HOUSE BILL REPORT

EHB 1578

BYRepresentatives R. Fisher, McLean, Holland, Silver, H. Sommers and Anderson; by request of Office of Financial Management

Allowing write-offs of uncollectible accounts.

House Committe on State Government

Majority Report:  Do pass with amendments.  (10)

      Signed by Representatives R. Fisher, Chair; Anderson, Vice Chair; McLean, Ranking Republican Member; Hankins, R. King, Morris, O'Brien, Rector, Sayan and Silver.

House Staff:Barbara McLain (786-7135)

AS PASSED HOUSE MARCH 15, 1989

BACKGROUND:

Accounting within state government is decentralized, and agencies use separate systems and procedures to manage their individual accounts receivable based on guidelines developed by the Office of Financial Management (OFM).

A November, 1987 report of the Legislative Budget Committee (LBC) found in an audit of the state's financial statements that the total accounts receivable owed by non-governmental entities were worth $1.5 billion.  Receivables delinquent over 90 days were worth $225 million.  The LBC report included a number of recommendations designed to improve the management of accounts receivable.

Write-Offs:  Certain accounts receivable become uncollectible and need to be written off the books to allow state financial statements to accurately reflect the state's financial affairs.  OFM has developed procedures that govern most agencies' write-offs.  In general, as soon as an account appears uncollectible, an agency is to seek the Attorney General's approval to write the account off, then the agency is to archive the record.

The write-off policies of the Departments of Employment Security, Social and Health Services, and Revenue are written in statute and are separate from those developed by OFM.

SUMMARY:

The procedures to write uncollectible accounts receivable off state accounting books in the Departments of Employment Security, Social and Health Services, and Revenue are changed to reflect Office of Financial Management (OFM) guidelines.  In general, write-offs are to be based on the criterion of cost- effectiveness.  The statutes are brought to conformity by eliminating specific criteria such as Attorney General approval, mandatory waiting periods, OFM approval, pursuit of all available and lawful means of collection, and dollar limitations.

All state agencies are to report annually to OFM all accounts receivable written off their books.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Bob Jacobs, Office of Financial Management; and Graeme Sackrison, Department of Employment Security.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Agencies must currently hold delinquent accounts receivables on the books, even when they should be written off.  This bill will aid agencies in keeping their books current.

House Committee - Testimony Against:      None Presented.