STATE OF CONNECTICUT
THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MEMORANDUM NO. 2000-15
March 31, 2000
TO THE HEADS OF ALL STATE AGENCIES
||Chief Administrative and Fiscal Officers, Business Managers, and
Payroll and Personnel Officers
||Recommended Practice for the Management of Receivables
- These attached guidelines provide an overview of the policies for recognizing,
measuring, reporting and collecting receivables.
- These guidelines will be included in the next revision of the State Accounting Manual.
- Please direct questions to:
- Office of the State Comptroller
- Policy Services Division at (860) 702-3440 or
- Office of the State Comptroller
- Accounting Services Division at (860) 702-3378
OFFICE OF THE STATE COMPTROLLER
Management of Receivables
Accounts receivable records should be accurate, complete, and maintained in a manner to
indicate the length of time the debt has been outstanding. This practice establishes
policies and procedures for all state agencies in the management and collection of
receivables. For clarity, these policies and procedures have been separated into three
sections: (I) Accounting for Receivables - defines and classifies receivables; (II)
Agency Procedures - establishes procedures for collecting delinquent accounts,
obtaining approval to write off accounts, and reporting receivable balances and
transactions to the State Comptroller's Office, Accounting Services Division; and
(III) Terminology - defines important terms used in these procedures.
The policies and procedures contained herein are in accordance with the following:
General Statutes 3-39a, 4a-12, 13a-166; Public Act 98-204; Public Act 99-2; and the State
I. Accounting for Receivables
- A. General: In general, the term
"receivables" includes all claims held against others for future receipts of
monies, goods and services. In accounting, however, this term is used in a more
restrictive sense to indicate claims, which have been billed and are expected to be
collected in monies. The term "receivables" includes taxes receivable, amounts
due from the federal government, from political subdivisions, from other funds, from other
agencies, and such other amounts which come due as a result of regular business
- B. Taxes Receivable: Taxes are not considered as receivables until a
determination is made that the tax is actually due, but has not yet been paid. Therefore,
under the classification of "Taxes Receivable", the following may be found:
- 1.Taxes under litigation, pending court decision.
- 2. Amounts erroneously underpaid by taxpayers that are expected to be
3. Amounts reported due from the taxpayer, but not yet paid.
In all of the instances cited above, documentation of the receivables must be available
before the transaction can be entered in the agency's books of accounts.
C. Amounts Due from Other Governmental Units: Amounts due from the
federal government are to be set up on the books of the receiving agency as receivables if
either of the following conditions is met:
- 1. The State of Connecticut has incurred expenditures which qualify and
are eligible for reimbursement from the federal government.
- 2. The State of Connecticut has expended funds to finance a project
which, either by law or by contractual agreement, is to be financed on a matching basis by
federal and state funds.
- Outright grants, since they do not meet these conditions, cannot be properly categorized
- Amounts due from other political subdivisions to be set up on the books of the receiving
agency as receivables may include:
- 1. The State's share of taxes collected by its political
- 2. Loans.
- 3. Charges for services rendered or goods sold.
- D. Loans Receivable: Amounts, which have been loaned to persons or
organizations,, including notes taken as security for such loans.
- E. Due from Other Funds: Amounts owed to a particular fund by another
fund in the same governmental unit for goods sold or services rendered. This includes only
short-term obligations on open account and not long-term loans.
- F. Licenses, Fees, Permits and Donations: Revenues and receivables for
licenses, fees, permits and donations should be recognized when the underlying event takes
place and the State has an enforceable legal claim to the amounts.
- Fees for Licenses and Permits - Citizens and others pay fees for
licenses and permits for the privilege of engaging in a regulated activity. Often the fee
is intended to cover a privilege granted for a particular period of time. Because citizens
and others granted the license or permit have no legal right to exercise the privilege
granted by a license or permit until the fee is paid, a government's enforceable
legal claim arises only when the fee is paid.
- Therefore, no receivables or revenues should be recorded when renewal notices for
licenses and permits are sent out. The revenues should only be recognized when payment is
- G. Miscellaneous/Other Receivables: Receivables arising from
transactions other than those outlined in the preceding paragraphs may be classified under
the general category of "other receivables". Such receivables may include items
such as overpayments by an agency subject to refund, interest and penalties assessed
against an individual or a corporation, and any of the receivables, which may arise during
an agency's course of operations.
II. Agency Procedures
- A. Minimum Collection Procedures: It is the responsibility of each
state agency to immediately notify the person or entity who owes money that money is owed.
It is the responsibility of each state agency to collect amounts owed to the State in the
most effective and efficient manner. Unless the State Comptroller's Office approves
an agency's alternative collection procedure, all state agencies will adhere to the
following basic procedures relating to collection of past due accounts. These procedures
are considered minimum efforts. Certain state agencies may find it necessary to expand
these general procedures to fit their particular circumstances.
- 1. All accounts which are more than 30 days past due must be subjected
to collection procedures.
- 2. A record must be kept for each action taken to collect an account,
the name of the person taking the action, and the date the action was taken. This
documentary evidence of collection efforts must be available at the agency to support
classifying an account as uncollectible.
- 3. At least three documented efforts should be made to collect all
delinquent accounts over $25. Accounts $25 and under require only one documented attempt.
- 4. When an account becomes 60 days past due, further credit should be
denied until the account is returned to a current status.
- 5. The State's right to off set debts owed the State against state
payments due such debtors should be utilized. Please refer to Section 6 of the State
Accounting Manual for information regarding the Offset Program.
- 6. Deferred payment terms should be extended on a limited basis, only
upon determining that the debtor is unable to pay the balance in full. Terms should not
extend beyond six months. However, terms can be extended for a few months more where large
balances are concerned and payment of such balances within six months would create a
hardship. Certain Higher Education funds are governed by federal laws.
- 7. Agencies may contact the Financial Services Center Unit of the
Department of Administrative Services for assistance in the collection of debts owed to
- 8. When other statutes address the agency's collection procedures,
those procedures should be followed.
- B. Write-Off Request Procedures: As of July 1, 1998, Public Act 98-204
went into effect. Under this legislation write-offs of uncollectible accounts no longer
require approval by the Governor. Also, effective July 1 the threshold for approval by OPM
was raised from $200 to $1,000. Agencies are permitted to write-off amounts under $1,000
without OPM approval. An agency must request approval from OPM to write off a receivable
over $1,000 when the following criteria are met:
- a. A valid receivable does exist, i.e., there are no unsettled differences between the
agency and the debtor as to the validity of the charges to the account.
- Note: Do not submit amounts resulting from billing errors (e.g., charges for services
not rendered) or medical insurance adjustments (e.g., non-covered Medicare charges). State
agencies may make the appropriate accounting entries to remove these items from their
- b. The receivable is past due (having missed a scheduled payment). The length of time
past due may vary by the type of the receivable.
- c. The agency has complied with the "Minimum Collection Procedure" section,
without success, and has determined that the receivable is uncollectible.
- As soon as the criteria noted above are met, the agency should prepare the request in
two copies; the original to be forwarded to OPM for approval to write off the receivable,
and the copy to be retained in the agency. Note: For agencies that routinely request
writeoff of uncollectibles, a statement describing their collection process which
determined that the item is uncollectible must be filed with OPM before any writeoffs are
considered. The request should include the following:
- 1. The number of accounts to be written off.
- 2. The total dollar amount of such accounts.
- 3. For each account, list the debtor's name, social security
number or federal employer identification number, amount, and a brief statement of the
reason or basis for determining the account uncollectible. In lieu of said brief
statement, the agency may use a numerical write-off code.
- Note: Agencies should make sure that the statement or write-off code
clearly identifies debts that have been discharged in bankruptcy.
- 4. A statement by the responsible individual that in his or her opinion
the accounts are uncollectible and that all reasonable efforts have been pursued and the
request is submitted in accordance with policy and procedure.
- 5. The signature of the agency head which certifies his or her approval
of the request. A request signed by an agency head's designee is acceptable, provided
OPM has received a designation letter from the agency head.
- The agency should retain the receivables on its record pending notification of approval
from OPM. Upon receiving such notification, the agency should promptly remove the
receivable from its records. All accounts receivable and taxes receivable written off by
the state agency as described above are thereby assigned for collection. The state agency
must maintain all information relating to the receivables, which were written off.
Officers and employees of the state agency may be required to participate in, and provide
documentation for, hearings or litigation regarding the collection of the receivables.
- C. Annual Reporting by Agencies - Fiscal year End Instructions:
Fiscal year end instructions should be referred to by each agency to report its fiscal
year end receivable transactions and balances to the State Comptroller's Office,
Accounting Services Division. The due date for the report will be the first Friday in
September and should be submitted to the Accounting Services Division.
- ABATEMENT: A complete or partial cancellation of a levy imposed by a
government. Abatements usually apply to tax levies, special assessments and service
- AGING OF RECEIVABLES: Classifying the account balances of all
receivables by the amount not yet due or past due by varying lengths of time.
- ALLOWANCE FOR ESTIMATED UNCOLLECTIBLE: A valuation account used to
indicate the portion of a receivable which it is estimated will never be collected.
- COMPROMISE: The statutory authority granted certain state agencies to
negotiate a settlement of a debt between the debtor and the agency.
- CURRENT ACCOUNT: An account which is within stated terms and has not
yet become past due.
- PAST DUE (DELIQUENT) ACCOUNT: An account in which one or more scheduled
payments have not been made.
- UNCOLLECTIBLE: An account unable to be collected.
- WRITE-OFF: Accounting procedures for removing uncollectible charges
Back to Comptroller's Home Page
Back to Index of 2000 Comptroller's Memoranda