Professional Documents
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Write Offs of Accounts Receivable - Policy
Write Offs of Accounts Receivable - Policy
Write Offs of Accounts Receivable - Policy
To provide clear direction for reporting and writing off uncollectible account receivables
owed Thurston County and to establish procedures and actions for recording write offs in
county financial systems. Writing off uncollectible receivables is an authorized process to
remove the revenues due the County from the financial records. It does not forgive the
obligation.
SCOPE:
This policy does not apply to collection of taxes, assessments collected by the County
Treasurer per RCW Title 84, loans and grants from other governmental units, and
receivables from which there is a statutory process for collection.
REFERENCES:
DEFINITIONS:
Allowance for Bad Debt: An allowance for bad debt is an estimate of uncollectible
accounts receivable. It is identified as a contra account when listed with current assets
on the balance sheet because it has a credit balance.
Bad Debt Expense: A bad debt expense is an entry in the financial income statements
that is made for an account that is written off as uncollectible.
POLICY:
Thurston County will make a vigilant effort to collect all receivables that are due for
products and services rendered, consistent with the practicality and marginal cost of
collection.
There are two common ways to account for bad debt: (a.) a direct write off; or (b.) an
allowance. Under the allowance method, a percentage of each fiscal period’s revenues
are estimated to be uncollectible and placed in a bad debt reserve. If the account is
written off, it will be recorded as a bad debt expense. The Board of County
Commissioners (BoCC) will approve write offs.
Thurston County’s process for addressing uncollectible accounts receivable shall be:
3. If requesting a write off, upon appropriate approvals, write off as bad debt
expense.