6-8: Write-offs and allowances

Effective: July 1, 1998
Revised: July 2, 2026
References: Admin Rule 21-1-9, 6-6: Past due receivables, 6-7: Payment plans for receivables, 13-4: Returned checks and debit card chargebacks

Purpose

This policy explains how to account for and write off uncollectible receivables.

This policy doesn’t explain how to create a write-off (WO) transaction in Vantage Financial. See the Creating a Write Off (WO) quick reference guide.

Definitions

Agency – Any agency, board, bureau, commission, office, department, or other administrative subunit of the executive, legislative, and judicial branches of state government.

GAAP – Generally accepted accounting principles.

GovOps – The Department of Government Operations.

OSDC – The Office of State Debt Collection.

Settlement – An agreed upon payment amount that is less than the total outstanding debt to consider a debt as paid in full.

State finance – The GovOps Division of Finance.

Write off – To remove a receivable from the accounting records or a receivable that has been removed from the accounting records.

Policy

A – Agencies must implement internal policy and procedures for reviewing receivables

1 – Agencies must implement internal policies and procedures for:

reviewing receivable balances for collectibility; and
approving and recording write offs of uncollectible receivables.

2 – Agencies must review receivable balances at least quarterly to determine whether collection is likely.

3 – At a minimum, agencies must consider the following factors when reviewing receivables:

aging of the receivable (current, 30, 60, 90+ days past due);
payment history and patterns;
status and results of collection efforts, including referral to OSDC;
known legal or financial conditions (such as bankruptcy, death, dissolution, or disputes);
the ability to locate or communicate with the debtor; and
any other relevant information that affects the likelihood of collection.

4 – Agencies must keep documentation that supports their decision on whether a receivable is still fully collectible or should be considered for a write-off, in compliance with section B.

5 – Agencies must include the required, agency-specific management-level approval(s) for writing off receivable balances in their policies.

6 – Agencies must ensure that approvers and recorders of write-offs don’t have conflicting duties between cash handling, recording, and/or reconciling duties.

7 – Agencies may use written receivable policies and procedures that are stricter than state finance’s, but those policies must meet the minimum requirements of this policy.

B – Agencies must monitor collection activity

1 – Agencies must refer receivables to OSDC when internal collection efforts are unsuccessful in compliance with state finance policies 6-6: Past due receivables and 6-7: Payment plans for receivables.

1a – Agencies must coordinate with OSDC to evaluate:

collection activity and results;
whether a payment plan has been established; and
whether payments are being received as agreed.

2 – Agencies must review receivables that have been referred to OSDC at least annually.

2a – If a receivable has been with OSDC for at least 18 months and no active, performing payment plan exists, the agency must evaluate the receivable for write-off.

2a – If the receivable qualifies as uncollectible under section B2, the agency must write it off.

2b – If the agency determines the receivable shouldn’t be written off, they must document the justification. Justifications may include:

an active and performing payment plan;
legal considerations, including statute of limitations;
federal or other restrictions that prohibit write-off; or
other relevant circumstances.

C – Receivables must meet write-off conditions

1 – Agencies may write off individual receivable balances of less than $100 once they’re determined to be uncollectible.

2 – Agencies must write off receivables, regardless of age or amount, if any of the following uncollectibility conditions are met and attach the required documentation in Vantage Financial:

The debt was discharged in bankruptcy (requires a copy of the court’s discharge notice);
the debtor died without sufficient assets (requires a copy of the death certificate and a statement that no estate was opened or that the estate lacks sufficient assets to pay the state’s claim);
the debtor corporation was dissolved with no assets (requires documentation from the Division of Corporations);
the Utah Attorney General has informed the agency that the statute of limitations for collecting the debt has passed; or
a final settlement payment was received for the debt, leaving a remaining balance.

3 – Excluding the conditions described in sections B1 and B2, agencies must not write off a receivable until OSDC has pursued collection for at least 18 months.

D – Agencies must obtain the required approvals for write-offs

1 – Agency management must approve the write-off of all individual receivable balances.

1a – Agencies must attach documentation of the approval and the reason for the write-off to the WO transaction in Vantage Financial.

2 – OSDC approves all WO transactions. The OSDC manager must approve the write-off of receivable balances of $100 or more. All WO transactions less than $100 are automatically approved by OSDC without review.

3 – In addition to the agency management approval, the state finance director, their designee, or the assistant state comptroller must approve write-offs of receivable balances of $50,000 or more.

E – Methods for recording and writing off uncollectible receivables

1 – Use of the direct write-off method

1a – Agencies must use the direct write-off method for writing-off uncollectible receivables unless state finance requires a different method.

1b – When an uncollectible receivable meets the requirements to be written off, agencies must record a WO transaction in Vantage Financial (see section E). This transaction reduces revenue and accounts receivable. Agencies must not use a bad debt expense.

2 – Use of the allowance method

2a – State finance determines when the allowance method is required for financial reporting purposes to ensure receivables are reported at net realizable value (accounts receivable minus the allowance for doubtful accounts) in compliance with GAAP.

2b – State finance considers the following factors when determining whether the allowance method should be used:

historical data that shows a consistent pattern of uncollectible receivables;
aging of receivables that shows a significant amount of balances are past due;
known collection issues or economic conditions that could increase the risk of non-collection; and
the materiality of estimated uncollectible amounts compared to the total receivables or revenues.

2c – When the allowance method is required, agencies must estimate uncollectible receivables using a systematic and rational method, such as aging, historical percentages, or other reasonable approaches.

2d – Agencies must review the estimate annually.

2e – State finance works with agencies to record and adjust allowances.

F – Agencies must enter a WO transaction in Vantage Financial

1 – Agencies must record write-offs using a WO transaction in Vantage Financial that references the original RE document. Agencies must never modify an RE balance or use a credit memo (RM) transaction for a write-off.

2 – Agencies must number the WO transaction with the same Document_ID as the RE transaction. Agencies must not use auto-numbering.

3 – For all WOs, agencies must attach documentation in Vantage Financial that includes the reason for the write-off and the approvals required in section C1.

G – Agencies must record payments received after write-offs

1 – If an agency receives payment in a fiscal year after a receivable was written off, they must record a cash receipt (CR) in the current fiscal year. They must not record a new receivable (RE).

H – Receivables funded with federal awards

1 – Agencies must manage receivables from federal awards, including federally funded loans, in compliance with applicable federal laws, regulations, and program requirements.

2 – Agencies must not write off receivables from federally funded loan programs unless allowed by the federal program or approved by the federal agency overseeing it.

3 – Agencies may only forgive or treat a federally funded loan as a grant if allowed by the federal program or approved by the federal agency overseeing it.

4 – Agencies must keep documentation that shows they followed federal requirements and provides evidence for any write-off, forgiveness, or reclassification.