Controller’s Office 2016

Year-End Reporting Package

Loans and Notes Receivable

This package is due to the Controller’s Office February 10, 2017. Submit the completed package by email in PDF format to the Controller’s Office CTL General Accounting Mailbox ().

PURPOSE

The purpose of this reporting package is to give agencies the necessary guidance on how to account for Loans and Notes receivable and the related allowance for uncollectible amounts and ensure that agencies have properly reportedloans and notes receivables as of December 31, 2016, so that theCity’s financial statements are accurate.

ACCOUNTING PRINCIPLES AND POLICIES

The City prepares its financial statements in accordance with Generally Accepted Accounting Principles (GAAP). GAAP requirements for reporting loans and notes receivable are found in Governmental Accounting Standards Board (GASB) Statement 34, ¶100, footnote 41; GASB statement 38, ¶13; GASB Comprehensive Implementation Guide -- 2005, questions 7.313, 7.316, and 7.479; NCGAS 1, ¶119; and Chapters 6 and 12 of Audits of State and Local Governmental Units (AICPA, 2003 edition).

GAAP requires the City to record the following:

  • Loans and notes receivable outstanding at December 31st,
  • A reserve for long-term loans and notes receivables,
  • An allowance for uncollectible loans and notes receivables in each fund where applicable, and
  • Interest receivable for related interest due on or before December 31st, but not yet received.

The detail information may or may not be recorded in PeopleSoft, however all December 31stbalances must be recorded in PeopleSoft.

DEFINITIONS

Allowance for Uncollectible Receivables – The amount of receivables that is estimated to be uncollectible. The financial statements show net receivables (i.e., gross receivables less the allowance). Your agency must have a policy on how the allowance is determined.

Interest Receivable – Related interest earned on or before December 31st, but not yet received.

Loans Receivable – Outstanding principal balances at December 31ston loans the City made. Loans receivable include balances for which the City holds collateral or security.

Notes Receivable – Notes receivable are a type of loan receivable. In certain cases, the City may lend money to a party under a note. A note is a written document in which a borrower promises to repay the money to the City or to a party the City indicates, on demand or at a particular future time.

WORKING PAPERS

Please submit the following workpapers by email with your reporting package.

  1. Summary schedule by fund that includes the following:

Beginning balance as of 1/1/2016

New loans

Loan payments

Interest received

Ending Balance as of 12/31/2016

Allowance amount

  1. Supporting schedules by fund and loan types with the following detail:

Debtor’s name and address

Date of loan

Original loan amount

Principal paid to date

Principal balance as of 1/1/2016

Principal payments

Interest payments

Current year loan disbursements

Loan balance as of 12/31/2016

Interest receivable as of 12/31/2016

Allowance

  1. Schedule of Allowance for doubtful accounts with detail loans.
  1. Support that system balances equal the summary schedule.
  1. Copy of policy for determining the Allowance for Uncollectible amounts.

Internal schedules may be submitted, if they provide all required information.

In addition to providing the workpapers, please complete the following questions and submit with your package.

Loans and Notes Receivable
Yes / No / N/A / Task / Initials
  1. Have you reconciled beginning and ending loan balances to the loan files?
Please explain your reconciliation process.
  1. Have all principal payments been posted to PeopleSoft?
If No, please explain.
  1. Does the notes receivable balance agree to the subsidiary ledger?
If No, please explain.
  1. Are all loans recorded in PeopleSoft?
If No, please explain.
  1. Has the change in the allowance for deferred and uncollectible accounts been recorded?
If No, please explain.
Loans and Notes Receivable, continued
Yes / No / N/A / Task / Initials
  1. Has any property been foreclosed on that needs to be recorded?

  1. Was Form 1098 (Mortgage Interest Statement)issued to the applicable borrowers by January 31st?
Were Forms 1098 and Form 1096 Transmittal sent to the IRS by February 28th?
  1. Was Form 1099-A (Acquisition or Abandonment of Secured Property) issued to the borrower by January 31st?
Were Forms 1099-A and Form 1096 Transmittal issued to the IRS by February 28th?
  1. Have you done any loan confirmations?
Please describe.
  1. Have all decisions to write off or defer loans been approved by management?

Authorizing Signature

Agency Finance Officer______Date______

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