Managing University Capital Equipment
Last Update: December 2013
Responsible University Officer:
- University Controller
- Director of Accounting Services
- Updated: December 2013
- Primary Contact : Chris Nichols
Printed on: . Please go to http://policy.umn.edu for the most current version of the Policy or related document.
The University has a significant investment in equipment, representing long-term commitments to fulfill its mission. The University owns and controls all equipment purchased with University funds, unless stipulated otherwise by the funding source. Custody and use of all assets is the responsibility of the various colleges and departments.
Inventory Services administers capital equipment asset matters and is responsible for the centralized accounting and reporting of University capital equipment assets, but not other personal property items.
- Departments are responsible for covering the loss and/or undocumented disposals of capital equipment assets with net book depreciable value from their departmental equipment assets carry forward.
- Departments must receive prior approval before a sale, a transfer or donation of University capital equipment assets to an entity external to the University, is made.
- Only equipment assets that are fully depreciated may be donated. Disposal of all property will be in a manner consistent with agency funding guidelines and public law, as well as the University’s interests.
- Whenever possible, equipment assets within the University will be re-used or reassigned when the original project or need for which it was acquired has been completed, unless otherwise restricted by the funding source.
- Off-campus use of University capital equipment assets will be permitted only when it is for a business related purposes contributing to the University's mission. Non-capital equipment should be tracked internally by a department when being used off campus, but Inventory Services need not be notified.
REASON FOR POLICY
This policy was established to:
- Ensure that equipment assets are retained by the University.
- Accounting treatment is in compliance with GASB.
- University financial reports are accurate, both in statement of asset values and their depreciation.
Asset values are reported on the University financial statements, subject to external examinations and provide the means of allocating costs to accounting periods which are used to establish the University's F & A rate. This policy establishes various requirements to help assure the accuracy of asset values, equipment duties are segregated, off-campus use is restricted, and ongoing verification is made.
- Acquiring Capital Equipment
- Recording and Maintaining University Equipment
- Disposing of University Equipment
- Federal Reporting and Compliance for Capital Equipment
- Equipment Bought on Fellowships
- BA 1393, GS92343: Capital Equipment Asset Disposal Form (PDF)
- UM 1601: Capital Equipment Asset Fabrication Form (PDF)
- UM 1674: Capital Equipment Asset Physical Data Change Form (PDF)
- UM 1744: Capital Equipment Asset Trade In Form (PDF)
- UM 1556: Capital Equipment Asset Transfer Form (PDF)
- UM 1561: Capital Equipment Assets Donated to University Report (PDF)
- UM 1677: Capital Equipment Assets Off Campus Request Form (PDF)
- UM 1675: Capital Equipment Assets Transferred from Another Institution Report (PDF)
- UM 1532: Property Loss Notice - Laptop Computer Program (PDF)
FREQUENTLY ASKED QUESTIONS
There is no FAQ for this policy.
- Acquisition Cost - Constructed Equipment
- Includes costs of materials and University internal service centers used in the course of construction. University payroll expenses, other than those included in internal service centers charges, are not included in the cost of constructed equipment.
- Acquisition Cost - Donated Assets
- The fair market or appraised value at the date of the gift. If market value or appraised value is not available, the gift will be recorded at estimated depreciable value.
- Acquisition Cost - Purchased Equipment
- Includes the invoice price and the cost of any modifications, in transit, insurance, freight (to or from the University) and is reduced by any trade-in. Installation is also included when those costs can easily be identified with the equipment acquisition.
- Capital Equipment
- Any movable, nonexpendable personal property equipment item, not permanently affixed to a building, with a life expectancy of more than one year and an acquisition cost of $5,000 or more per unit. This includes improvements that increase the value or extend the useful life of equipment. For example, modular furniture for an office will in total cost $5,000 or more, but if individual components ordered are not $5,000 or more, this purchase should not be coded as capital equipment and therefore cannot be purchased from the capital equipment replacement/reserve funds. This distinction is important because it conforms with Federal definitions and requirements as well as NACUBO accounting standards for 'capital' equipment and matches a current University definition of capital equipment in the chart of accounts. (See also Administrative Procedure: Purchasing from Equipment Reserve Accounts)
- An asset that a University department holds for sale or use in providing goods and/or services to customers. An example of inventory would be computers sold by the UM Bookstore. Capital equipment assets are not "inventory."
- Non-Capital Equipment/Expendable Material
- Personal property items with a cost of less than $5,000 OR a useful life of less than one year.
- The University has title to all equipment assets purchased on University accounts or transferred here from another institution unless it is specifically stated in a government grant or contract that the government retains title to the equipment purchased on that award.
- Personal Property
- A tangible piece of movable property. It includes such items as equipment, library holdings, art work, livestock, supplies and other inventories.
- Any item purchased, donated or acquired through trade, regardless of value or condition. Property includes all real estate, equipment, furniture, materials, library holdings, supplies, livestock, inventories, or any item that may be used or sold.
- Accounting Services
- Responsible for the accurate reporting on all capital assets for the University's financial statement. Assist departments in establishing proper methods for accounting for inventories.
- Dean, Department Head or Administrative Officer
- Approve the transfer, sale or disposal of University capital equipment assets outside the University. It is preferred if the Dean approve any transfers of equipment to other institutions.
- Inventory Services
- Manages the centralized accounting and reporting of University capital equipment in the Asset Management module. Approves all disposals of capital equipment, observing agency funding guidelines, if appropriate.
- Reviews capitally-coded expenses to assure all such equipment meets the capitalization criteria, and establishes and executes a periodic inspection to meet Federal and external audit requirements, and to support data for inclusion in the computation of the F & A Rate. Makes a timely initial inspection and performs barcode tagging of capital equipment assets that meets the capitalization criteria.
- University Departments
- Must properly use and protect all University property in their custody. Should develop their own clear, consistent policies and procedures for dealing with property. Include acceptable use, disposal, transfer and recording of property location, inventory counts, and physical security measures in departmental policies and procedures. May fine-tune policies and procedures to meet own unique operating guidelines, but this document should provide baseline or minimum requirement in regard to assets. Goal is to motivate compliance among staff, faculty and University community by presenting benefits of strong financial management and control, as per the Board of Regents Policy: Code of Conduct.
- Appoint individuals to be responsible for inventory, capital equipment asset disposals and transfers, and physical security. Review Inventory Services reports for accuracy and completeness. Report theft, loss, or disappearance to University Police and Inventory Services.
- Keep a current record of property located off-campus in the form of descriptions, capital equipment asset tag numbers, period of time and location of property off-campus, and person(s) in charge of the property. Notify Inventory Services to obtain prior approval when disposing of unwanted or unserviceable property, observing agency funding guidelines, if appropriate.
- Turn unused or underused equipment and furniture over to University Reuse Program (or to University Computer Services for computer equipment) so that others within the University may use them, but obtain Inventory Services approval prior to disposition. Seek Inventory Services approval prior to transfer of equipment to another institution.
- Report capital equipment assets donated to the University to Inventory Services for capitalization. Obtain prior approval from Inventory Services to donate capital equipment assets outside the University. Equipment assets to be donated must be fully depreciated to be considered for approval.
- Plan, budget and approve equipment purchases as well as custody, safeguarding, and maintaining equipment assets to fulfill intended uses. Ensure that equipment asset purchases are classified with the proper capital asset account code.
- Follow proper procedure for sale of University-owned capital equipment assets. Obtain Fair Market Value or Net Book Value in sale. Equipment assets bought on sponsored funds will transfer to other institutions with department head's approval. Assets bought on non-sponsored funds must follow sale procedure.
- Board of Regents Policy: Accessioning and Deaccessioning Museum Collections
- Board of Regents Policy: Code of Conduct
- Administrative Policy: Building Reserves for Capital Equipment Replacement
- Administrative Policy: Acquiring and Disposing of University Real Estate
- OMB Circular A-21, Cost Principles for Educational Institutions
- OMB Circular A-110, Attachment N, Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Nonprofit Organizations
- Federal Acquisition Guidelines
- U.S. Department of Health and Human Services Grant Administration Regulations (45 CFR Part 74, Subpart O)
- NACUBO Financial Accounting and Reporting Manual, Chapter 400
- December 2013 - Major Revision. Threshold to be considered capital equipment increased from $2,500 to $5,000.
- July 2008 - Policy completely revised to address the Enterprise Financial System rollout. All procedures updated to reflect use of PeopleSoft for the Enterprise Financial System (EFS). Added new forms.
- January 2004 - Added Appendix A: Common Audit Recommendations - Equipment.
- February 2003
- Policy entitled Property, dated December 1990 last updated in August of 2001.