ACCOUNTS RECEIVABLE - 8291

(Revised 10/2020 and renumbered from 8776)

Accounts receivable (AR) is defined as a claim against a debtor, such as a person, business, or governmental entity for money owed to the state. A valid AR should be billed and recorded in the agency/department books in a timely manner.

Government Code section 13400-13407, State Leadership Accountability Act (SLAA) requires entity management to establish and maintain effective systems of internal controls. Proper controls over receipts and receivables include:

• Recording ARs accurately and timely
• Collecting ARs timely
• Reviewing the controls over ARs to ensure timely collections
• Using risk assessment, determine their vulnerabilities, and identifying the controls that are or should be in place. The risk assessment should include, but not be limited to, a review of the agency’s/department’s legal authority to impose fines and penalties.
• Ensuring that written policies and procedures are in place and followed to ensure that past due receivables are followed-up promptly and in a manner that is cost-effective. These procedures should include, but not limited to:

• Collection procedures to be performed and a timeframe for completion of each procedure.
• The roles and responsibilities for all staff involved in the process.
• Supervisor and management review of delinquent accounts to ensure staff act timely on collection actions.