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Accounts Receivable Write-Offs

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    Title:

    Accounts Receivable Write-Offs

    Publication date:

    10/23/18

    Effective date:

    10/23/18

    BRIEF

    Policy Summary

    This policy provides guidelines on Lawrence Berkeley National Laboratory (Berkeley Lab) write-offs of uncollectible accounts receivable. To limit write-off entries, Berkeley Lab aggressively takes collection actions to resolve all delinquent debt whenever doing so is possible and cost-effective.

    Who Should Read This Policy

    All employees in the Office of the Chief Financial Officer (OCFO) and division leadership (including business operations staff and principal investigators) responsible for receivables management and related write-offs

    To Read the Full Policy, Go To:

    The POLICY tab on this wiki page

    Contact Information

    Reimbursable Budget Manager, OCFO


    Title:

    Accounts Receivable Write-Offs

    Publication date:

    10/23/18

    Effective date:

    10/23/18

    POLICY

    A. Purpose

    This policy provides guidelines on Lawrence Berkeley National Laboratory (Berkeley Lab) write-offs of uncollectible accounts receivable.

    B. Persons Affected

    All employees in the Office of the Chief Financial Officer (OCFO) and division leadership (including business operations staff and principal investigators) responsible for receivables management and related write-offs

    C. Exceptions

    Not applicable

    D. Policy Statement

    1. General
      1. Berkeley Lab has two types of receivables that may be subject to delinquency and nonpayment:
        1. Reimbursable receivables.
        2. University of California (UC) receivables.
      2. To limit write-off entries, the Laboratory aggressively takes collection actions to prevent delinquent accounts-receivable balances and resolve all delinquent debt whenever doing so is possible and cost-effective.
      3. The Laboratory Financial Management System generates, on a monthly basis, accounts-receivable aging reports for all receivables, reimbursable or UC. All reports are categorized by contract or advance type and include the following information:
      4. Invoice number.
      5. Days outstanding calculated from the invoice date and binned in 30-day increments.
      6. It is the Reimbursable Budget Group's responsibility to monitor the aging on a monthly basis and aggressively collect reimbursable receivables in order to minimize risk of loss.
      7. It is the Intellectual Property Office's (IPO) responsibility to monitor the aging of UC receivables on a monthly basis and aggressively collect reimbursable receivables in order to minimize risk of loss.
    2. Reimbursable Receivables
      1. Reimbursable receivables include the following:
        • Sponsored Research awards.
        • Interlocation Appointments.
        • Cooperative Research and Development Agreements (CRADAs).
        • Other miscellaneous receivables.
      2. Uncollectible receivables arise when reimbursable activities performed under the management and operating (M&O) contract between the UC and DOE are unpaid by the sponsor/third party.
      3. Uncollected receivables are to be considered bad debts and written off when they are determined to be uncollectible. Under the terms of Contract 31 and FAR 31.205-6, bad debts are unallowable costs. Therefore, when receivables for reimbursable activities are deemed uncollectible, the costs are charged to the UC management fee.
      4. When aged reimbursable receivables may need to be written off, the following steps are taken:
        • The Reimbursable Budget Group will prepare a quarterly report of uncollectible and aged receivables and submit that report to the Controller for review. Aged receivables are invoices greater than 180 days. The quarterly submission will include Reimbursable Group's recommendations and justification to support either ongoing collection efforts or write-offs
        • The Controller will review the uncollectible and aged receivable report with the Chief Financial Officer (CFO), and those receivables deemed uncollectible will be submitted to the UC Office of the National Laboratories (UCNL) for review and approval to be charged to the UC management fee.
    3. UC Receivables
      1. UC receivables are receivables related to intellectual property (IP) activities, including:
        • License, option, and bailment fees (such as issue fees).
        • Royalties.
        • Recoverable patenting costs (hereafter called "licensing fees").
      2. During the term of Contract 31, the receivables generated from IP‐related activities are owned by UC in accordance with (i) Contract 31 Clause I.102(h) and (ii) the Bayh‐Dole Act (effective July 1, 1981), which allows universities and small businesses to elect to retain ownership of inventions made under federal funding.
      3. Because these receivables are UC-owned, they are subject to the write-off provisions contained in the UC Accounting Manual (AM) R-212-2, Receivables Management. UC policy requires the write-off of uncollectible receivables to be authorized by campus chancellors.
      4. Uncollectible receivables arise when invoices for IP licensing fees are unpaid by the licensee or optionee. Uncollected receivables are to be considered bad debts and written off when they are determined to be uncollectible.
      5. When an aged UC receivable may need to be written off, the following steps are taken:
        • The IPO will prepare a quarterly report of aged receivables and submit that report to the Controller for review for delinquency. The quarterly submission will include the IPO's recommendations and justification to support either ongoing collection efforts or write-offs.
        • The Controller will review the submitted materials with the CFO. The CFO will authorize receivables for write-offs. If the write-off would result in unallowable costs, the write-off will be submitted to UCNL for review and approval to be charged to the UC management fee.

    E. Roles and Responsibilities

    Role

    Responsibility

    Reimbursable Budget Group

    • Leads collection efforts related to reimbursable receivables.
    • Prepares quarterly report of uncollectible and aged reimbursable receivables.
    • Submits reimbursable receivable write-off requests to the Controller's group as needed.

    Intellectual Property Office (IPO)

    • Leads collection efforts related to UC receivables.
    • Prepares the quarterly report of aged UC receivables.
    • Submits UC receivable write-off requests to the Controller's group as needed.

    Controller/CFO

    • Reviews write-offs for uncollectible UC receivables with the CFO to obtain authorization for write-offs.
    • Submits uncollectible reimbursable receivables to the UCNL for review and authorization.

    Division Leadership/Principal Investigator1

    • Provides assistance with collection efforts as needed.
    • Provides relevant project documentation to support write-off requests.

    1. In the context of this policy, division leadership includes the division director, deputy director, business manager, or other division operations staff to whom the division director has assigned financial accountability.

    F. Definitions/Acronyms

    Term

    Definition

    Bad Debts

    Actual or estimated losses arising from uncollectible accounts receivable due from customers and other claims, and any directly associated costs, such as collection costs and legal costs. Bad debts are unallowable on Contract 31.

    Cooperative Research and Development Agreement (CRADA)

    An agreement entered into between the University of California, as operator of the Laboratory, and one or more participants including at least one non-federal party under which the government, through the Laboratory, provides personnel services, facilities, equipment, or other resources with or without reimbursement toward the conduct of specified research or development efforts consistent with the mission of the Laboratory. The Laboratory is precluded from contributing funds to other sponsors in support of a CRADA.

    G. Recordkeeping Requirements

    None

    H. Implementing Documents

    None

    I. Contact Information

    Reimbursable Budget Manager, OCFO

    J. Revision History

    Date

    Revision

    By Whom

    Revision Description

    Section(s) Affected

    Change Type

    1/2/2012

    1

    S. Frainier

    Reformat for wiki

    All

    Minor

    9/20/2013

    2

    S. Frainier

    Review and Updates

    All

    Major

    10/23/18

    3

    N. Skowronski

    Update for org changes; clarification of existing policy

    All

    Major

    DOCUMENT INFORMATION

    Title:

    Accounts Receivable Write-Offs

    Document number

    11.01.015.000

    Revision number

    3

    Publication date:

    10/23/18

    Effective date:

    10/23/18

    Next review date:

    5/31/21

    Policy Area:

    Accounting

    RPM Section (home)

    Financial Management

    RPM Section (cross-reference)

    11.37

    Functional Division

    OCFO

    Prior reference information (optional)

    RPM, Chapter 11, Section 11.37

    Source Requirements Documents

    Implementing Documents

    None

    Other References

    Document Number

    Title

    Type

    11.07.004.000

    Cost Allowability

    Policy

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