Written by Diane Benjamin - editor

Bloomington can’t collect $513,722.53, but they don’t know from whom?

by Diane Benjamin

The Trial Balance from 4/30/2012 has an entry to write-off Uncollectible Accounts:  (Click to enlarge)

uncoll2I asked for details since this entry says nothing about why over half a million dollars was deemed uncollectible.

Here’s the response I received:

 In regards to item #3, the Finance Dept. has advised that they do not have detail only estimates that are based on review of detail and historical collections.

The total budget is $169,000,000.  To be fair, losing $513,723 is a small percent.

On the other hand:

They don’t know where they lost it?

They are estimating losses?  They are basing loses on HISTORY?

If the city was run like a business, an exact list of write-offs would be available.  People who don’t pay would be banned from doing business with the company unless they did so in CASH.  Unpaid accounts would be turned over to a collection agency who get to keep part of what is collected and don’t charge anything unless money is paid.  Obviously they aren’t a business.

I questioned that statement yesterday.  This morning they clarified it:

In regards to item 3, the Finance Dept. had this response:

 

The amount listed as allowance for uncollectible accounts in the amount of $513,722.53 at April 30, 2012 is a valuation allowance used, in accordance with generally accepted accounting principles, to value the accounts receivable in the General Fund at April 30, 2012.  This amount is an estimate of the amount of the accounts receivable that the City may not collect.
 
For the general fund receivables include amounts for ambulance services, loans (similar to the Community Development Block Grant program), and other miscellaneous receivables.  Some of these amounts are ultimately not collected for a variety of reasons including bankruptcy, inability/refusal to pay, or settlement for lesser amounts.  We make our estimate of the allowance for uncollectible accounts based on a review of the current accounts receivable aging and historical collection patterns, therefore, we do not have a list of specific accounts that make up the allowance.  For example, our estimate may include an assumption (based on past history) that we will only collect 10% of certain types of receivables if the balance is past due more than 180 days.

The only part this explains is the entries made on 4/30/2012 during the final review.  $343,171.10 was transferred from the old accounting program, so the statement doesn’t apply to that amount.  Evidently details are too difficult.

Community Development Block Grants are a receivable? 

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