FIN-034: Maintenance of Equipment Inventory

Date: 06/13/2011 Status: Final
Policy Type: University
Oversight Executive: Vice President for Finance
Applies To: Academic Division and the College at Wise.
Reason for Policy:

Capital equipment owned or held by the University must be accurately recorded and inventoried to safeguard assets and to meet generally accepted accounting principles. This policy sets forth guidelines on how movable capital equipment records are to be maintained.

Definition of Terms in Statement:
  • 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.

  • Fixed Assets Accounting Group:

    The University unit under the Office of the Comptroller that is responsible for the accurate accounting and inventory of fixed assets, to include but not limited to buildings, infrastructure, equipment, software, and library books. 

  • Government–Furnished Equipment (GFE):

    Equipment provided by the federal government, where title remains with the federal government, and does not become University property.

  • Movable Capital Equipment (Capital Equipment):

    Equipment that meets ALL the University’s criteria for asset capitalization:

    1. A minimum cost of $5,000 upon acquisition or completion of a fabricated asset;
    2. A useful life of greater than one year;
    3. The equipment is titled to the University;
    4. The equipment functions either as a standalone item or as an integral part of a larger University-fabricated system; and
    5. The equipment is not stationary or otherwise affixed to a building.
  • Sponsor–Owned Equipment:
    Capital equipment purchased by grants awarded to the University, for which title is retained by the Sponsor.
Policy Statement:

Select equipment (capital equipment, ETF equipment, GFE, Sponsor-owned, and sensitive equipment) must be maintained in the University’s fixed asset inventory. This equipment must be identified, tagged, maintained, and used only for authorized purposes. The University must report on the use of select equipment as required by accounting standards, government regulations, contracts, and agreements. Fixed equipment, which is part of the building systems, is not included in this policy.

Individual capital equipment asset records are maintained within the Integrated System fixed assets module by the Fixed Assets Accounting Group.

  1. Types of Equipment:
    1. Capital and ETF Equipment:
      The responsible party (i.e., principal investigator (PI), department or unit head, chair, and dean/vice president) must establish internal controls over their inventory of capital equipment, to include any items purchased under University or sponsored funding or gifted to the institution. This includes documenting procedures for staff and assisting the Fixed Assets Accounting Group in tagging: new capital equipment purchases, equipment provided or loaned by Sponsors and any capital equipment gifted to the University.

      The responsible party must designate an Equipment Administrator/Coordinator to oversee the inventory of equipment within their area and serve as the liaison with the Fixed Assets Accounting Group. (Refer to “Responsibilities of Equipment Administrators.”)

      The Equipment Administrator/Coordinator must notify the Fixed Assets Accounting Group of all changes regarding University capital equipment or Government/Sponsor-owned equipment via a P-1 form signed by the appropriate responsible party.
      (See also: Procedure 10-1, "Preparation of Inventory Change Request.")

    2. Government-Furnished Equipment (GFE):
      Upon receipt of Government-Furnished Equipment, the Principal Investigator (PI) must maintain records for these items and submit a copy of the supporting property documents to both Office of Sponsored Programs (OSP) and the Fixed Assets Accounting Group for their respective records.

    3. Sensitive Equipment:
      Some non-capital equipment (less than $5,000) may be deemed “sensitive” equipment by the sponsoring agency. Sensitive equipment may include: cameras, computers, camcorders, small instruments, tools, and other high-value items. For such equipment, the PI, coupled with the appropriate responsible party will maintain custodial records identifying individual possession, and will provide secure storage for these items. The PI may be required by the Sponsoring Agency to periodically report on any such equipment.

  2. Maintenance and Use of Equipment:
    1. Maintenance:
      The responsible party and users of the equipment are jointly responsible for the proper care, maintenance and use of its equipment. That equipment may consist of University-owned capital equipment but may also include Government-owned or Sponsor-owned equipment/property.

      Maintenance includes repair, replacement, rehabilitation, and correction of defects in compliance with manufacturer's instructions. All repairs and servicing will be entered in the equipment maintenance records. Note:  Maintenance DOES NOT include the cannibalization of existing equipment to maintain other equipment without proper approval. That approval consists of an approved P-1 form for University-owned capital equipment.  In the case of Government-owned or Sponsor-owned property, prior approval from that sponsor must be secured prior to destroying any such property.

    2. Use:
      The PI is responsible for assuring Government-furnished or Sponsor-owned property is used only for the specific contract/grant under which it was acquired or for authorized purposes. A utilization record must be maintained for each item of equipment. Such records should be available and it is recommended they be kept in a plastic envelope attached to each equipment item.  (Reference: Federal Acquisition Regulation clause 52-245-1 Section IX.)
  3. Identification:
    All University-owned equipment (over $5,000 unit cost); or ETF equipment (over $500 unit cost) 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 Fixed Assets Accounting Group, Surplus Property, or authorized third-party (such as a computer recycling vendor).

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 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.

  1. Reporting:
    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 PI’s 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 grant or contract expiration date. OSP must notify the Fixed Assets Accounting Group promptly upon a contract or grant 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 PI’s will provide the required property detail to the Fixed Assets Accounting Group.

  1. Disposition of Equipment:
    Equipment must be disposed of appropriately, such that disposal of:
    1. Sponsored equipment must be coordinated with the Office of Sponsored Programs.
    2. Capital and ETF equipment must be coordinated with the Fixed Assets Accounting Group.
    3. Equipment containing stored electronic data must be in compliance with policy IRM-004, Electronic Data Removal.

Types of disposition include, but are not limited to:

  1. Transfer of Equipment: To another institution, usually at the request of, or as a condition of the grant/contract awarded by, the sponsoring agency that owns the equipment.  This could also occur at the request of a faculty/PI, who is relocating his or her work to another institution. Transfers of equipment are described in the policy Releasing Capital Equipment to Another Institution Outside the Commonwealth.
  2. Loan of Equipment: Similar to a transfer, but this is a temporary transfer of equipment to an outside institution, usually related to research activities. Loans of equipment are described in the policy Releasing Capital Equipment to Another Institution Outside the Commonwealth.
  3. 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.
  4. Donation of Equipment: Surplus equipment may be released (donated) to another university as described in Releasing Capital Equipment to Another Institution Outside the Commonwealth.

Equipment Inventory Change Request Form (P-1)
For tracking purposes, Off-Grounds Equipment Certification Form (P-2)
Procedure 10-1, Preparation of Inventory Change Request

Related Information:

IRM-004, Electronic Data Removal
PRM-016, Surplus Property Disposal
Equipment Trust Fund (ETF)
Responsibilities of Equipment Administrators

Major Category: Finance and Business Operations
Category Cross Reference: Physical Resource Management
Approved by, Date: Policy Review Committee, 06/13/2011
Supersedes (previous policy):
VIII.E.4, Fixed Assets Accounting (Property) - Maintenance of Equipment Records.