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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.
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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
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RESOLUTION NO. 93 - 93
A RESOLUTION OF THE CITY COUI~CIL
OF THE CITY OF DUBLIN
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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.
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Attachment 1
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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 ' '
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ABSENT: None
Mayor
ATTEST:
ty C er
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RESOLUTION NO. XX - 10
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
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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
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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