Policies and Procedures
Procedure 503.2 – Writing off Uncollectible Accounts
January 23, 2004
July 1, 2010
Assistant Vice Chancellor & Controller
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 Records 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 Office of Attorney General (OAG) or are collected.
In order for the accounts to be written off the University's Financial Records System (FRS), 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 which had no response from past due or demand letters, and are $25.00 or less may be written off. Accounts in amounts over $25.00 should follow the procedure for collecting past due accounts receivable before a write off can occur.
Accounts past due from individuals or vendors must be submitted to the Department of Revenue for setoff debt proceedings at least once prior to write off. After write off, these accounts continue to be tracked by the Department of Revenue for debt setoff proceedings.
The University is not required to obtain approval from the OAG to write off uncollectible accounts. However, Office of the State Controller (OSC) requires that the reasons for writing off an account and compliance with the University’s write-off policy must be adequately documented. Such documentation must be readily available for audit.
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
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
July 1, 2010