HomeMy WebLinkAboutReso 2017-079RESOLUTION NO. 2017-079
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA ADOPTING AN UNCOLLECTIBLE
ACCOUNTS RECEIVABLE WRITE-OFF POLICY
WHEREAS, the City of Chula Vista desires to adopt guidelines and authorization levels
for write-off of uncollectible accounts receivable; and
WHEREAS, to this end, staff has drafted an Uncollectible Accounts Receivable Write -
Off Policy; and
WHEREAS, the proposed policy follows the generally accepted accounting principles of
writing -off receivables to a conservative collectible level for financial reporting purposes in
order to eliminate the overstatement of those assets on the City's balance sheet; and
WHEREAS, by writing -off the uncollectible accounts, the City is not forgiving them, but
acknowledging that the collection of these accounts is doubtful; and
WHEREAS, writing -off of an account does not stop the City, from pursuing further
collection of the account should new information become available; and
WHEREAS, the attached accounts receivable policy establishes criteria under which an
account may be written -off, describes due diligence documentation and defines authorization
levels for write-offs.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, that it does hereby, accept and adopt the newly established Uncollectible Accounts
Receivable Write -Off Policy as reflected in Exhibit 1.
Presented by
David Bilby, MSBA, CPK
Director of Finance/Treasurer
Approved as to form by
qen R. Go gins
City
i Atto y
Resolution No. 2017-079
Page No. 2
PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista,
California, this 23rd day of May 2017 by the following vote:
AYES:
NAYS
ABSENT:
ATTEST:
Councilmembers: Diaz, McCann, and Padilla
Councilmembers: None
Councilmembers: Aguilar and Salas
Donna R. Norris, CMt, City Clerk
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
CITY OF CHULA VISTA )
I, Donna R. Norris, City Clerk of Chula Vista, California, do hereby certify that the foregoing
Resolution No. 2017-079 was duly passed, approved, and adopted by the City Council at a
regular meeting of the Chula Vista City Council held on the 23rd day of May 2017.
Executed this 23rd day of May 2017.
Donna R. Norris, MC, City Clerk
Resolution No. 2017-079
PnrTa ATn 2
COUNCIL POLICY
CITY OF CHULA VISTA
SUBJECT: UNCOLLECTIBLE ACCOUNTS
POLICY
EFFECTIVE
RECEIVABLE WRITE-OFF POLICY
NUMBER
DATE
PAGE
220-08
05/23/2017
1 of 4
ADOPTED BY: Resolution No. 2017-079
DATED: 5/23/2017
AMENDED BY: Resolution No. (date of resolution)
I. PURPOSE: The purpose of this policy is to establish procedures for write-off
of uncollectible accounts receivable debt and improve measurement of the
City's accounts receivable.
II. POLICY
A. BACKGROUND: A liability or debt to the City establishes an "accounts
receivable." This generally occurs when a City department issues an
invoice for goods or services provided to an organization or a recipient.
Other circumstances that also create an account receivable are:
1. Amounts due the City as a result of advances or payments under
contracts where the spending is less than the advances or payments;
2. Overpayments, or payments in error, to vendors or providers; or
3. Any other circumstance where an obligation of money is due the City.
B. SCOPE: This policy applies to all City departments and funds.
C. PROCEDURES: Collection procedures are established- by the Finance
Department in collaboration with the responsible departments and will
vary depending on the nature of the receivable. Types of receivables
covered by this policy include but are not limited to: business license tax,
transient occupancy tax; sewer utility billings; regulatory and development
impact fees; fees for services; recovery for damage to City property; fines
and penalties; and legal judgments.
Accounts receivable should generally be written -off during the fiscal year
in which an account is determined to be uncollectible. Subsequent
collection of an account previously written -off will be treated as new
revenue in the appropriate fund.
1. Designation of an Account as Uncollectible
An account will be considered uncollectible after the appropriate
collection procedures have been followed if it meets one or more of
the following criteria:
Resolution No. 2017-079
Pana Nn d
COUNCIL POLICY
CITY OF CHULA VISTA
SUBJECT: UNCOLLECTIBLE ACCOUNTS
POLICY
EFFECTIVE
RECEIVABLE WRITE-OFF POLICY
NUMBER
DATE
PAGE
220-08
05/23/2017
2 of 4
ADOPTED BY: Resolution No. 2017-079
DATED: 5/23/2017
AMENDED BY: Resolution No. (date of resolution) .
• The debt is disputed and the City has insufficient
documentation to pursue collection efforts;
• The cost of further collection efforts will exceed the
estimated recovery amount;
• The amount is under $20 and remains unpaid after one
year;
• The account remains unpaid after the lesser of four years or
the applicable period for commencement of a recovery
action (statute of limitations);
• The debtor cannot be located, nor any of the debtor's
assets;
• The debtor has no assets and there is no expectation they
will have any in the future;
• The debtor has died and there is no known estate or
guarantor;
• The debtor is a company which is no longer in business;
• The debt is discharged through legal action (bankruptcy or
court judgment).
2. Preparation of Request for Write -Off of Accounts Receivable
At least annually, Finance Department staff will identify any
accounts receivable that meet the criteria for designation as an _
uncollectible account. A request for write-off of accounts
receivable will be prepared and submitted to the Finance Treasury
Manager.
The request for write-off of accounts receivable must include an
itemized list of the uncollectible accounts to be written off
specifying the following:
Resolution No. 2017-079
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COUNCIL POLICY
CITY OF CHULA VISTA
SUBJECT: UNCOLLECTIBLE ACCOUNTS
POLICY
EFFECTIVE
RECEIVABLE WRITE-OFF POLICY
NU_�ER
DATE
PAGE
220-08
05/23/2017
3 of 4
ADOPTED BY: Resolution No. 2017-079
DATED: 5/23/2017
AMENDED BY: Resolution No. (date of resolution)
• Account number of the receivable in the City's accounting
system;
• Debtor name;
• Account balance;
• Due date;
• Brief description of receivable type; and
• Criteria under which the account was deemed uncollectible.
For each uncollectible account, documentation must be attached to
the request to supportthe uncollectible account designation and
substantiate that collection procedures have been followed and
due diligence exercised in the collection efforts. Due diligence
documentation could include:
• Invoices, reminder letters, or collection letters (and any
documentation that are -returned as undeliverable, no known
forwarding address, etc.);
• Information from the California Department of Corporations;
• Referral to the City's collection agency;
• Bankruptcy claim and any related plan or discharge;
• Judgment awarded by a court or settlement agreement;
• Notice of discontinuation of services.
III. APPROVAL AUTHORITY: Upon receipt of a request for write-off of
accounts receivable, the Finance Treasury Manager will review the request to
ensure that it is complete and that all necessary due diligence documentation
has been attached. Once the review has been completed, the qualified
accounts to be written -off will be presented to the appropriate authorizing
Resolution No. 2017-079
D___ 'KT_ L
COUNCIL POLICY
CITY OF CHULA VISTA
SUBJECT: UNCOLLECTIBLE ACCOUNTS
POLICY
EFFECTIVE
RECEIVABLE WRITE-OFF POLICY
NUMBER
DATE
PAGE
220-08
05/23/2017
4 of 4
ADOPTED BY: Resolution No. 2017-079
DATED: 5/23/2017
AMENDED BY: Resolution No. (date of resolution)
official for approval:
• The Director of Finance is authorized to approve the write-off of
accounts with an outstanding balance due of up to $25,000;
• The City Manager is authorized to approve -the write-off of accounts
with an outstanding balance in excess of $25,000 and up to
$100,000;
• Write-off of accounts with an outstanding balance due in excess of
$100,000 must be approved by action of the City Council.
FORMS
Attachment 1: Uncollectible Accounts Receivable Debt Write -Off Request
Form