State of Florida DEP 540 Department of Environmental Protection Effective: March 31, 2005 ACCOUNTS RECEIVABLE COLLECTIONS AND WRITE-OFF PROCEDURES

Transcription

1 State of Florida DEP 540 Department of Environmental Protection Effective: Administrative Directive Approved by the Secretary 1. Purpose ACCOUNTS RECEIVABLE COLLECTIONS AND WRITE-OFF PROCEDURES Establishes uniform guidelines and principles for the internal control, collection and writeoff of accounts receivable held or administered by the divisions or districts of the Department of Environmental Protection. Policies contained herein are designed to comply with applicable state laws, rules and regulations. 2. Authority Chapter 17.04, 17.20, and 95.11, Florida Statutes and Chapter 3A-21 Florida Administrative Code (F.A.C.), Chief Financial Officer Memoranda No. 20 ( ), and No. 15 ( ) 3. Definitions a. Accounts Receivable - A record reflecting amounts due from applicants, vendors, contractors, employees or other responsible parties for goods and services furnished by the Department, as well as, amounts assessed and due for consent orders, judgements or settlements. These amounts include fines, penalties, damages and reimbursements of cost for enforcement actions brought on behalf of the Department or as a result of an accident involving Department owned property. b. Collection Office - The office(s) designated by the Division/District responsible for the billing and/or receipt of monies due. c. Debt - An obligation to pay. d. Finance and Accounting Revenue Section Procedures Manual - Procedures established to ensure proper controls, consistency and accountability of funds collected for the Department of Environmental Protection. e. Fiscal Year - The State fiscal year covering the 12 month period from July 1 through June 30. f. Florida Accounting Information Resource (FLAIR) - The official accounting information system for the State of Florida. FLAIR was developed through the joint efforts of the Department of Financial Services (Office of Comptroller) and the Office of the Auditor General.

2 Page 2 of 10 g. Internal Controls - Policies and procedures established to provide reasonable assurance that specific objectives are achieved. h. Semi-Annually - Twice during the fiscal year (preferably October and April). i. State Treasury - The designated depository for all State funds. j. Trial Balance - A record containing all the accounts needed to reflect the financial position and the results of operations for the agency. k. Write-Off - An accounting adjustment reflecting the portion of an accounts receivable determined not collectible. 4. Policy This procedure provides a general description of the structure of the Department's accounts receivable function. The Bureau of Finance and Accounting, Revenue Section is responsible for supervising accounts receivable. When an account receivable is known to be delinquent, the responsible division or district will make a diligent effort to collect the account in compliance with these procedures. Where law requires specific collection efforts, the applicable division/district should establish written accounts receivable procedures. The Bureau of Finance and Accounting should approve these procedures. If such efforts fail to achieve collection, the office will promptly refer the account to either the Bureau of Finance and Accounting Revenue Section or to legal counsel for evaluation and further actions as required by law to protect the financial interest of the state. The Bureau of Finance and Accounting shall assist the divisions and districts in establishing written procedures for collection. 5. General Description of the Structure of the Department s Accounts Receivable The Department has several different accounts receivable systems that have evolved over a period of years on an as needed, where needed basis. There are two systems that are on-line mainframe systems supported by the Department s Bureau of Information Systems. One system is the Legal Case Tracking System. It is used to keep track of amounts assessed, paid and due for consent orders, judgments or settlements. These amounts include fines, damages and reimbursement of costs for enforcement actions brought on behalf of the districts and divisions of the department. The second mainframe system is used to keep track of amounts due for the Division of Waste Management Underground Storage Tank (STCM) registrations and late penalties. It is referred to as the STCM System.

3 Page 3 of 10 Accounts receivable for these two applications are monitored in detail on these subsidiary systems and recorded or adjusted in the Florida Accounting Information Resource (FLAIR) annually in lump sum. The Bureau of Finance and Accounting Revenue Section is responsible for maintaining the FLAIR accounts receivable subsystem. Other miscellaneous accounts receivable systems include, but; are not limited to: a. Division of State Lands Lease System is used to track amounts due for Submerged Lands and Upland leases. b. Office of Emergency Response System is used to track amounts due for Coastal Protection and Inland Protection Pollutant spills. c. Bureau of Information Systems maintains a system to track amounts due for data processing services. The Bureau of Finance and Accounting Revenue Section maintains suspense files on all accounts receivable with the exception of the two maintained by mainframe applications, which are recorded in the FLAIR accounts receivable subsystem at fiscal year end. Once a receivable is recorded in FLAIR, it is monitored monthly. Accounts receivable from bad checks are recorded in FLAIR at the time of occurrence. The FLAIR Accounts Receivable Subsystem is reconciled monthly to the FLAIR Trial Balance. 6. Requirements for Detailed Records and Accounts Receivable The Department must maintain a record detailing the amounts due from applicants, vendors, contractors, employees or other responsible parties. Because of the number of accounts involved, it is important that procedures be implemented that maintain accounts efficiently and accurately. Although the form for the detail accounts will vary by type of obligation, at a minimum the following data is necessary: a. Responsible Party's Name b. Billing Address c. Social Security Number or Federal Employer Identification Number (if available) d. Name and Telephone Number of Division/District/Program Contact Person e. District/Division/Program Reference Number f. Date of Transaction

4 Page 4 of 10 g. Explanation of Transaction h. Source Document Number (Assigned by Revenue Section when the accounts receivable is entered in FLAIR) i. Amount Due (1) Amount Assessed (2) Adjustment Amounts (3) Paid Amounts (4) Write-Off Amounts (5) Balance Due Pre-audit procedures should be established by the responsible division/district to ensure the total of all amounts due, payments, and adjustments are recorded accurately. Monthly reconciliation is needed to detect errors. The Bureau of Finance and Accounting Revenue Section is responsible for reconciliation of the FLAIR Accounts Receivable Ledger to the FLAIR Trial Balance. These ledgers will be reconciled monthly. 7. Responsibility for Receivable Records and Internal Controls The division or district having responsibilities related to billing or receipt of monies shall establish a record of amounts and dates due. Whenever such report indicates that an amount owed was not collected at the time it became due, the division or district will create a record for collection efforts. The record shall include at least the same detail as described in Paragraph Six (6). In addition, the record shall include all other data requirements of the specific circumstances surrounding the particular obligation. The respective district or division directors will establish internal check procedures that will ensure that amounts owed are collected properly and fully, and that collections are properly remitted to the Bureau of Finance and Accounting Revenue Section for deposit into the appropriate fund within the State Treasury in accordance with the Finance and Accounting Revenue Section Procedures Manual and where applicable, DEP 630, Reporting of Accidents Involving State Owned Motor Vehicles/Watercraft and the Procurement of Related Repairs.

5 Page 5 of Legal Considerations a. Delinquent Accounts: An account receivable becomes delinquent when payment is not received in accordance with conditions giving rise to the receivable. Thus, if payment is not made in an amount at least equal to that required or within the time specified for the account, such account is delinquent. The Department, however, declares an account "past due" if not paid within thirty (30) days of the due date. If not paid within ninety (90) days following its due date, the account is considered "delinquent". In all cases, the exercise of due diligence in collecting an account requires prompt notification of the account s overdue status to the obligee and request for payment. b. Statute of Limitations: Because of changes in applicable statutes and the complexity of applying the statutes to specific cases, the Department will not attempt to settle or write-off any account receivable without specific legal authorization from the Chief Financial Officer or as may be specifically authorized by a law or rule relating to the debt giving rise to the receivable. If legal action is to be initiated by the department's legal counsel, or by the Chief Financial Officer, the responsible division or district must not delay in referring the account for appropriate action or write-off authority. The following citations are pertinent: (1) Section 95.11(2)(b), F.S., states: "A legal or equitable action on a contract, obligation, or liability founded on a written instrument" must be commenced within five years from the time the receivable is recognized. (2) Section 95.11(3), F.S., states Within four years an action founded on a statutory liability, penalty or forfeiture, fraud, or an action on a contract, obligation or liability not founded on a written instrument. (3) Section 95.11(4), F.S., allows a two-year period for An action to recover wages or overtime or damages or penalties concerning payment of wages and overtime. c. Write-Off Authority: Except as otherwise provided by statute, the authority to adjust and settle accounts or debts owed to the state rests with the Chief Financial Officer (or Department of Financial Services) under Section 17.04, F.S., and Chapter 3A-21,

6 Page 6 of Collection Efforts Florida Administrative Code (F.A.C.), Audit and Adjustment of Accounts and Recovery of Accounts Receivable. Corrections that reduce a fee by reason of error in the assessment or recording must not be regarded as a compromise, write-off or default. However, any such adjustments to the accounts must be supported by documents explaining the reason for the adjustment signed by the respective Division or District Director or designee. Responsibility for collecting accounts receivable rests with the pertinent division or district. The Bureau of Finance and Accounting Revenue Section will pursue accounts arising from returned checks. Before declaring an account uncollectable, diligent effort must be made to collect the amount outstanding. The collection effort may be shared by the division or district and the Office of the General Counsel, but must include at least the following: a. Responsibilities of the Division, District or Program Area: (1) If payment is not received within thirty (30) days after its due date, the collection facility for the division or district (respectively, the Collection Office ) will notify the responsible party in writing of the amount that is past due. (See Attachment I - Sample Notification Letter). A copy of this notice shall be provided to the appropriate attorney in the Office of the General Counsel. (2) The Division or District Director or designee may negotiate an extended payment agreement for the past due payment with the responsible party for a period not to exceed six (6) months. If this is done, it is the Collection Office's responsibility to keep track of payments and a running balance of the amount due. Legal counsel should approve extended payment agreements that exceed six (6) months. In addition, the division or district will notify the appropriate attorney and make necessary changes in payment terms and conditions on accounts receivable system (Legal Case Tracking, STCM, Emergency Response, State Land Leases, BIS, etc). (3) If payment is not received, or an extended payment agreement is not reached within sixty (60) days from the due date, the Collection Office will notify the responsible party in writing that the account is overdue. The letter will include the statement that if payment is not received or an extended payment agreement reached within two (2) weeks of the

7 Page 7 of 10 notification, the account will be referred to legal counsel, and that if this occurs the account may be turned over to the Chief Financial Officer s Collection Agency and Credit Bureaus will be notified. (See Attachment II - Sample Notification Letter.) (4) If an adequate resolution of the past due account is not reached within ninety (90) days of the due date, the Collection Office will refer the account either to the Bureau of Finance and Accounting s Revenue Section or to the Office of the General Counsel. Before referring the account, the Collection Office will assemble available documents to assist the Revenue Section or legal counsel in determining an appropriate action. Such documents should include relevant documentation of the debt and efforts made to collect or contact the debtor. A summary of these efforts, in writing, will expedite a decision. The referral shall contain a recommendation by the Collection Office whether to pursue collection or, refer or seek authority from the Chief Financial Officer to settle, compromise or write off the debt. The responsible party s ability to pay will determine whether the Department will seek enforcement or refer the account to Finance and Accounting to request assistance from the Chief Financial Officer in either the collection of or authority to write off the account. Presumptively, accounts of $5,000 and less will be referred directly to the Bureau of Finance and Accounting Revenue Section (with notice to the appropriate attorney). However, the Collection Office may determine to retain and continue to pursue such accounts or to refer the same to legal counsel. If the Collection Office determines not to refer a delinquent account to the Revenue Section, it will include in its report of accounts an explanation of the factors leading to that decision. (5) Semi-annually as of June 30 and as of December 31, the Collection Offices shall notify the Bureau of Finance and Accounting, in writing, of all pending collection items that have not been referred to the Revenue Section; including those accounts which have been retained and those referred to legal counsel for enforcement. These reports shall include the date the item was due, and the date and content, if any, of the Collection Office s recommendation to legal counsel. b. Responsibilities of Legal Counsel: (1) Legal counsel will respond to a referral of account by, and the recommendation of, the Collection Office. Such response will include an

8 Page 8 of 10 estimate of collection costs (if applicable) and any suggested alternative course of action. The Collection Office will make the ultimate decision of whether and how to pursue the account. (2) Within thirty (30) days of receipt of the account from the Collection Office, legal counsel will notify the responsible party that the account has been referred for review and possible litigation. Legal action may include, but not be limited to, suit and post judgment execution, levy, garnishment, or cancellation of lease and removal of structures. (3) If payment is not received, or extended payment agreement reached, within thirty (30) days from the date of notification from legal counsel, appropriate action based on the recommendation of the Collection Office will be taken. (4) Legal counsel may determine that diligent effort has been made by the Department to collect a receivable and that the account is uncollectable. Counsel will advise the Collection Office, which may then request the Bureau of Finance and Accounting Revenue Section to refer the account to the Chief Financial Officer either for further collection efforts or for approval to write-off the account. c. Responsibilities of the Bureau of Finance and Accounting: The Revenue Section shall make diligent effort to collect receivables for returned checks and associated service charges. The appropriate division or district will be notified in writing of the payer amounts due from dishonored checks. The responsible division or district will review to determine the validity of the account and advise the Revenue Section in writing within ten (10) days whether to pursue collection. If the amount is still valid, the Revenue Section will promptly forward a request with documentation to the Chief Financial Officer in accordance with Chief Financial Officer Memoranda No. 15 ( ) and No. 20 ( ). (Refer to Attachments III and IV.) 10. Request for Assistance in Collection or Write-Off Authority After all the above procedures have been completed and except as otherwise provided by statute, the Bureau of Finance and Accounting Revenue Section will promptly forward a request with documentation to the Department of Financial Services in accordance with Chief Financial Officer Memorandum No. 15 ( ), Delinquent Accounts Receivable (See Attachment III).

9 Page 9 of Follow-Up on Request for Assistance in Collection or Write-Off Authority If a request for authority to write off an account is not acknowledged, or a response received within ninety (90) days, the Bureau of Finance and Accounting Revenue Section will initiate an inquiry to the Office of the Chief Financial Officer. The Revenue Section will provide any additional information requested by the Chief Financial Officer to act on the request. The Revenue Section shall determine the cause of the delay and the probable clearance date. The pertinent division or district will be notified in writing by the Revenue Section when the account is either paid or written-off. If no correspondence is received from the Revenue Section within six (6) months, the division or district may initiate an inquiry to determine the status of the account. 12. Recording the Write-Off or Collection Upon receipt of the appropriate authorization from the Chief Financial Officer, the Bureau of Finance and Accounting Revenue Section records the write-off in FLAIR by reducing the accounts receivable and the appropriate adjustment to the allowance account. If the account is collected through the Office of the Chief Financial Officer s contracted collection agency; the Revenue Section will deposit the check into the appropriate fund with the State Treasury. The deposit will be recorded in FLAIR as a credit to the account receivable and a debit to cash. The collection fee withheld by the collection agency is recorded as a debit to a non-operating expenditure and a credit to the accounts receivable. This Directive supersedes and replaces DEP Directive 540, dated December 2, Establishes uniform guidelines and principles for the internal control, collection and write-off of accounts receivable held or administered by the divisions or districts of the Department of Environmental Protection. Responsible Office: Division of Administrative Services Bureau of Finance and Accounting

10 Page 10 of 10 ATTACHMENTS: Attachment I Notification Letter for Accounts 30 Days Past Due Attachment II Notification Letter for Accounts 60 Days Past Due Visit the web sites listed to view the associated Comptroller Memorandum s Attachment III Comptroller Memorandum No. 20 ( ) Attachment IV Comptroller Memorandum No. 15 ( )