and Rand
Powder Company v. Burkhardt, 97 U. S. 61, 24 L. Ed. 973 (1878)
10. The remedy Congress has provided to ensure the recovery
of advances not fully accounted for is fully consistent with our position
that funds advanced to the employee are his personal property. Both
the Travel Expense Act and. the Overseas Differentials and Allowances
Act specifically provide for recovery by set-off. This has been defined
as a right existing between two parties to set off their debts by way of
mutual deductions so that in an action the moving party may recover only
the residue remaining after a deduction has been made for the amount
owed. Scammon v. Kimball, 92 U. S. 362, 23 L. Ed. 483 (1876) -Set-off
is a procedural economy for the enforcement of mutual obligations of
indebtedness. ' ' Columbia Aircraft Company v. United States, 163 F. Supp.
932 (1958)Being a pr ocedur' e ,for the enforcement of a claim in debt,
set-off coes" not give rise to an interest in th' other party's property.
Its existence does. not impair or in any way restrict the other party's
right of ownership.; Until the right of set-off is exercised, the debtor
may do as he pleases with his property. U. S. Bank and Trust Co. Case,
311 Pa. 320 (1933) In sum, as a proceclu.ral remedy in an action for debt,
set-off is not consistent with a claim of ownership. We think that a
similar result obtains in the ;case of an advance nzacle by the Agency.
Given the nature of the transaction contemplated by the statutes au-
thorizing advances for travel and allowances, we do not believe the
Agency can be considered to have retained its proprietary interest in
the funds disbursed. Although funds of the United States in the hands of
a disbursing officer are as much the property of the United States as
though they had never been withdrawn frofn the Treasury, it has been
held that once those monies are disbursed to one entitled to receive
them, they become his property. In this connection see Buchannan v.
Alexander, 45 U. S. 18, 11 L. Ed. 857 (1846) and Romney v. United
States, supra. .
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11. As a consequence of the view expressed above, the
opinions of this office identified as OGC 66-1 117 of 20 May 1966
and OGC 69-2199 of 21 November 1969 are expressly overruled.
12. In the hopes of dispelling the confusion that may have
existed regarding the issue of ownership of funds advanced for
employee travel and living allowances, we suggest that the wording
"including funds advanced to Agency personnel" be deleted from
the definition of "Agency funds" as contained i
Assistant General Counsel
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