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09 THE CITY OF P- -N.- CITY COUNCIL AGENDA REPORT October 18, 2011 Finance TITLE: APPROVAL OF CITY'S POLICY FOR WRITE-OFF OF UNCOLLECTIBLE ACCOUNTS RECEIVABLE SUMMARY Various City departments issue invoices for costs incurred by the City for damage to City property, employee injury, citations, service and use fees, business license tax and utility billings. According to generally accepted accounting principles, after in-house collection efforts have been exhausted or other mitigating factors (collection agency) have taken place, accounts receivable that are considered uncollectible should be written-off as bad debt in order to avoid overstating the City's assets. The City does not have a write-off of bad debt policy. Staff is recommending that the City Council adopt a policy for write-off of uncollectible accounts receivable. RECOMMENDATION Staff recommends the City Council adopt by resolution the City's Policy for Write-off of Uncollectible Accounts Receivable. FINANCIAL STATEMENT To date, the City has not had a Policy for Write-off of Uncollectible Accounts Receivable. Staff estimates the amount of accounts receivable to be written off to be approximately $350,000 for all of the funds of the City, and of that amount approximately $150,000 is in the General Fund. The uncollectible accounts receivable are an accumulation over the twenty years from 1987 to 2007. The average annual uncollectible accounts receivable during that time period was approximately $17,500. As per the policy, the write-off of any individual uncollectible account receivable that exceeds $10,000 must be approved by the City Council. If Council adopts the Write-off Policy, Staff anticipates bringing forth the individual uncollectible accounts receivable in excess of $10,000 for Council's consideration for write-off in December 2011.