Policy References:

Section 40-a of the State Finance Law generally sets forth the basis for recognizing an appropriated loan receivable.

Process and Document Preparation:

There are two categories of receivables on the Statement of Net Position and Balance Sheet - "Accounts Receivable" and "Internal Balances / Due from Other Funds".

ACCOUNTS RECEIVABLE

The account description, “Accounts Receivable,” is comprised of the following four items:

• Taxes - Taxes receivable are comprised of four principal sources of State tax revenues which include personal income taxes, corporate income taxes, sales taxes and other taxes. The accounting treatment for recording and disclosing uncollected tax revenues is included in Section 4.B - Tax Revenues of this Chapter.
• Leases - Leases receivable are recorded based on revenue the State expects to collect as a result of revenue lease contracts the State has entered into. The accounting for revenue leases is included in Section 4.O – Intangible Right-to-use Assets of this Chapter. 
• Due from Federal government - Generally, Federal funds due to the State represent amounts due to the State for reimbursable Federal program expenditures. The accounting policy for recording Federal grant revenues is included in Section 4.C - Federal Grant Accruals of this Chapter.
• Loans and notes - This account includes receivables created by loan and note  transactions reported by public benefit corporations.
• Other - This account includes all other accounts receivable of the State not accrued elsewhere. Other receivables will primarily consist of appropriated loans receivable and miscellaneous receivables.

Generally, the basis for recognizing an appropriated loan receivable is set forth in Section 40-a of the State Finance Law. State money is appropriated and subsequently loaned to non-State agencies in anticipation of (1) future repayment from the recipient, or (2) future reimbursement from third-party sources. Loans are made to recipients (generally public benefit corporations and localities) in accordance with appropriations enacted by the State Legislature, most frequently for capital purposes. The State Finance Law requires that no loans shall be made until a written repayment agreement, including a schedule as to when the loans will be repaid, is entered into by the recipient and the Director of the Budget. Often the loans are required to be repaid over a period of years.

Miscellaneous receivables include all other accounts receivable of the State not accrued elsewhere. These amounts will be accumulated from data supplied by agencies in the Agency Financial Reporting Package.

The State also appropriates monies to certain public benefit corporations from regular appropriations subject to repayment agreements. These are not advance appropriations subject to Section 40-a of the State Finance Law and therefore will be recorded as expenditures as the liability is incurred, but no receivable will be recorded concurrently since repayment is doubtful. The repayment agreements are primarily drawn up to establish creditor rights, however, the existence of the repayment agreements will be disclosed in the financial statements footnotes.

INTERNAL BALANCES / DUE FROM OTHER FUNDS

This receivable arises as a result of certain interfund transactions. These receivables will be recognized by analyzing those areas of State operations in which material interfund transactions occur (e.g., centralized services, correctional industries and supply support). The major policy issues relating to accounting for accounts receivable deal with the following:

• Criteria for Recognition of Receivables; and
• Maintenance of an Allowance for Uncollectible.

RECOGNITION OF RECEIVABLES

Generally, receivables are susceptible to accrual as soon as measurable. See Section 4.B - Tax Revenues of this Chapter, for discussion of recognition of tax revenues and Section 4.C - Federal Grant Accruals of this Chapter, for discussion of recognition of Federal grant revenues.

ALLOWANCE FOR UNCOLLECTIBLE

Receivables should be presented in the financial statements net of an allowance for uncollectible amounts. The State will reserve doubtful receivables based on a specific identification method, except in the case of high volume revenue transactions such as income taxes or tuition which a consistent method of estimating by revenue category will be applied. However, estimates must be made on a consistent basis from year to year. The reserve for doubtful accounts is recorded by a reduction of revenues and a credit to the reserve; with the exception of reserves relating to appropriated loans receivables that are recorded as expenditure. Subsequently, as it is determined that accounts are indeed uncollectible, the write-off is booked by a debit to the reserve (allowance) account and a credit to the Receivable, thus eliminating the account from the books. Prior to any write-off, efforts to collect should be fully pursued.

APPROPRIATED LOAN RECEIVABLES

In determining the reserves relating to appropriated loan receivables certain factors are considered such as:

• What, if any, repayment agreement is on file?
• Are repayment dates complied with?
• Has the agency or public authority acknowledged that it is unable to repay?
• Are repayment terms such that repayment will not occur during the estimated life of the capital projects being used as collateral or maximum of 50 years?

Guide to Financial Operations

REV. 12/26/2023