Handbook of Business Procedures
June 22, 2011
June 22, 2011
Office of Accounting Administration Services
5.3.3. OTHER ACCOUNTS RECEIVABLE
A. Types of Other University Receivables
- Outside Governmental Agency and Higher Education Debt
The University of Texas at Austin rents/leases property to several local governmental agencies and may also bill for utilities and janitorial services. These receivables are billed in accordance with contract terms and follow monthly billing and collection procedures, excluding referral to a collection agency.
- Real Estate Leasing Debt
Tenants are expected to pay rent by the due date in the amount listed in the lease agreement. Per the lease agreement, statements are not issued to the tenants. Tenants are expected to adhere to rent escalations throughout the contract term. If payment is not made on time, the vendor contact for the tenant is notified. If payment is not made after the vendor contact is notified, the procedures outlined in the tenant’s lease default agreement are followed.
- Component Support Debt
The university provides central administrative and systems support as defined in the Office of Accounting Institution Support Policy. Statements are not issued to components; components are expected to make payments as scheduled.
- Pledge Receivable Assets
A pledge is a promise made to The University of Texas at Austin by a donor who states the intent to voluntarily transfer items of value, usually in the form of cash, checks, securities, or property at some future date. The Governmental Accounting Standards Board (GASB) establishes guidelines by which a pledge is to be recorded as a receivable with immediate revenue recognition. The receivable is classified as current (has a payment date within the coming year) or long term (has a payment date that is more than one year in the future). Pledge Receivables are stated net of an estimated amount for those deemed to be uncollectible.
B. Provision for Bad Debts
The Texas Education Code includes no provision that allows the university to write off bad debt. However, the university established a policy that all uncollectible debt will be written off. This debt is written off from the department’s income account to the department’s allowance account. This is normally done annually at fiscal year-end.
The university records the allowance for doubtful accounts for outstanding centralized receivables and other university receivable systems using the following calculation:
- For debt 1-2 years old, 85 percent of the total amount
- For debt greater than 2 years old, 100 percent of the total amount
Student Accounts Receivable (SAR) prepares a monthly comparison of the Centralized Receivables (CR) system balances to the *DEFINE accounting balances. Differences are investigated by the department and the cause is determined. If necessary, the department enters an adjustment, either to CR or to *DEFINE accounting, depending on the nature of the error, to correct the difference.
Departments that use CR to post bills are required to prepare their own monthly reconciliations and send copies to SAR at email@example.com.