Texas State Auditor's Office SAO Reports: A Review of Accounts Receivable Management at Higher Education Institutions, Medical Institutions, and University System Offices

Education

A Review of Accounts Receivable Management at Higher Education Institutions, Medical Institutions, and University System Offices

May 2002

Report Number 02-041

Overall Conclusion

Results of our survey of 55 higher education institutions, medical institutions, and university system offices indicate that these entities need to improve their accounts receivable management systems. The size of these entities' accounts receivable balances underscore the need to have adequate accounts receivable management systems.

Forty-one of the 55 surveyed entities indicated that they wrote off a total of $771,463,212 in uncollectible accounts receivable in fiscal years 1998 through 2000. The receivables that were written off were from a variety of accounts, including patient care services and student tuition, fees, and loans. Fourteen of the 55 entities we surveyed (25 percent) did not write off any accounts receivable during that time.

Key Facts and Findings

Results of our survey of 55 higher education institutions, medical institutions, and university system offices indicate that these entities could improve their accounts receivable management systems by:

• Documenting procedures for valuing accounts receivable, determining allowances for doubtful accounts, and writing off uncollectible accounts receivable.
• Using written agreements when extending credit.
• Performing a monthly accounts receivable aging analysis.
• Increasing their diligence in pursuing collection of balances owed to them and imposing sanctions for nonpayment.
• Assessing the adequacy of staffing in their billing and collection departments.
• Comparing billing and collection data to goals and benchmarks.
  

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