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Write off Unpaid Claims

Policy: 

F/EA shall prepare and review an aged trial balance of the accounts receivable as often as necessary, but at least annually at year-end, in order to determine if any delinquent receivables must be written off as bad debts.

The F/EA Accountant will send the request to the <<Staff Title>> and the Chief Financial Officer for authorization to write-off receivables as bad debts. The request shall be supported by sufficient evidence that the claims are uncollectible.

Procedure: 

 

  1. Each month, <<Staff Title>> will save an Accounts Receivable Aging Report to <<File Path>>
  2. The spreadsheet is sorted by bill_date
    • Receivable are categorized based on aging: 0-30 days, 31-60 days, 61-90 days, and over 90 days 
  3. Any receivables over 30 days old are researched
  • If the claims are denied because of eligibility or any failure by F/EA to comply with program rules and regulations, the claims will be deemed uncollectable from the participant.
  • These claims will be written-off per this procedure
  1. <<Staff Title>> prepares a spreadsheet called Write-off MMYY saved in <<File Path>>. 
  2. Each entry to be written off is entered in the spreadsheet
  3. For each claim that will be written off, the remittance advice claim number is entered into the spreadsheet for the claim
  4. <<Staff Title>> prepares a cover letter and the Write-Off report
  5. Cover letter and Write-Off report are submitted to the <<Staff Title>> and or the Chief Financial Officer for authorization to write off the claims.
  6.  <<Staff Title>> and or the Chief Financial Officer approves the write off by signing the report and returning it to the F/EA Accountant.
 
Post Bad Debt Write-Off For Reimbursement from F/EA
 
  1. <<Staff Title>> will copy the authorized Write off Report and forward it to the <<Staff Title>> to adjust the claim in the billing system.
  2. <<Staff Title>> adjusts claims in the billing system.
  3. <<Staff Title>> prepares a journal entry to record the write off and record the reimbursement due to the Cash Advance Account from F/EA
  4. The General Ledger Account receivable account <<GL Account>> is credited and the General Ledger Account # Due to/Due From Service Account <<GL Account Number>>.
  5. <<Staff Title>> signs and dates the journal entry.
  6. <<Staff Title>> forwards to <<Staff Title>> for approval
  7. <<Staff Title>> signs and date the journal entry
  8. <<Staff Title>> returns to <<Staff Title>> for posting
  9. <<Staff Title>> posts the journal entry to the General Ledger
  10. <<Staff Title>> emails Chief Financial Offcier to request reimbursement for the bad debt written off.  
Internal Controls: 

The internal controls used by F/EA to monitor this process establish responsibility, segregate duties, document procedures and ensure independent internal verification. The methods of internal control utilized by F/EA are:

  1. An Aging Report of denied claims is produced and verified monthly
  2. Each denied claim is individually researched by the <<Staff Title>> and reviewed by the <<Staff Title>>
    1. Any claims that are deemed unrecoverable at the fault of F/EA are reported on the Write Off report
  3. The F/EA Accountant prepares, signs and dates a journal entry template and the Write Off report
  4. The <<Staff Title>> or CFO review and sign the Write Off report
  5. <<Staff Title>>  verifies that the deposit for the Write Off amount was made to the program operating account from the F/EA account