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AGENDA REPORT
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| | | | | | | | DATE:
| October 19, 2021
| TO:
| Mayor and City Council
| FROM:
| Stefan T. Chatwin, City Manager
| | SUBJECT: | Resolution 2021-252 of the City Council of the City of Fairfield Authorizing the Director of Finance to Write Off Uncollectible Accounts
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| | | | | | | | | RECOMMENDED ACTION | | Adopt resolution. |
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| | | | | | | | | STATEMENT OF ISSUE | | In addition to proactively collecting the City’s delinquent accounts, it is also important to write off the City’s uncollectible debts to ensure the City’s financial statements are reflected correctly. |
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| | | | | | | | | DISCUSSION | The attached resolution authorizes the director of finance to write off uncollectible utility accounts and nonutility accounts. In response to comments provided by its external auditor, the City adopted a policy that requires the City Council to approve the write off of accounts with balances greater than or equal to $1,000. There are four uncollectible utility accounts that closed between July 1, 2019 and June 30, 2020 (12 months), and are in excess of $1,000 for a total of $7,661.73 (Exhibit A), and there are 10 uncollectable nonutility accounts that were billed between July 1, 2018, and June 30, 2019, (12 months) and are in excess of $1,000 for a total of $54,926.17 (Exhibit A). It should be noted that such write offs are not a relinquishment of the City’s claim for debts due the City. Even after writing off accounts that are deemed uncollectible, the Finance Department will continue to pursue collection on the accounts to the extent legally possible.
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| | | | | | | | | FINANCIAL IMPACT | The department establishes reserves for bad debt to cover potential write offs for uncollectible accounts. The bad debt reserves are funded as an estimate of total billings each year. The accounts recommended for bad debt write off will be offset by the by the bad debt reserves that have been established. During the City’s annual external audit of the City’s financial statements, the City’s external auditors review the City’s bad debt exposure as well as the adequacy of the bad debt reserves.
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| | | | | | | | | PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION | N/A
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| | | | | | | | | ALTERNATIVE ACTION | | Council could choose not to approve the resolution, which would result in inaccuracies in the City’s financial statements. |
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| | | | | | | | | STAFF CONTACT | Emily Combs, Director of Finance
(707) 428-7629
ecombs@fairfield.ca.gov
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| REVIEWERS: | | Reviewer | Action | Date | | Answerer | Rejected | 9/28/2021 - 11:56 AM | | Garibay, Ana | Approved | 9/28/2021 - 1:57 PM | | Answerer | Rejected | 9/28/2021 - 2:06 PM | | Answerer | Approved | 9/28/2021 - 2:06 PM | | Answerer | Rejected | 9/28/2021 - 5:07 PM | | Garibay, Ana | Approved | 9/28/2021 - 2:59 PM | | Answerer | Approved | 9/28/2021 - 6:06 PM | | Garibay, Ana | Approved | 9/28/2021 - 6:07 PM | | Answerer | Approved | 9/28/2021 - 6:08 PM | | Alexander, Amber | Approved | 10/5/2021 - 11:32 AM | | Alexander, Amber | Approved | 10/5/2021 - 11:33 AM |
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