University Policy on Allowance for Doubtful Accounts, Lecture notes of Finance

Download University Policy on Allowance for Doubtful Accounts and more Lecture notes Finance in PDF only on Docsity! 1 NUMBER: FINA 4.13 (NEW) SECTION: Administration and Finance SUBJECT: Allowance for Doubtful Accounts DATE: May 11, 2015 Policy for: All Campuses Procedure for: All Campuses Authorized by: Leslie Brunelli Issued by: University Finance – Bursar’s Office ______________________________________________________________________________ I. Policy In order to accurately recognize revenues on the University Financial Statements, the University must provide for the possibility that some present and future revenues may not be collectible. This policy will facilitate an accurate forecast of this allowance based on actual experience and relevant data. This policy applies to the recording of all revenue in the University’s financial records. This policy sets forth the university system wide procedures for establishing an allowance to handle removing uncollectable debts from university accounts. This policy also establishes the calendar for writing off this bad debt during the fiscal year. A. Definitions 1. In this instance “Doubtful Accounts” are defined as monies owed to the university with low probability of repayment. This category may include, but is not limited to tuition, fees, other charges, advances, etc. 2. The “Allowance” is a budgeted operating expense created by a campus/department with the expectation that some doubtful accounts exist in that department’s ledger. The required threshold for establishing an allowance is documented below. 3. The University department/campus responsible for the billing and administration of the accounts is the “Responsible Party” for the allowance for known or potentially uncollectible accounts. II. Procedure A. The university shall calculate an allowance of non-collectability for any revenues for which uncertainty exists about future collections. All campuses or University departments are required to allow for the non-collectability of revenues when the