In the Matter of the Petition by

SHARON E. ROBY-WILSON
351 South 47th Street, Apt. B205

         at

Philadelphia, PA 19143-1864

P.S. Docket No. DCA 01-96

APPEARANCE FOR PETITIONER:
David R. Dearden, Esq.
Kalogredis, Sansweet, Dearden & Burke, Ltd.
987 Old Eagle School Road, Suite 704
Wayne, PA 19087-1708

APPEARANCE FOR RESPONDENT:
Kenneth Giles
Labor Relations Specialist
United States Postal Service
P.O. Box 7956
Philadelphia, PA 19101-7956

Petitioner, Sharon E. Roby-Wilson, filed a Petition after receiving a Notice of Involuntary Administrative Salary Offsets from her supervisor. This Notice stated the Postal Service's intention to withhold $18,150.83 from Petitioner's salary to recover for various shortages at the Logan Station in Philadelphia, Pennsylvania that occurred while Petitioner was the manager of that post office.

A hearing was held in Philadelphia on May 24-25, 2001. The Postal Service presented testimony from James Adams, Petitioner's supervisor, and Carmen Campagna, an accounting supervisor. Petitioner testified in her own behalf, and presented testimony from Vanessa Capehart, a T-6 window clerk at Logan Station. Both sides relied on documents filed previously, and both submitted some additional documents at the hearing. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.

1. At the times pertinent to this case, Petitioner was the manager of Logan Station, a position she had held since 1989 (Tr2. 7).¹

2. During the spring and summer of 1999, several discrepancies in the financial records of Logan Station were noted by the District Accounting Office, and were brought to Petitioner's attention by various emails and by PS Form 1908s. A Form 1908 is used to communicate to a postmaster or station manager that a specific discrepancy has been noted, and must be cleared up. The manager is required to respond to a Form 1908. (Tr1. 20-21, 32, 77; PS Ex. 3; RF 25, 27-29).² The reason for these many discrepancies may be attributable, at least in part, to the loss of an experienced finance supervisor, a turnover in employees performing T-6 duties, and the fact that Petitioner was not experienced in financial matters herself. A T-6 is a clerk who performs some supervisory duties in financial matters. (Tr1. 43-46, 168; Tr2. 9-13).

3. At various times during this period, Petitioner's supervisor, Mr. Adams, helped Petitioner balance her books by clearing certain "suspense" items. "Trust" and "suspense" are terms used to correct accounting discrepancies. When the origin of apparent overages or shortages cannot immediately be determined, overages are transferred to trust accounts and shortages are transferred to suspense accounts, so that the original accounts can be balanced. Suspense items can be "cleared" by offsetting them against trust items. (Tr1. 15, 25, 30-32, 69, 83).

4. In January 2000, two finance officials known as Postal Systems Coordinators conducted an audit of Petitioner's post office. The purpose was to "ascertain compliance with financial procedures, identify areas of concern and suggest recommendations for improvement of financial controls." Several problem areas were identified and corrections recommended. (Tr1. 22-23; Tr2. 14-16; RF 42-48).

5. Beginning in December 1999, a number of emails, and trust and suspense lists, had been sent from the District Accounting Office to the Logan Station office, asking that action be taken to clear up the apparent discrepancies. (Tr1. 91-94; RF 29-41).

6. On March 7, 2000, because Petitioner had not taken action to clear the suspense lists, Mr. Adams issued Petitioner a Debt Determination letter, stating that Petitioner owed the Postal Service $18,150.93,³ based on an attached suspense report (PS Form 1556), dated February 15, 2000, "that details your indebtedness." The suspense report listed four items under the heading "Money Order Difference," that totaled $14,708.39; ten items under the heading "General Miscellaneous," that totaled $2,437.82; three items under the heading "Bank Shortage," that totaled $1,002.61; and one item under the heading "Audit Shortage," that totaled $2.11. (Tr1. 24, 39; RF 49-50).⁴

7. The suspense list (PS Form 1556) provides minimal information on each line item. For example, for the four money order entries, the form shows the date that the accounting system first noted an apparent discrepancy, the numbers of the money orders in question, the date the transaction occurred at the Logan Post Office, and a Clerk Number that identifies the specific window clerk who was accountable for those money orders.⁵ Respondent presented no other evidence to show how these line items equate to a loss of money to the Postal Service. (Tr1. 54-55, 70, 114-16; RF 50).

8. Other evidence in the record, much of which was presented by Petitioner, but some of which is contained in Respondent's own report of the audit performed in January 2000, demonstrates clearly what caused these line items to appear on the suspense list, and also demonstrates clearly that there has been no loss to the Postal Service for the first three line items, and that Petitioner is not accountable for the fourth line item. The February 15, 2000 Form 1556 lists two money order shortages attributable to Clerk #12 on May 25, 1999, totaling $10,250.65. The audit report, dated February 7, 2000 and signed by the two Postal Systems Coordinators, states that on May 25, 1999, the Form 1412 for Clerk #12 was not consolidated with the unit Form 1412, but that Clerk #12 did remit the money collected for the sale of these money orders and that the money was deposited in the bank.⁶ (Tr1. 129-34; RF 45). This is further established by records presented by Petitioner, including deposit slips, clerk notes, records of money picked up by Brinks Co. on specific dates for delivery to the bank, and a list, provided by the bank, of bank deposits by date. (Tr1. 187-93; Pet. Exs. K, O-W).

9. Although not mentioned in the audit report, the record is equally clear that the Postal Service suffered no actual loss on the first money order line item on the February 15, 2000 Form 1556. This line item is for $3,772.74 in money order sales by Clerk #5 on May 13, 1999. As with the items discussed in the previous paragraph, records presented by Petitioner, including deposit slips, clerk notes, records of money picked up by Brinks Co. on specific dates for delivery to the bank, and a list, provided by the bank, of bank deposits by date show that this money was collected by the clerk and was deposited in the bank. The suspense item appeared because this clerk's Form 1412 was not consolidated on the unit 1412 for May 13, 1999. (Tr1. 173-86; Pet. Exs. F-N).

10. The fourth money order line item, for $685, shows only that it is attributable to Clerk #5 for a transaction on July 22, 1999. Mr. Adams testified that the proper action for Petitioner to have taken on all these line items was to have issued letters of demand to the appropriate clerks. Had she done so, the items would have been removed from the suspense list and she would no longer be accountable. In fact, a letter of demand was issued to Clerk #5, Ms. Highsmith, by Petitioner's finance supervisor, Ms. Black-Cooper, on March 7, 2000, in accordance with established procedure. A grievance was filed on behalf of Ms. Highsmith by her union on March 9, 2000 and the matter is apparently still in the grievance process. (Tr1. 195-97; Pet. Exs. X-Y).

11. Respondent presented no testimony or other evidence to prove how the line items under the heading "General Miscellaneous" constitute losses. For example, the first item, for $99.46, simply names an employee, "Bradford," and says "clk left, no sign out." The second item, for $250, again has the name Bradford and says "MO entered 2x." The third item, for $33, includes a date, "10-14-99," and the notation "CR/CD S/D 2-2000." The other seven line items are similar. Petitioner's witness, Ms. Capehart, testified that she attempted to investigate all these items, at Petitioner's direction, and located various receipts and records that demonstrated, at least to her satisfaction, that eight of the line items do not represent Postal Service losses, but were merely record keeping errors.⁷ These receipts and records are part of the record in this case. (Tr1. 200-39; RF 50; Pet. Exs. C, Z and AA).

12. The Form 1556 lists three items under "Bank Shortage." Other than a statement by Mr. Adams that these are based on notices received from the bank, Respondent presented no explanation for these items. (Tr1. 61). The first item is noted as "1412 error," and lists a $702.61 shortage. The only testimony on this item was from Ms. Capehart who said that she asked for information from the accounting office but did not receive any and was unable to discover what this represented. The other two items are denoted "Bank Shortage 12/28," and "Bank Shortage 1/5," in amounts of $220 and $80. On the first of these, Ms. Capehart counted the money that was sent to the bank for deposit and signed a deposit slip. When the bank counted the deposit, it was $220 short of what Ms. Capehart had signed for. On the second of these, the same thing happened, but it was Ms. Black-Cooper who had counted and signed the deposit slip. The procedure for preparing bank deposits requires that funds be counted in the presence of a witness and that the witness and the preparer both sign the deposit slip.⁸ Employees in Petitioner's office did not regularly follow this procedure, and no witness was used in these two instances. Petitioner did not issue letters of demand to either of these employees. (Tr1. 242-45, 251, 291-93; Tr2. 36-37).

13. Handbook F-1, Post Office Accounting Procedures (November 1996), §14 states:

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.

Respondent's theory of liability in this case is based on §14 of the F-1 Handbook, quoted above (Finding of Fact #13). It was Petitioner's responsibility, Respondent argues, to clear up the suspense items listed on the Form 1556, either by finding the money or by issuing letters of demand to the accountable persons. When she failed to do so, Respondent argues, she became liable under the policy in §14. An integral part of Respondent's position is that items listed on suspense lists constitute shortages, i.e., losses, unless the responsible manager takes action to clear them up.

When confronted with the uncontrovertible evidence from its own audit report that at least two of the money order line items do not represent actual losses of money to the Postal Service, Respondent's witness agreed that those items should not have been on the suspense list. However, he then contended that the money that went to the bank would have been an overage and must have been placed in a trust account, which must then have been used, inaccurately, to offset some other shortage. Therefore, Respondent continues, the net bottom line shortage is still $18,150.93, and as station manager Petitioner is liable for it.

As to the shortages that have been identified as clerk errors, i.e., the $685 money order error, and the two bank deposit errors, Respondent's theory as to the second two is that Petitioner is liable because proper procedures were not followed and she did not issue letters of demand to her subordinates. As to the first, Respondent's theory now is apparently that, even if a letter of demand was issued to the appropriate clerk, Petitioner is nevertheless liable because she did not make that known to her supervisor or the accounting office.

Except for the two small bank shortages, none of the above arguments have any merit. It may well be that Petitioner did not do a satisfactory job of managing office financial records during this period of time, and that she did not promptly take action to clear up suspense lists. Respondent's first burden of proof in cases such as this, however, is to prove an actual loss. As we have held many times, accounting discrepancies do not necessarily equate to losses, and the Debt Collection Act is not a vehicle to punish poor job performance. It is a vehicle to recover losses. Gertrude Campbell, P.S. Docket No. DCA 99-70 (June 3, 1999); Edward Sheehan, Jr., P.S. Docket No. DCA 98-391 (December 11, 1998); Eulalia Anne S. Lee, P.S. Docket No. DCA 97-38 (June 13, 1997).

Merely placing an item on a suspense list does not prove that it represents a loss and this case well-illustrates why that is so. The documents in this record, along with the thorough, credible testimony of Ms. Capehart, demonstrate that nearly all of the line items on the February 15, 2000 Form 1556 do not represent actual losses. Respondent's argument that Petitioner should nevertheless be held liable for other unknown and unidentified shortages cannot prevail. Such a practice would not satisfy even the barest minimum of due process requirements.

There are three line items on the February 15, 2000 suspense list that identify actual losses. The first is the $685 money order discrepancy, where it appears that a clerk collected only $15 but mistakenly printed a $700 money order. Because a letter of demand was issued to that clerk in accordance with procedures applicable to Petitioner's office, however, there is no basis for also holding Petitioner liable for it. The other two items are the bank shortages of $220 and $80. In the absence of any evidence that the bank made an error, the fact that the bank received less than the amounts indicated on the deposit slips proves a loss to the Postal Service. Petitioner is liable for these losses under the standard in Handbook F-1, §14 (see Findings of Fact #12 and #13).

Because Respondent has failed to prove losses, other than the $300.00 discussed immediately above, the Petition is sustained as to all other portions of the alleged debt. Respondent may collect $300.00 from Petitioner's salary. Any money in excess of $300.00 that has already been withheld on account of the debt alleged in this case shall be reimbursed to Petitioner.

Bruce R. Houston
Chief Administrative Law Judge

¹ References to the hearing transcript are "Tr._." The first day's transcript is "Tr1," and the second day's transcript is "Tr2."

² Respondent's exhibits presented at the hearing are "PS Ex._." Documents submitted by Respondent prior to the hearing are numbered consecutively as pages 1-65, and are referred to as "RF -_." Petitioner's exhibits will be referred to as "Pet. Ex. _."

³ The Notice of Involuntary Administrative Salary Offsets stated the amount as $18,150.83. The components add to $18,150.93, but the difference is of no consequence.

⁴ Some of the figures on the Form 1556 that is RF 50 are not legible, but the same figures appear on Pet. Ex. C, another Form 1556.

⁵ The reason these items originally showed up on a suspense list is that the Postal Service Accounting Center in St. Louis had records that these money orders had been cashed for the noted amounts, but had no record of money being collected by the Logan Post Office for the sale of these money orders. (Tr1. 71-72).

⁶ Form 1412 is a record of daily financial transactions. At the end of each day, all clerk 1412s are consolidated on a unit 1412. (Tr1. 82, 170-71).

⁷ For two of the line items, Ms. Capehart was unable to find records to identify what the alleged shortages were.

⁸ Handbook F-1, Post Office Accounting Procedures (November 1996), §333.2.