HomeMy WebLinkAbout4.11 Write-offUncollectRec/CrDep
CITY CLERK
File # Cl.1[l1]~-~~
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AGENDA STATEMENT
CITY COUNCIL MEETING DATE: (March 4,1997)
SUBJECT:
~rite-off of Uncollectible Accounts Receivable and Credit Deposits
W -\.L repared By: Paul S. Rankin, Assistant City Manager)
1. Current Policy On Receivables
2. Resolution
3. Budget Change
EXHIBITS ATTACHED:
RECOMMENDATION:
Approve the Resolution Approving The Write-Off of
Uncollectible Accounts Receivable and the Budget Change
FINANCIAL STATEMENT: 11 Approval ofthis resolution would result in a net reduction in the
'1r' estimated year end contribution to the General Fund fund balance,
~ by $16,569.29. The net amount assumes that all deposits reported
below remain unclaimed.
DESCRIPTION: In 1993, the City Council adopted a policy related to the write-off of
receivable accounts (Exhibit 1). The policy requires City Council action on all amounts which exceed
$500. Although it is prudent to periodically purge uncollectible accounts receivable, this is the fIrst time
~ the 15 years as a City that items have been brought forth with a recommendation to write-off amounts
from the City fInancial records. Development of procedures to improve the follow-up and handling of
accounts receivable was a goal established in the 1994 Goals and Objectives. The procedures are now in
place and approval of this item will bring the City financial records into proper order.
In addition to the accounts receivable, there are also credit deposits carried on the City books and Staff
has been unable to locate the entity originally placing the deposit and there has been no contact from these
entities requesting a refund. The Government Code establishes a procedure, related to these dormant
funds. Staff has also consulted with the external auditors and they concur that the proposed plan of action
is prudent and recommended at this time.
As stated this is the first time an item has been brought to the City Council recommending a write-off of
accounts. In the future it is expected that this would occur on a periodic basis and not more than once per
year. Resolution No. 93-93 authorizes the write-off of receivables exceeding $500 based upon the
recommendation of Staff and with the approval of City Council. A reasonable effort has been made by
Staff on all of the receivable accounts listed below to obtain payment. In some cases the amounts may
relate to monies owed from applicants who have filed bankruptcy. As noted, in all cases the amounts
under consideration were generated more than 4 years ago. The accounts below represent the accounts
that Staff recommends to be written off, all of which relate to work performed processing developments in
pnor years:
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COPIES TO:
ITEM NO. -----4...n
g:\agenda\agwrtoff
Account Number
Date of Last Work
Performed'On Account
Amount of
Receivable
to Write-off
001-1000-333-012
001-1000-333-042
001-1000-333-080
001-1000-333-104
001-1000-333-167
001-1000-333-221
001-1000-333-234
001-1000-333-254
March 1988
November 1985
December 1985
March 1987
May 1988
September 1991
January 1991
January 1993
1,354.56
1,203.12
3,959.58
3,124.23
937.62
9,371.63
2,184.43
5,211.80
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Total Developer
Processing Receivables
to Write-off
27,346.97
Staff has implemented measures to monitor account balances and a multi - part Developer Processing
Agreement has been developed. These measures should reduce the exposure to future losses from
uncollectible balances. It should be noted that when compared to the total revenues collected over the
past 15 years for Development Processing, that the amount to be written off is a very small percentage.
Since the balances currently under consideration have been generated in prior years Staff recommends
that the City Council adopt a Budget amendment, and the write-off will be recorded in a non-departmental
account. As reported with the Mid-Year Financial Report the amount can be covered from unappropriated
reserves, since 1996/97 General Fund Revenues are expected to exceed expenses. .'
Miscellaneous Accounts Receivable
In addition to the Development Processing Accounts the City also bills for Miscellaneous Accounts
Receivable. These typically involve items such as public damage and/or Driving Under Influence (Dill)
Emergency Response Charges. In some cases outstanding balances are in excess of the $500 limit for
Staff to write them off. The City has typically attempted collection by sending at least 3 letters and
invoices to the last known address. In some cases the City is unable to obtain the current address. Unlike
the receivables discussed previously, the City has not previously recorded revenues or shown these
accounts as part of the fmancial reports. Therefore, the writeoff of these accounts will have no impact on
fund balance. In order to keep the accounts receivable records in good order and to limit the number of
stale accounts, Staff also recommends that the following accounts be written off:
Type of Public Damage
Date of Last Work
Performed On Account
Amount of
Receivable
to Write-off
Street Light Knockdown
Street Light Knockdown
Irrigation System Damage
March 1987
May 1991
March 1986
2,567.84
3,538.63
543.60
Total Public Damage
Receivables to Write-off
(With no impact on fund balance)
.
6,650.07
- "),-
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Unclaimed Deposits
In some cases the City obtains cash deposits to be used as security for performance of certain work and /
or to be applied against the development processing cost. An effort has been made by Staff to contact the
original depositors on all of the deposit accounts listed below. It is also prudent on an annual basis to
. write-off unclaimed deposit accounts. These unclaimed monies would be recorded as miscellaneous
revenue in the General Fund. All accounts have gone unclaimed for more than 3 years.
Account Number
Date of Last
Activity On
Account
Amount of
Deposit to
Write-Off
001-1000-333-028
001-1000-333-039
001-1000-333-054
001-1000-333-177
001-1000-332-002
1984
1985
1991
1990
1993
1,800.00
335.00
1,095.40
2,320.90
5,226.38
Total Deposits to Write-off
to Miscellaneous Revenue
10,777.68
Government Code Section 50050 states that "... money not the property of a local agency which remains
unclaimed...for three years is the property of the local agency... At any time after the three year period
the treasurer of the local agency may cause a notice to be published once a week for two successive weeks
in a newspaper of general circulation published in the local agency." Staff plans to proceed with a public
. notice which meets the requirements of the law.
If the deposits remain unclaimed after the two week period, Staff will record the items as revenue in the
General Fund. This will reduce the impact by 40% of the necessary allowance for the uncollectible
accounts receivable (i.e. $27,346.97 in development processing uncollectible accounts will be offset by
$10,777.68 in unclaimed funds).
RECOMMENDATION ~,
Staff recommends that the City Council adopt the attached resolution and budget change form, which will
allow Staff to proceed with recording the appropriate write-off. Further, Staff will proceed with the
preparation of the necessary notices to allow for any unclaimed funds to be deposited into the City
General Fund account.
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RESOLUTION NO. 93 - 93
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
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Establishing Procedures For write-Off of
Uncollectible Accounts Receivable
WHEREAS, it is prudent for the City to have established procedures to
purge stale accounts receivable items from the financial records; and
WHEREAS, in accordance with financial policies it shall be the intent
of the City to undertake reasonable efforts to seCure payment of
outstanding debts; and
WHEREAS, accounts may become uncollectible due to circumstances such
as, but not limited to: the statute of limitations for a legal proceeding
has been exceeded; bankruptcy has been filed; the City is unsuccessful in
locating the debtor; the cost of collection exceeds the amount owed, etc.;
and
WHEREAS, to reduce the potential number of accounts which become
uncollectible, the City Council has authorized the use of a collection
Jency;
WHEREAS, it is desirous to have procedures, which allow City Staff to
administratively dispose of accounts, which are less than $500; and
WHEREAS, City Council approval would be required for all amounts over
$500, which are proposed to be written off.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin
does hereby adopt the following procedures for the handling of accounts
receivable which are deemed by City Staff to be uncollectible:
PROCEDURE
These procedures establish the approval required to write - off
uncollectible accounts from the City's financial records. A reasonable
effort shall be made by the City to obtain payment prior to writing off
past due amounts. City Staff shall maintain records "of such efforts.
1. Individual accounts of $200 and less may be written off upon approval
of the Assistant City Manager/Administrative Services Director.
2. Individual accounts of more than $200 and less than $500, may be
written off based upon the recommendation of the Assistant City Manager/
"1ministrative Services Director, and-with the approval of the City
.imager. ". "__ _ ',.,-
3. Individual accounts over,$500 may be writt~nt~:fc~~;ego~~~~l~he
recommendation of Staff and w~th the approva 0
PASSED, APPROVED AND ADOPTED this 26th day of July, 1993.
AYES: Councilmembers Burton, Houston, Howard, Moffatt, and
Mayor Snyder
NOES:
None
ABSENT:
None
RESOLUTION NO. - 97
A RESOLUTION OF THE CITY COUNCn.
OF THE CITY OF DUBLIN
*********
APPROVlNG THE WRITE-OFF OF
UNCOLLECTffiLEACCOUNTSRECEIVABLEFORTHE
FISCAL YEAR ENDED JUNE 30, 1996
WHEREAS, the City of Dublin has certain delinquent receivable accounts where collection efforts have
been exhausted; and
WHEREAS, accounts may become uncollectible due to circumstances such as, but not limited to; the
statute of limitations for a legal proceeding has been exceeded; bankruptcy has been filed; the City is
unsuccessful in locating the debtor; the cost of collection exceeds the amount owed, etc.; and
WHEREAS, it would appear appropriate for these receivable accounts to be written off; and
WHEREAS, the above-described action within the City accounting records does not constitute a release of
any debtor for liability for payment of any amount; and
NOW, THEREFORE, BE IT RESOLVED that the City Manager is hereby authorized to writeoff
uncollectible receivable accounts, as described in a Staff Report presented March 4, 1997 and to record
this amount as a bad debts expense.
PASSED, APPROVED AND ADOPTED this 4th day of March, 1997.
AYES:
NOES:
ABSENT:
ABSTAIN:
A TIEST:
Mayor
City Clerk
G:\AGENDA\RESOS\ARWRIT02.DOC
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CITY OF DUBLIN
BUDGET CHANGE FORM
CHANGE FORM #
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New Appropriations (City Council Approval Required):
Budget Transfers:
~x~ From Unappropriated Reserves From Budgeted Contingent Reserve (1080~799.000)
Within Same Department Activity
From New Revenues Between Departments (City Council Approval Required)
Other
?H@\.~~~::IlJB;I.ftm'P.;mWMtl:~IMIt1:Y..Wf!Ifl1'tR_I$.If$mQltt;l*~<<~BilTIIW&if~g_MI;m
Name: Name: General Fund Non-Departmental - Misc.
Expense (Write-Off)
Account #:
$27,350
Name:
Account # :00 1-1 080-798-000
Name:
AccoWlt #:
Name:
Account #:
Name:
AccoWlt #:
Account #:
City Manager:
Date:
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Signature
REASON FOR BUDGET CHANGE ENTRY: The City has reviewed uncollectible balances, and In
accordance with adopted policies the City Council may authorize the write-off of balances In excess of $500.
The balances being written off relate to costs incurred from 1988 through 1993. The item was presented to the
City Council on March 4, 1997.
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Mayor: Date:
Signature
Posted By:
Date:
Signature
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EXHIBIT 3
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