MANAGEMENT OF RECEIVABLES
1.0 Statutory Reference
CGS 3-39a, 4a-12, 13a-166; Public Act 98-204; Public Act 99-2.
2.0 General Principles
Accounts receivable records should be accurate, complete, and maintained
in a manner to indicate the length of time the debt has been outstanding.
This practice establishes policies and procedures for all state agencies in
the management and collection of receivables.
3.0 Accounting for Receivables
3.1 Definition of Receivables
The term �receivables� includes all claims held against others for future
receipts of monies, goods and services. For State accounting, the term is
used in a more restrictive sense to indicate claims, which have been billed
and are expected to be collected in monies. The term �receivables� includes
taxes receivable, amounts due from the federal government, from political
subdivisions, from other funds, from other agencies, and such other amounts
which come due as a result of regular business transactions.
For a fuller explanation see Comptroller's Memorandum 2000-15
http://osc.ct.gov/memoarchives3/2000memos/200015.htm
3.2 Taxes Receivable
Taxes are not considered as receivables until a determination is made
that the tax is actually due, but has not yet been paid. Therefore, under
the classification of �Taxes Receivable,� the following may be found:
A. Taxes under litigation, pending court decision.
B. Amounts erroneously underpaid by taxpayers that are expected to be
collected.
C. Amounts reported due from the taxpayer, but not yet paid.
In all of the instances cited above, documentation of the receivables
must be available before the transaction can be entered in the agency's
books of accounts.
3.3 Amounts Due from Other Governmental Units
Amounts due from the federal government are to be set up on the books of
the receiving agency as receivables if either of the following conditions is
met:
A. The State of Connecticut has incurred expenditures which qualify and
are eligible for reimbursement from the federal government.
B. The State of Connecticut has expended funds to finance a project
which, either by law or by contractual agreement, is to be financed on a
matching basis by federal and state funds.
Outright grants, since they do not meet these conditions, cannot be
properly categorized as receivables.
Amounts due from other political subdivisions to be set up on the books
of the receiving agency as receivables may include:
A. The State's share of taxes collected by its political subdivisions.
B. Loans.
C. Charges for services rendered or goods sold.
3.4 Loans Receivable
Amounts, which have been loaned to persons or organizations,, including
notes taken as security for such loans.
3.5 Due from Other Funds
Amounts owed to a particular fund by another fund in the same
governmental unit for goods sold or services rendered. This includes only
short-term obligations on open account and not long-term loans.
3.6 Licenses, Fees, Permits and Donations
Revenues and receivables for licenses, fees, permits and donations should
be recognized when the underlying event takes place and the State has an
enforceable legal claim to the amounts.
Fees for Licenses and Permits - Citizens and others pay fees for licenses
and permits for the privilege of engaging in a regulated activity. Often the
fee is intended to cover a privilege granted for a particular period of
time. Because citizens and others granted the license or permit have no
legal right to exercise the privilege granted by a license or permit until
the fee is paid, a government's enforceable legal claim arises only when the
fee is paid.
Therefore, no receivables or revenues should be recorded when renewal
notices for licenses and permits are sent out. The revenues should only be
recognized when payment is received.
3.7 COP-9
These forms are used for recoveries of salary overpayments to employees
and workers' compensation recoveries when a payment is received from an
employee or third party insurance administrator.
See
http://www.core-ct.state.ct.us/hr/payroll/doc/cop-9_form.doc
3.8 Miscellaneous/Other Receivables
Receivables arising from transactions other than those outlined in the
preceding paragraphs may be classified under the general category of �other
receivables.� Such receivables may include items such as overpayments by an
agency subject to refund, interest and penalties assessed against an
individual or a corporation, and any of the receivables, which may arise
during an agency's course of operations.
4.0 Agency Procedures
4.1 Minimum Collection Procedure
It is the responsibility of each state agency to immediately notify the
person or entity who owes money that money is owed. It is the responsibility
of each state agency to collect amounts owed to the State in the most
effective and efficient manner. Unless the State Comptroller's Office
approves an agency's alternative collection procedure, all state agencies
will adhere to the following basic procedures relating to collection of past
due accounts. These procedures are considered minimum efforts. Certain state
agencies may find it necessary to expand these general procedures to fit
their particular circumstances.
A. All accounts which are more than 30 days past due must be subjected to
collection procedures.
B. A record must be kept for each action taken to collect an account, the
name of the person taking the action, and the date the action was taken.
This documentary evidence of collection efforts must be available at the
agency to support classifying an account as uncollectible.
C. At least three documented efforts should be made to collect all
delinquent accounts over $25. Accounts $25 and under require only one
documented attempt.
D. When an account becomes 60 days past due, further credit should be
denied until the account is returned to a current status.
E. The State's right to offset debts owed the State against state
payments due such debtors should be utilized.
See Expenditure Section 5.3 for information regarding the Offset Program.
F. Deferred payment terms should be extended on a limited basis, only
upon determining that the debtor is unable to pay the balance in full. Terms
should not extend beyond six months. However, terms can be extended for a
few months more where large balances are concerned and payment of such
balances within six months would create a hardship. Certain Higher Education
funds are governed by federal laws.
G. Agencies may contact the Collection Services Division of the
Department of Administrative Services for assistance in the collection of
debts owed to the State.
H. When other statutes address the agency's collection procedures, those
procedures should be followed.
4.2 Write-Off Request Procedures
C.G.S. 3-7 and permits agencies to write-off uncollectible amounts under
$5,000 without OPM approval. These write-offs of uncollectible accounts do
not require approval by the Governor. An agency must request approval from
OPM to write off a receivable over $5,000 when the following criteria are
met:
A. A valid receivable does exist, i.e., there are no unsettled
differences between the agency and the debtor as to the validity of the
charges to the account.
Note: Do not submit amounts resulting from billing errors (e.g., charges
for services not rendered) or medical insurance adjustments (e.g.,
non-covered Medicare charges). State agencies may make the appropriate
accounting entries to remove these items from their accounts.
B. The receivable is past due (having missed a scheduled payment). The
length of time past due may vary by the type of the receivable.
C. The agency has complied with the �Minimum Collection Procedure�
section, without success, and has determined that the receivable is
uncollectible. As soon as the criteria noted above are met, the agency
should prepare the request in two copies; the original to be forwarded to
OPM for approval to write off the receivable, and the copy to be retained in
the agency.
For agencies that routinely request write-off of uncollectible accounts,
a statement describing their collection process which determined that the
item is uncollectible must be filed with OPM before any write-offs are
considered. The request should include the following:
A. The number of accounts to be written off.
B. The total dollar amount of such accounts.
C. For each account, list the debtor's name, social security number or
federal employer identification number, amount, and a brief statement of the
reason or basis for determining the account uncollectible. In lieu of said
brief statement, the agency may use a numerical write-off code.
Note: Agencies should make sure that the statement or write-off code
clearly identifies debts that have been discharged in bankruptcy.
D. A statement by the responsible individual that in his or her opinion
the accounts are uncollectible and that all reasonable efforts have been
pursued and the request is submitted in accordance with policy and
procedure.
E. The signature of the agency head which certifies his or her approval
of the request. A request signed by an agency head's designee is acceptable,
provided OPM has received a designation letter from the agency head.
The agency should retain the receivables on its record pending
notification of approval from OPM. Upon receiving such notification, the
agency should promptly remove the receivable from its records.
All accounts receivable and taxes receivable written off by the state
agency as described above are thereby assigned for collection. The state
agency must maintain all information relating to the receivables, which were
written off. Officers and employees of the state agency may be required to
participate in, and provide documentation for, hearings or litigation
regarding the collection of the receivables. See Job Aid at: http://www.core-ct.state.ct.us/user/finjobaids/docs/write_off_bill.doc
4.3 Annual Reporting by Agencies
Fiscal Year End Instructions: Fiscal year end instructions should be
referred to by each agency to report its fiscal year end receivable
transactions and balances to the State Comptroller's Office, Budget &
Financial Analysis Division. The due date for the report will be the first
Friday in September.
For further information: http://osc.ct.gov/2009memos/numbered/200938.htm
5.0 Definitions
Abatement: A complete or partial cancellation of a levy imposed by a
government. Abatements usually apply to tax levies, special assessments and
service charges.
Aging of Receivables: Classifying the account balances of all receivables
by the amount not yet due or past due by varying lengths of time.
Allowance for Estimated Uncollectible: A valuation account used to
indicate the portion of a receivable which it is estimated will never be
collected.
Compromise: The statutory authority granted certain state agencies to
negotiate a settlement of a debt between the debtor and the agency.
Current Account: An account which is within stated terms and has not yet
become past due.
Past Due (Delinquent) Account: An account in which one or more scheduled
payments have not been made.
Uncollectible: An account unable to be collected.
Write-Off: Accounting procedures for removing uncollectible charges
receivable balances.
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