HomeMy WebLinkAbout1992-05-11 92-254 ORDERDane 5-11-92 •'v„ Item No. 92-256
• Approvfsg Adopucan of an Acmwte N ivable
Inam/Subject: lblicy as an elaoas[ of Uc C£ty's 37Snarc5a1 1?iacer5¢ee
oval
Responsible Department: Finance nav
Commentary:
At last week's Finurcss Colmrtl a nesting, staff reviawed saitT t Firon®
Committee a proposed accoimis policy, adifch vnsld M vs a part of the
City's overall Finacial '1§a attached policy casttisna the
vazious dut aM reslnngibilitias of Ute Clty's various Ent prlsa finds and
depazuoaaslte in Uc ares of acrowRa xxaivable ad establish reressary
pooseachsose for sgvsimrisg and workings Isnsble acoamta.
As ycu are spore, this £a as axes wdticit the City less spent a significant spoon
Of typo on w¢ tlx last six to sdre nmtbs and sees m arm of weakreas which
wen called to our atta¢fon by our outside aditone.
Apinxwal of this policy by the full Council would ellva mos; issuance to Use
various ammnn staff mubers a d would allw me to constinm to work tarmrd
implarentinq a more mmaiatmtt aM unSfonn policy on bmtlliag these acecmfs.
_ p l} peparn nt /lead
Manager's Comments:
c,
'r U
Orymvueger
Associated Iniormati r po
Budget Approval:
Finance oiK
Legal Approval:
crysone;mr urVu
Intro uced Fqr
Passage
❑ First Reading Ppge_of_
❑Referral
Assigned to Councilor gaidacci 92-254
tt y 11,1992
CITY OF BANGOR
(TITLE.) MrDPr,-_--..........AppmjS Adoptim.. of an. A.ecvvau.l issble. Palicyas
an eless t of the City's Firtvcial 1>tacedtale 19arwal
By City CouneB of 4e CRY ofBanw;
ORDERED.
TMT
the attached policy (City of ft n , Aoconrtts leceiv le Policy
StatOmnt) is hei by adopted as an ele� of the City's overall Financial
P1CCeduiav lem�al.
In city Council May 11,1992
Passed
92-254
ORDER
Title,
Approving Adoption of an Accounts
tieeei hn'le'poiiey.'se 'el'emene oi' bne "
City's financial procedures manual.
L Aw�N�
CO1NCi11M1]n
City of Bangor 92-254
lecamts ieceivahae Fblicy Statement
Purpose:
The purpose of this policy statement is to provide gufdensa to the various
deavments and funds of the City of Bangor fn extending credit through
acmats rxafvable and identifying those funis or departments which have
authority in aaiaging the city's receivables. _
por purposos of this policy statement, the Schmol Superimardent, Schcol
mmsinass Manager or SupalntmdaR'e designee shall exercise the Bene
respaaibiltt[os for the School Daparement as are exercised by the Finance
Direolnr on behalf of the city departmeraz.
Due to the volure of transactions and appointment of a Financial xmager
at the Airport, the Airport Dep rarent say urease certain emoeptiora to
Portions; f thisv___�t with the overall intent of Hie policy
ir— w approval
Policy for Exte,aim of Credit:
It shall be the policy of the City of Begur to mMaid credit through
accounts receivable on an as re basis for masonaDle business opera-
tfae only. mere possible and practical the efty will require paywent
for services when they are re:tlezed. The city's Cameral Fund depsvmehts
will give particular attention to requiring payaent when services are
radexal to redox the risk of lost revenues and the transfer of the cost
of services to the Property taxpayers because of nxpayma¢.
It shall be the policy of the City of Bangor's enterprise fnrffi to extand
credit through aruwts receivable prudently and reasonably, for the type
of i mIrstry or service in which the city is engaged. ' enterlaise funis
will also tate Ardent steps to reduce the risk of nonpWment and last
revennes by requiring payment for services received when xaasonsble.
'Ilene funds which are not yet self-supporting shall be especially careful
to sanitize the risk of transfer the cost of service to prgp q taxpay-
ers by nm aysent.
Initfatfwn and heta Inlet:
p4arerel Fund departments will be realxnsible for the preparation of the
accounts receivable data input sheet, but sepal ingot will he Imfeaed
by the Finene De artuout, wart, certain exceptions. Corrections and ad-
justmrcs of General Fad raetvablos will be meds by the Finance
Bepument upon rest and verification of the correction or adjustment
by the initiating depmtaent and approval of the department hid, director-
oc over rnspmmeible Eason a 3 HmeFtrerre pepazbrnR. Clerical
positions do not caatitute, rest nsible parsons for approval. (See:
6NAPfF S).
Enterprise funds will be alimool access to data ingot of their xaeivablos
and cnrrationa of halarcaa through payrets transfers or ¢alit neaps.
92-25k .
each coaecrion will have sqvo ti m � to prcvids a coglete
audit trail aM wlll be forxanlol to tM1a Rveriiel Adi.tor for navies ann
approval. Dxrwentation to au om a coma nmet bac approved by tAe
dsps tlixelf r or other xeepmmi6le perm: in W dap� a i not
by a clerical positfon. xll cba in talancr8 thrwgh corcectials will
xxcur�nticly a Elect the co m ion of euro error, ard will rot he used to
charge off without mrthnri Uon. (See: SAHI,fs 1).
T Airport u> <.� will corcirwe to u such fonre and iMemaz
coni o� consistent with the invent of iwis policy as am waavtly in
use. Any cbm R in pmcednms or foam usai by iln Alrpoct Da...,..m.t
will be approved by the Ffnanw Dire: and apperned to the pvoor
nw(maz.
$ou[re Nnvfenffi:
in azl instances W dspnmerrc providing tin goo& or eerviass ahall ba
maipreible
for accurately a adequately d otinq ils value of the
services provided by Tin city, a assuring the reliability of the bill-
fm3• Spmfaz atterrcfm be paid to aasum that the source dp�ments
winch support Un deet ern C copiers aM emanate shwld Hre City be m-
quimd to pursue a legal, claim.
All ewers docwvRaUon will be E tiatug dc.vrrman
until the ch� is paid or sort on for collect work. Anwally, The
dximentatiw for paid fmofrss for audit :nom+:^^ az
fu� mfe . Sack dovrentatfm ahnuhf rpt be destroyed, eumept
according to the city's records rebsafon policy and state's mmricfpal
retards mtakion roles and regunations.
the Finazns Depatona t w111 act on behalf of. the =acig 1 deparhients for
tracking payments and collect ' w .apt for the enterprise funs am
audrrlarms billings. r*t m funs will be meporsible for their am
colt 2Ew activity. Fath i gating dep.rpt will m1ENain a Elle for
each billing sufficient to support tis debt and will provide that file to
Fimace when requ¢tal. Dep3rtoaits will be mapwiaible for ]mowing what
receivables they lm iesaedr which of thea is delirguent eM s spwg .
credit to amourrs raeivable customem win am not paying, or wtn ere
almw payem.
Good hvsiresa evazuatim wi11 dictate when to Teumtnate the cmlit
mletionehip.
Hrc rpriae funffi are respans le for i acking their accounts ani delinry
cyr un takf:g all reasoiable efforts to collect the debt. Fefom infer-
ring a delinquent ao M to either W Ffnarcc m Iegil departaanis for
mllsotlon activity the i tiatLV dcw.irront Haat bml g to9eUw.r all of
the sourm docwrenter:...sun a rsprd�of mllectfw artfvity. (Seas
SP SLB 3).
92-254 I(0'
The rttvrl of collation activity will L ude pies of ataterenis,
letters of eorxespo deae, ratunad maflai, reeds of telepf calls aha
of contact with tFe cusbm . Mae Pquest for
loyal/Coll� s tivfty almg w tb Un custaoer file and the Aecortl of
colleSon Activlty will be forweNal to the pbvwxe nizFsmr £or
evaluatirn, and refma:al to eitl the Collection Clerk, Iagal Oepaxtoant
o[M1x action. (Sea: SM1Pf& 4).
with psdor apprvml of the City Manager, the Airport Dep� may malm
xafenals dirsctlY to the legal xw.w.e.,. with crorcurxont ratification w
the Ffnanxe 0freetor.
Departments which say need t� or assist in collatfmx ba hj uea
can Hale asanxgaee is with the Finarce Ofzecmr, ar asaxge to attend a
collections seuu , vtim avaLlable.
aamfcipal depsrYments which deoeatrate pr eam with aleTiate dn:mosRa-
t an or clmr'9e off xpxieroe will be evaluata3 ra de ne the cause of
such pr ems. Emery effort lust be male m assure Fran the MK that
tle city is paid f� services its laovides.
xloaanse for ecvbtful Aavamts:
P nfs to be carried as Allwsrce for Ibubtful aacvmts shall be revisal
axd rav3 as part of the close of each fiscal }ear. ne amount casi i
as AlldenCe for Osibtfivl aavxrc wf11 refle t a cox ve approach to
valufxg accounts =aivable. Ospssvimrts wlll have d t i estnblish-
i.g t appvop. arms by:
1. raviead g the �irquent accents issued thmao their
offices;
2. dMe.m'n' � which asmaK are:
a. in benkrupbc pedirg discbaz or dish=d in p k_
rvptry and whether a proof of claim was filed with its bm*-
rvptcy ocurt, or,
b. doubtful due to refusal m pay, inability to pay, irson
rest actlrxs or other reasras;
3. assuring that ro alditi c t fs pea tte� Gxe accowrc
without goad cause.
7be Allonerce for Wubtful aaamt will be established as the value of:
1. all 120 day aovumt balauws
2. one half the value of 90 day amn¢s ani
3. all aosimfa in ballooptc or i Ufiai as doubtful which
are not otherwise acmuniai for in the 120 day s 90 day accounts. (Seer
SAMPIE 2). vas: rc above � below ilia inlicatad value maybe made on
raamerclation aha xplaratiax of the depsrVvaxt. bold.
92-254 1-1.
11D Fepoxt of Dadm2nl Pnrnmts will be filed by the depachnet with the
Finarce Department to assure that all doubtfinl accuunlos have Leen
reviev . Dap� axe mapaaible for assure that doubtful arcamts
are rot granted arty additi cxslft, uNess an affirmative decision to
ccotimne gran" credit is nada by the department head ani affinnai by
the FiMnce DixecKnr.
Charge-offs:
The Finanre Director shall have tha final autl ¢ity for charging -off utsol-
lectfblec. The initiati.g depa=ent shall forward tte file wiN original
material and a ravni of collection activity. The initiating
departneoR will alas provide a stataomt as to the nssnons the debt is
uncollectible. M deputoaR or fund may ch puff airy tlebt osi the city
'that written approval of the Finance Duector. (Seen Snta'fs 5).
Issuance of S nawenta:
Monthly star®ercs will be issued ttwc gh the Treasur¢"s Office vhfch
will not be reepamible for "pulling" stat®arca. If it is riappropciats
to prepare azul forvaN a am¢hly statanent for an account, then a "flag
will be adled to the costcver file to indicate that no statenent should be
issue.
Fath deParbmnnt is respunsible for assuring that a cam lete address in
aadonrence with postal regulations is on file for its accounts receivable
custamers. is cestaoer file skald be with an address, or with an
incomplete addraes. FL y, a flag will be added for formign �s
custa ' so that sorting for mailing and postage laupwea can be
attrnpiishai.
Timing of Receivables:
In carnfonmuce with Gaw aljy Accepnsi hacmnRbS Frinciluls for nalifiai
smnal mann ng, evamnes will be recogcised st t)D tine that the goods
or setvbces sre provided, not a: the time payment is zaselved. the
purpose Of weintaLming a naceivahle file fs to track amounts that are due
Use city, and to match up rcw ass with in thelr proper time
penieds. The account receivable system is not a mDans of inflating reve-
nues fining CFD fiscal year k ng that payment is not likely to be re-
ceived.
92-254 1$'
m not report Bal Wbt ro the granmc agacy {SECIPS as an expen92 of a
net reduction of xemv>es. Hscovexy of dlal tett thxwgh a grant is a
disallox cost.
r.'tar.-arsssie^r�.irrout.W:nm�+..�.rn:sfrrssrrsc
! cralited as Miscellaneous � for $100.00 with a $100.00
accounts reoaxv cle. At fiscal year eni Its account is delirgnarcy anal is
120 days ovea5e. The $100.00 is debited from the � account and a
credit for $100.00 is suds to the Alloxmare for toubtful account,
therefore the year aid xevame ds reportM as zero, but the acmmrts re-
ceivable x®ai.a on the gem nal ledger. The offsetting credit in the
Mecums for toubtful account agates the account reoaI ble 6slaus
thereby rendering a zero asset.
If the asst is paid in to following fiscal year, the $100.00 would be
xe-credited to the Miaccllmmus � in the following fiscal lsar
Mxn the Allamce for tcvbtful account is meralatal.
the purpcee of mmitoru the acca rte receivables and establishing the
Allowance for tanbtful account is first, to assure payment to Le city for
services redarsi, and sewM, to prevent the overstetamt of revemrea
ani zeceivahles. Nbniterdng the account balances will pm a backlog
of unpaid receivables being carried on the city's tools as assets w
there is little likelileod of collecting ibaa. Second, the loss of
revenue sMuld be matched up as close as possible with the time pariod
Cohan the debt was created a not years after the fact.
Any department having a question abort the policy of its application in a
spscdfdc lnetaee shorld contact the Fiance Director. All foms will be
preemdarai atl prepared in triplicate. The sendim dep.y.�ry will
retain the last copy and fcrwert the original and sa:od oipy. she
original Copy will rem n with the transaction record of the file, and the
approval secsd copy xetmsi to the sedu department. ' apyuovod
send copy will be the, sandig dspa ent's acioiowlerkymrnc that the
request was granted, and that the department is relieved of fu tl�
xespoy regooty fox xcwm. Ftvn plat b rive l a l dopa rot may ba sent
co vac rely le en eccrnat starve update by the legal dgar4oaR or the
cro11aY1w clerk.
effa w ate:
store policies will take effect when algaved by the City Ceuail ani may
be amended as n #d. All forms a prvgraffdng eb r will be provided
as scon as possible. 0sfarmats will retain respomible for the ooWc[
Of this policy arch its application in their issuarce anal collection of
accounts xe exMcle.aom by dspam s for ivQmv�nte should
be brought formrd forcwaitleretion sol future adoption. dda Firance
Director stall have authority to amded Luna policy ad pxoceAne as
needed.
92-254 Jd`
&M PL6 1
City of Ba:rAr
marymt fox Kwimt Coxrectiom
DBparbnanti Dare:
I Minty rep est that the follw eccmnta raxdvable be corrected for
the reasms give::
Nsf i Name Irnoice vrvolce dJerECcion limen.
!Caterer mmber [iimibec a to dbgsested
+ Lvrmee Mlarice
() decrease bslarca
dUtal Gffiec[iane AxNested $
I hereby oartify that m the beat of myl I ige the smmtej imoicm
eM balances ldatei above are irsoxrec[ for the reasons Stated. That the
wrx�d3on redueated will emsa Y reflect the airnmt dm the City of
ddmgor f the =burner. xttecdrrl are ec of the invoices.
Oelxixtmxlt idaa3
ntpry _ fbt sppoved
Piralca DirecYnx Date
I w lm� to acawrca laxeiveble file by:
modes made to &bslddary ledger files by: /
mtries made to (# rel ledger film by: %.
92-254 10.
SAMP E 2
City of Bangor
Report of Wubtful scoaurca
I kler�y xegn tlut t £ollohl g amimffi iecefventn b clesaified ae
hwUc£ui for tM zeaeone give::
WpiVa+nt. Held
rppx _Not Appu _ /
Fina:ce nlxectox ONe
B iea nestle Ta o,naim� Iadg fi by:
Flrtrla� vada Te Geral Ied� files by: /_.
92-254 ap.
City of Bvtgor
request for skmefer of Pile and
report o£ Callectioe Activity
Da[nihomt: fate•
I hereby raga that tie follavfng acrwnrt receivable file be trmeferxai
[oi ahlit:,..,.i wll Yim w leg l activity. Balaw is a xecoid of
activities undertaloal by this dcrw.a..o.n w seen.¢ pay of the debt
oed w the Cfty of Bangor. Licludai are ttm imms o£ these persona win
have first lend l ledge of by the
Cfty of Bangor to MUa this debt
CueTmer Ilam
Natmet Nuober
Invoice Invoice Immiw Activities _------
[haober �Le Anrnm[
TOT l ]?alanre $
I hereby cerilfy ilei w ths beat of W ] ledry the smart ,that this
ata mid the attaciwd dcourenta reflect the accuracy of the debt mai
w Hie City Of Bargor mid reflect He actiae which Hie city has
�K�>� to wllect the debt.
it Additiwlleotiw or Segal actiwa
are required to collect this debt, mtl it is xfed that this file aM
respvmibility for wllectimg this debt De transferral.
DeFartimt •.__� -
peEaziai to: Collectfac Clerk:
I Al Action amu -
Clam -Civil Corot:
Bankniptcy.
Otter'(Sp ify):
Approval_ Rrt Approved _ - /_
F� DtraYor trot
91_254 a�
� 4
City o£ Ba
Sm^eTy repot o£ request For
Ieg 1/0111ectrrn Activity � x Uple Accrnvrca
Cueta�er Nme Imroicc Irnoice Imolce reason
Waterer lfisber Kimber Lbfe Pmmn[
doral Palm>ces refexxed g
I ice' certify t t m Um beet of W I IedW the atmunts, immic�
aria lvlaricee listen a xe:P:ite eaaitional mllecifone = leg l action.
T 's deprooa t Tas rely all caoamuble a p t ams m allect W
mount osa. Anal tate mPiee
Of tM i+rvoicee, ani all rbnmence r31at-
ei
R'(NLFinaR Fla3d
referral m: W11� Clerk:
ia9a1 Potion 3m11 Claim Cost:
Civil wort:
0.an4ni s
OF)IEY (SpeCl£yi[
Apps _ [M Appxorai
Pi:urse Dixecmr mr
92-2 r�
'FM yOW
Oeperboent:, MY;
I hareW seq� that tTe follaatng acromma xxeivable he cbarga off as
rue:ollectibles £e th rename given:
I hecaby certify that to His bmt of w I ledge He a-.ornmtar irnoic�
ab balamea 1iaCed a ane arcvllectible for t xanema ataTad. 1Tet
He City of Hmgor a L s dmnmrc.+.• ] talm: all ieasmiable aM pcn_
daR atepe to mll ttia asnmt owsi. Att cM1etl ace cpig of Ue imoio-
esr mvl all d�nn�nts aelatai W Hrese accwnis and trartsactime
Mp1rzrn'etl _ etrt p{:pmued _ /
Finance Director psta
&:tries : ie to Pccamrs P ivable flle try:
bmtriee merle to 9 idiary Iadp flies byi
IDRriea verde to (iae Iadler files by: / .