Chapter 3.35
ALLOWANCE FOR DOUBTFUL ACCOUNTS POLICY
Sections:
3.35.020 Procedure and formula.
3.35.030 Authority for administration.
3.35.010 General information.
(A) The allowance for doubtful accounts policy is being revised effective January 1, 2003. The new policy will be referred to as the allowance for doubtful accounts policy. This revision was instituted to change the methodology employed to determine the percentage of property tax receivables that is unlikely or doubtful to be realistically collected within a reasonable period of time following the close of a fiscal year. The policy will apply to all funds of the municipality, including its utilities in which property taxes are accounted or figure in the revenue stream. The revision is related to the implementation of the new reporting model, Governmental Accounting Standards Board Statement 34.
(B) The policy will be applied to the preparation of the financial statements of the municipality, in conformity to the prevailing generally accepted accounting practices (GAAP) and the guidance statements of the Governmental Account Standards Board (GASB). The policy need not inform practical policies of collection nor limit the ability of the municipality to carry the full amount of receivables affected for other purposes. [Ord. 1240 § 1, 2004. Code 2000 § 35.35].
3.35.020 Procedure and formula.
(A) The clerk-treasurer, in consultation with and relying upon statistical and historical data compiled and supplied by the office of the Lake County auditor, shall identify the amounts of property taxes charged and collected for the three years most immediately preceding the subject year of the financial reporting.
(B) The clerk-treasurer, in consultation with and relying upon information compiled and supplied by the office of the Lake County auditor, shall then calculate the percentage of payment of property taxes receivables using only those charge-type or categories associated with unpaid taxes, which includes but is not limited to late installments and penalties.
(C) The percentage paid in each of the three years immediately preceding the subject year of the financial reporting shall be averaged to produce the average percentage of collections as applied to the receivables. The inverse of that percentage shall represent the allowance for doubtful collections. (Example: If the three-year average of collections on delinquencies or receivables is 55 percent, then the allowance for doubtful collections would be 45 percent.) [Ord. 1240 § 1, 2004. Code 2000 § 35.36].
3.35.030 Authority for administration.
The town clerk-treasurer shall have continuing authority for the administration and implementation of this policy. This shall include the authority to interpret its provisions in a manner not in conflict with any of its terms including the authority to determine the estimate of allowance for doubtful accounts that will be used. As a management policy, all departments shall cooperate in its execution. [Ord. 1240 § 1, 2004. Code 2000 § 35.37].