Bad Debt Write Off Procedure

Effective

December 13, 2007

Category(ies)

Finance and Administration

Approval(s)

President and Vice Presidents: January 6, 2007 Signature (pdf)

Purpose: The Bad Debt Write-off procedures specify steps that must be taken to designate an account as uncollectible and to remove such accounts from the general ledger account fund balance (e.g. write it off).

Scope: This procedure applies to all accounts receivable at The Evergreen State College (TESC). The Business Services office has primary responsibility for ensuring compliance with these procedures.

Authority:

Accounting procedures for collection activities are covered in OFM 85.54.50 and "The Evergreen State College Student Accounts Collection Procedures".

Accounting procedures for write-offs of uncollectible receivables is covered in OFM 85.54.60f and this document.

Definitions:

Accounts Receivable - Money owed to The Evergreen State College for goods or services provided to students and/or other parties.

Student Accounts - Accounts containing charges and payments for normal student activity, such as tuition and fee's, student housing charges, childcare, meal plans, and other miscellaneous items. These accounts are also used for faculty and staff for purchase of similar services (such as meal plans or childcare).

Non-student Accounts - All other accounts receivable for services provided by non community members, such as conference services, tuition guarantees, advertising, and equipment charges.

Past Due - Includes any debt that has not been paid by the specified due date.

Procedure Detail:

Once an account receivable has been created, it becomes subject to The Evergreen State College "Accounts Receivable Collection Procedures". The Student Accounts office is responsible for maintaining all accounts receivable subsidiary ledgers at TESC and managing the collection process for over due accounts.

The Student Account office will review outstanding receivables quarterly, and if the amount is material, they will determine which accounts are considered uncollectible and write them off. Otherwise all accounts determined to be uncollectible will be written off annually.

An account is determined to be uncollectible if it meets one or more of the following criteria:

1. Evergreen's collection procedures have been followed and the account remains unpaid.
2. The debtor cannot be located, nor any of the debtor's assets.
3. The debtor has no assets and there is no expectation they will have any in the future.
4. The debt is disputed and the college has insufficient documentation to pursue collection efforts.
5. The debt is discharged in bankruptcy.
6. The debtor has died and there is no known estate or guarantor.
7. It is determined that it is not cost effective to continue collection efforts.

Only the Student Accounts office is authorized to determine if an account is uncollectible and to write-off the associated charges. For accounting and financial reporting purposes, write-offs of uncollectible receivables are to be made against the appropriate allowance or revenue accounts. Adjustments to the allowance accounts are done annually and are based on a 3-year average of write off amounts or other appropriate basis as determined by the Student Accounts Department.

Transactions to write off charges on a student account are handled through a Student Account Entry document. Supporting documentation for a write-off will at a minimum include a listing of each ID, name, charge detail code, description of charge, original charge amount and the balance being written off. This listing will be reviewed and signed by the Director of Business Services prior to entry.

Management of individual Departments shall promptly review all accounts written off in accordance with the following guidelines:

1. Write-off of amounts up to $5,000 will be approved by the Director of Business Services. For accounts between $1,000 and $5,000 an individual form will be written up describing the debt, collection procedures followed, and action taken to support the write off.
2. Write-off of amounts over $5,000 will be submitted to the Attorney General's Office for review and approval. These requests must be accompanied by documentation of collection procedures followed and the reason the account was written off. Accounts not approved for write-off by the Attorney General will be returned and the write-off entries will be reversed.

Accounts that have had a write-off will be flagged as having had an uncollectible balance in the past. Any future transactions for those account holders, such as registration or transcripts, will be denied until the uncollectible balance is paid in full. However, this provision will not apply if the debt is fully discharged in bankruptcy or if the account was disputed and TESC has insufficient documentation to pursue collections.