Accounting for Uncollectible Accounts (APS 027)

Processing Uncollectible Receivables in USAS

Revenue Receivables

The revenue-generating activities of an agency will frequently result in receivables on the agency’s accounting records. If the agency arrives at the conclusion that any of the amounts so established cannot be collected using the criteria in the Collectible or Uncollectible section of this fiscal policy and procedure (FPP), reduce the amount of the receivable. The USAS transaction entry to specifically write off a revenue receivable bad debt, regardless of appropriation year (AY), using document type U, batch type 5 is:

The general ledger account debited (5100 – GAAP Revenue Offset) is incorporated in the transaction code. The general ledger account credited is entered during transaction entry and is the receivable account to be decreased.

Non-Revenue Receivables

An example of a non-revenue receivable would be a receivable resulting from an overpayment to a vendor. The USAS entry to specifically write off a non-revenue receivable bad debt is:

The general ledger account debited (5600 – GAAP Expenditure Offset) is incorporated in the transaction code. The general ledger account credited is entered during transaction entry and is the receivable account to be decreased. The comptroller object code (7868 – Uncollectible Debt) is to be used for governmental transactions.

An agency may not eliminate a revenue receivable by writing it off as an expenditure because, according to GAAP, it does not represent an expenditure of current financial resources during the period. Non-revenue receivables, however, are typically expenditures or items that can be justified as expenditures that reduce appropriations; thus, decreasing these receivables by reclassifying them to expenditures is appropriate.

Petty Cash and Travel Allowances

Petty cash and travel advances made from petty cash or travel advance accounts are not considered receivables for reporting purposes because these are imprest balances. Write-offs of petty, imprest and travel cash amounts must be made by a cash reimbursement transaction. Complete all other write-off procedures for uncollectible accounts, including proper documentation and state auditor approval.

Proprietary Fund Receivables

For proprietary funds, any type of receivable can be written off directly. The USAS entry for this transaction is: