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Home My WebLink About4.06 Write Off Uncollect BalG~~~ OF Dp~l f~ /// ~ 1`~~~j2 \\ ~ % ~~L/FOR~~~ STAFF REPORT C I T Y C L E R K DUBLIN CITY COUNCIL File # ^^3 [~]~-~~ DATE: October 5, 2010 TO: Honorable Mayor and City Councilmembers FROM: ` Joni Pattillo, City Manager SUBJE ~:-'Adoption of Resolution Updating the Procedures Used for the Write-Off of Uncollectible Account Balances and Unclaimed Credit Balances Prepared By: Paul S. Rankin, Administrative Services Director. EXECUTIVE SUMMARY: The current procedures for the write-off of uncollectible accounts established specific limits as to Staff authorized to write-off accounts. The limits adopted in 1993, require the City Council authorization for all accounts over $500. Staff has reviewed these thresholds with respect to placing appropriate controls over material amounts and examining administrative procedures to write off accounts. Staff is recommending changes to the policy which will allow Staff to write off accounts up to $1,000. The City Council will be notified prior to the write-off of accounts in excess of $1,000. The update also references the procedure in State Law for handling the disposition of credit balances which are unclaimed. FINANCIAL IMPACT: The changes in the policy will streamline the process to record the write-off of accounts and reduce the Staff time associated with the write-off of accounts over $500. RECOMMENDATION: Adopt the Resolution Rescinding Resolution 93-93 and Establishing Updated Procedures for Write-Off of Uncollectible Accounts Receivable and Credit Balances. ~~~ ~ ~~~ ~ Submitted By: Reviewe Administrative Services Director Assistant City Manager DESCRIPTION: In 1993, the City Council adopted procedures related to when accounts were deemed to be uncollectible and should be written off. The policies authorized Staff to administratively write-off accounts up to $500, and the City Council formally authorized write-offs in excess of that amount. Over the past 17 years the policy has not been modified (Attachment #1). Page 1 of 2 ITEIlII NO. ~.~_ Staff researched examples of policies and procedures in place with other agencies and found a variety of practices. The practices ranged from a completely administrative process without any notice provided to the City Council, to a requirement for the City Council to authorize all accounts over $100. Of the policies reviewed most allowed Staff to administratively write-off accounts above $500. Among the sample policies obtained from other agencies was also one in which the City Council was administratively noticed when write-offs occurred in excess of a certain threshold amount. This provides City Council disclosure and oversight. To effectively purge the receivable files of accounts, Staff will periodically review accounts determined to be uncollectible (exceed statute of limitations, bankrupt, skip, not traceable, etc.) In cases of material amounts Staff will also consult with the City Attorney regarding options to pursue prior to proceeding with the write-off. Staff will maintain records of efforts to pursue recovery of amounts owed. The revised procedures are included in the proposed Resolution (Attachment #2). Based on the review Staff is recommending an update to the current policy which would contain the following provisions: 1. Individual accounts of $500 and less may be written off upon approval of the Assistant City Manager or the Administrative Services Director. 2. Individual accounts of more than $500 and less than $1,000 may be written off based upon the recommendation of the Assistant City Manager or Administrative Services Director, and with the approval of the City Manager. 3. Individual accounts over $1,000 shall require the preparation of an Administrative Notice of Intent to Write-Off. The accounts to be written-off shall be recommended by Staff as outlined in number 2. The Notice of Intent shall indicate the date the write-off will occur, which shall not be less than 10 calendar days after the date of the Notice. The Notice shall be delivered to each member of the City Council. 4. Further, the write-off of any public funds loaned which is typically disclosed as part of the Comprehensive Annual Financial Report (CAFR), shall be disclosed as part of the CAFR for the period when the write-off occurs. The disclosure may be included in the Notes to the CAFR. The City does occasionally hold credit balances where a payment has been issued but the check remains uncashed. The California Government Code establishes a procedure to be followed when such funds are unclaimed for three years. They can be transferred to the City General Fund after going through a process of Public Notice. The law also specifies for amounts less than fifteen dollars a one year holding period is applied. The proposed resolution states that these procedures will be handled administratively in accordance with State Law. NOTICING REQUIREMENTS/PUBLIC OUTREACH: None ATTACHMENTS: 1. Resolution 93-93 Establishing Procedures for Write-Off of Uncollectible Accounts Receivable. 2. Proposed Resolution Rescinding Resolution 93-93 and Establishing Updated Procedures for Write-Off of Uncollectible Accounts Receivable and Credit Balances Page 2 of 2 ~ ~j ~ RESOLUTION NO. 93 - 93 A RESOLUTION OF THE CITY COUI~CIL OF THE CITY OF DUBLIN *~***~t***********~r****~t**~* Establishing Procedures For Write-Off of Uncollectible Accounts Receivable WHEREAS, it is prudent for the City to have established procedures to purge stale accounts receivable items from the financial records; and WHEREAS, in accordance with financial policies it shall be the intent of the City to undertake reasonable efforts to secure payment of outstanding debts; and WHEREAS, accounts may become uncollectible due to circumstances such as, but not limited to: the statute of limitations for a legal proceeding has been exceeded; bankruptcy has been filed; the City is unsuccessful in locating the debtor; the cost of collection exceeds the amount owed, etc.; and WHEREAS, to reduce the potential number of accounts which become uncollectible, the City Council has authorized the use of a collection agency; WHEREAS, it is desirous to have procedures, which allow City Staff to administratively dispose of accounts, which are less than $500; and WHEREAS, City Council approval would be required for all amounts over $500, which are proposed to be written off. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby adopt the following procedures for the handling of accounts receivable which are deemed by City Staff to be uncollectible: PROCEDURE These procedures establish the approval required to write - off uncollectible accounts from the City's financial records. A reasonable effort shall be made by the City to obtain payment prior to writing off past due amounts. City Staff shall maintain records of such efforts. 1. Individual accounts of $200 and less may be written off upon approval of the Assistant City Manager/Administrative Services Director. 2. Individual accounts of more than $200 and less than $500, may be written off based upon the recommendation of the Assistant City Manager/ Administrative Services Director, and with the approval of the City Manager. '~. t~ /o-5 - i~ Attachment 1 r~( ~~ j ~ ~J 3. Individual accounts over $500 may be written off based upon the recommendation of Staff and with the approval of the City Council. PASSED, APPROVED AND ADOPTED this 26th day of July, 1993. AYES: Councilmembers Burton, Houston, Howard, Moffatt, and Mayor Snyder NOES: None ' ' ~' ABSENT: None Mayor ATTEST: ty C er 3~~~ RESOLUTION NO. XX - 10 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN **********~ Rescinding Resolution 93-93 and Establishing Updated Procedures for Write-Off of Uncollectible Accounts Receivable and Credit Balances WHEREAS, on July 26, 1993 the City Council adopted Resolution #93-93, which established procedures for the write-off of uncollectible balances on the City's Financial Records; and WHEREAS, it is prudent for the City to periodically review established procedures to determine if there can be more efficient policies developed; and WHEREAS, Staff is recommending that the policy established by Resolution 93-93 shall be rescinded by the City Council and updated with the adoption of new procedures; and WHEREAS, the new procedures will continue to provide an orderly way to purge stale accounts receivable items and unclaimed balances from the financial records; and WHEREAS, accounts may become uncollectible due to circumstances such as, but not limited to: the statute of limitations for a legal proceeding has been exceeded; bankruptcy has been filed; the City is unsuccessful in locating the debtor; the cost of collection exceeds the amount owed, etc.; and WHEREAS, it is desirous to have procedures, which allow City Staff to administratively dispose of accounts while maintaining appropriate oversight. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby rescind City of Dublin Resolution 93-93, a resolution "Establishing Procedures For Write-Off of Uncollectible Accounts Receivable." BE IT FURTHER RESOLVED that the City of Dublin does hereby adopt the following procedures for the handling of accounts receivable which are deemed by City Staff to be uncollectible and unclaimed credit balances: ATTACHMENT 2 ~ ~ ~ PROCEDURE These procedures establish the approval process required to write - off uncollectible accounts from the City's financial records. A reasonable effort shall be made by the City to obtain payment prior to writing off past due amounts. This may include consultation and review by the City Attorney in cases involving material amounts. City Staff shall maintain records of such efforts. The procedures also address the handling of credit balances which are unclaimed in accordance with State Law. 1. Individual accounts of $500 and less may be written off upon approval of the Assistant City Manager or the Administrative Services Director. 2. Individual accounts of more than $500 and less than $1,000, may be written off based upon the recommendation of the Assistant City Manager or Administrative Services Director, and with the approval of the City Manager. 3. Individual accounts over $1,000 shall require the preparation of an Administrative Notice of Intent to Write-Off. The accounts to be written-off shall be recommended by Staff as outlined in number 2. The Notice of Intent shall indicate the date the write-off will occur, which shall not be less than 10 calendar days after the date of the Notice. The Notice shall be delivered to the Mayor and each member of the City Council. 4. In addition, the write-off of any public funds loaned which is typically disclosed as part of the Comprehensive Annual Financial Report (CAFR), shall be disclosed as part of the CAFR for the period when the write-off occurs. The disclosure may be included in the Notes to the CAFR. 5. Credit balances on accounts which are unclaimed may be transferred to the General Fund administratively by Staff, upon following all of the requirements of California Government Code section 50050 et seq. PASSED, APPROVED AND ADOPTED this 5th day of October, 2010, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: City Clerk Mayor ATTACHMENT 2 G:Wgenda Items For City Counci1~2010\a_Finance\10_5_2010_Write_Off_Procedure\Resolution_Write_Off_policy.doc