August 23, 2004
In the Matter of the Petition by
ALBERTHA JOHNSON
5037 Packard Street
at
Baton Rouge, LA 70811-5546
P.S. Docket No. DCA 04-71
APPEARANCE FOR PETITIONER:
Albert E. Lum
5240 72nd Place
Maspeth, NY 11378-1516
APPEARANCE FOR RESPONDENT:
Nina A. Moreau
Labor Relations Representative
United States Postal Service
P.O. Box 262100
Baton Rouge, LA 70826-9998
FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982
Petitioner, Albertha Johnson, filed a Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets, dated May 3, 2004. This Notice stated the Postal Service's intention to withhold $18,099 from Petitioner's salary to recover a shortage in an account at Petitioner’s post office.
A hearing was held in Baton Rouge, Louisiana on July 20, 2004. The Postal Service presented testimony from the Acting Manager of Post Office Operations, a financial analyst, a Postal Inspector, and the current officer-in-charge of the Plaquemine, Louisiana Post Office. Petitioner testified in her own behalf and both sides relied on documents that had previously been filed. Also, both sides presented additional documents during the hearing. The following findings of fact are based on the entire record.
FINDINGS OF FACT
1. During the time pertinent to this case Petitioner was supervisor of customer services at the Plaquemine, Louisiana Post Office. She had been in that office since 1996, and was given responsibility for managing financial matters, including the retail floor stock, sometime prior to 2002. (Tr. 104-05).[1]
2. The Plaquemine Post Office operates on what is known as a segmented inventory accounting (SIA) system, which means, in part, that stamps are sold to the public from a segment known as the “retail floor stock”, to which several people have access and for which no individual employee is assigned personal accountability.[2] The unit reserve custodian is personally accountable for the unit reserve and is the only person who should have access to that account. At the time pertinent to this case, the postmaster, Mr. Royal, was the unit reserve custodian. Stamps are supplied from the unit reserve to the floor stock, usually to a designated clerk who is authorized to verify the “shipment.” (Tr. 18-19, 29, 38, 115).
3. In late February 2004, a team from the Postal Service Inspector General’s Office conducted an unannounced random audit of the Plaquemine Post Office. They found many discrepancies in the financial management of the office, including a large shortage in the retail floor stock.[3] They reported this to the Acting Manager of Post Office Operations, who then asked the District Finance Office to send someone to Plaquemine to perform another audit to review and verify the findings of the IG team. (Tr. 7-9; PS Ex. 1).
4. On March 1, 2004, Mr. Waymire, an internal control analyst from the District Finance Office, along with Petitioner, conducted an audit of the retail floor stock. Their count showed a shortage of $13,588.41. Petitioner signed a PS Form 3294, Cash and Stamp Stock Count and Summary, indicating that she agreed with the accuracy of the count. (Tr. 22, 36; Pet. Ex. 1).
5. Mr. Waymire also conducted an audit of the unit reserve, with the postmaster. During the course of that audit, the postmaster presented Mr. Waymire with a PS Form 17 that listed four stamp stock items with a total value of $4,510.30.[4] Although the form was undated and unsigned, the postmaster told Mr. Waymire that he had issued these stamps to the retail clerk, Ms. Powell, several days earlier but had not made the required entry into the POS computer system, thereby failing to reduce the unit reserve accountability and increase the floor stock accountability. They then asked Ms. Powell if she remembered this. She said she did, so Mr. Waymire made the adjustments to the two accounts. On the PS Form 3294 that recorded the floor stock audit, he added $4,510.30 to the accountability and increased the shortage to $18,098.71.[5] He did not inform Petitioner that he had done this. (Tr. 29-33, 36-37, 123-24; Pet. Exs. 1 and 2).
6. Records in the finance office computer system show extremely small shortages in the Plaquemine retail floor stock on eight consecutive counts prior to March 1, 2004. The counts are shown to have been done from October 2001 through December 2003, and the amounts of the shortages range from 71¢ to $6.41. Postal regulations require that floor stock audits be done each accounting period (AP) until the counts are within a prescribed tolerance level on three consecutive audits. Then the floor stock need be audited only every three APs as long as the counts remain within tolerance. (Tr. 23-24, 64-65, 67-68; PS Supp. Exs. 8 and 9; Handbook F-1, §487.63).
7. The Postal Inspection Service investigated the shortages found at Plaquemine and interviewed several employees, including Petitioner. Petitioner denied taking any stamps, but told the inspectors that she manipulated the counts of the floor stock to make the account appear to be in balance on all the counts noted in Finding #6. She told the inspectors that she did this so she would not have to conduct floor stock audits every month. In a handwritten statement given to the Postal Inspectors on March 16, 2004, Petitioner stated, in part:
“I take responsibility for adding to the shortage of Retail to keep it in balance. By this I mean after the Retail was physically counted and inputted into the system – if the system total was more than the actual count, stamps was added to make up the difference in order to reduce shortage. This was done to alleviate the count every month.”
There is nothing in the record to show by how much any of these audits would have been short had Petitioner not changed the figures. (Tr. 64-65, 69-70, 76-77, 117-19; PS Ex. 3).
8. Postal Service Handbook F-1, Post Office Accounting Procedures, contains the following provisions pertinent to this case:
Section 14 Liability for Financial Losses
When an accountable financial loss occurs and evidence shows that the postmaster or responsible manager enforced U.S. Postal Service (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 that the postmaster or responsible manager met those conditions, the Postal Service charges the postmaster or responsible manager with the full amount of the loss.
(PS Supp. Ex. 2).
Section 48 of the Handbook F-1 covers the rules and procedures applicable to offices with Segmented Inventory Accountability (SIA). This section speaks often of the “responsibility” of all employees for complying with prescribed procedures and protecting the security of postal property and assets. It also speaks of the “accountability” of specific employees for specific items. The first part of section 482.2 refers to the responsibility of all employees to ensure “financial integrity,” and other matters, then states:
“Employees are accountable for:
· Cash directly assigned to them.
· Money order stock directly assigned to them.
· Stamp stock directly assigned to them.”
483 Unit Reserve Responsibility
***
3> The individual assigned to the unit reserve is referred to as the unit reserve custodian. The unit reserve custodian is directly accountable for the value of all items in the unit reserve stock.
484.2 Segments Assigned from the Unit Reserve
***
· Retail Floor Stock - Stock for this inventory is issued from the unit reserve. The purpose is to provide a common inventory for use by the associates in units as defined in section 481.1. This credit is not accountable to any individual.
484.3 Documentation of Stock Assignments
484.31 POS ONE Offices
1> Assignments of all individually accountable credits and unit reserve stock are documented by the completion of Form 3369. In these instances, assigned employees are accountable for all stock, accountable paper, money orders, and money in their respective credits.
***
3> Retail floor stock is issued directly from the unit reserve. Although no individual is accountable for this stock, each associate making sales from this credit is responsible for ensuring adequate protection and security of Postal Service resources.
9. Postal Service Handbook PO-208, Retail Operations, February 1999, Updated with Postal Bulletin Revisions Through October 4, 2002, contains the following pertinent provision:
423 Accountability
423.11 Unit Inventory Assignment[6]
The unit inventory is assigned to the postmaster, store manager, or supervisor. Since he or she does not have personal control of this stock at all times, he or she is relieved of audit shortages unless it can be established that the loss is a direct result of his or her negligence, theft, fraud, or embezzlement. * * *
(PS Supp. Ex. 1).
10. On April 13, 2004, Petitioner was issued a letter of debt determination stating that she owed the Postal Service $18,099, and on May 3, 2004 she was issued the Notice of Involuntary Administrative Salary Offsets for the same amount. The Notice stated that the debt was “based on Falsification of Postal Records Resulting in a Loss of Postal Funds.” (Attached to Petition).
DECISION
Respondent’s theory of liability is based on two grounds. First, Respondent simply cites Section 14 of Handbook F-1, quoted above, and argues that Petitioner failed to enforce Postal Service policies and procedures in that she did not properly conduct the audits of the retail floor stock as it was her responsibility to do. Therefore, Respondent argues, Mr. Waymire’s March 1, 2004 audit proves a loss from the retail floor stock and Petitioner is liable for the loss under the rule stated in Section 14.
Second, Respondent argues that Petitioner did not just fail to perform her duties correctly, she actively concealed the floor stock shortage by falsifying the results of several audits, and that this is an additional basis for liability.
Petitioner cites the regulatory provision that holds no individual personally accountable for the retail floor stock, and argues that she cannot be held personally liable for a loss in the floor stock without evidence that she actually caused the loss through negligence or misconduct. Petitioner also argues that, even if she could be held liable, her liability should be limited to the result of the audit she participated in with Mr. Waymire, and should not include the amount he added later (see Finding #5).
It is not possible to reconcile Respondent’s interpretation of Handbook F-1, Section 14, with the other specific sections quoted above. We have said many times that the Debt Collection Act is not a vehicle to punish poor job performance. It may be that Petitioner did not perform her job well, but postal regulations do not make her personally liable, under a strict liability standard, for losses from an account that is not assigned to her. Under the regulations quoted above, it is important to note the difference between being "responsible" for complying with procedures and for the security of postal property, and being "accountable" for losses.
Assuming that Petitioner could be held liable for a floor stock loss if it were proved that some specific act of malfeasance or negligence by her directly caused the loss (see §423.11 of Handbook PO-208, quoted in Finding #9), Respondent's evidence falls short of that. (See Dale May, P. S. Docket No. DCA 02-381 (November 7, 2002); Alvetta S. Callis, P. S. Docket No. DCA 02-125 (June 6, 2002)). There is no question that Petitioner’s manipulation of retail floor stock counts to conceal shortages was highly improper, but there is no evidence that this action caused the shortage.
The Petition is granted. Respondent may not collect $18,099 from Petitioner’s salary.
Bruce R. Houston
Chief Administrative Law Judge
[1] References to the hearing transcript are “Tr._.” Documents filed by Respondent with the Answer, in a supplemental filing, and at the hearing will be identified as “PS Ex._, and PS Supp. Ex._.” Documents submitted by Petitioner at the hearing will be identified as “Pet. Ex._.”
[2] A full description of the SIA system is found in Section 48 of Postal Service Handbook F-1, Post Office Accounting Procedures, November 1996, Updated with Postal Bulletin Revisions Through March 18, 2004.
[3] In addition to the retail floor stock shortage, large shortages in the unit reserve and vending stock were also found.
[4] Form 17 is titled Stamp Requisition, and is a form used to record transfers of stamp stock from one account to another.
[5] This amount was apparently rounded off to $18,099 when the Notice of Involuntary Administrative Salary Offsets was issued. The difference is insignificant.
[6] Unit inventory refers to all the stamp stock and accountable paper in a particular post office or branch office (Tr. 58-59).