2016 Accounts Receivable Write-off Report

Transcription

1 GM20.4 REPORT FOR ACTION 2016 Accounts Receivable Write-off Report Date: April 7, 2017 To: Government Management Committee From: Treasurer Wards: All SUMMARY This report provides information on account receivable amounts written off as uncollectible in 2016 under delegated authority provided to the Treasurer. RECOMMENDATIONS The Treasurer recommends that: 1. Government Management Committee receive this report for information. FINANCIAL IMPACT There are no financial implications as a result of this report. Amounts totalling $578,514 were written off by the Treasurer in 2016 in accordance with the City's Financial Control By-law, after completion of appropriate collection efforts. These amounts (detailed in the Comments section of this report) have been provided for in the City's "Allowance for Doubtful Accounts" and expensed in previous years, as such there was no impact to the 2016 operating expenditures. The Deputy City Manager & Chief Financial Officer has reviewed this report and agrees with the financial impact information Accounts Receivable Write-off Report Page 1 of 5

2 DECISION HISTORY The City's Financial Control By-law (i.e. Chapter 71, Toronto Municipal Code, Financial Control) as amended by Council on December 13, 2007, states that: "Write-offs of amounts owing to the City in excess of $50,000 must be approved by Council except for tax reductions as a result of a successful appeal of assessment or taxes by a taxpayer". The Treasurer has the authority to write-off outstanding amounts owing to the City as uncollectible, if the amount is not more than $50,000 and is not an amount raised as taxation or deemed to be taxes, except for items added to the tax bills for collection purposes only and not as a result of a tax or assessment appeal. A further amendment to the Financial Control By-law of June 24, 2008 authorizes the Treasurer to write-off amounts up to $500,000 where the City Solicitor has been asked to try to recover the amount owing and the City Solicitor concludes that the amount is uncollectible. Following is the link to Chapter 71, Toronto Municipal Code, Financial Control: On an annual basis, the Treasurer reports to Committee and Council on accounts receivable amounts written off as uncollectible under delegated authority, and if required, to seek approval for the write-off of uncollectible amounts in accordance with the provisions of the Financial Control By-law (Toronto Municipal Code, Chapter 71). Following is the link to the 2015 Accounts Receivable Write-off Report received by Government Management Committee at its meeting held on May 9, 2016 (re: GM 12.14). ISSUE BACKGROUND All City Divisions are required to review their outstanding receivables on a regular basis and establish appropriate allowances for all accounts where collection is considered doubtful. The Accounting Services Division reviews these provisions annually for adequacy and recommends adjustments where appropriate. As a general practice, all amounts over $1,000 are forwarded to Legal Services for collection action which may include litigation or small claims court action. Legal Services may recommend settlement based on the information available. Amounts under $1,000 are sent to two collection agencies. If the first collection agency is unsuccessful within six (6) months the amount is sent to the second collection agency for another six (6) months. Once all collection efforts have been exhausted and senior management staff, Legal Services and/or the City's contracted collection agencies have deemed the amount(s) to be uncollectible, a write off request is initiated and the required approvals are obtained from the appropriate Division, Director of Accounting Services and the Treasurer Accounts Receivable Write-off Report Page 2 of 5

3 This report does not include Council authorized settlements delegated to the City Solicitor on specific matters. COMMENTS In 2016, the Treasurer approved the write off of individual accounts receivable balances of $50,000 or less, as summarized in Table 1 below. Table 1: Amounts Approved for Write-off by Treasurer in 2016 Toronto Water $259,269 Transportation Services $182,706 Long Term Care Homes & Services $60,787 Municipal Licensing & Standards $36,494 Solid Waste Management $27,199 Other Divisions $12,059 TOTAL written off $578,514 Toronto Water Toronto Water Services recommended that the Treasurer approve write-offs of $259,269, as follows: Late payment charges and the balance of an invoice to recover costs incurred to repair damages to the City's service line at 130 Eglinton Avenue, after reaching a Legal settlement for $215,000. An invoice including late payment charges for water and storm sewer service installation at Dupont. The Company declared and presented evidence that they had no assets. The residual amount that remained outstanding from an original invoice of $283,965 for water, sanitary and storm services at 62 Osler Street. The actual cost of work completed by the City's contractor was more than the estimated cost and deposit. The matter was litigated, and settlement for the amount of the deposit was reached. Various invoice balances and late payment fees deemed uncollectible by Legal Services or the collection agencies. $112,814 $89,191 $24,449 $32,815 The total write-off for Toronto Water in less than 0.4% of applicable annual revenues Accounts Receivable Write-off Report Page 3 of 5

4 Transportation Services Transportation Services recommended that the Treasurer approve write-offs of $182,706, as follows: Invoices billed to third parties for repairs made to the Transportation infrastructure (poles, guide rails, traffic signals etc.). These were the result of motor vehicle accidents for which reports were obtained from the Toronto Police Service, supporting the noted damages. All the invoices were sent to two collection agencies who were unable to collect. $176,888 Other Transportation invoices $5,818 These write-offs represent approximately 0.3% of total applicable annual charges. Long-Term Care Homes & Services (LTCHS) Long Term Care Homes & Services recommended that the Treasurer approve write-offs in the amount of $60,787. Ontario Regulation 79/10 and prior legislation prohibits LTCHS from discharging a resident based on the resident's financial situation, including the non-payment of accommodation fees. Referral for write-off is not made while the resident is living in the Home. All accounts referred for write-off by LTCHS are accounts of deceased or discharged residents, the majority being deceased residents. When a debtor resident passes away, the City's Legal Services conducts estate searches in order to collect amounts outstanding, and may conclude that the estate is insolvent and the account is recommended for write-off. Amounts that are written off by LTCHS are also submitted to the Ministry of Health and Long Term Care in order for the Ministry to provide a subsidy of 50% back to LTCHS for basic accommodation fees. The total write-off for Long Term Care Homes & Services represent less than 0.1% of applicable annual revenues. Municipal Licensing & Standards Municipal Licensing & Standards recommended that the Treasurer approve write-offs in the amount of $36,494, as follows: Charges incurred by the Municipal Licensing & Standards Division for remedial action resulting from urgent hazards orders issued City wide. These charges were reviewed and investigated by City Legal Services who confirmed that no further action can be taken as per the Provincial legislation, Building Code Act. $22,546 Various invoice balances and late payment fees. These invoices were deemed uncollectible either by Legal Services or by the collection agencies. $13, Accounts Receivable Write-off Report Page 4 of 5

5 The total write-off for Municipal Licensing & Standards is approximately 0.1% of applicable annual revenues. Solid Waste Management Solid Waste Management recommended that the Treasurer approve write-offs in the amount of $27,199, as follows: Various invoices and their late payment charges for purchases of commercial bins. Collection attempts by two collection agencies were unsuccessful. $11,494 An amount invoiced to a disposal company for dumping privilege at City facilities. The invoice was sent to Legal Services after the balance remained outstanding beyond payment terms. Legal Services attempted to collect on the account without success and the account was subsequently referred to a collection agency who was also unsuccessful in its collection efforts. $15,705 The total write off for Solid Waste Management is less than 0.03% of applicable annual revenues. Other Divisions Accounting Services recommended that the Treasurer approve write-offs in the amount of $12,059 for various amounts deemed uncollectible by the respective Divisions, Accounting Services and either Legal Services or collection agencies. CONTACT Sandra Califaretti, Director, Accounting Services, Phone: (416) , Fax: (416) , Sandra.Califaretti@toronto.ca SIGNATURE Mike St. Amant Treasurer 2016 Accounts Receivable Write-off Report Page 5 of 5