Agenda Item # 2
Columbus Consolidated Government
Council Meeting
04/03/2007
Agenda Report # 119
TO: Mayor and Council
SUBJECT: Write off Policy
INITIATED BY: Finance Department
Recommendation: Approval is requested to establish a write off policy to
provide for uniform guidelines and requirements to determine accounts
receivable that should be considered as bad debt and written off.
Background: The departments and agencies of the Columbus Consolidated
Government provide services that allow for the users to pay for the service
after it is rendered. When government services are provided on credit, a need
is generated to set up a receivable and thereafter, a process to collect the
receivable. Efforts are made to pursue timely collection of delinquent
accounts. Services are restricted unless law requires continuation of the
services. When such accounts are deemed uncollectible, they should be written
off from the financial statements.
Analysis: The department and agencies of the Columbus Consolidated Government
are responsible to review aged receivable reports as often as necessary, but at
least annually at year-end to determine if any delinquent account should be
written off. The policy allows for criteria to be met in order for an account
to be considered bad debt. Every effort will be made to collect on an account
before it is considered uncollectible.
Financial Considerations: The calculation for the allowance for doubtful
accounts is performed annually to provide for fair representation of the
accounts receivable in the Columbus Consolidated Government?s financial
statements. A cost of providing services on credit is bad debt expense. To
insure bad debt expense is reasonable, internal controls must be in place,
billing procedures established, and collection efforts maximized.
Legal Considerations: None.
Recommendations/ Actions: Approval is requested to establish a write off
policy to provide for uniform guidelines and requirements to determine accounts
receivable that should be considered as bad debt and written off.
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