November 3, 1992
In the Matter of the Petition by
LEROY HENRY
9735 Wylie Road
at
Hopkins, SC 29061—9206
P. S. Docket No. DCA—149
APPEARANCE FOR PETITIONER:
William M. Brady
National Association of Postmasters
of the United States
300 South Main Street
Wilkes Barre, PA 18701-9998
APPEARANCE FOR RESPONDENT:
Jack A. Mabe, Manager
Labor Relations
USPS Columbia Division
1601 Assembly Street
Columbia, SC 29201—9401
FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982
Petitioner, Leroy Henry, has filed a petition requesting a hearing based on written submissions under the Debt Collection Act of 1982, as amended, 5 U.S.C. §5514(a), based on a Notice of Involuntary Salary Offset issued to him on August 14, 1992. The Notice advised Petitioner that action would be taken to collect a debt in the amount $5,952.20 because of a shortage allegedly found in the main stamp stock at the Orangeburg, SC, post office, at which Petitioner is postmaster. The Notice further advised that 15 percent of Petitioner’s disposable pay, or approximately $213.72, would be deducted from each of Petitioner’s pay checks until the debt was paid. The bases for assessing the shortage against Petitioner are his alleged access to the main stamp stock, although he was not the custodian, and alleged use of improper accounting procedures by those under his supervision.
FINDINGS OF FACT
1. On February 5, 1992, an audit of the stamp accountability was conducted at the Oranqeburg, SC, post office by the Columbia Division Systems Compliance Coordinator, assisted by postmasters from other post offices in South Carolina. The audit concluded that, in addition to other shortages and overages found in individual "flexible credits," the main stock showed a shortage of $5,015.46. (Answer, Exhibit (Ans. Exh.) 8, 15)[1]
2. A second audit of the main stock was conducted the next day, February 6, 1992, and showed a shortage of $5,952.20. That amount was placed in suspense. The reason for the difference in the two calculations is not completely clear, but the record indicates that during the first audit, envelopes containing “redeemed stock” were counted by reading amounts written on the outside of the envelopes, but in the second audit the envelopes were opened and the contents counted. With the exception of a correction to be described below, Petitioner has not challenged the accuracy of the second count, and it is accepted as accurate. (Ans. Exh. 8, 9, 15).
3. During the recap of the second audit, it appears that $794.93 in philatelic products were not included in the count of the total stamp stock, in addition, notations on the list of redeemed stock indicate that a $58.00 item was to be transferred to a different place in the report, but that the item, when transferred, was listed as $580.00. Thus, the total stamp stock was understated by $794.93 and overstated by $522.00 ($580.00 - $58.00) for a net understatement of $272.93. Therefore, the actual shortage reflected in the second audit should have been $5,679.27 ($5,952.20 - $272.93). (Ans. Exh. 8, 9).
4. On February 12, 1992, a third audit of the main stock was conducted. The audit, conducted after the $5,952.20 had been placed in suspense, showed an overage of $272.93, the same amount reflected by the error discussed above. (Ans. Exh. 10).
5. In a May 28, 1992, memorandum to the Columbia Division Director of Field Operations, the controller described 12 items which he apparently believed represented problem areas at Orangeburg. (Ans. Exh. 4).
6. In an invoice dated June 11, 1992, and a memorandum dated June 25, 1992, from the Director of Field Operations, Petitioner was informed that he had been charged with a shortage in the amount of $5,952.20. The bases stated for the assessment were that Petitioner had access to the main stamp stock and to Self Service Postal Center (SSPC) units, a "[breach of] the security of those individuals charged with those accountabilities," and that Petitioner was responsible for "improper accounting procedures on suspense items and account book procedures." (Ans. Exh. 11, 12).
7. In a letter dated July 8, 1992, to the Field Division General Manager, Petitioner discussed the findings made in the May 28, 1992, memorandum from the Controller to the Director of Field Operations, and requested that he be granted relief for the full amount of the loss. That request was denied by the General Manager in a letter dated July 27, 1992. In that letter the General Manager stated that Petitioner had access to the main stock and the SSPC units and that the accountbook procedures used were improper. The General Manager stated that "your accounting procedures reflect that the main stock was forced to balance with the cash book." (Ans. Exh. 2, 3).
8. As indicated above, a Notice of Involuntary Salary Offsets was issued to Petitioner on August 14, 1992, and a timely petition was filed.
9. In an Investigative Memorandum dated July 27, 1992, a Postal Inspector detailed several questionable transactions by an SSPC clerk at Orangeburg and some confusion on the part of the clerk and the SPO (who apparently supervised the clerk) over stamp stock transfers to and from the SSPC account over the previous year. According to the Inspector,
"In conversation with SPO Kindell, it was stated the main stock accountability could have been unknowingly adjusted. SPO Kindell said she arrived at the main stock accountability by subtracting the daily total clerk accountability from the overall office accountability. SPO Kindell said this had been normal practice since 1990. This method of accounting for the main stock inventory lended itself to absorbing undetected clerk shortages and overages. Therefore any undetected clerk adjustments could have appeared in the main stock as opposed to individual clerk accountability."
10. For some undetermined period of time, Petitioner did have a key to the cage in which part of the stamp stock was stored. He did not have access to the bulk of the stock, which was stored in safes within the cage. As to that portion to which he had access, postal cards and envelopes, there were no shortages detected. Petitioner also had access to the keys belonging to the SSPC clerk and used them to service machine problems when the clerk was unavailable. There is no evidence of any shortages due to that activity. (Statement by Delona Kindell dated September 1, 1992; Ans. Exh. 2).
11. Handbook F-1, Post Office Accounting Procedures contains a number of provisions relevant to this matter (Ans. Exh. 17-19):
"120 Responsibility
121 Basic
Postmasters must collect all receipts to which their offices are entitled, account for all funds entrusted to them, and ensure that accounting objectives are met.
* * *
130 Liability
131 Postmasters
When an accountable financial loss occurs and evidence shows the postmaster conscientiously enforced USPS policies and procedures in managing the post office, the Postal Service grants relief for the full amount of the loss. When evidence fails to show the postmaster met those conditions, the Postal Service charges the postmaster with the full amount of the loss.
132 Other Employees
The postmaster consigns postal funds and accountable paper to other employees. Employees are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties.
* * *
Chapter 2
Financial Reports
210 General
211 Overview
Current reports of all receipts, disbursements, and inventories are necessary to manage financial components in a professional, cost-effective manner. The beginning link in this chain of reporting is the Daily Financial Reports from window clerks, which flow into the post office Accountbook. A compilation of the Accountbook, the Statement of Account, is sent to the PDC...."
The handbook further requires that the Accountbook and Statement of Account be prepared by the postmaster or by someone under his immediate supervision (§212), and that total stamp accountability be maintained in the Accountbook and be verified at least at the end of each four-week accounting period (§436.ll and 436.31). Thus, the general scheme holds the postmaster responsible for the Accountbook and certain verifications of stamp stock reflected therein.
DECISION
Respondent argues that Petitioner’s liability for the shortage arises in two areas. First, Respondent argues that Petitioner had access to the main stamp stock and to keys for the SSPC units, contrary to the requirement that only the custodians of those accountabilities have access to them. In reply, Petitioner argues that his access to the main stock included only postal cards and envelopes stored in the cage, and not the main portion of the stock which was stored in safes within the cage. As to the SSPC keys, Petitioner argues that the keys were normally kept in a sealed envelope. Petitioner states that during the rate change period in l991, when there were long lines of customers, it became necessary for him to service the units after the SSPC clerk had left for the day. Petitioner states that he removed the keys from the envelope, serviced the unit in the presence of a witness, and resealed the keys in an envelope.
Respondent’s second argument is that improper accounting procedures were used by those under Petitioner’s control within the post office and that Petitioner’s failure to enforce proper procedures makes him liable.
Petitioner argues that the Division Manager arbitrarily took the largest shortage reported in the three audits and charged it against him. He argues that the shortage, of whatever size, was the responsibility of the SPO because of her poor recordkeeping practices. In addition, Petitioner argues that there was a clerk at the Orangeburg post office who had been identified as stealing and thereafter resigned. Finally, Petitioner argues that discontinuing the use of manual recap sheets, allegedly at the direction of the Division, may have contributed to the loss.
Respondent’s Answer also identifies four specific procedures in the Controller’s report (Finding 5) which are alleged to be undisputed and which are alleged to show that improper procedures were used. The first of these items related to the discovery of "line outs" on integrated retail terminal (IRT) tapes in the areas of Postage Stock on Hand and Postage Stock Received. In reply, as contained in Petitioner’s letter requesting reconsideration of the assessment (Ans. Exh. 3), petitioner correctly points out that the dates involved were not identified, making comment difficult. However, Petitioner speculates that the line outs were likely caused by what he alleges was the inability to correct errors made during the recording of incoming stock on the IRT.
The second item identified by Respondent is the allegation that the "Accountbook unit" was "forcing" the balance of the main stamp stock daily by subtracting the individual clerk accountabilities from the total Postage Stock on Hand and listing the balance as the main stamp stock. Thus, the Accountbook unit was not ensuring that stock issued or returned was properly accounted for by clerks or by the SPO (as custodian of the main stamp stock). Petitioner’s response is not entirely clear, but he specifically denies that the process described was used for any purpose other than to verify, rather than determine, the main stock balance, Petitioner specifically denies that balances were forced.
The third item identified by Respondent is an allegation that the clerks’ accountabilities on the IRT-generated forms were inaccurate and that the Accountbook unit was, instead, maintaining flexible credit balances on a manual recap sheet. Petitioner replies that, again, if errors were made on the IRT and could not be corrected, the IRT tapes would not represent accurate balances. Petitioner alleges that errors in the forms were corrected at the beginning of each accounting period.
The fourth item noted by Respondent is an allegation that data on forms apparently generated on the IRT were inaccurate and that the Accountbook was not posted from IRT information, but was posted from manual forms. In Petitioner’s reply he describes a procedure used at the post office, but it is not clear whether he is confirming or denying the statements made in the Controller’s memorandum. In any event, the significance, if any, of the alleged impropriety is not explained by Respondent.
Based on the evidence submitted, I conclude that there was a shortage at the Orangeburg post office. I also conclude that the amount of the shortage was $5,952.20, as calculated in the second audit, reduced by $272.93, as explained in Finding 3, for a total of $5,679.27.
With respect to petitioner’s liability based on his possession of keys to the cage and SSPC units, I conclude that there is insufficient evidence that such actions directly resulted in any loss. Accordingly, that basis for finding Petitioner liable is rejected.
Having considered the evidence and arguments related to alleged improprieties in accounting procedures, I conclude that Petitioner should not be held liable for the loss. Of the four items specifically relied on by Respondent, three relate to allegedly inaccurate information on IRT generated forms. There has been no showing that Petitioner’s failure to enforce any specified procedures was the cause of the inaccurate information or that such inaccurate information contributed to the loss discovered at the post office.
In the fourth item, related to "forcing" the main stock balance, there has been insufficient evidence that Petitioner was aware of the practice if, indeed, the procedure was used at all. Respondent has identified no evidence in the form of a direct statement by the SPO that the "forcing" took place. The evidence that the balance was forced appears in reports from others concerning what the SPO allegedly told them. Balanced against such evidence is Appellant’s direct statement in his letter requesting reconsideration that balances were not forced. Given the weakness of the evidence presented, I cannot conclude on this record that Petitioner failed to enforce USPS policies and procedures. Therefore, I conclude that he is not liable for the loss. The petition is granted.
David I. Brochstein
Administrative Judge
[1] Although reference is made to Exhibits 8, 9, and 10 of the Answer, those exhibits contain only the first page of each of the three audits which took place. What appear to be the full audit reports were included with the petition and have been considered.