Receivables

Policy

FIACCT 06-02_04 – Receivables – FINET – exempt – write-offs and allowances

Effective: July 1, 1998
Revised: December 1, 2019
Reviewed: December 1, 2019

Purpose

This policy explains the differences in policies and procedures between FINET agencies and those that FINET exempt agencies should follow to account for their uncollectible Receivables.


Background

Please see FIACCT 06-01.14 for background. This policy identifies only policies and procedures that are unique to agencies that are exempt from using FINET to record and track receivables. Unless explicitly stated otherwise in this policy, FIACCT 06-01.14 applies to all agencies whether using FINET or not.


Policy

A. Agencies exempt from using FINET to track receivables do not generate a WO document in FINET as indicated in FIACCT 06-01.14 (J). Instead the agency will create an IET in FINET and notify OSDC via email regarding accounts eligible for write-off.


Procedures-direct write-off method

Responsibility

Action

Agency

  1. Acquire agency approval according to agency policy.
  2. Unless exempted by OSDC or unless different approval procedures for write-off are specifically addressed by state statute, obtain OSDC approval to write off a Receivable that is $25.00 or more.

Division of Finance

Approve the write off of any Receivable that is $1,000 or more, except where different approval procedures for write-off are specifically addressed by state statute.

Agency

  1. Create an IET to write-off a specific uncollectible Receivable. This is done by debiting (Buyer) the original revenue source and crediting (Seller) the accounts receivable balance sheet account used when recording the Receivable.
  2. Forward a copy of the IET and the complete Receivable file to OSDC upon writing off an account.

OSDC

Consult with agencies to determine if all reasonable steps for collection have been taken and the Receivable is uncollectible. Review write-off IETs that were approved.

Procedures-allowance method

Agency

  1. Establish an estimate for allowance for doubtful accounts by processing an ITA.
  2. On the Seller side, enter the fund where the Receivables are recorded and a balance sheet account for Allowance for Bad Debt. Contact the Revenue Accountant at the Division of Finance to have a specific allowance account set up for your specific Receivables.
  3. On the Buyer side enter the same coding block, including the revenue source, which was used to record the Receivables. Let both sides of the ITA default to Increase.

    In order to accurately reflect current year revenue and Receivable balances, the Division of Finance recommends that agencies review and adjust the allowance quarterly. The allowance shall be reviewed and adjusted at the end of each fiscal year.
  4. As specific Receivables are determined to be uncollectible, follow the same procedures detailed in the Direct Write-Off Method except that the ITA is done by debiting (Buyer) the appropriate balance sheet allowance account.

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