In the Matter of the Petition by ) December 23, 1997 ) BOBBITT J. VAUGHN ) 25873 Peterman Avenue ) ) at ) ) Hayward, CA 94545-3101 ) P.S. Docket No. DCA 97-100 APPEARANCE FOR PETITIONER: Mario Sanchez NAPS Representative, Branch 239 12651 San Pablo Avenue Richmond, CA 94805-9991 APPEARANCE FOR RESPONDENT: Eric Thomas Labor Relations Specialist United States Postal Service 1675 7th Street, Room 4217 Oakland, CA 94615-9405
Petitioner, Bobbitt J. Vaughn, filed a Petition requesting a hearing under the Debt Collection Act of 1982, as amended, 5 U.S.C. §5514(a), after being notified that Respondent intended to initiate deductions from his salary to collect a debt he allegedly owed to Respondent. Respondent's claim was based on a shortage discovered in the unit reserve stock at the Albany Branch of the Berkeley Post Office at the time Petitioner was the custodian.
An oral hearing was held at which evidence was presented and the parties had an opportunity to make closing arguments in support of their positions.
1. From 1993 until January 1997, Petitioner was the manager of the Albany Branch of the Berkeley, California Post Office (Transcript of Hearing, pages ("Tr.") 60, 99) and the custodian of the Branch's unit reserve, which consists of stamps and other accountable paper held for distribution to the window clerks as needed (Tr. 20-21). Petitioner did not receive formal finance training when he was first assigned to manage the office, but he did receive on-the-job training over the years he managed the finances of the office (Tr. 97, 99).
2. In early November 1995, an overage of $58,661.97 was discovered in the accountability of the Albany Branch due to errors made in the office's financial records (Tr. 28, 57, 71, 87-88, 100). The source of the overage was not identified, and there was no contemporaneous count of the unit reserve that would have determined whether all or part of the overage was from the unit reserve (RX B). By February 1996, after investigating the cause, the Oakland accounting office, which supervises the Albany Branch, confirmed the $58,661.97 overage. The amount of the overage was placed in the office's trust account(1)
(Tr. 87-88; Petitioner's Exhibit ("PX") E (pp. 14-22); Respondent's Exhibit ("RX") L).
3. The Albany Branch unit reserve was counted on May 31, 1996, and a shortage in the amount of $31,530.18 was disclosed (Tr. 70-73, 75; PX C (pp. 6-10); RX B, C). The amount of the shortage was posted to the office accounts and transferred to the suspense entries of the branch, returning the unit reserve to a balanced condition (Tr. 31-32, 102). Petitioner was never issued a letter of indebtedness regarding the $31,530.18 shortage (Tr. 101).
4. In 1996, the Albany Branch had a high number of suspense and trust entries, the highest of any unit in the Oakland District, and the Berkeley Postmaster assigned a manager from a different station to clear Albany's suspense and trust items (Tr. 56, 58-59, 77-78, 98). That manager reviewed each entry, reviewed the records of the branch to ascertain the original cause of the discrepancy and made adjustments to the branch records to clear most of the suspense and trust entries (Tr. 78-83; PX D). Petitioner had had problems clearing suspense and trust items in the past (Tr. 59), and the Oakland finance office had provided him a six-hour training session on how to handle these accounts (Tr. 96-97).
5. On July 31, 1996, $41,150.31 of the $58,661.97 overage placed in trust for the November 1995 overage was applied to eliminate a number of suspense entries (shortages) in the Albany accounts, including completely offsetting the $31,530.18 shortage identified in Petitioner's unit reserve stock in the May 31, 1996 count (Tr. 75, 78; RX L). By August 8, 1996, the entire $58,661.97 overage in trust had been applied to reduce or eliminate suspense items in the branch accounts, including bank shortages, clerk shortages and shortages in other accounts for which Petitioner was not personally financially accountable (Tr. 10-13, 14, 75-76, 79, 81, 107; PX D (pp. 3, 12-18); RX A, L).
6. In January 1997, Petitioner was assigned to a detail as a route supervisor, and his duties at Albany, including custody of the unit reserve, were assigned to another manager (Tr. 44). On January 3, 1997, the two of them counted the unit reserve in conjunction with transferring responsibility for the accountability to Petitioner's successor (Tr. 44-45). That count disclosed a shortage of $24,606.30 (Tr. 21-22, 29, 37, 46, 49; RX A (Exhibits 2, 3), B, C). The detailed results of their count were entered on PS Form 3294, Cash and Stamp Stock Count and Summary, and Petitioner signified his agreement with the count by signing the last page of the count document (Tr. 29, 33-34, 45, 103; RX A (Exhibit 2), K (F-1 Handbook, Post Office Accounting Procedures (November 1996), Section 422)). At the time responsibility for the branch was transferred, a large number of suspense and trust entries remained (Tr. 40; RX A (p. 2)).
7. On February 13, 1997, Respondent issued Petitioner a Letter of Indebtedness demanding payment of $24,606.30 (Tr. 37; RX D), and on March 14, 1997 Respondent issued Petitioner a notice of involuntary collection in that amount advising Petitioner of his right to request a hearing under the Debt Collection Act (RX E). Petitioner filed a Petition for a hearing that was docketed by the Recorder.
8. In February, Respondent discovered additional stock that was part of the unit reserve that had not been counted on January 3 and credited it to Petitioner's shortage (Tr. 22-23, 46; RX A (Exhibits 11, 12)). Overages in other accounts were also identified as related to Petitioner's shortage, and Respondent credited those against the shortage (Tr. 23, 46; PX A; RX A (p. 2)). Accordingly, Respondent reduced its claim against Petitioner, and the amount at issue is now $17,014.71 (Tr. 38-39; RX G, H, J, K).
9. Section 141 of the F-1 Handbook, Post Office Accounting Procedures (November 1996), describes the circumstances under which an employee will be held liable for a shortage in an assigned credit: "Employees are held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties." (RX K). Prior to the November 1996 revision of the F-1 Handbook, the standard was slightly different: "Employees are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties." (F-1 Handbook, Post Office Accounting Procedures (April 1991), Section 132).
Respondent argues that it has shown a shortage existed in the unit reserve for which Petitioner was responsible and that, therefore, Petitioner is strictly liable for its repayment. It argues that Petitioner has received all of the favorable adjustments due to overages in the office that he is entitled to and that the remaining balance, $17,014.71, is recoverable from his salary.
Petitioner has not challenged the accuracy of the January 3, 1997 count, and the evidence demonstrates that the shortage shown accurately reflected the condition of the unit reserve as counted on January 3. Subsequent adjustments in Petitioner's favor reduced the claimed shortage to $17,014.71 (Finding 8). Proving the existence of a shortage in the stock account, as Respondent has done here, is usually sufficient to show that Respondent suffered a loss in the amount of the shortage. However, in this case, Petitioner argues that he was entitled to the benefit of the entire $58,661.97 overage that was discovered in November 1995 (Finding 2) and that it was improper for Respondent to apply any of that overage to accounts other than his. Applying the overage as he urges would result in elimination of the January 3, 1997 shortage in the unit reserve and would mean, according to Petitioner, that Respondent did not suffer a loss on account of the January 3 shortage. This argument is rejected. First, it was not shown that the $58,661.97 overage related to the unit reserve stock (Finding 2) as the only evidence regarding the source of the overage was that it stemmed from accounting errors made by the branch that were not identified. Therefore, Petitioner has not shown that it was improper to clear the branch's suspense entries using the $58,661.97 accounting overage.(2) The office overage does not remain on the books solely for Petitioner's benefit should he at any time in the future have a shortage in the unit reserve.
Additionally, Petitioner has failed to show any relationship between the overage of 1995 and his January 1997 unit reserve shortage that would justify applying the overage to eliminate the January 1997 shortage as was done for Petitioner's May 31, 1996 shortage of $31,530.18. Moreover, any relationship between the two is extremely unlikely. After the overage was identified in 1995, the May 1996 count of the unit reserve disclosed that Petitioner was short $31,530.18 (Finding 3). Part of the overage was eventually applied to eliminate that shortage, but at the time of the May 31, 1996 count, the shortage amount was placed in suspense, and the unit reserve accountability was restored to a balanced condition (Finding 3). Petitioner has not suggested how any shortage developing thereafter in the unit reserve could possibly be related to the overage that occurred before the May 1996 count and the balancing of the unit reserve.(3)
Petitioner suggested that the January 1997 shortage resulted from a shipment of nonsalable stock from the Albany Branch to the Oakland office for destruction. However, this theory was not developed at the hearing or in documents, and Petitioner has not demonstrated that a shipment of redeemed stock had any bearing on the shortage in the unit reserve.
Accordingly, Respondent has established a loss in the amount of $17,014.71. Petitioner is strictly accountable for the loss unless the evidence shows that he followed Postal Service procedures in managing the unit reserve or that he exercised reasonable care in the performance of his duties (Finding 9). It is Petitioner's burden to produce evidence that he followed Postal Service procedures or exercised reasonable care in managing the unit reserve,(4) and he presented no testimony or other evidence demonstrating that he did so.(5) Therefore, Petitioner is strictly liable for the loss (Finding 9).
As a defense to Respondent's collection of the shortage, Petitioner claimed that he was thrust into a finance position by the Postal Service in 1993 without adequate training in financial management. However, he received training on the job and had some training regarding handling of suspense and trust entries (Findings 1, 4), and after being on the job for approximately three years, it must be assumed that he was adequately trained in financial management of the unit reserve. Additionally, he has not shown any relationship between a lack of training in 1993 and particular problems he might have had managing the stock at the Albany Branch.
Accordingly, Petitioner is liable for the loss from the unit reserve stock in the amount of $17,014.71, and that amount may be collected by offset from his salary. The Petition is denied.
Norman D. Menegat Administrative Judge
1. When accounting discrepancies affecting an office's accounts are discovered and cannot be corrected immediately, the deficiency is transferred to the office trust or suspense accounts to allow the account that was short or over to be returned to a balanced condition (Tr. 53, 87). Overages are placed in trust and shortages are placed in suspense (Tr. 15-16, 24, 26). It was Petitioner's responsibility to review these suspense and trust items within a reasonable time to find and correct the discrepancy that caused each and make the appropriate adjustments to the accounts to eliminate the trust or suspense entry (Tr. 24, 26, 40-41, 50, 53-54, 71; F-1 Handbook, Post Office Accounting Procedures (November 1996), Sections 353, 514, 525).
2. The manager who cleared the suspense and trust entries testified that he had done so based on relationships between the suspense and trust items, but the back-up papers were not presented at the hearing, and he could not state in particular cases what the relationship was that justified his offsets of suspense and trust entries.
3. Petitioner has suggested that the May 31, 1996 count was inaccurate. However, even if the shortage was some other amount or was not a shortage at all, the balancing of the unit reserve account after that count makes it unlikely that there could be any relationship between a pre-count office overage and a unit reserve shortage developing after the count.
4. The F-1 Handbook provision addressing liability of an employee for a loss to his accountability changed between the May 31, 1996 count and that of January 3, 1997 (Finding 9). However, regardless of the standard applicable to Petitioner's January 3 shortage, it remained his burden in this Debt Collection Act proceeding to produce evidence that he met the standard. Petitioner did not produce evidence addressing either standard; i.e. that he followed Postal Service procedures or that he exercised reasonable care.
5. Moreover, the evidence in the record regarding whether Petitioner followed Postal Service procedures or exercised reasonable care suggests that he did not. He had difficulty managing the branch accounts as demonstrated by his continuing problems clearing the trust and suspense entries (Findings 4, 6).