UAMS ADMINISTRATIVE GUIDE

NUMBER: 8.5.02
DATE: 10/15/96
REVISION:

SECTION: FINANCE DEPARTMENT
AREA: FINANCIAL REPORTING
SUBJECT: ABATEMENT OF UNCOLLECTIBLE ACCOUNTS RECEIVABLE

PURPOSE

The purpose of this policy is to inform departments within the University of Arkansas for Medical Sciences (UAMS) of the procedures to follow for the abatement of uncollectible accounts receivable. Prudent fiscal policy dictates that uncollectible accounts be written off in a timely fashion and in a manner consistent with State law. Therefore, UAMS will request abatement of all uncollectible accounts on an annual basis.

PROCEDURE

  1. Billing entities will make every effort to diligently and actively collect the balances. Diligently and actively pursuing the collection of these accounts may include, but is not limited to:
  1. Contacting debtor by phone or letter within a reasonable time after an account is deemed delinquent; or
  2. Referring an account to a licensed collection agency or an attorney for collection with remuneration not exceeding fifty percent (50%) for accounts of $500.00 or less and not exceeding thirty-three and one-third percent (33 1/3%) for accounts in excess of $500.00, except that if an agency is unable to procure the services of a collection agency or attorney for the collection of any account in excess of five hundred dollars ($500.00) or a fee of one-third (1/3) of the amount recovered as authorized herein, the agency may report such a fact to the Legislative Joint Auditing Committee and the Committee may authorize the agency to pay a higher fee for collecting such accounts but not to exceed fifty percent (50%); or
  3. Pursuing set-off of debt against income tax refunds allowed by Act 372 of 1983 as amended; or
  4. Pursuing all other available means of collection if deemed feasible and economically justifiable by the state Agency.
  1. Once the appropriate collection vehicles are exhausted, the billing entity may declare the debt uncollectible and request abatement of the receivable.
  2. Requests for abatement of receivables must be directed to the Controller in written form and shall include the following information: (1) a statement certifying that all appropriate collection efforts have been exhausted, a summary stating the total number and the total value of accounts to be abated, and (2) a detailed listing of each account showing the name of the debtor, the balance uncollectible and the date that the balance was deemed uncollectible.
  3. The Controller will move the balances from Accounts Receivable to Accounts Receivable Write-Off (object 139000) and maintain the detail until permission to abate is received.
  4. Prior to the end of each fiscal year, UAMS will request the approval of the University of Arkansas Board of Trustees and the Chief Fiscal Officer of the State of Arkansas to abate the uncollectible receivables.
  5. Upon approval to abate the uncollectible receivables, the Controller will remove the amount from Accounts Receivable Write-Off and forward a copy of the approved request to the appropriate departments.