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Policies and Procedures

Procedure 503.2 – Writing off Uncollectible Accounts

Effective
January 23, 2004
Last Updated
June 29, 2015
Last Reviewed
June 29, 2015
Responsible University Officer
University Controller
Responsible Unit
Accounting Services

Procedure Statement

Accounts should be written off when all collection procedures, including those required by the Office of the Attorney General (OAG), have been conducted without results and management deems the accounts uncollectible.

Uncollectible accounts may be written off the University's financial accounting system and no longer recognized as collectible receivables for financial reporting purposes, but the legal obligation to pay the debt still remains. Accounts written off remain debts to the University until discharged by the OAG, University Legal Counsel or are collected.

In order for the accounts to be written off, a memorandum must be submitted to the University Controller. The memorandum should include the justification for the write-off, collection efforts made supported by account detail for approval and posting.

Accounts with balances of $10 or less may be written off without additional collection procedures if approved by management.

Accounts with balances of less than $50 which have had no response from internal collections procedures outline in Procedure 503.1 may be written off if approved by management.

For accounts $50 or greater, additional collection procedures must be followed, including referral to the Office of Attorney General, referral to collection agencies and the Setoff Debt Collection Act (SDOCA) – for at least one collection cycle – and the State Employees Debt Collection Act (SEDCA), if applicable. At six months after assignment to a collection agency, the debt may be considered for write-off (except for federal student loans). If, after twelve months after assignment to a collection agency, management determines that it is not cost-effective to consider pursuing the debt, a write-off may be considered.

A write-off of a debt does not remove the obligation of the debtor and is not discharged until authorized by law, the OAG or paid. Unless prohibited by law, written off accounts should continue to be submitted to SODCA.

The Office of the State Controller (OSC) requires that the reasons for writing off an account and compliance with this write-off policy/procedure must be adequately documented. Such documentation must be readily available for audit.

Consult with Cash Management for guidance on recording debt write-offs and maintaining SODCA submissions.

Interagency receivables (between the University and other N.C. state agencies) cannot be written off without OSC’s approval. If the University is unable to collect receivables from another state agency, the University should contact OSC’s Statewide Accounts Receivable Management Unit for assistance. The Controller (OSC) has the authority to process the interagency transactions that s/he considers necessary under the circumstances.

Federally-sponsored student loans should be written off and no longer considered a debt of the agency when assigned to the U.S. Department of Education or other applicable federal agency.

Establishing an Allowance for Doubtful Accounts

The dean, director or department chair is responsible for establishing an allowance for doubtful accounts to reflect the amount of accounts receivable that they estimate will be uncollectible. The establishment of an allowance ensures that the University’s receivables are not overstated for financial reporting purposes.

Given the unique nature of operations, the method of establishing an allowance for doubtful accounts is left to the division’s/department’s discretion. However, the estimated allowance should be based upon historical data or other pertinent information relative to the receivables in question. If a division or department needs guidance in establishing an allowance for doubtful accounts, the University Controller’s office should be contacted.

Forms and Instructions

  • 503.1rd – UNC Procedural Guidance on Collection of Past Due Accounts and Write-Offs, Section D

Related Data

North Carolina Office of State Controller - Statewide Accounts Receivable Program

General Statute 147-86.21 State agencies to collect Accounts receivable in accordance with statewide policies.

503.1 - Collecting Past Due Accounts Receivable

History

Revised:
June 29, 2015: Added information on collecting accounts and Related Data item.
July 1, 2010