ASSET WRITE-OFF POLICY

Contact: University Accountant

Asset Write-Off Request

Last update: April 2015

Overview

Individual university units should monitor the carrying value of assets included in their unit balance sheets. Assets are generally recorded and carried in the university’s accounting records at cost, except for investments which are primarily recorded and adjusted to their fair value each month. When the value of individual university assets falls below the carrying amount it may become necessary to reduce or remove (write-off) their recorded amount from the accounting records. Circumstances that could indicate the need for a write-off or write-down of asset value may include: loss or damage, failure of third parties to meet contractual agreements, decline in asset value, etc. Generally, to be considered for a write-off, a decline in value should be other than temporary in nature and thus the value should not be subject to frequent upward or downward adjustment.

Assets subject to this procedure include, but are not limited to:

• Bank and cash accounts
• Accounts and notes receivable
• Inventories
• Prepaid assets and deposits
• Investments carried at cost
• Land, buildings and equipment

On occasion a department may wish to reduce the amount owed by a customer due to a faulty product or service or other similar reason. Such reductions represent billing adjustments and should generally be recorded as a reduction of current revenue and not as a write-off of receivables due from customers.
Proposed write-off of donor pledged contributions receivable will be submitted by LDS Philanthropies for approval of the Advancement Vice President. LDS Philanthropies will recommend write-offs or reserves for collectability of pledges receivable based on communications with the donors.

The carrying amounts of investments carried at cost should be reviewed at each annual reporting date to determine whether the fair value of such investments has declined below the carrying amount. When a decline has occurred that is other than temporary, a reserve should be established or be adjusted to reduce the net carrying cost to the fair value of the investment. If, using available means such as appraisals and other experts, an investment carried at cost is determined to be worthless, the investment should be written-off after obtaining the necessary approval indicated by the table below. Some investments, such as privately held securities, are initially valued at $1 when they have no readily available market that can be observed to determine a value.

Corrections of errors made in recording assets are not considered to be write-offs and require no approval beyond normal department approvals.

Processing Requests for Write-Off

Requests for the write-off of assets should be made using the Request for Asset Write-Off form. The request should be prepared and signed by the requesting personnel and be accompanied by supporting documentation. Some complicated situations benefit from additional explanation; for that purpose, an optional Asset Write-Off Summary is included as the second page of the Write-Off Request.

The Write-Off Request shall be approved by other appropriate department or administration officials as outlined in the following table. At least one approver, in addition to the preparer, is required for all write-off transactions. The Designated Financial Services Personnel will obtain additional required signatures where necessary. The Write-Off Request will then be forwarded to the appropriate office to complete the necessary accounting entries.

In the above table Unit Personnel are defined as campus controllers or other department-designated full time employees working in university departments who are knowledgeable regarding the assets in question. Designated Financial Services Personnel for the second level approval, by asset classification, are defined as follows:

Chief Financial Officer
Land, buildings and equipment
University Controller or Director, Financial Accounting & Reporting
Bank and cash accounts
Amounts receivable from vendors (vendor credits)
Inventories
Prepaid assets, deposits, and other assets
Director, Student Financial Services
Accounts and loans receivable
Director, Regulatory Accounting
Accounts receivable from research activities
University Treasurer
Investments carried at cost