OSOP_Financial Liability

Department of Defense HUMINT Training – Joint Center of Excellence 821 Irwin Street, Matlack Hall Fort Huachuca, AZ 85613

22 January 2013

HT-JCOE ORGANIZATIONAL STANDARD OPERATING PROCEDURES

Financial Liability Investigation of Property Loss

Summary. This Organizational Standard Operating Procedure (OSOP) establishes policies and procedures for completing financial libility investigation of property loss for property assigned to HT-JCOE that is lost or damaged.

Applicability. This OSOP is applicable to all DoD Civilians, contractors and military personnel of HT-JCOE. All HT-JCOE personnel are held accountable to and are expected to adhere to the procedures set forth in this OSOP.

Proponent: HT-JCOE, J4

DSN: 821-4047, COMM: (520) 533-4047

HT-JCOE Financial Liability Investigation of Property Loss

1. Purpose. This OSOP is designed to provide standardized procedures for completing Financial Liability Investigations of Property Loss (FLIPL) for property or equipment assigned to HT-JCOE that becomes lost or damaged. This OSOP is intended to assist the command in conducting a timely, thorough, and legally sufficient investigation of property loss. Use AR 735-5 as your principal reference.

2. References:

a. Department of Defense Instructions 5000.64 dated May 2011.

b. Department of Defense Directive 5134.01 dated.

c. Department of the Army Regulation 735-5 dated February 2005.

3. General. The purpose of the Financial Liability Investigations of Property Loss (FLIPL) is to determine responsibility for the loss. To determine such responsibility, the facts contributing to the loss must be developed through investigation. The Financial Liability Officer will perform the investigation as thoroughly as needed to ensure the facts are fully developed, the interests of the Government are fully served, and the rights of the involved individuals are fully protected.

4. Financial Liability Investigation of Property Loss procedures and terms. A newly appointed financial liability officer will be expected to become familiar with the Financial Liability Investigations of Property Loss (FLIPL), DD Form 200. Particular attention should be given to blocks 4 through 9, circumstances under which specific property was lost, damaged or destroyed and the contents of any exhibits. Financial liability officer investigation procedures are detailed further in AR 735–5, chapter 13.

Several key terms for a financial liability officer are listed and defined below:

a. Loss. Loss is the dispossession of, damage to, or destruction of U.S.

Government property under the control of the Army. Loss is also, a shortfall in accountability. Property is considered lost when it cannot be found, or accounted for, by the last responsible person in the audit trail.

b. Responsibility. The type of responsibility a person has for property signifies the obligations that person has for the property. The different types of responsibility for property are defined in AR 735–5, paragraphs 2–8. The type of responsibility a person has for the lost, damaged or destroyed property is a very important element in the conduct of the financial liability investigation of property loss.

c. Command responsibility. Command responsibility is the obligation of a commander to ensure all Government property within his or her command is properly used. This includes providing for the proper custody, safekeeping and disposition of the property. Command responsibility is inherent in all positions of command and cannot be delegated. It is evidenced by assignment to a command position at any level. Command responsibility includes—

(1) Ensuring that security is provided for all property within the command, whether the property is in use or in storage.

(2) Observing subordinates to ensure their activities contribute to the proper use, care, custody, safekeeping and disposition of all property within the command.

(3) Enforcement of all security, safety, and accounting requirements.

(4) Taking administrative and/or disciplinary actions when necessary.

d. Supervisory responsibility. Supervisory responsibility is the obligation of a supervisor to ensure all Government property issued to, or used by, his or her subordinates, is properly used and cared for. It includes providing proper custody, safekeeping and disposition of the property. Supervisory responsibility is inherent in all supervisory positions. It is not contingent upon signed receipts or responsibility statements. Supervisory responsibility arises by assignment to a supervisory position. It includes—

(1) Providing proper guidance and direction to subordinate personnel.

(2) Enforcement of all security, safety, and accounting requirements.

(3) Maintaining a supervisory climate that facilitates and ensures the proper use and care of Government property.

e. Direct responsibility. Direct responsibility is the obligation of a person to ensure all Government property, for which he or she has receipted, is properly used and cared for. It includes providing proper custody, safekeeping and disposition of the property. Direct responsibility results from assignment as an accountable officer, the receipt of formal written delegation, or the acceptance of the property on a hand receipt from an accountable officer.

f. Custodial responsibility. The obligation of an individual for property in storage, awaiting issue or turn-in, to exercise reasonable and prudent actions to properly care for, and ensure proper custody, safekeeping and disposition of the property are provided. Custodial responsibility results from assignment as a supply sergeant, supply custodian, supply clerk, or warehouse person, and is rated by and answerable directly to the accountable officer or the individual having direct responsibility for the property. Responsibilities include—

(1) Ensuring the security of all property stored within the supply room and storage annexes belonging to the supply room is adequate.

(2) Observing subordinates to ensure their activities contribute to the proper custody, care, and safekeeping of all property within the supply room and storage annexes belonging to the supply room.

(3) Enforcing all security, safety, and accounting requirements.

(4) When unable to enforce any of these, reporting the problem(s) to their immediate supervisor.

g. Personal responsibility. Personal responsibility is the obligation of a person to exercise reasonable and prudent actions to properly use, care for, and safeguard all Government property in their physical possession. It applies to all Government property issued for, acquired for, or converted to a person’s exclusive use, with or without receipt.

h. Culpability. Before a person can be held financially liable, the findings must show that he or she, through negligence or willful misconduct, violated a particular duty involving the care for the property. Whether the person’s actions or omissions constitute negligence depends on the circumstances of each case.

Negligence under some circumstances may not reflect negligence under other circumstances. Therefore, consider fully the following factors when determining the reasonableness of a person’s conduct:

(1) The person’s age, experience, physical condition, and special qualifications.

(2) The type of responsibility the person(s) had toward the property.

(3) The type and nature of the property.

(4) The nature, complexity, level of danger, or urgency of the ongoing activity at the time of the loss.

(5) The adequacy of supervisory measures or guidance for property control.

(6) The feasibility of maintaining close supervision over the property given the complexity of the organization or activity supervised.

(7) The extent supervision could have influenced the situation considering pressing duties or the lack of qualified assistants.

i. Proximate cause. Proximate cause is the cause, which, in a natural and continuous sequence, unbroken by a new cause, produces loss, damage or destruction, and without which, the loss, damage or destruction would not have occurred. See AR 735–5, paragraph 13–29c.

j. Simple negligence. Simple negligence is the failure to act as a reasonably prudent person would have acted under similar circumstances. See AR 735–5, paragraph 13–29b(2).

k. Gross negligence. Gross negligence is the extreme departure from the course of action expected of a reasonably prudent person, accompanied by a reckless, deliberate, or wanton disregard for the foreseeable consequences of the act.

See AR 735–5, paragraph 13–29b(3).

l. Willful misconduct. Willful misconduct is any intentionally wrongful or unlawful act or omission relating to Government property, to include misappropriation of Government property.

5. Appointing a Financial Liability Officer

a. A Financial Liability Officer is appointed by either the approving authority or by an appointing authority (fig 1–1). The appointment is made using a memorandum per AR 735–5, paragraph 13–24, using the format shown in AR 735–5,figure 13–

12. The decision of whether a financial liability officer is necessary or not is indicated by the approving authority or appointing authority as appropriate, completing block 13c, Department of Defense (DD) Form 200(Financial Liability Investigation of Property Loss) and entering their signature and the date. The following individuals may be appointed as financial liability officers:

(1) Army commissioned or warrant officers.

(2) Army noncommissioned officers in the military grade of sergeant first class or above.

(3) Civilian employees in the grade of General Schedule–7 (GS–7) or above; or wage leader and wage supervisory employees.

(4) In joint DOD service activities, any assigned DOD commissioned or warrant officer, or noncommissioned officer in the pay grade of E7 or above.

b. The Financial Liability Investigation of Property Loss will be enclosed under a checklist and tracking document which will be presented to the financial liability investigating officer by the approving authority or appointing authority. Block 15 of DA Form 7531 (Checklist and Tracking Document for Financial Liability Investigations of Property Loss) will be completed by the financial liability officer prior to returning the investigation to the appointing authority or approving authority.

6. Questions the Financial Liability Officers should ask themselves

a. What is your mission? You investigate the loss, damage, or destruction (LDD) of government property. Your objective is both to determine the cause of the loss, damage, or destruction and assess responsibility. Once you collect the facts, you draw conclusions which are known as findings. Based upon these findings, you make recommendations. Your chain of command will act on your recommendations.

b. How do you start your investigation?

(1) You usually will be appointed by the Appointing Authority and you will be provided a copy of DD Form 200, “Financial Liability Investigation of Property Loss.” The front half of the form will already be completed. This form will have the basic information on what property was lost, damaged or destroyed.

Read the form and any attached exhibits, and promptly start your investigation. In conducting the investigation, strive to answer four basic questions:

(2) WHAT was lost, damaged, or destroyed?

(3) WHEN and WHERE was it lost, damaged, or destroyed?

(4) WHY was it lost, damaged, or destroyed?

(5) WHO was responsible for the loss, damage, or destruction?

(6) In attempting to answer these questions, you must collect evidence. Begin by interviewing those individuals who logically are connected to the lost, damaged or destroyed property. These may be the individuals who are identified in Block 9, DD Form 200. If the circumstances surrounding the loss, damage, or destruction are vague, begin your investigation with the property’s hand receipt holder. It may be necessary to interview sub-hand receipt holders and other individuals who used the property. These interviews often will reveal additional individuals who must be interviewed to answer the “WHAT,” “WHEN,” “WHERE,” “WHY,” and “WHO,” of the loss, damage or destruction. 2

(7) Record the substance of these interviews on DA Form 2823, “Sworn Statement.” As survey officer, you are authorized to administer oaths. When DA Form 2823 is not available, use plain bond or ruled paper. Type or legibly print the word “CERTIFICATE” across the top of the plain bond or ruled paper. Be sure to include the following language at the end of the statement:

“I, ________________________, have read or have had read to me this statement which begins on page 1 and ends on page _____. I fully understand the contents of the entire statement made by me. The statement is true. I have initiated all corrections and have initialed the bottom of each page containing the statement. I have made this statement freely without hope of benefit or reward, without threat of punishment, and without coercion, unlawful influence, or unlawful inducement.”

Either form of statement must be dated and signed by the individual making the statement. Finally, the statement should be lettered alphabetically as an exhibit, followed by the date; the amount; and organization… all as is listed on the face of the financial liability investigation of property loss. Example:

Exhibit A, IOPL, 23 August 2012, $375.00, HT-JCOE

For further guidance on preparing either DA Form 2823 or a “Certificate,” see AR 735-5, paragraph 13-31g.

7. Determining “WHAT” was lost, damaged, or destroyed.

a. Your first mission is to determine WHAT was lost, damaged, or destroyed. This usually will be straightforward. Examine the front side of DD Form 200; the affected property will be listed in blocks 4 through 7, as well as on the continuation sheet, if any. The specific LDD characterization will be marked in the appropriate box in block 9. You must prove loss; one way to prove loss is by obtaining a copy of the hand receipt showing the property now unaccounted for was issued. To prove property damage or destruction, examine the property;

obtain police reports, and obtain estimated or actual costs for the damage or destruction. Using this method, you answer the “what” question and are able to support your answer with exhibits.

b. If the investigation involves damaged property, examine the property immediately. You then must release the property for repair or turn-in. If an expert opinion would be helpful in determining the cause of the damage, ensure that technical inspectors examine the property and give an opinion on the probable cause of the damage.

c. You must always attempt to locate lost property. The nature of the search will depend on the type of property lost and the “why” and “where” of its loss.

8. What to do if property is recovered during the investigation. During the course of the investigation, you may locate the property that had been reported missing. AR 735-5, paragraph 14-14, provides detailed guidance on the steps you must follow to re-establish accountability. These steps are summarized as follows:

a. If property is recovered prior to a document or voucher number being assigned and all property listed on the report is recovered, the initiator will destroy the document.

b. If some—but not all—of the property is recovered prior to the document or voucher number being assigned, you still must conduct an investigation with respect to the remaining property. The initiator will line through the recovered property identified in blocks 4 through 8, and initial entries on all copies. The initiator will adjust the grand total in block 8, total cost.

c. When property is recovered after a document or voucher number has been assigned to the investigation, the initiator, the financial liability officer, appointing authority, or the approving authority, as appropriate, will direct the accountable officer in writing to re-establish accountability for the recovered property.

9. Determining “WHEN” and “WHERE” the property was lost, damaged, or destroyed.

a. When and where the loss occurred is often clear. You need only confirm the accuracy of the information in Block 9 of DD Form 200. In other cases—such as when an inventory determined property to be missing—determining “when” and “where” the loss occurred may be difficult, or even impossible. In such cases, you only may be able to determine “why” the loss occurred and “who” was responsible. For example, you may conclude that because the property was left unsecured, it was lost through theft at an indeterminate time or that it was issued at an indeterminate time without a hand receipt, and that this caused a loss of accountability.

b. If you cannot determine accurately “when” and “where” the loss occurred, attempt to determine when the property was accounted for last. Resolving when the property was last accounted for will assist you in determining the “who” and "why" questions of the loss. If you are unable to pinpoint “when” and “where” the loss occurred, you still may be able to make a legally sufficient recommendation for financial liability. You need only conclude that the property was lost because of negligence (WHY) on the part of a specific individual (WHO).

c. If you cannot determine to whom the property was issued, the individual who last was responsible for it may be liable. The basis for a recommendation of liability would be a negligent loss of accountability. For example, A issued the property to an unknown individual, and the property is now missing. A is liable if he or she negligently failed to maintain accountability for the property. On the other hand, if the investigation clearly reveals A issued the missing property to B, then A should not be held liable, even though a sub-hand receipt was not obtained, because accountability for the property was not lost when it was issued to B.

The property clearly was issued to B, so A’s negligence in issuing the property without a hand receipt did not cause the loss. (See the discussion below on proximate cause.) Therefore, your investigation should focus on B’s conduct. 4

10. Determining “WHY” the loss or damage occurred.

a. Determining the reason for the loss is the critical purpose of a financial liability investigation of property loss. In some cases, the determination may be straightforward. For example, block 9, DD Form 200 may indicate, “I, SGT Magee, make the following statement: My vehicle was damaged when PVT Taylor intentionally struck it with a hammer.” To answer the “why” question, all you need to do is verify these facts; support them with exhibits, and discuss the loss or damage in the narrative portion of the investigation of property loss.

b. In other cases, explaining the “why” of the loss or damage may be more difficult.

For example, block 9, DD Form 200, may indicate, “I, SGT Magee, make the following statement: The incoming commander and I conducted a thorough search of the area and the above listed shortages could not be located.” How do you attempt to answer the “why” question in a case like this? The following guidance will assist you in answering this question:

(1) Start with what you know. Property described in blocks 4 through 7, DD Form 200, is currently considered missing. Although the “what” question has been answered partially, you still must verify that the property really is missing.

(2) Determine who was responsible for the property. This involves learning to whom the property was issued. To answer this, you must obtain a copy of the basic hand receipt. The copy should be preserved as an exhibit.

(3) Determine what happened to the property. For example, examine the following:

(a) Where was it stored? If it was not secured properly, the “WHY” of the loss may have been theft.

(b) Was it issued without a hand receipt? If so, the “WHY” of the loss may have been loss of accountability.

(4) If it was sub-hand receipted or given to an identified individual, you must attempt to resolve the questions discussed directly above in b(3)(a) and b(3)(b) as they pertain to that individual. Your goal is to determine who was the last person identified as responsible for the property, and then determine “why” the property is missing.

11. Determining “WHO” was responsible for the loss, damage or destruction (LDD). Identifying the individuals who were responsible for the property is the first step to establishing financial responsibility. AR 735-5, para. 13-29a lists the five types of responsibility. If you are able to determine all the other four “W” questions about the circumstances of the loss or damage, you usually will be able to answer the “who” question. Answering the “who” question is a conclusion based upon your investigation and assessment of the collected evidence of the circumstances leading to the loss, damage, or destruction. If you are unable to pinpoint the circumstances which leading to loss, damage or destruction, you may not be able to resolve who should be held financially liable for the loss, damage or destruction. 5

12. Legal Standards. You may hold an individual financially liable for lost, damaged or destroyed Government property only if:

a. He or she was “negligent” or committed “willful” misconduct;” and

b. This negligence or willful misconduct was the “proximate cause” of the loss or damage.

(1) Example 1: Mr. Smith leaves his laptop computer unattended in plain view in his vehicle in downtown Oakland. The laptop is stolen. Mr. Smith's negligence caused the loss. By placing the laptop in a location where theft could reasonably be anticipated, he created the conditions that allowed the loss by theft to occur. In other words, Mr. Smith's negligence “proximately caused” the resulting loss.

(2) Example 2: Mr. Jones is driving a government vehicle at seventy miles per hour in an area marked thirty miles per hour. He fails to negotiate a sharp turn at the bottom of the road and crashes into an embankment destroying the vehicle. If the investigation officer concludes that Mr. Jones was negligent by driving too fast for the conditions, Mr. Jones’ negligence caused the accident. By driving too fast, Mr. Jones’ negligence “proximately caused” the loss.

(3) Example 3: Corporal Crash is driving while intoxicated. A limb on an old pine tree hanging over the road breaks, falls, and shatters his windshield while he is driving. Here, even though Corporal Crash was negligent by driving while intoxicated, his negligence was not the “proximate cause” of the accident.

The damage caused by the falling tree limb was independent of his level of intoxication. In other words, the damage would have occurred even if Corporal Crash had been sober.

(4) Example 4: Mr. Brown negligently issued property without obtaining hand receipts. The property cannot be located, nor can you determine to whom the property was issued. The property cannot be located because no accountability documents exist indicating to whom the property was issued.

By failing to properly obtain hand receipts for the now missing property, and because you cannot determine to whom he issued the property, Mr. Brown’s negligence “proximately caused” the loss.

c. Presumed Negligence. In some cases, you may not be able to determine the actual cause of the loss. Nonetheless, you may still be able to conclude that a certain individual is responsible when you find that an individual had exclusive access and control over property and you can rule out all other causes for the loss or damage. This can best be illustrated by these examples.

(1) Example 1: Supply Sergeant Green has exclusive control over the supply room and the property inside; he has the only key. All linen was accounted for when he signed for the supply room. Three months later, an inventory determines that thirty percent of the linen is missing. No signs of theft can be found. Because Sergeant Green had exclusive control of the supply room and other causes of loss have been ruled out, Sergeant Green may be presumed to have caused the loss.

(2) Example 2: Private Johnson goes absent without leave. His locker is immediately secured and its contents are inventoried. Most of its contents, including his field equipment, are missing. Because Private Johnson had exclusive control over his locker, and it was immediately secured and inventoried, he may be presumed to have been the cause of its loss. If the locker was neither secured nor its contents inventoried for some time after Private Johnson went AWOL then the presumption may not apply. You must be able to rule out theft.

13. Findings and Recommendations. Common military practice condones substituting text in block 15a with a continuation sheet or an informal memorandum. Drafting your findings and recommendations in this format makes saving and amending your findings and recommendations easier, without altering the DD Form 200 itself. As a practical matter, either write “Please refer to the continuation sheet for the findings narrative.” or “See attached memorandum for the findings narrative.” (or similar wording to that effect), in block 15a and place all continuation sheets and memoranda behind the last page of the DD Form 200, in numerical order.

a. Findings. Once you have completed the investigation and believe you are prepared to answer the WHO, WHAT, WHEN, WHERE, and WHY questions, begin to draft your findings. AR 735-5, para. 13-32a, requires you to state the facts—as supported by the evidence obtained through the investigation—in your own words. Your findings must be as complete as possible so any reviewer can easily see the basis for assessment or relief from liability without returning the IOPL for more information.

(1) When writing your findings for block 15a, start with a conclusion. Draw your conclusions from the evidence, not unsupported speculations or suspicions.

Verify or disprove any statements made in block 9 and any other statements in the investigation. While you must avoid using stereotyped phrases such as “loss or damaged in manner stated,” the following language presents a framework within which to start drafting your findings:

I have examined all the available evidence shown in block 9, and exhibits “A” thru “__” as indicated below. I have personally investigated the same and it is in my belief that the articles listed hereon and on any continuation sheets, total cost $____, was/were…

—select one of the three sentence options below—

(a) (lost, damaged, or destroyed) through the simple/gross negligence of __________; or

(b) (lost, damaged, or destroyed) by the willful misconduct of ___________;

or

(c) (lost, damaged, or destroyed) as the result of an (unavoidable accident, an unpreventable theft, undeterminable circumstances, etc.).

For further guidance on preparing your written findings, see AR 735-5, Figure 13-8, which is located at Appendix C of this Guide. If you still have questions once you have completed a draft of your written findings, contact your supporting administrative law attorney for assistance.

(2) By stating a conclusion, you have answered the WHAT question; you have told the reviewer that the property listed in block 5 was lost, damaged, or destroyed. The next step is for you to “state in your own words, how the loss, damage, or destruction occurred.” To this end, explain the WHEN, WHERE, WHY, and WHO of the loss by writing:

(a) WHEN and WHERE it was lost, damaged, or destroyed;

(b) WHY it was lost, damaged, or destroyed, and

(c) WHO was responsible for the loss, damage, or destruction. 8

(3) When drafting your findings, support all asserted facts by citing specific exhibits. The exhibits contain all the evidence you collected during the course of the investigation of property loss. This evidence is the only legitimate basis for your findings. In writing findings, your goal is to explain, in narrative format, the cause of loss, damage or destruction. The evidence must support findings, and findings must support the conclusion, as illustrated below:

Conclusion

Recommendation

Findings of Fact

Evidence, as gathered and contained within the exhibits

If you relied on self-serving statements from the individual who was responsible for the property, you must explain what other evidence confirms the self-serving statement. If the investigation contains contradictory evidence you must explain how your resolved the contradiction. For further guidance, see AR 735-5, paragraphs 13-32a(1) and a(2).

(4) A reviewer, upon reading the findings, should clearly understand certain property was lost, damaged, or destroyed in a certain way, and at a certain place and time. If you cannot answer any of the WHAT, WHEN, WHY, and WHO, questions, explain that in your findings. The following example addresses the loss of a night vision sight mounted tripod:

SFC Lucas, the unit supply sergeant, permitted SSG Lewis to take the item for use on a weekend camping trip with the Boy Scouts in September 2012 [Exhibit B]. The troop leader corroborates this fact [Exhibit C]. At the conclusion of the camping trip, the items were never returned [Exhibit B].

SSG Lewis retired from the Army on 30 November 2012 [Exhibit D]. Attempts to contact SSG Lewis regarding this item have proven unsuccessful [Exhibit E].

SFC Lucas had custodial responsibility for the missing item per AR 735-5, paragraph 2-8a(4). This obligated SFC Lucas with ensuring these items were cared for, and that proper custody and safekeeping were provided. SFC Lucas was negligent in allowing this item to be taken from the supply room without a properly prepared hand receipt signed by SSG Lewis. SFC Lucas’s actions further violated AR 735-5, paragraphs 2-1e and f, which state Government property will not be loaned or used for private purposes. The amount of the loss was depreciated by 5 percent for each year of service (15 percent) IAW AR 735-5, paragraph B-2b [Exhibit F].

Recommendation: That SFC Lucas, 000-00-0000 and SSG (Retired) Lewis, 000-00-0000, be held financially liable in the amounts of $2,000.00 and $1,596.35, respectively [Exhibit F].

(5) You must set out in blocks 15b and 15d the value as derived from the current Army Master Data File (AMDF) contained on FED LOG, or other alternative equivalent value of the property and its value after deduction of any allowable depreciation. See section 11.d, below. If uneconomically repairable property is involved, state the property’s final disposition, or your recommended disposition in your findings in accordance with AR 735-5, paragraph 13- 32c(3). 9

b. Recommendations. As set out in the example above, immediately after making findings, recommend whether assessment of financial liability is appropriate.

Start this section with the word “recommendations.” Indicate whether the investigation lists property for which a claim may be processed under AR 27-20.

For further guidance, see AR 735-5, paragraph 13-32c.

(1) Relief from responsibility and accountability. If you are unable to determine the cause of, or responsibility for, the loss, damage, or destruction, recommend all parties be relieved of accountability and responsibility. Make a similar recommendation if you determine that neither negligence nor willful misconduct was involved.

(2) Financial Liability. If you conclude that an individual's negligence or willful misconduct caused the loss, damage or destruction, you must make an assessment of financial liability. Start a recommendation for financial liability by giving the individual’s full name, social security number, monthly base pay (for DOD civilians, 1/12 of annual pay) at the time of the loss, and the date that the individual is expected to terminate service or employment. You must clearly state the amount of liability. (See discussion below on amount of liability.)

14. How much liability?

a. General Rule. An individual’s liability usually will be limited to the lesser of: (1) one month’s base pay for Soldiers (or 1/12 of annual pay for civilians) at the time of the loss or (2) the actual loss to the government. When two or more investigations have been initiated for the same incident, AR 735-5, paragraph 13- 41b(3), specifies that liability is still limited to one month’s base pay. When two or more investigations arise out of the same incident, the investigations must be cross-referenced to each other, pursuant to AR 735-5, paragraph 13-4a.

b. Exceptions. AR 735-5, paragraph 13-41a recognizes that in certain circumstances it is appropriate to assess the full amount of loss to the Government without reference to monthly pay. Soldiers who lose personal arms or equipment are liable for the full amount of the loss, damage or destruction.

Persons who lose, damage or destroy government quarters or their contents through gross negligence or willful misconduct are liable for the full amount of the loss, damage or destruction. At times an individual owes a higher fiduciary duty, as with accountable officers and persons losing public funds. At times an investigation may form the basis for an affirmative claim against a third-party.

Other circumstances involve larger entities able to absorb the full amount of any loss to the Government, such as states, contractors and NAFIs.

c. Actual Loss to the Government—Repairable Property. The value of repairable property loss is the repair cost required to return the damaged property to the condition it was in at the time of the damage, or the value of the item at the time of the damage, whichever is less.

AR 735-5, Appendix B, paragraph B-1. With respect to repair costs:

(1) The cost of repair consists of the sum of the costs of material, labor, overhead, and transportation, minus any salvage or scrap value of replaced component parts.

(2) If repair makes the item more valuable than it was before the damage, reduce the amount of the repairs by the amount of the increase in value. 10

(3) When the actual cost of damage cannot be obtained in a reasonable period of time, an estimated cost of damage (ECOD) may be used. You must state the reasons for using an ECOD and the basis on which the estimate was made.

Further, the damaged property must go through the repair process to determine the actual cost of repairs. When the actual cost of damage is less than the estimate, the investigation must be reopened through use of an adjustment document, and the respondent must be reimbursed. AR 735-5, Appendix B, paragraph B-1b.

d. Actual Loss to the Government—Lost, Destroyed or Irreparably Damaged Property. For lost, destroyed or irreparably damaged property, you must determine the actual value of the property at the time of its loss or destruction.

The loss to the Government is this actual value, minus any salvage or scrap value.

(1) Fair Market Value. The preferred method of fixing the value of property at the time of loss or damage is by a qualified technician’s appraisal in accordance with AR 735-5, Appendix B, paragraph B-2a.

(2) Depreciation Method. When an appraisal is not feasible and the property is in less than new condition, you must compute the depreciated value, by subtracting depreciation from the standard price of a new item. Depreciation is not deducted on loss or irreparable damage to new property. If the property is new, use the price of a new item, as computed in blocks 7 and/or 8, and go to the discussion in section 11.e., below.

AR 735-5, Appendix B, paragraph B-2b lists standard depreciations for several different types of property:

(a) Organizational Clothing and Individual Equipment(OCIE) and nonpower handtools: ten percent (10%) for each such item;

(b) Non-OCIE items made of relatively perishable material (leather, canvas, plastic or rubber): twenty-five percent (25%) for each such item;

(c) Electronic equipment and office furniture: five percent (5%) per year of service, up to a maximum of fifty percent (50%);

(d) Tactical and general purpose vehicles: five percent (5%) per year of service, not to exceed ninety percent (90%) total depreciation;

(e) Family quarters and furnishings: see AR 210-50, paragraph 9-12k(1);

(f) Small arms are not depreciated;

(g) Items not specifically listed, use five percent per year of service, up to a maximum of seventy five percent.

(h) If the time in service cannot be determined, depreciate a standard twenty-five percent (25%).

The rates of depreciation above are based on normal use. If the investigation shows more or less than average use, you are authorized to increase or decrease the rate of depreciation pursuant to AR 735-5, Appendix B, para.

B-2b(6). AR 27-20 may be used as a guide to determine a fair rate of depreciation.

(3) Standard Rebuild Cost. If using an appraisal or the depreciation method is either not possible or not equitable, use the standard rebuild cost to determine loss to the government. Use this method only if the property has been used long enough to warrant overhaul—but has not recently been overhauled—and a standard rebuild cost has been published. When using this method, subtract the standard rebuild cost plus salvage value, from the current Army Master Data File price. The property must have a salvageable residue. AR 735-5, Appendix B, para. B-2c.

(4) Computing Salvage Value. When property has been damaged irreparably, a technician will compute salvage credit by adding the value of the scrap recovered, plus the depreciated value of serviceable repair parts or other end items. See AR 735-5, paragraph B-3.

e. Joint Liability. When you conclude more than one individual is responsible for loss, damage or destruction, make a recommendation for joint liability in accordance with AR 735-5, paragraph 13-31c(5)(d), which refers to table 12-4 (located at Appendix D of this Guide). Compute charges in the following manner:

(1) When the actual loss exceeds the combined monthly basic pay for all individuals combined, charge the full amount of the monthly basic pay of each soldier, or the full amount of 1/12 of the annual pay of each civilian employee.

15. Time constraints

It is important for a financial liability officer to start the investigation of property loss immediately, while the facts and circumstances are still fresh in everyone’s mind. In most cases, 30 calendar days are allotted to conduct an investigation and document the findings and recommendations. If unable to complete the investigation in the time allotted, the financial liability officer or the person responsible for the delay will explain, in writing, the reason for the delay and will attach the explanation to the financial liability investigation of property loss, as an exhibit. The exhibit will be marked as shown in paragraph 3–1f of AR 735-5.

16. Actions when financial liability is recommended

a. When making a recommendation to hold an individual or individuals financially liable, the financial liability officer will make the individual(s) being recommended for the assessment of financial liability aware of the recommendations, and inform them of their rights. Individuals recommended for charges of financial liability (respondents) have the right to—

(1) Inspect and copy Army records relating to the debt.

(2) Legal advice as authorized by AR 27–3, paragraphs 2–5a(6), and 3–6g(4)(b).

(3) The financial liability officer will submit a statement and other evidence in rebuttal of the findings and recommendations.

b. The financial liability officer will inform the respondent of the recommendations and of their rights using a notification memorandum prepared in accordance with the example shown in figure 6–1. The endorsement (figure 6–2) should be included, for the respondent to use for acknowledging receipt of notification and returning DD Form 200 with blocks 16a through 16h completed. A complete copy of the financial liability investigation of property loss, showing findings and recommendations, should be attached to the memorandum as an enclosure.

Copies of all the exhibits should be attached to the financial liability investigation of property loss. When presenting the memorandum to the respondent, the financial liability officer will—

(1) Explain the consequences of the recommendation, if the recommendation is approved by the approval authority.

(2) Explain the significance of any statement made by the respondent regarding possible financial liability.

(3) Consider, and attach as an exhibit to the financial liability investigation of property loss, any statement the respondent desires to submit.

(4) When the financial liability investigation of property loss involves Government quarters, and/or Government furnishings and equipment therein, explain to the respondent whether gross negligence was established. If gross negligence was established, explain the consequence of the gross negligence, that is, the full amount of the loss is assessed against the individual (see para 5–4b(7)).

(5) Ensure the respondent completes blocks 16a through 16h of DD Form 200 acknowledging his or her understanding of their rights, as shown in figure 6–

3. A copy may be made of the DD Form 200 (reverse side) by the financial liability officer or the respondent for this purpose.

c. In the notification memorandum, the financial liability officer will inform the individual when their rebuttal statement or other evidence must be received in order for it to be considered in the determination of whether or not financial liability will be assessed.

(1) Normally, when individuals being recommended for assessment of financial liability are at the same installation as the financial liability officer, the notification memorandum with enclosed financial liability investigation of property loss is hand delivered to the individual. Seven calendar days from the date of receipt are allowed for the individual to submit a rebuttal statement or other evidence.

(2) Individuals unavailable, but within the same country as the financial liability officer, are normally allowed 15 calendar days from the date the notification memorandum was mailed to submit their rebuttal statement or other evidence.

(3) For those individuals unavailable and in a different country than the financial liability officer, 30 calendar days from the date the notification memorandum was mailed are normally allowed for individuals to submit their rebuttal statement or other evidence.

d. Notification of unavailable individuals is made using certified mail, return receipt requested. Copies of the notification memorandum, together with the evidence of the mailing and return receipt, will be attached to the financial liability investigation of property loss as exhibits. The financial liability officer will mark the exhibits as shown in paragraph 3–1f.

e. Upon receipt of a rebuttal statement or other evidence within the allowed time, the financial liability officer will consider the financial liability investigation of property loss with any new evidence or allegations of error presented by the respondent. The financial liability officer will make a recommendation in DD Form 200, block 15a or on a continuation sheet following the original recommendation, and attach the rebuttal statement to the financial liability investigation of property loss as an exhibit. See paragraph 3–1f for marking exhibits. The financial liability officer will forward the completed financial liability investigation of property loss to the approval authority or appointing authority, as appropriate.

f. If there is no rebuttal statement or other evidence from the individual within the allowed time, the financial liability officer will forward the completed financial liability investigation of property loss to the approving authority or appointing authority, as appropriate.

g. In the event of receipt of a rebuttal statement or other evidence after the allowed time, the financial liability officer will consider any new evidence presented by the individual. If appropriate, the financial liability officer will amend the recommendations to the approval authority, and forward the amended recommendation through the same channels by which the financial liability investigation of property loss was processed.

17. Examples of Documents

ATZS-HT 8 NOVEMBER 2012

MEMORANDUM THRU Commander, 5th Special Forces Group, Fort Campbell, Kentucky 42223 FOR: SFC XXXXXXX, 5th Special Forces Group, Fort Campbell, Kentucky 42223

SUBJECT: Financial Liability Investigation of Property Loss number W5675W2263-1, in the amount of $2076.72

1. You are hereby notified that you are being recommended for charge of financial liability to the United States Government, in the amount of $2076.72 for the damage of Government property investigated under subject investigation of property loss number W5675W2263-1. If approved, you may be held financially liable for the cost to repair the government property damaged in the GSA vehicle accident that you were involved in on September 12, 2012 at the Westward Look Resort in Tucson, Arizona.

2. Your attention is invited to AR 735-5, paragraph 13-34b, which lists your rights relative to this matter. You have the right to-

a. Inspect and copy Army records relating to this debt.

b. Legal advice.

c. Submit a statement and other evidence in rebuttal of my recommendation. Any rebuttal statement that you submit will be taken into consideration before making a determination of financial liability.

3. Time constrains for submission of rebuttal are contained in AR 735-5, 13-35b.

4. You are requested to complete blocks 16a through 16g of the enclosed DD Form 200, and to sign the enclosed endorsement for receipt of notification of recommendation for charge of financial liability to the United States Government. Request these be returned to me not later than November 23, 2012.

ATZS-HT

amount of $2076.72

In the event I am not in receipt of these documents on November 23, 2012, I will make a decision on the financial liability investigation of property loss based on the information that I have.

5 Encls XXXXXXXX

1. Investigation of Property Loss COL, USA

2. Vehicle Accident Report Commanding

3. Traffic Citation

4. Estimate for Repairs

5. Photograph of Damaged Vehicle

West Campus Financial Liability Investigation of property Loss

ATZS-HT 5 NOVEMBER 2012

MEMORANDUM THRU Commander, 2BSTB, 10th Mountain Division (Light Infantry), Fort Drum, New York 13602

FOR: SGT XXXXXXX, 2BSTB, 10th Mountain Division (Light Infantry) Fort Drum, New York 13602

SUBJECT: Financial Liability Investigation of Property Loss number W5675W2292-1, in the amount of $4545.03

1. You are hereby notified that an approved charge of financial liability has been assessed against you by the United States Government, in the amount of $2375.40 for the damage of Government property investigated under subject investigation of property loss.

2. Your attention is invited to AR 735-5, paragraph 13-42 which lists your rights relative to this matter. You have the right to

a. Inspect and copy Army records relating to this debt.

b. Obtain legal advice relating to the assessment of financial liability per AR 27-3.

c. Request reconsideration of the assessment of financial liability.

d. Request a hearing concerning the amount of the debt.

e. Request remission or cancellation of the indebtedness under the provisions od AR 600-4.

f. Request extension of the collection period.

g. Submit an application to the Army Board for Correction of Military Records under the provisions of AR 15-185.

h. Enter into a written agreement with FAO to repay the debt by installment.

3. Submission of a request for reconsideration, a hearing, or remission or cancellation of indebtedness, stops all collection action, pending a decision on the request by the appropriate official. These rights are listed in the order in which they should be exercised.

ATZS-HT

SUBJECT: Financial Liability Investigation of Property Loss number W5675W2292-1, in the amount of $4545.03

a. You have thirty calendar days from the date of this memorandum to submit a request for reconsideration. Submit request for reconsideration to: Commander, HT-JCOE Building 80122, Fort Huachuca, Arizona 85613-7000.

b. You have thirty calendar days from the date of the notification of adverse action resulting from a request for reconsideration to submit a request for remission or cancellation of the indebtedness. Submit request for remission or cancellation or indebtedness to: Commander, HT-JCOE Building 80122, Fort Huachuca, Arizona 85613-7000.

c. When the rights in paragraph a through c above have been exercised and you have been notified you are still financially liable and must make reimbursement to the government, you should immediately contact your servicing FAO to determine how to avoid possible interest and/or penalty charges if payment is not immediately made.

d. Should all of these rights be denied, or you fail to exercise one of the rights within the appropriate time frame, your last avenue of redress is to make application to the Army Board for Correction of Military Records (ABCMR). Application to the ABCMR does not stop collection actions.

4. Should you have any questions concerning the above rights, you may contact the servicing Staff Judge Advocate office.

Encl XXXXXXXXXX Investigation of Property Loss COL, U.S. Army Commanding

ATZS-HT Date: ______________

MEMORANDUM THRU Commander, 5th Special Forces Group, Fort Campbell, Kentucky 42223

FOR: Commander, HT-JCOE Building 80122, Fort Huachuca, Arizona 85613-7000.

amount of $2076.72

I hereby acknowledge receipt of notice recommending me for charges of financial liability contained in the basic correspondence for Financial Liability Investigation of Property Loss number W5675W2263-1. A copy of DD Form 200 with blocks 16a through 16h completed is returned as requested.

XXXXXXXXX

SFC, USA