The Catholic University of America

Finance: Accounting
Allowance Policy

 

Approved by: Board of Trustees/President
History: Issued -- March 14, 2002
  Revised --Nov. 3, 2008
  Additional History
Related Policies:  
Additional References:  
Responsible Official: Controller, Sheri Hardison   202-319-5031
 

I. Introduction

The university, to accurately recognize revenues on its financial statements, must provide for the possibility that some present and future revenues may not be collectible. To assure the most accurate data, methods of developing allowances for uncollectible amounts must be developed, based on actual experience and other relevant data.

This policy applies to the recording of all revenue in the university's financial records.

II. Definitions
N/A

III. Allowances Required

The university shall calculate an allowance for uncollectibility for any revenues for which uncertainty exists about the amount of future collections.

Examples of these include, but are not limited to:

  • Student accounts receivable
  • Student loans receivable
  • Pledges receivable
  • Future interests in split interest and trust agreements
  • Grants & contracts receivable
  • Notes receivable
  • CUA Press accounts receivable
  • Conferences & Summer Programs accounts receivable

IV. Method for Calculating Allowance

The method for calculating allowances shall be based on historical experience and shall be calculated at least annually prior to the fiscal year close, based on the most recent years' experience as well as other know factors specific to the particular revenue.

V. Responsible Party

The departments responsible for the billing and administration of the accounts are also responsible for the calculation of an allowance which covers known or potentially uncollectible accounts. This calculation should be submitted to the Controller's Office for review on at least an annual basis. Account writeoffs and increases to the allowance are recorded in the department recording the revenue; therefore, the potential for uncollectible accounts should be considered during the annual budget process.