In the Matter of the Petition by

F.A. McCARTNEY
856 Freeman Mills Road

at

Suffolk, VA  23438-9624

P.S. Docket No. DCA 95-135

APPEARANCE FOR PETITIONER:
Michael D. Hooper, President
NAPS, Hampton Roads District Branch 132
Post Office Box 1025
Norfolk, VA  23501-1025

APPEARANCE FOR RESPONDENT:
Wayne T. Boothe
Labor Relations Specialist
United States Postal Service
1801 Brook Road
Richmond, VA  23232-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

          By timely filed petition, Petitioner, F.A. McCartney, requested an oral hearing on a Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act.  The notice advised Petitioner that he is indebted to the Postal Service, Respondent, in the amount of $4,359.31, based upon a shortage in his stamp accountability revealed by an audit taken on January 27, 1995.  The notice further advised Petitioner of Respondent’s intent to collect the indebtedness by deducting approximately $149.00 from each of Petitioner’s pay checks until the debt is satisfied.

          Petitioner contests the indebtedness and raises three primary defenses on his behalf.  First, he alleges that his stamp stock was “breached,” that is that others had access to it.  Second, he alleges that Respondent failed to follow its own regulations by not taking a yearly audit of Petitioner’s stamp stock.  Third, he alleges that under the circumstances of this matter he exercised reasonable care in the performance of his duties.

          A hearing was held at Petitioner’s request.  Respondent presented the testimony of two witnesses, while Petitioner presented the testimony of four witnesses, including himself.

FINDINGS OF FACT

          1. Since approximately 1987, Petitioner has been the Station Manager, Driver Station, Suffolk, VA.  In such capacity, Petitioner was responsible for the reserve stamp stock for the station (Transcript (Tr.) 72-73; §432, Handbook F-1, Post Office Accounting Procedures, April 1991).

          2. The reserve stamp stock of a unit is a stamp credit consigned to the main office window unit, station or branch manager, who is responsible for its efficient management” (§432, Handbook F-1).

          3. Section 345.2 of Financial Management Manual (FMM) states in regard to accountability verification of non-bargaining employees, such as Petitioner:

“The postmaster or finance supervisor verifies
accountability at least once each postal fiscal year.
If accountability appears to warrant a full audit, the
postmaster requests it through the Inspector in
Charge.”

          4. Although the FMM required only account verification, and not complete audit annually, it was Petitioner’s expectation that his reserve account would be audited annually (Tr. 73).  It was the Richmond Virginia District policy to conduct complete audits annually.  However, Petitioner’s account had been audited only once in his eight-year period as station manager (Petitioner’s May 16, 1995 submission; Tr. 73).

          5. Verification consists of a visual inventory of the stamp stock and comparison of the results with the computer printout of the stock inventory as it was carried in the post office records (§436.3 Handbook F-1; Petitioner’s May 16, 1995 submission; Tr. 15, 25, 78).  An audit is a piece by piece physical count of the stamp stock (Respondent’s June 21, 1995 submission; Tr. 15, 76-77).

          6. Petitioner checked the accountability of his reserve account daily utilizing the verification process (Tr. 78-79).

          7. On one occasion in late 1994, during a period when Petitioner was on leave, co-workers had access to Petitioner’s stamp stock, and in fact drew stamps from the account.  Such a procedure is contrary to regulation.  In this regard §433.22 of Handbook F-1 states: “no employee, supervisor, or postmaster may have access to the stamp credit of another employee” (Tr. 50, 54-58, 73-74; Tab 8 of Respondent’s Response to Petition).  On another occasion in 1994 the seal had been cut on the bag containing stamps for Petitioner’s stock shipped from the main post office (Tr. 74-75).

          8. In neither of the instances described in Finding of Fact No. 7 was Petitioner’s accountability impaired, however.  In the first instance he was able to reconcile the amount of stamps taken with receipts given by the employees.  In the second instance the value of stamps received equaled the amount shown on the document of transmittal (Tr. 80-84).

          9. An audit was conducted of Petitioner’s reserve stock account on January 27, 1995.  The audit revealed that Petitioner’s account was short by $4,359.31 (Tab 6, Respondent’s submission).  Thereafter a letter of demand for such amount was sent to Petitioner (Id., Tab 5, Tr. 11).

          10. Employees to whom accountable paper, such as the reserve stock, has been consigned “are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties“ (§132, Handbook F-1).

DECISION

           Neither of Petitioner’s first two defenses – that his stamp stock was breached and that Respondent failed to follow its own regulations – would absolve Petitioner from the indebtedness imposed by §132 of Handbook F-1.  While it is true that others had access to his stamp account in late 1994, and in fact drew stamps from the account, and that on another occasion in 1994 the seal on his stock shipment bag had been cut, Petitioner unequivocally testified that these transgressions did not impair his accountability.  On both occasions Petitioner was able to accurately reconcile his account.

          Contrary to Petitioner’s assertion, Respondent did not fail to follow its own regulation in regard to audit of Petitioner’s account.  The regulation (§345.2 of the FMM) required only annual verification, not complete audit of Petitioner’s account.  Neither Petitioner’s expectation of an annual audit, nor the Richmond District’s policy in this regard (Finding of Fact No. 4), constituted a regulatory mandate that a complete audit be taken.  Further, the record fails to disclose that at any time during his eight-year tenure as Station Manager, Petitioner took any affirmative steps to request higher management to initiate an audit procedure.

          Petitioner’s third defense to the indebtedness – that he exercised reasonable care in the performance of his duties is meritorious, however.  Petitioner testified under oath that he verified the reserve account daily.  The testimony was not contradicted or impeached.  There is no documentary evidence in the record which would indicate Petitioner’s testimony was inaccurate.  Respondent offered no evidence in regard to reasonable care or lack thereof by Petitioner which would overcome Petitioner’s testimony.  Under the circumstances of this matter therefore it cannot be found that the existence of the shortage itself reflected a lack of reasonable care by Petitioner in the exercise of his duties which would impose a liability on Petitioner for the $4,359.31 shortage.

          Accordingly, Petitioner is not liable for the loss.  The Petition is granted.

James D. Finn, Jr.
Administrative Judge