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FEDERAL APPROPRIATION LAW Our objective in Principles (Red Book)is to present a basic reference work covering those areas of law in which the Comptroller.

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Presentation on theme: "FEDERAL APPROPRIATION LAW Our objective in Principles (Red Book)is to present a basic reference work covering those areas of law in which the Comptroller."— Presentation transcript:

1 FEDERAL APPROPRIATION LAW Our objective in Principles (Red Book)is to present a basic reference work covering those areas of law in which the Comptroller General issues decisions, using text discussion with specific legal authorities to illustrate the principles discussed, their application, and exceptions. Principles should be used as a general guide and starting point, not as a substitute for original legal research. Government Accountability Office: Investigative arm of Congress charged with examining matters relating to the receipt and payment of public funds

2 Nature of Appropriations Law A federal agency is a creature of law and can function only to the extent authorized by law. The Supreme Court has expressed what is perhaps the quintessential axiom of “appropriations law” as follows: “ The established rule is that the expenditure of public funds is proper only when authorized by Congress, not that public funds may be expended unless prohibited by Congress.” Decision B

3 Comptroller General Decisions The Comptroller General of the United States is the director of Government Accountability Office, a legislative branch agency established by Congress in 1921 to ensure the fiscal and managerial accountability of the federal government.legislative branchCongress Certain federal officials are entitled by statute to receive GAO decisions. The Comptroller General renders decisions in advance of payment when requested by disbursing officers, certifying officers, or the head of any department or establishment of the federal government, who may be uncertain whether he or she has authority to make, or authorize the making of, particular payments. 31 U.S.C § A decision regarding an account of the government is binding on the executive branch and on the Comptroller General himself...

4 Accountable & Certifying Officers In brief, certifying officers are responsible for the legality of proposed payments and are liable for the amount of illegal or improper payments resulting from their certifications. “A special trust responsibility exists with regard to public monies and with this special trust goes personal financial responsibility.” GAO SP Principles of Federal Appropriations Law 3 rd Edition Vol II pg 9-13

5 Liability of Accountable Officers The mere fact that a loss or deficiency has occurred gives rise to a presumption of negligence on the part of the accountable officer. The presumption may be rebutted by evidence to the contrary, but it is the accountable officer’s burden to produce the evidence. The government does not have to produce evidence to establish that the accountable officer was at fault in order to hold the officer liable. Rather, to be entitled to relief, the accountable officer must produce evidence to show that there was no contributing fault or negligence on his or her part, that is, that he or she exercised the requisite degree of care. This rule originated in decisions of the Court of Claims under 28 U.S.C. § 2512, before any of the administrative relief statutes existed, and has been consistently followed. An early statement is the following from Boggs v. United States, 44 Ct. Cl. 367, 384 (1909): “[T]here is at the outset a presumption of liability, and the burden of proof must rest upon the officer who has sustained the loss.” A later case quoting and applying Boggs is O’Neal v. United States, 60 Ct. Cl. 413 (1925). More recently, the court said: “[T]he Government does not have the burden of proving fault or negligence on the part of plaintiff; plaintiff has the sole burden of proving that he was without fault or negligence in order to qualify for [relief].”

6 Liability of Accountable Officer cont’d The fact that the cashier received instructions from superiors to make the improper payment does not relieve him of responsibility for the resulting deficiency in his account. Statement of a superior that he would "assume liability for repayment of the funds" is personal to the cashier and does not affect the cashier's liability for the improper payment. B Unlike other agency officials, certifying officers are personally financially liable for improper payments that they certify. 31 U.S.C. § 3528(a)(4) (‘A certifying official certifying a voucher is responsible for... repaying a payment... (A) illegal, improper or incorrect because of an inaccurate or misleading certificate; (B) prohibited by law; or (C) that does not represent a legal obligation under the appropriation or fund involved’).” GAO SP Principles of Federal Appropriations Law: 3 rd Edition Vol II pg 9-91

7 Liability of Accountable Officer cont’d Whatever else the certifying officer’s verification burden may or may not involve, it certainly involves questioning items on the face of vouchers or supporting documents... Certifying officers should not certify payment vouchers that are unsupported by pertinent documentation indicating that procedural safeguards regarding payment have been observed.

8 Request for Advance Decision A certifying officer has the statutory right to seek and obtain an advance decision from the Comptroller General regarding the lawfulness of any payment to be certified. 31 U.S.C. § This procedure will insulate the certifying officer against liability. Following the advice of agency counsel, on the other hand, does not guarantee protection against liability. E.g., 55 Comp. Gen. 297 (1975). Having said this, we do not wish to imply that consulting agency counsel is a pointless gesture. See B , June 1, 1995 (certifying officer’s good faith was demonstrated, in part, by reliance on agency counsel approval of settlement agreement). On the contrary, it is to be encouraged. Seeking internal legal advice prior to certification of matters on which the certifying officer is unsure will in many cases obviate any need for an advance decision. In other cases it may help define those situations in which consulting GAO may be desirable.

9 Bona Fide Needs Rule Over a century ago, the Comptroller of the Treasury stated, “An appropriation should not be used for the purchase of an article not necessary for the use of a fiscal year in which ordered merely in order to use up such an appropriation.” 8 Comp. Dec. 346, 348 (1901). The bona fide needs rule is one of the fundamental principles of appropriations law: A fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in, or in some cases arising prior to but continuing to exist in, the fiscal year for which the appropriation was made. Citations to this principle are numerous. See, e.g., 33 Comp. Gen. 57, 61 (1953); 16 Comp. Gen. 37 (1936); B , Dec. 30, 2002; B , Sept. 27, 1999; B , July 30, 1990.

10 Decisions Bottled Water – first CG decision in 1938; most recent The decisions have held consistent for nearly a century; predominantly that no relief of liability for accountable officers, expending public funds, for bottled water when potable water is available for use. A CG Decision Relief of Liability for Accountable Officers : the liability and relief of government officers and employees who are entrusted with public funds or who have certain specific responsibilities in their disbursement. In government language, they are called “accountable officers.” 1 B US Forest Service-request for relief of liability of Accountable Officer Oct 20, 2004

11 Gifts and Awards Appropriated funds may not be used for personal gifts, unless, of course, there is specific statutory authority. 68 Comp. Gen. 226 (1989). To state the rule in this manner is to make it appear rather obvious. If, for example, a General Counsel decided it would be a nice gesture and improve employee morale to give each lawyer in the agency a Thanksgiving turkey, few would argue that the expense should be borne by the agency’s appropriations. Appropriated funds could not be used because the appropriation was not made for this purpose (assuming, of course, that the agency has not received an appropriation for Thanksgiving turkeys) and because giving turkeys to lawyers is not reasonably necessary to carry out the mission at least of any agency that now exists. Most cases, however, are not quite this obvious or simple. In B , Aug. 29, 1979, the Comptroller General held that an expenditure of appropriated funds for the cost of jackets and sweaters as holiday gifts to corpsmen at a Job Corps Center with the intent of increasing morale and enhancing program support was unauthorized. It was determined that these were not a necessary and proper use of appropriated funds and therefore were personal gifts. The following cases are additional illustrations of expenditures that were found to be in the nature of personal gifts and therefore improper: T-shirts stamped with Combined Federal Campaign logo to be given to employees contributing a certain amount. 70 Comp. Gen. 248 (1991). Winter caps purchased by National Oceanographic and Atmospheric Administration to be given to volunteer participants in weather observation program to create “esprit de corps” and enhance motivation. B , Feb. 25, 1981.

12 Don’t get tempted... In B , Sept. 12, 1986, relief was denied to an Army Finance and Accounting Officer who purchased beer for troops engaged in a joint military exercise. While the beer could have been purchased with nonappropriated funds (or—dare we suggest—paid for by the individuals who drank it), it is not an appropriate use of the taxpayers’ money. The decision recognized that relief might nevertheless be possible if the standards for relief of a supervisor under 31 U.S.C. § 3527(c) were met, but the record did not contain sufficient information to enable an independent judgment.

13 FSH FAR Part 4G13 –Simplified Acquisition Procedures 4G – Administrative Actions (a) Administrative actions are warranted in the following: (2) Some errors are primarily fiscal in nature, for example, incorrect budget object codes and the “wrong color of money”. An example would be that fire funds may not be used to pay for new road construction. The proper “color” would be CMRD and not WFPR. While LAPC’s are encouraged to be watchful for these kinds of errors, the primary responsibility for policing these issues lies with local budget officials in Financial Management. Effective Date 07/28/2011

14 Reference GAO – Comptroller General Decisions -Principles of Appropriation Law (Redbook) -CG CITATIONS -A Oakland Municipal Airport -B Fraudulent Travel Expenses -B Purchase of Alcohol


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