Awrite-offis an elimination of an uncollectible accounts receivable recorded on the general ledger. An accounts receivable balance represents an amount due to Cornell University. If the individual is unable to fulfill the obligation, the outstanding balance must be written off after collection attempts have occurred.
Asset/Liability Reconciliation Guidelinesrequire that accounts receivable object codes be reconciled monthly, assuming monthly activity has been posted. An accounts receivable reconciliation should include an aged list of outstanding invoices and amounts that agree to the general ledger balance.
Generally, receivable outstanding balances should be paid within 30 days. If any unpaid balance exceeds 60 days, the unit should contact the customer to request payment.
Units are expected to include accounts receivable write-offs as part of the internal control initiative and include the unit-specific process and materiality threshold.
Authorization for Accounts Receivable (Non-Sponsored and Non-Employee-Related) Write-Offs
Authorization Limits:
- Less than $5,000:Send to the operating unit's senior business officer for approval.
- Greater than or equal to $5,000:Send to the university controller.
Requests for authorization of non-sponsored, non-employee-related write-offs should include:
- A brief narrative of the reason for the write-off.
- Evidence of multiple collection attempts.
- The account number that will fund the write-off.
- Email confirmation from the operating unit's senior business officer stating that he or she agrees with the write-off.
Note: For correcting unknown variances that are not write-offs, see Correcting Unknown Variances.
Authorization for Sponsored Write-Offs
Sponsored accounts receivable write-offs will be handled internally, following Sponsored Financial Services guidelines.
- Less than $5,000may be approved by the senior director of sponsored financial services.
- Greater than or equal to$5,000 or morewill require the endorsem*nt of the senior director of sponsored financial services and the approval of the university controller.
Write-off e-docs for sponsored funds will be originated by Sponsored Financial Services. See the instructions below for employee-related write-offs on sponsored accounts.
Authorization for Employee-Related Write-Offs
Typically, these write-offs are for travel advances. This does not apply to payroll overpayments.
For non-sponsored accounts, the unit’s finance manager, BSC director, or college business officer should send requests for employee-related (current and prior employment) write-offs to the university controller. Include in the backup a brief narrative of the reasons for the write-off, evidence of multiple collection attempts, and the account number that will fund the write off.
For sponsored accounts, to write off an employee-related receivable, expense or travel advance from a sponsored project, a unit must first prepare an e-doc moving the expense from the sponsored account to a non-sponsored discretionary account with the same higher-ed function code. Once the expense has been moved, the unit’s finance manager, BSC director, or college business officer should send the write-off request to the university controller. Include in the backup a brief narrative of the reasons for the write-off, evidence of multiple collection attempts, and the account number that will fund the write-off.
Note: An employee-related write-off may result in taxable income to the employee. Payroll should be notified of all employee-related write-offs.
Authorization for Student Loan Receivable Write-Offs
The University Treasurer has the authority to write-off student receivable bad debt of any dollar amount against the bursar allowance accounts, for balances deemed by the Bursar’s office to be uncollectable for the following types of receivables:
- Student loan receivables
- Student bursar receivables other than CornellCard
- Student CornellCard receivables
Note: Bursar office procedures are designed to ensure that effective and ongoing collection efforts are undertaken before any write-off is authorized.
Write-off Entries
Once authorization has been granted for a write-off, the requesting unit will process a Distribution of Income and Expenses (DI) e-doc with the following entries:
- DR(to) Departmental Account number and object code 6330 - Bad Debt Expense
- CR (from) Departmental Account number and accounts receivable object code
- Adifferent entryis needed for units that maintain anallowance for doubtful accounts:
- DR(to) Departmental Account number and object code 1250 Allowance for Doubtful Accts
- CR (from) Departmental Account number and accounts receivable object code
The documentation submitted for authorization must be attached to the e-doc.
Accounting will conduct a post-audit review of object code 6330 to ensure that it is used in conjunction with an appropriate offsetting account receivable or accounts receivable allowance object code.
