Business Procedures Manual

Essential business procedural components for University System of Georgia institutions.

(Last Modified on April 3, 2019)

The University System of Georgia (USG) operates in a complex business environment whereby revenues are generated from exchange and non-exchange transactions. Effective management of any accounts receivable resulting from these revenue generating activities is important to the financial health of the USG.

Article VII, Section IV, Paragraph VIII of the State of Georgia Constitution provides as follows:

  1. “The credit of the state shall not be pledged or loaned to any individual, company, corporation, or association.”

By virtue of this constitutional provision and related Attorney General Opinions, departments and agencies of State government, including the USG, are limited as to the extension of credit terms and must be judicious in the extension of billing terms and management of accounts receivable.

In order to effect prompt collection of outstanding receivable balances and minimize credit losses, each institution must maintain a diligent program for managing accounts receivable. The management function consists of the granting of credit only when allowable, prompt billing for accounts, analyzing outstanding accounts (aging), implementing and maintaining collection procedures, and providing for uncollectible balances.

This Section establishes guidelines for the establishment, management, and collection of accounts receivable. Each institution must comply with regulations regarding billing, collections, and write-off of uncollectible accounts.

(Last Modified on April 9, 2019)

Generally accounts are considered past due when outstanding balances are more than 30 days old. For active students, if there is pending aid or other financial arrangements, the past due date will need to be modified depending on conditions of arrangement, however, the due date should not extend past midpoint of the semester.

(Last Modified on April 3, 2019)

Student receivables make up a significant portion of outstanding accounts receivable, however procedures outlined in this BPM section would also apply to amounts due from federal, state or local government agencies, vendors and other non-student accounts as a result of normal business operations.

10.1.1 Student Receivables

(Last Modified on April 19, 2019)

Student receivables generally consist of a combination of tuition, mandatory fees, housing fees, food service fees, other elective fees and special charges.

Per Section 7.3.3 of the BOR Policy Manual, “all tuition and fees are due and payable on or before the last day of the drop/add period for the specific academic term.” However, collection of tuition and fees may be deferred for a specific academic term in the following circumstances for amounts:

  1. Guaranteed by an outside agency/third party,
  2. Covered by loans or scholarships,
  3. Stated in certificate or documents guaranteeing payment for international students.

Students, who have not paid or whose approved/awarded financial aid, scholarships and/or loans are not sufficient to cover remaining balances due, must be purged from class rolls unless “gap” funding is available. “Gap” funding is funding provided from designated resources, such as emergency type loans or foundation funds to bridge the difference (gap) between what has been applied to a student’s account (cash, aid, scholarships) to cover semester charges vs what remains due from student. This could be temporary or permanent funding, depending on source. Institutional operating funds may not be used as a source for “Gap” funding.

The purge date should normally be the final add/drop date and the purge process should start on that date. However, to accommodate financial aid processing at institutions with a large number of late/walk up registrations, the purge date for the late/walk up registrations may be extended with permission from the USG Chief Financial Officer. At no time should the purge date be extended beyond fourteen (14) working days from the add/drop date. This should provide institutions with ample time to process and finalize financial aid awards.

Scholarship funds or financial commitment letter must be on hand at financial aid office by ‘add/drop” date to be considered approved resources.

Balances due for sponsored students should be billed to the proper sponsoring agency no later than mid-term for the semester for which the balances are due.

If financial aid is withdrawn at or near the end of the semester, and the student has already registered for the following semester, the student must be withdrawn from the following semester if prior semester’s balance is not paid by the “add/drop” date.

  1. Note: Beginning in Fall Semester 2019, institutions are required to send preliminary billing notices to students 45 to 60 days after tuition and fee rates are approved by the Board of Regents (BOR) for the upcoming semester.

In certain circumstances, institutions may be allowed to collect tuition and fees on an installment basis. Collections must always be made in advance of services rendered to remain in compliance with the State’s “gratuities clause”.

  1. For institutions, which desire to manage the collection of tuition and fees on an installment basis, a proposed installment payment plan must be submitted to the USG Chief Fiscal Officer for approval. The following items are required:
    1. The request must be made in writing and must be signed by the President and the Chief Business Officer.
    2. The institution must show that it has sufficient staff to administer a payment plan.
    3. The institution must demonstrate that it has sufficient available operating cash reserves to manage cash flows needs during each semester the payment plan is in effect.

      “Available operating cash” is defined as cash available for normal operating expenses, therefore, the following items must be removed when calculating “available operating cash”:

      • Non-current restricted cash
      • Cash reserved for capital renewals and replacements (including R&R reserves)
      • Endowment fund cash

    4. The installment plan must be structured so that tuition and fees are collected in advance of services provided.
  2. Once approved for an installment program, the institution must:
    1. Stay current on all collection efforts,
    2. Submit a listing of aged accounts receivable to the USG Chief Fiscal Officer on a quarterly basis,
    3. Maintain data on participants in the installment program:
      • Number of participants and dollar amounts,
      • Participants who paid late, including amounts,
      • Participants that did not pay and amounts due,
      This data must be available to the USG Chief Fiscal Officer upon request. Proper management of the program will have a significant bearing on an institution’s ability to continue the installment program.

    An institution’s authority to offer the tuition and fee installment plan, may be removed at any time, if the USG Chief Financial Officer deems that the plan is not being effectively managed or the financial position of the institution is adversely affected.

Institutions manage housing fees in accordance with terms of the housing contract with students. Per some contracts, housing fees are collected on an installment basis, with the fees collected in advance of services rendered.

Institutions may also collect food service/meal plan fees in advance of services provided. However, if the institution has been approved by USG Chief Fiscal Officer to use the tuition and fee installment payment plan option, housing fees and food service fees must be collected using the same installment terms as used for tuition and fees.

If any institutions collect housing or meal plan fees on an installment basis, they must structure the payments to limit the possibility of creating an accounts receivable resulting from a student withdrawal and return of Title IV funds.

10.1.1.1 Financial Responsibility Agreement

Beginning Spring Semester 2020, institutions must maintain a signed Financial Responsibility Agreement on file for each student. Early implementation is encouraged. These agreements must be signed, at a minimum, annually. See BPM Section 10.6.3 for a sample form. This agreement acknowledges the student’s responsibility and agreement to pay all tuition, fees and all related costs for the services received.

In situations where a student has incurred debt, this agreement acknowledges a student’s financial obligation to repay the institution and provides the institution the mechanism to charge collection fees to the student (15%) as suggested by the Attorney General’s Office in accordance with OCGA 13-1-1.

10.1.1.2 Restriction of Services to Students

All students with outstanding account balances older than thirty (30) days must have services withheld until the balance is paid. The restriction of services will prevent the student from having access to transcripts, registering for additional classes/subsequent semester, or graduating until the receivable is paid. At many institutions, this restriction of services may be referenced as a “hold” on the student’s records. Once a hold has been placed on a student’s account, the student must not receive any services that would create additional charges.

In certain circumstances a limited amount of financial aid may be retroactively applied to a previous semester. In this scenario, the hold may only be removed in a controlled environment and only by the Registrar or designee. With the exception of retroactive application of financial aid, holds may not be removed under any other circumstances until student has paid account in full.


10.1.2 Employee Receivables

(Last Modified on April 3, 2019)

Units of the University System normally should not have employee receivables, however, there may be instances where errors occur in payroll and/or travel reimbursements which could create balances due from employees. These receivables may be collected in two ways: either through payroll deductions or direct repayment from employee. If payroll deduction is used, the university must get authorization from the employee. Signed authorization would be best practice, but e-mail authorization would be acceptable if employee expressly states in an e-mail the nature of the deduction and amount being approved.

If employee ceases to make payments, the institution’s chief business officer in consultation with the human resources director should determine proper course of action. Employees, who do not demonstrate good faith effort to repay, may be placed with collections.

Travel advances, which are provided on occasion to employees on travel status, are treated as prepaid items, not employee receivables. However, the repayment of travel advances should be handled in a manner similar to employee receivables. Each travel advance should be repaid before any future travel advances are allowed (generally within 10 days after completion of trip). If a trip is cancelled, funds should be remitted to the institution as soon as trip is cancelled.

Per Office of Planning and Budget Policy (OPB) (Revision 7), travel advances are only available to an employee whose current salary is $ 50,000 or less when traveling within the United States. See Section 4.8 of this manual for additional requirements regarding travel advances.

  1. Note: Per SAO regulations, an employee should have only one travel advance outstanding at a time. Each advance should be cleared before another advance is granted. See OPB (Revision No. 7) Section 12 for more information.

If an outstanding advance has not been recovered by the time the accounting for the trip is due, institutions should, in the absence of extenuating circumstances, initiate action for recovery.


10.1.3 State, Federal, and Similar Receivables

(Last Modified on April 3, 2019)

Accounts receivable discussed in this section relate primarily to externally sponsored grants and contracts. Ensuring timely submission of invoices is important in ensuring that all available contract/grant funds are received on projects. Invoices related to federal contract and grant activity or with state or private research agreements must be submitted promptly and accurately in accordance with award provisions.

Generally, reimbursable expenditures, net of amounts that are required to be withheld until final claims, should be billed to the proper agency within thirty (30) days of the close of the period (monthly, bimonthly, quarterly, etc.) for which reimbursement can be claimed.

Final claims for reimbursable expenditures are normally required to be submitted to the proper agency within ninety (90) days of the completion of the term of the contract, grant, or other agreement under which the expenses have been incurred.

Fixed-price contracts are often used by governments because of the benefits for more precise budgeting where the buyer and seller know what to expect to pay or receive based on product or service provided. If an institution has amounts due from fixed priced contracts, these amounts should be billed within 30 days of the completion of terms of the agreement. If the agreement is structured such that payments are to be received upon completion of certain contract parameters, billing should occur within 30 days of completion of prescribed contract provisions.

Georgia State Financing and Investment Commission (GSFIC) reimbursements are to be submitted, at a minimum, on a quarterly basis; however, it is recommended that reimbursement requests be submitted on a monthly basis. GSFIC reimbursement policy states as follows:

  1. “Requests for reimbursement that are not received on a timely basis, or contain invoices that are over one hundred twenty (120) days old, are subject to denial by GSFIC”.

Accounts receivable may also result from business arrangements with other governmental units and foundations resulting in claims for payment. Diligence must be exercised to ensure timely billing and collection to minimize the receivables arising from these claims.


10.1.4 Auxiliary and Service Enterprises

(Last Modified on April 3, 2019)

Residence Halls

As stated in Section 10.1.1, Board policy allows for the collection of housing rents on an installment basis. Housing rents must be collected in accordance with the terms of the residence hall contracts.

Rents collected on behalf of vendors participating in the Public Private Partnership (PPP) initiative are not revenues of the institution and will be treated as a custodial relationship. Therefore, any receivables created from this revenue collection process are not considered accounts receivable of the institution. Any collection efforts related to these receivables would be responsibility of participating vendor.

Bookstores

Bookstores should limit the extension of credit to faculty and staff members, and outside organizations that regularly deal with bookstores.

Some institutions, with institutionally managed bookstores, may allow students to charge books and other academic supplies from the bookstore, subject to any institutional limit and aid available on the student’s account. Any amounts charged in excess of aid available must be paid within 15 days after add/drop date.

Health Services

Health Services are generally funded by student fees, however there are some health service charges that are not covered by fees and are the responsibility of the student or the student’s health insurance provider. Any amounts not covered by the health insurance provider should be added to the student’s account. Federal financial aid cannot be applied against health insurance charges due from student, therefore, institutions must modify coding to accommodate for that restriction. When billing students for these outstanding balances, the student must be provided written notice of the nature and amount of the obligations due. Health Information Portability and Accountability Act (HIPAA) regulations must be observed, and if turned over for collections, institutions may only provide minimum information necessary for collection agency to perform the collection effort.

For student privacy purposes, some institutions maintain health service charges in a separate subsystem. This is acceptable as long as detail is maintained by student in the subsidiary ledger and the charges and any resulting accounts receivable are recorded in the general ledger.


10.1.5 Fines and Fees

(Last Modified on April 3, 2019)

Fines and Fees are primarily the result of punitive action for failure to comply with institution or departmental regulations. These are generally made up of parking fines, library fines, miscellaneous fees, etc.

At times, these charges may be of such minimal values that it would not be practical or cost effective to continually create or modify accounts receivable balances by feeding these charges from the subsystem (normally Banner) to the general ledger as transactions occur.

In such situations, institutions may determine that it would be more efficient to manage the activity on a cash basis throughout the year, whereby charges are transferred to the general ledger as payments are received. Institutions using this approach would still be responsible for maintaining the charges by student/vendor and collecting the charges. Procedures must be in place to ensure that:

  • Reasonable collection efforts are made. Collection notices must be sent even though these amounts are managed on the cash basis.
  • Proper/independent supervisory personnel must approve any non-collection.
  • Non-collection approval must be documented.
  1. Note: Nominal amounts of $25 or less per individual may be adjusted.

At year end, any charges remaining in these subsytems should be recorded as accounts receivable on the general ledger through a year-end GAAP ledger entry. Sample entries will be provided.


10.1.6 Other/Miscellaneous Receivables

(Last Modified on April 3, 2019)

Each institution has a variety of other receivables not specifically described above. In each case, these accounts are to be analyzed and managed according to the control procedures that are most applicable to the particular receivable.

Accounts receivable in this category require particular attention in all phases of the management function because they normally represent a large number of transactions that arise from all types of activities throughout the USG. Also, the bulk of the transactions involve relatively small, amounts, many involving debtors that may not regularly do business with the USG, therefore, the potential for uncollectibles is elevated.

The following are types of transactions that could generate other/miscellaneous receivable balances.

  1. Departmental Services: At many institutions, activities such as Departmental Sales and Services, extension services, etc., are authorized to provide services or products to students and the general public, even though the solicitation of customers and generation of income are not primary aims of the activities. Most of these transactions are for small amounts and payment should be received when the goods or services are provided, however, when the risk of loss is considered relatively low, the establishment of an accounts receivable creating a temporary payment term is acceptable because of the need for the service.
  2. Credit Memos: Generally occur in institutionally managed auxiliary operations when vendors owe institutions returns of merchandise, make pricing adjustments or provide marketing allowances. Credit memos are normally cleared by applying reductions against future invoices from the vendor. At minimum, institutions should work open credit memos on a monthly basis. Credit memos should be credited or cashed out within 30 to 90 days. If the institution has an outstanding credit memo with a vendor which it no longer does business, the institution should request immediate payment from the vendor.
  3. COBRA and Retiree Receivables: It is permissible to establish accounts receivable for retirees and other persons receiving benefits under COBRA. All credit granted under this provision should be kept current; i.e., collected within thirty (30) days. If continued collection efforts are not successful, then benefits must be terminated in accordance with deadlines established in BPM Section 5.1.5.

(Last Modified on April 3, 2019)

Prompt billing for reimbursement of expenses or charges arising from services provided under various agreements is essential for effective management of accounts receivable. Information must be maintained on the status of all unbilled accounts to ensure that all actions necessary for the preparation of the bill have been taken as required, which will allow the bill to be issued as expeditiously as possible.

Implicit in the extension of credit by an institution is the intention that payment will be made in full upon receipt of a bill.

(Last Modified on April 9, 2019)

Generally accepted accounting principles (GAAP) requires a determination of accounts receivable deemed uncollectible. These amounts must be reported as an Allowance for Doubtful Accounts in the general ledger (Actuals ledger) and on the institution’s annual financial statements.

Uncollectible amounts must also be accounted for in State statutory (budget) basis reporting, which requires a different presentation than GAAP reporting. In Statutory Basis budget compliance reporting (BCR), the uncollectible amounts are recorded as reserves of fund balance instead of Allowance for Doubtful Accounts. Year-end budget reporting instructions necessary provide conversion entries.

(Last Modified on April 9, 2019)

10.4.1 Death of a Debtor

(Last Modified on April 9, 2019)

A claim against the estate of a Georgia resident must be prepared in accordance with specific regulations and filed within six (6) months after first publication of notice to creditors. Therefore, in order to assure that the USG’s interests are fully protected, help from the institution’s general counsel or the system office, as appropriate, is to be sought whenever an institution receives notification that a person owing money to the institution has died. Potential claims against deceased nonresidents are to be referred to the institution’s general counsel for guidance. All tuition and fees shall be refunded and the revenue transaction reversed in the event of the death of a student at any time during the academic session. Refer to Section 7.3.5.2, Death of a Student in the BOR Policy Manual for additional information.


10.4.2 Bankruptcy

(Last Modified on April 19, 2019)

Upon receipt of any Notification of Bankruptcy, where an institutional account is involved, cease communication with individual or company that has filed for bankruptcy. Contact institution’s general counsel to determine how to proceed with the uncollectible account.

If a student’s account is discharged through bankruptcy, the institution is required to remove charges and any related holds from the student’s account with limited exceptions. Some student accounts receivable may be considered non-discharged debt, such as student loan obligations, including Perkins, Health Professions, and certain institutional loans with promissory notes, installment payment plan debt and Title IV overpayments.

Upon receipt of final determination of bankruptcy from the United States Bankruptcy Court, the debt will either be discharged and subject to write-off of debt, or portions thereof, may be reinstated. This should be determined with advice from legal counsel.


10.4.3 Loan Funds

(Last Modified on April 9, 2019)

When loans advanced from loan funds are determined to be uncollectible and have been approved for write-off, they are to be written off against the specific fund from which the loan has been advanced. If funds are not available in the specific loan fund, the institution should look for other resources, either from institution or related affiliated organization(s) to absorb the write-off. Operating funds would not be an appropriate source of funding.


10.4.4 Non-Sufficient Funds (NSF) – Returned Checks

(Last Modified on April 9, 2019)

When returned check fees have been collected from the writer of a NSF (bad) check, the amount should be recorded as income of the fund receiving the credit when the receivable was established. Institutions may charge NSF fees as appropriate to cover costs associated with processing NSF checks.

The cost of collections effort may be recorded as an expense of the same fund. Due to de-minimis nature of this activity and to expedite processing, institutions may choose to record all NSF fees in fund 10600.

If institution has received NSF checks from a student/vendor and collected on that NSF check, then the institution may still accept checks from that student/vendor; however, if the institution receives a second NSF check from that same student/vendor, the institution will no longer accept checks from that student/vendor.

Note:If a student, with an NSF hold on their account, enrolls in a subsequent fiscal year, the institution must decide if sufficient time has elapsed to accept checks from the student. However, no checks may be accepted from the student until all old outstanding balances, including NSF amounts, are paid in full. Checks may be accepted from a third party on behalf of the student. Each institution must develop a policy on time frame to accept checks for re-enrolling students. If no policy is adopted, then checks may not be accepted from these students.

Institutions experiencing significant credit card charge-backs may determine that is appropriate to charge fees for those returned charges. If so, it is recommended that guidance provided in the first two paragraphs of this sub-section be followed.


(Last Modified on April 9, 2019)

10.6.1 Past Due Notices

(Last Modified on April 19, 2019)

At a minimum, past due notices should be sent as follows:

 Required Correspondence e-mail or letterLetter RequiredCertified, Registered or Priority tracking letter (*)Send to Collection Agency
Amounts Due30 days past due60 days past due90 days past due90 days past due120 - 180 days past due>120 - 180 days
≤ $300   
> $300 ≤ $1,000  
> $1,000 

Past due notices should include the following:

  1. 1) Amount due 2) Days past due 3) Date payment expected 4) Consequences of not paying outstanding balance

Institution may choose to send certain accounts to collection agency after 120 past due, if it has been determined that all good faith collection efforts have been exhausted.

  1. Note:If an institution utilizes a third party to send collection notices, the institution must ensure that third party follows guidelines adopted in this section. If timing of notices and methods of correspondence vary from the prescribed format discussed above, the institution must request approval from USG Chief Fiscal Officer.

10.6.2 Sample Request for Write-Off

(Last Modified on April 9, 2019)

SAO has provided a sample request for write off template at the following website:
https://sao.georgia.gov/business-process-policies

Institutions may use their own write off request form as long as it includes required elements listed on SAO’s template.


10.6.3 Student Financial Responsibility Agreement (Example)

(Last Modified on April 9, 2019)

STUDENT REGISTRATION / FINANCIAL AGREEMENT

This Agreement is entered into between the Student and the Board of Regents of the University System of Georgia, by and on behalf of [ USG institution ]. In exchange for registering for classes and receiving education services from [ USG institution ], I understand and agree that my eligibility to enroll in classes is expressly conditioned upon acceptance of all terms and conditions set forth in this Agreement.

I understand and agree to the following:

  1. When I register for any class at [ USG institution ] or receive any service from [ USG institution ], I accept full responsibility to pay all tuition, fees and other associated costs assessed as a result of my registration and/or receipt of services on or before the due date.

  2. If I drop or withdraw from some or all of the classes for which I register, I will be responsible for paying all or a portion of tuition and fees in accordance with the published refund schedule.

  3. I am personally responsible for payment of all money due regardless of my eligibility for financial aid or other assistance.

  4. Financial aid or other financial assistance I may receive will be used to pay any and all money due to [ USG institution ], including tuition, fees, campus housing and meal plans, student health insurance, parking permits, service fees, fines, bookstore charges, or any other amount, in accordance with the terms of the aid or assistance. If some or all of my financial aid or other assistance is revoked because I drop or withdraw from classes and/or from school, I will repay all revoked aid that was disbursed to my account.

  5. If I fail to pay all money due by the due date, [ USG institution ] will place a financial hold on my student account, cancelling my class registration and preventing me from registering for future classes, obtaining transcripts or receiving my diploma.

  6. If I fail to pay all money due by the due date and fail to make payment arrangements acceptable to [ USG institution ], [ USG institution ] may refer my account to a collection agency, and I will be responsible for paying the collection agency fee, which may be based on a percentage of up to 15% of the debt, together with all costs and expenses including reasonable attorney’s fees, necessary for the collection of my account.

  7. I authorize [ USG institution ] and its agents to contact me at my current and any future cellular phone number(s), email address(es) or wireless device(s) regarding my delinquent student account(s)/loan(s) or any other debt I owe to [ USG institution ], or to provide general information from [ USG institution ]. I authorize [ USG institution ] and it agents to use automated telephone dialing equipment, artificial or pre-recorded voice or text messages, and personal calls and email messages, in their efforts to reach me.

  8. I am responsible for keeping [ USG institution ] records up to date with my current physical address(es), email address(es), and phone numbers by [explain or refer to institution’s procedure]. My responsibility to do so will continue upon leaving [ USG institution ] for any reason for purposes of continued communication regarding any amounts that remain due and owing to[ USG institution ].

  9. I am subject to and responsible for complying with all applicable [ USG institution ] and Board of Regents of the University System of Georgia policies and procedures.

  10. This Agreement shall be governed by the laws of the State of Georgia without regard to choice of law’s provisions, and all actions arising under this Agreement will be filed and litigated exclusively in the appropriate courts within the State of Georgia.

I understand and agree to the all of the terms and conditions above.

                              
[Student]


10.2.1 Billing and Collections

(Last Modified on April 3, 2019)

Any debt owed to a unit of the USG should be linked to a specific debtor with appropriate documentation identifying the name of the debtor, the amount due, the nature of the debt and the date payment is due. Per State Accounting Office (SAO) guidelines, state organizations are required to:

  • Prepare and send bills in a timely manner (monthly).
  • Billing invoices should include amount due, organizational contact information and remittance requirements.
  • Proceed with third party collection efforts if internal billing efforts are ineffective.
  • Discontinue services to delinquent customers, including students.
  • Place a hold on transcripts and diplomas until outstanding amounts are collected from students.

Note: For billing purposes due date is defined as follows:

  1. 1) For student accounts, the due date is generally the final day of drop/add.
    2) For non-student accounts, the due date is generally thirty (30) days after the invoice date.
    3) For institutions operating under approved payment plans, due dates will correspond to terms of payment plan approved by USG Chief Financial Officer.
    4) For student accounts, where approved aid has been withdrawn, the due date maybe modified in order to give the student and institution an opportunity to locate other payment arrangements. The revised date should not extend beyond 10 days from the date aid was withdrawn. If the due dates cannot be changed in the accounts receivable subsystem, any modifications would have to be tracked manually by the institution.

Presidents and chief business officers are authorized to file actions in small claims court for the collection of debts over which they have administrative control.


10.2.2 Aging Accounts Receivable

(Last Modified on April 3, 2019)

Institutions are required to properly age accounts receivable to assist in the determination of collectability. Adequate information concerning the age of outstanding accounts receivable is essential for proper overall control of accounts receivable process. Therefore:

  1. Aging information must be collected, maintained, reported, and acted upon in a standardized and consistent manner.
  2. Levels of effort in record keeping and collection must be commensurate with collection value.
  3. Outstanding invoices must be collected as expeditiously as possible, but the cost(s) of collection should not exceed the expected revenue. Cost of collection efforts should be monitored to ensure that costs do not exceed obligation due.

10.2.3 Analysis and Reporting

(Last Modified on April 8, 2019)

The BANNER accounts receivable subsystem should be reconciled on a daily basis, if practical. However, each institution must, at a minimum, reconcile accounts receivable on a quarterly basis as required by SAO. The BANNER subsystem must be reconciled to the People Soft general ledger. This is generally accomplished using three reports (TGRAGES, TGRRCON and ZGRAGES). The TGRAGES, which is by person and detail code should support the TGRRCON which is a summary report in BANNER. ZGRAGES, which is a ITS modification from baseline BANNER, is also available for the reconciliation process because it provides detail by student and fund. ZGRAGES may be more useful than TGRAGES because it can be downloaded into excel. These reports should be ran concurrently to ensure proper reporting. The final part of the reconciliation is to then verify that the TGRRCON reconciles to the People Soft trial balance.

If an institution uses a subsystem other than BANNER to maintain accounts receivable activity, those receivables must also be reconciled, aged and maintained by person/vendor. Also, if the subsystem generates aging and reconciliation reports other than TGRAGES, ZGRAGES and TGRRCON, those reports must be maintained as discussed above and transferred to the USG Office of Fiscal Affairs as required by the schedules below.

Each institution is required to submit the TGRRCON, including evidence supporting reconciliation with the general ledger, to the USG Office of Fiscal Affairs as follows:

Date of AnalysisDue Date
September 30thOctober 31st
December 31stJanuary 31st
March 31stMay 1st
June 30thAugust 1st

Each institution is also required to properly age accounts receivable per SAO requirements. Institutions are required to submit an aging analysis (TGRAGES, ZGRAGES or equivalent) that reconciles to the general ledger to the USG Office of Fiscal Affairs on a semi-annual basis. The aging analysis must be submitted as follows:

Date of AnalysisDue Date
December 31stFebruary 10th
June 30th10 days after submission of AFR

10.3.1 Provision for Uncollectible Accounts (Bad Debts) GAAP Basis

(Last Modified on April 9, 2019)

In most cases, the Governmental Accounting Standards Board (GASB) provides that uncollectible receivables should be treated as a contra asset (Allowance for Doubtful Accounts) and contra-revenue.

Uncollectible receivables, that are a result of revenue generating activities, should be recorded as a contra revenue so as to reduce the related revenue accounts. Tuition and fees would be an example of revenue generating activities.

Note:An exception to this general rule will be when an uncollectible is not related to revenue generating activity (non-revenue receivable). In those instances, a bad debts expense will be recorded as the offset to the Allowance for Doubtful Accounts. Vendor Overpayments would be an example of non-revenue activity.

When to record as Allowance for Doubtful Accounts

Allowance for Doubtful Accounts will be recorded in the Actuals Ledger in accordance with generally accepted accounting principles, as follows:

  1. Once internal collection efforts prove unsuccessful and/or once accounts receivable have aged more than one hundred eighty (180) days from the due date, the receivables in question should be recorded as an Allowance for Doubtful Accounts.
  2. If an invoice is determined to be uncollectible before the one hundred eighty (180) day past due date, that amount should immediately be recorded as Allowance for Doubtful Accounts.

10.3.2 Statutory (Budget Basis) Reserve for Compliance Reporting

(Last Modified on April 19, 2019)

An Allowance for Doubtful Accounts in not recognized under statutory/budget basis reporting. Accounts receivable must be reported at the total gross amount due, not netted for uncollectible amounts. However, the uncollectible portion should be recorded on the Budgetary Compliance Report (BCR) as a reserve of fund balance (Reserve for Uncollectible Accounts Receivable).

Determining the Statutory (Budget Basis) Reserve

As a general rule, the Budget Basis reserve should be the same amount as the Allowance for Doubtful Accounts reported on the GAAP basis, however if an institution does not have adequate unreserved fund balance in the appropriate budget basis fund to reserve the total amount reported on the GAAP basis, the fund cannot be reserved into a deficit position, therefore, the Budget Basis reserve must be calculated as follows:

  1. When reporting accounts receivable on the budget basis, the uncollectible portion may only be reserved to the point where available unreserved fund balance (on budget basis) is reduced to a zero balance. In these instances, the Budget Basis “Reserve for Uncollectible Accounts Receivable” on Statutory Basis statements will be less than amounts reported as Allowance for Doubtful Accounts on the GAAP basis.

If an institution finds itself in a position where fund balance is not sufficient to cover budget basis uncollectible amounts, a funding plan must be devised to address the reserve inequity on the Budget Basis. The institution’s original budget submission must contain an amount set aside for this purpose. Institutions should budget this activity within a unique department created to clearly identify the planned contributions towards reducing the reserve inequity. Along with the original budget, institutions will be asked to submit a plan of funding projections for future years until the remaining reserve inequity is funded. This plan will be reviewed during budget development and discussed during the annual budget hearing.


10.3.3 Assigning Uncollectible Receivables to Third Party Collection Agencies

(Last Modified on April 9, 2019)

After internal collection efforts have been determined ineffective, amounts due should be turned over to a collection agency. See Section 10.6.1 for requirements on past due notices. Once the collection agency notifies an institution that collection efforts have been exhausted, amounts that are less than or equal to $3,000, should be forwarded to SAO requesting permission to write-off the uncollectible amounts. See section 10.6.2 for additional information on format of write-off requests. Generally, uncollectible amounts should only be assigned to a collection agency for 12 months, unless there is evidence that collection is imminent. After 12 months, accounts should be assigned to another collection agency or returned to the institution. Institutions may rotate to alternative collection agencies as long as amounts are deemed collectible. However, once collection efforts are no longer economically practical, they should be removed from third party collections.


10.3.4 Write-Off of Uncollectible Accounts Receivable

(Last Modified on April 9, 2019)

The Constitution of the State of Georgia generally prohibits writing off obligations due to the State. However, OCGA Section 50-16-18, provides state agencies with a mechanism for writing off selected obligations of an immaterial nature when the collection has been deemed unlikely after appropriate effort has been made, and costs of continued collection efforts would exceed value owed to the institution.

The legislation authorizes units of the USG with a means of discharging any obligations of $ 3,000 or less providing that appropriate collection efforts have been unsuccessful. Therefore, when accounts receivable of $3,000 or less are ultimately determined uncollectible and all required due diligence collection efforts have been exhausted, the institution should request permission from the SAO to officially write off uncollectible amounts. Once the SAO approves request, the uncollectible amount(s) should be eliminated from the accounting records of the institution.

Note: Due diligence is defined as the performance of both:

    • Collection efforts by the institution according to the minimum guidelines in Section 10.6, and
    • Collection agency efforts, subject to cost vs. benefit assessment by the institution.

Write-off of a receivable is based upon the aggregate amount due from a debtor, not on an individual transaction. Also, if an institution uses multiple subsystems to capture accounts receivable balances, the amounts in the various subsystems must be aggregated by student/vendor. If aggregated amounts exceed $3,000, write off may not be requested. For example, if a student owes a total amount $4,000, which is made up of several transactions from various subsystems, where no single transaction exceeds $3,000, then, no portion of the $4,000 may be written-off.

The writing off of federal receivables, resulting from contract and grant activity, will be treated as disallowed charges. Therefore, instead of actually writing off these amounts, they will be funded from indirect cost recoveries (revenue). The account number/code for indirect cost recoveries-federal is 472100.

Other receivables from the federal government related to revenue generating activities such as tuition, fees, veterans’ processing allowances, etc., that result in uncollectible accounts will be handled in the same manner as uncollectible amounts discussed in section 10.3.1.

For nominal uncollectible balances, the institution may determine that it is not cost effective to pursue collection beyond a certain point. At that point, those amounts should either be funded from available funding sources or submitted for write-off. See section 10.6.1 for more information on required due diligence for nominal balances.

Receivables due from another state agency, foundation or another unit of the university system should not be written off. These receivables should be worked until collected. The USG Office of Fiscal Affairs should be contacted for assistance if item is over 120 days old.

Journal Entries

GAAP Basis – AFR Reporting – Actuals Ledger

  DebitCredit
1)Allowance for Doubtful Revenue (Contra Revenue)3,000 
           Allowance for Doubtful Accounts (Contra Asset) 3,000
 To reverse revenue and set up contra asset for A/R after internal collection efforts have been exhausted. This entry occurs at point institution considers amount due to be likely be uncollectible, normally around 180 days when sent to collection agency.
2)Allowance for Doubtful Accounts (Contra Asset)3,000 
           Accounts Receivable 3,000
 To perform actual write-off of A/R after approval received from SAO.
Note:If collections are made after recording the allowance entry (1) above, the allowance entry should be reversed and revenue recognized against the receivable balance. If recovery occurs after the revenue has been removed from the accounting records, entries (1) and (2) above, the amount recovered should be recognized as miscellaneous revenue in period received.

Any recoveries, received in a subsequent period, which are associated with non-revenue generating accounts receivable write-offs (vendor overpayments) will also be reflected as miscellaneous revenue in period received.

Statutory Basis (Budget Basis) Reporting – BCR Ledger

BCR reporting instructions provides a list of entries necessary to convert from GAAP reporting to Statutory Basis reporting. Within that listing, entries BCR 6 through BCR 10 are necessary to convert the receivables to Statutory Basis. In essence, these entries negate the effects of the Allowance for Doubtful Accounts and reports Accounts receivable on a statutory (grossed up) basis, with an offsetting Reserve for Uncollectible Accounts Receivable as discussed is section 10.3.2 above.

Statutory Basis entries are only required for funds with lapse provisions (10000, 10500, 10600 and 50000). For consistency in reporting, schools may choose to report accounts receivable for the remaining budget basis funds (14000, 15000 and 16000) on the Statutory Basis.


10.5.1 Maintenance of Records-Physical Security

(Last Modified on April 9, 2019)

The physical paperwork providing proof of the receivable, and the electronic records recording the receivable and the continuing balance, should be stored according to current Records Retention Standards published by the State of Georgia. Even though records retention standards may allow destroying of paper documents and related electronic records after a certain period of time, institutions should be diligent in protecting all physical paperwork and electronic records that provide proof of the receivable. These paper documents providing proof of receivables may be very valuable in future collections, and may be checked during audits by state and internal auditors. If electronic archiving of data systems will destroy or make inaccessible these receivable records, then the institution should print and file this information for use.


10.5.2 Breakdown of Control Standards

(Last Modified on April 9, 2019)

Any material breakdown of the record-keeping capability will be reported to the institution’s chief business officer, who will advise the USG’s Chief Fiscal Officer if deemed appropriate.


10.5.3 Reconciliation and Review

(Last Modified on April 9, 2019)

An aged listing of individual receivable balances will be prepared, maintained and submitted in accordance with instructions in Section 10.2.3. Management above the level responsible for supervising the billing and collection follow-up function will review old dated balances. The Controller’s office will ensure that subsidiary ledger records (including those maintained outside the Controller’s office) are reconciled to the control account balances at least quarterly.


10.5.4 Division of Responsibility

(Last Modified on April 9, 2019)

Personnel responsible for the following activities will be functionally divided and the divisions maintained as follows (*):

  1. Establishment of charges.
  2. Recording of charges.
  3. Recording of cash collections. When cash is received in payment of outstanding accounts receivable balance, the cash should only be receipted at a designated cash collection points.
  4. Approval of write-off requests and other types of non-cash credits, such as cancellations. Non-cash credits will be approved by management levels above the supervisors of the functional divisions involved.
  5. Processing of documents.
  6. Accounting.
    • All control account input will be approved and transmitted by the Accounting office.
    • A subsidiary record of balances written-off as uncollectible will be maintained.
  7. Billing. Billings to individual debtors will be accessible only to individuals responsible for invoicing.
  8. Collection follow-up.

(*) Compensating controls may be used to mitigate risks for institutions with smaller staffs when duties cannot be functionally separated.


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