FIN-034: Accounting Requirements for Equipment AssetsDate: 06/13/2011 Status: Final
- Initial Accounting and Recording
- Disposition of Equipment
- Compliance with Policy
Equipment assets owned or held by the University must be accurately inventoried to safeguard and recorded to meet both generally accepted accounting principles and federal or state regulations. This policy sets forth guidelines on how equipment assets records are to be maintained.
Includes all of the following with the exception of fixed equipment, which is part of a building structure or its systems (such equipment is part of the cost of the building and is accounted for as such):
Capital Equipment (Capital and ETF Equipment):
Equipment that meets ALL the University’s criteria for asset capitalization which are:
- A minimum cost of $5,000 ($500 if ETF funded) upon acquisition or completion of a fabricated equipment asset (note: ETF funding doesn’t allow fabrications);
- A useful life of greater than one year;
- The equipment asset is titled to the University; and
- The equipment functions either as a standalone asset or as an integral part of a larger University asset.
Equipment Trust Fund (ETF):
Funds that are provided by the Commonwealth of Virginia and managed by the State Council for Higher Education of Virginia (SCHEV) for purchasing new or upgrading obsolete equipment used for instruction and research. The threshold for ETF equipment to be capitalized is $500.
Government–Furnished Equipment (GFE):
Equipment provided by a federal sponsor where title remains with the federal government and does not become University property.
Non-capital equipment (less than $5,000) deemed sensitive by the sponsoring agency. Sensitive equipment may include: cameras, computers, camcorders, small instruments, tools, and unique or custom items.
Equipment purchased using sponsored program funds for which the title is retained by the Sponsor.
Fixed Assets Accounting Group:
The University unit in Financial Reporting and Operations that is responsible for the accurate accounting, financial reporting, and inventorying of fixed assets (which includes but is not limited to: buildings, infrastructure, equipment, software, and library books).
Organization (department) chair, dean/vice president or Principal Investigator (PI) who controls the use of capital equipment.
Equipment assets must be recorded, maintained, and inventoried in the University’s Integrated System fixed asset module. These equipment assets must be identified, tagged, maintained, and used only for authorized purposes. The University must report on the use of equipment assets as required by accounting standards, government regulations, contracts, and agreements.
The Fixed Assets Accounting Group is responsible for maintaining individual equipment asset records within the Integrated System fixed assets module.
Initial Accounting and Recording:
To meet institutional expectations for effective internal control and responsible stewardship over equipment assets, the responsible party must designate an equipment administrator/coordinator to manage equipment assets within their unit(s) and serve as the liaison with the Fixed Assets Accounting Group.
Upon receipt, the responsible party must notify the Fixed Assets Accounting Group so that asset tags can be applied and the equipment assets can be properly recorded. All supporting property documents must be submitted to Fixed Assets Accounting Group and, when acquired to support a sponsored program, to the Office of Sponsored Programs for their respective records.
The equipment administrator/coordinator must notify the Fixed Assets Accounting Group of all changes regarding University equipment assets via an Equipment Inventory Change Request (P-1) form signed by the appropriate responsible party.
The responsible party or designated equipment administrator/coordinator must assist the Fixed Assets Accounting Group in identifying and tagging new equipment assets within their unit(s).
All equipment assets will have asset tags affixed by the Fixed Assets Accounting Group to the main body of the item where they are conspicuous and readily visible for inventory scanning without having to move the item. Asset tags may only be removed by the responsible party, Facilities Management (i.e., for surplus property), or an authorized third-party (such as a computer recycling vendor) when equipment is being disposed of, surplused, or traded-in. Once removed assets tags must be returned to the Fixed Assets Accounting Group.
All federal Government-furnished equipment (GFE) over $5,000 will be tagged with both University asset tags and “PROPERTY OF U.S. GOVERNMENT” stickers. All GFE will have a “PROPERTY OF U.S. GOVERNMENT” sticker affixed to them. These asset tag numbers and data will then be entered into the Integrated System Fixed Assets Sub-Ledger.
Sponsors may require separate sponsor tags be assigned and affixed to the equipment they fund (i.e., JPL – Jet Propulsion Labs subcontractor for NASA requires their tags be placed on equipment).
If the title is transferred to another institution or if disposed by sale, scrap, or donation, GFE identification tags are to be removed only by authorized parties. If the equipment is processed by a third-party vendor, they will remove and submit all tags to the Fixed Assets Accounting Group. If the equipment is processed by Surplus Property, they will remove all University asset tags and return them to the Fixed Assets Accounting Group.
Government property should be segregated from University property. Since commingling cannot always be prevented, it is important that Government property be clearly identified and controlled by appropriate records.
The responsible party must make sure that equipment assets are only used for authorized purposes, this includes compliance with any sponsor/owner terms and conditions. A utilization record must be maintained for each equipment asset. Such records should be available, upon request, and it is recommended they be kept in a plastic envelope attached to each equipment asset. (Reference: Federal Acquisition Regulation clause 52-245-1.)
Maintenance includes repair, rehabilitation, and correction of defects according to manufacturer's instructions. All repairs and servicing will be entered in the maintenance records. If an item is replaced by the manufacturer due to defect, the equipment administrator/coordinator must work with the Fixed Assets Accounting Group to remove the tag from the original and affix a new tag to the replacement upon receipt. Note: Maintenance DOES NOT include the cannibalization of existing equipment to maintain other equipment without proper approval. An approved P-1 form is required for University-owned equipment assets. If Government-owned or Sponsor-owned, prior written approval from the owner must be secured before the equipment asset is destroyed.
Each responsible party is required to participate in the annual inventory process of equipment assets (including sponsor-owned equipment). This involves completing and submitting the “Self-Audit,” “Not Found” and “Final Certification” reports in a timely manner.
Fixed Assets Accounting Group is responsible for year-end financial reporting of fixed assets, as well as submitting both annual and final equipment reports as required for sponsored programs. However, sponsor reporting may require equipment items not capitalized (i.e. Sensitive equipment or Supplies), for which the responsible party will provide the required property detail to the Fixed Assets Accounting Group.
For Government-furnished equipment there may be additional reporting requirements. Federal regulations require the annual submission of reports for contracts with agencies such as the Department of Defense and NASA. These reports are to reflect the total equipment inventory cost values (not detailed listing of each piece of equipment) recorded through September 30 (the end of the federal fiscal year), and are due no later than October 31 of the same year. Additionally, there are many other Governmental agencies as well as other sponsors who maintain ownership of any equipment purchased by University or furnished to University and require similar reports.
Federal regulations also require the submission of final, or close-out inventories. These close-out inventories are due to the Government sponsoring agency within 90 days of the sponsored program expiration date. OSP must notify the Fixed Assets Accounting Group promptly upon a sponsored program expiration where a property report is required.
The Fixed Assets Accounting Group is responsible for preparing and submitting both annual and final equipment reports. However, sponsor reporting may require equipment items not capitalized (i.e. Sensitive equipment or Supplies), for which Principal Investigators (PIs) will provide the required property detail to the Fixed Assets Accounting Group.
- Sponsored equipment must be coordinated with the Office of Sponsored Programs.
- Capital and ETF equipment must be coordinated with the Fixed Assets Accounting Group.
- Equipment containing stored electronic data must be in compliance with University policy IRM-003: Data Protection of University Information.
Types of disposition include, but are not limited to:
- Transfer of Equipment: To another institution, usually at the request of, or as a contractual condition from the equipment owner. This could also occur at the request of a faculty/PI, who is relocating to another institution. Transfers of equipment are described in the policy, X.A.2, Releasing Capital Equipment to Another Institution Outside the Commonwealth.
- Surplus and Sale of Equipment: To dispose of equipment that is not needed, no longer useful, or is no longer functional and cannot be repaired or improved in a cost-effective manner, departments must follow University policy PRM-016: Surplus Property Disposal.
- Donation of Equipment: Surplus equipment may be released (donated) to another university as described in policy, X.A.2 Releasing Capital Equipment to Another Institution Outside the Commonwealth.
Compliance with Policy:
Failure to comply with the requirements of this policy may result in disciplinary action up to and including termination or expulsion in accordance with relevant University policies.
Procedures are currently under revision; any questions should be directed to the Contact Office.
Fixed Assets Accounting Group Forms:
Equipment Inventory Change Request Form (P-1)
For tracking purposes, Off-Grounds Equipment Certification Form (P-2)