Provision for Doubtful Accounts

(Last Updated 06/28/2000)

Beginning in FY 1999, provisions for doubtful accounts (estimated bad debts) will be recorded as a direct expense rather than as a reduction to revenue. The method by which the amount is calculated, i.e. as a percentage of fee-for-service charges, has not changed. This provision will continue to be posted monthly as part of the automated journal module generated directly from IDX data.Prior to FY 1999 the provision for doubtful accounts in department (or division) number DDDD was booked as a debit to the “accrued fee-for-service revenue” account

11-DDDD-57-21-91489.

Starting with the July, 1998, entries the provision amount will be debited instead to a new “accrued fee-for-service expense” account

12-DDDD-35-60-91489

using a new expense budget/object 35-60 for “provision for doubtful accounts.” Budget/object 57-21 will no longer be used. In July, 1998, Budget Adjustment transactions will also be posted to move each FIS current budget amount on budget/object 57-21 in each revenue account to the new budget/object 35-60 in the corresponding new expense account.

Note that the amount converting fee-for-service revenue from a cash basis to an accrual basis will now be the sum of accounts 11-DDDD-91489 and 12-DDDD-91489 instead of solely account 11-DDDD-91489.

If you have any questions about this change, please contact your Budget Office representative.