Doubtful and bad debts policy
To ensure all staff RMIT University group are consistent in the management of debtors, and doubtful and bad debts.
This policy applies to all debtors of RMIT University and its controlled entities.
To ensure that the authorisation, accounting treatment and overall responsibility for debtors and doubtful and bad debts comply with RMIT University’s legislation, Australian Accounting Standards and other relevant State and Commonwealth legislation.
For the purpose of financial management of assets at RMIT, the following definitions of debtors apply:
- student fee debtors: students with outstanding charges
- third-party debtors: entities that assume debt on behalf of a student
- trade debtors: debtors who have received goods and services
- doubtful debts: debts that may become irrecoverable in a future period
- bad debts: debts still outstanding after all attempts to recover the amount have failed
1.1 The University’s Credit Management Department will ensure that all debtors and doubtful and bad debts are properly authorised in accordance with the Delegations policy and schedules.
1.2 All sales made to customers who have not been approved for credit are to be made on a ‘cash on delivery’ basis only.
1.3 Credit Management will recommend debts to be written off after all economic attempts to recover the amount have failed. Authorisation of write-offs will be performed in accordance with the Delegations policy and schedules.
2. Recognition and measurement
2.1 In accordance with Australian Accounting Standards, debtors are recognised initially at fair value and subsequently measured at amortized cost using the effective interest method less provision for impairment.
2.2 Periodically, individual debt will be assessed for risk of debt recovery and the provision will be adjusted accordingly (see Doubtful and bad debts procedure).
2.3 Bad debts are expensed in accordance with Budget allocation of expenses.
3. Overall responsibility
3.1 The Credit Management team are responsible for implementing the Doubtful and Bad Debts Policy. Any deviation from the Policy or Procedure should be requested in writing and addressed to the Credit Manager and the Deputy Director Financial Operations.[Next: Supporting documents and information ]