Write Off Policy for
Aging Accounts
Finance, Administrative, &
Procurement Subcommittee
January 10, 2024
Recommendation
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Background & Discussion
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Write Off Policy for Aging Accounts
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Financial Impact
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Thank you!
Aging Account Write-Off Policy
Policy Number:
Approval Date:
Agenda Item: Item 7Approved by Resolution: {To be added by Clerk} Purpose
The purpose of this policy is to establish a consistent, self-standing process for writing off aging accounts in coordination with established accounts receivable and recovery policy and practices.
Background Discussion
Ava Community Energy Authority (Ava) has the authority to deem an account unrecoverable and approve a write-off of an amount owed by a customer.
In accordance with Generally Accepted Accounting Principles (GAAP), Ava recognizes bad debt expense in the period that the unrecoverable balance has been identified. Under California State law, Ava may pursue the aged balances in accordance with its Board approved recovery policy. Ava may write off certain unrecoverable balances that meet specific criteria which satisfy both governing laws and guiding principles.
Policy
1. Unless otherwise formally directed, administered, or requested by the Board of Directors through an amendment to this policy, balances will only be written off from terminated accounts. Terminated accounts are defined as customers no longer under service by Ava Community Energy Authority. Active accounts are still being notified of any past-due amounts through the customer’s monthly bill.
2. Per California Code of Civil Procedure §337, the statute of limitations on actively pursuing debt is four years after termination. Pursuant to this Civil Procedure any terminated accounts with debts aged greater than four years will be considered for immediate write-off.
3. If applicable, terminated accounts with balances below the established minimum recovery threshold will be written off upon the returning of the aged balance from PG&E.
4. Terminated accounts with balances above the minimum recovery threshold, if established, will be evaluated for write-off in a process in accordance with governing best-practices and Ava’s accounts receivable recovery policy.
5. Periodically, staff will review this write-off policy for best practice developments and propose any adjustment to the Board of Directors for any recommended changes.