Fixed Assets Policy & Procedures.pdf - Vincennes University MIC

VINCENNES UNIVERSITY
FIXED ASSET SYSTEM
POLICY & PROCEDURES
I. PURPOSE:
‣ To assist responsible University personnel to administer, account for, and
preserve the institution’s property, plant, and equipment by maintaining detailed
information necessary to accomplish these responsibilities. These policies and
procedures apply to all University property. Additionally, this policy is
intended to comply with Governmental Accounting Standards Board (GASB)
statement #34, Generally Accepted Accounting Principles (GAAP), and all
applicable federal and state governmental regulation relating to fixed assets.
Vincennes University currently tracks its fixed assets using a software package
developed by Sungard (SCT) as part of the Banner product. The SCT Fixed
Asset module provides a facility for tracking all fixed assets and it is integrated
with the Purchasing, Payable and Accounting modules.
II. RESPONSIBILITY:
‣ Under the Fixed Asset System, individuals have been assigned as custodians
and are ultimately responsible for the equipment in his/her area.
‣ It will be the combined responsibility of the designated custodians and Financial
Services to ensure the capital assets presented in the University’s financial
statements are accountable and accurately stated.
III. EQUIPMENT CLASSIFICATION CRITERIA
‣ CAPITALIZED EQUIPMENT - As a general rule, equipment costing or having
a market value of $500 or more and having a useful life of two or more years
will be reflected in the University’s financial statement as a capitalized asset.
This equipment will be identified with an identification tag and number.
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The following are general guidelines for asset classifications and their estimated
useful lives:
Description
Useful Life
Land
N/A
Land Improvements 20
Buildings (New) 50
Building Improvements
Variable
Furniture and Furnishings 10
Office Equipment 7
Telephone Equipment 5
Lab Equipment 5
Appliances 5
Vehicles and Light Equipment 5
Heavy Maintenance Equipment 7
Capital Leases
Variable
Leasehold Improvements
Variable
Library Books & Fine Art
N/A
Aircraft 7
Computers 5
Broadcasting Equip 7
‣ NON CAPITALIZED EQUIPMENT - Equipment costing or having a market
value of $500 or less and having a useful life of one year or more. Computer
Equipment (computer, printer, scanner, PDA) will be the only equipment
tracked under the non capitalized equipment.
Equipment used in grants and contracts should not be capitalized unless it is
probable that the equipment will revert to the institution at the end of the grant.
This equipment is also being tracked as non-capitalized equipment.
IV. PROCEDURES – RECORDING AND TAGGING
‣ All purchased equipment is interfaced from accounts payable to fixed assets by
running a purchasing extract (FFPOEXT) on the Banner system. This interface
is run weekly and at the end of each month and it establishes an Origination Tag
(OTAG) for any invoice payment charged to the equipment account 77104.
Each asset is then reviewed by Inventory Control and any equipment not
meeting the capitalization or non capitalization criteria will be removed. An
asset sheet will be sent to each respective custodian for equipment purchases
meeting the criteria. Equipment Managers will be requested to furnish any
additional equipment information on this document not available from the
purchase order or invoice. A VU identification tag will also be sent to the
custodian at this time to be placed on the equipment. After the custodian
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verifies the equipment information as being correct, and confirms actual receipt
of the equipment, the document will be signed by the custodian and returned to
Inventory Control. Inventory Control will then make any changes or
corrections, making the equipment part of the custodian’s permanent equipment
inventory record.
‣ INVENTORY REQUEST FORMS – LOTUS NOTES
Inventory request forms on Lotus Notes will be used by custodians to notify the
Inventory Control Facilitator of changes that occur to equipment for which they
are responsible. These changes include the following:
TRANSFERS/DISPOSALS – Approval must be received from
the Inventory Control Facilitator, who works with the Director of
Purchasing, to either (1) Move equipment from one building,
department, room, etc, to another or (2) Dispose of the
equipment in an appropriate manner. If the equipment is no
longer needed in the custodian’s area, the Inventory Control
Facilitator will match this equipment to any request for similar
equipment needs across campus. All disposals must be
approved by the Director of Purchasing before the item is
disposed. Before disposing of equipment, the University must
ensure that the University has title to the equipment (i.e.
equipment purchased with Perkins funding is not University
property).
SALE OF EQUIPMENT – Departments will likely want to sell
at the remaining net book value, because selling at a loss will
negatively impact the University. If an item has no book value,
the item should be sold at the fair market value as a general
guideline. The Department should work with the Inventory
Control Facilitator to determine net book value. Based on the
information provided on the disposal form, the Director of
Purchasing will decide whether to approve the sale. All sales
must be approved by the Director of Purchasing before the
item is disposed.
STOLEN EQUIPMENT - for equipment that has been reported
stolen. A police report must be filed with the police and a copy
of this filed report must be forwarded with the inventory request
form to the Inventory Control Facilitator.
DONATING EQUIPMENT FROM THE UNIVERSITY -
Before the equipment is donated, it must be approved by the
Director of Purchasing. The requestor must ensure that the
University has title to the equipment before donating the item.
DONATED EQUIPMENT TO THE UNIVERSITY - for
equipment acquired through donations.
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Note: If Physical Plant is needed for the physical movement
of the equipment, Inventory Control will forward the request
to them for their action. Physical Plant will not move
equipment without an approved disposal sheet from the
Purchasing Department.
MIC TAGGED – for use by the Management Information Center
to report to Inventory Control the equipment tagged by them.
SWAPPED OUT - for computer equipment that has been
swapped out by our service repair contract.
TRADE-INS – When as asset is traded in, it is removed from the
fixed asset system. Because gains and losses are treated
differently, the Inventory Control Coordinator must be notified
of all transactions involving trade-ins. The Accounting
Department will calculate the cost of the new asset.
‣ TAGGING EQUIPMENT – All equipment tags will be assigned by Inventory
Control initiated either by the purchasing record, donated equipment form, or
swapped out equipment form. Once a tag is assigned and sent to a custodian, it
is their responsibility to see that the equipment is tagged properly and the asset
control sheet returned to Inventory Control.
‣ PHYSICAL INVENTORIES – Actual physical equipment inventories will be
required every two years. Equipment lists will be sent to each custodian to be
checked, verified and returned to Inventory Control with any discrepancies
noted. Spot inventory checks will be done by Inventory Control on a periodic
basis.
V. DEPRECIATION POLICY
‣ All capitalized assets, with the exception of land, library books and collections
(art work), must be depreciated. The University currently depreciates all assets
annually using the Straight Line Method. This is a depreciation method based
on the passage of time, recognizing equal periodic charges over the estimated
useful life of an asset. The calculation is as follows:
Depreciation Expense =
Asset Cost – Salvage Value
______________________
Estimated Useful Life
Salvage value is the estimate of the amount that will be realized at the end of the
useful life of a depreciable asset. Frequently, depreciable assets have little or
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no salvage value at the end of their estimated useful life and, if immaterial the
amount may be ignored.
The current year depreciation expense and the accumulated depreciation is
reported in the financial statements as required by GASB 34.
VI. PROCEDURES - FINANCIAL/ACCOUNTING
‣ RECONCILIATION OF FIXED ASSET SYSTEM TO GENERAL LEDGER –
The Banner system automatically capitalizes all assets purchased under expense
account 77104. Inventory Control reconciles the General Ledger asset accounts
in Fund 96000 to the detail transactions within the Fixed Asset System monthly
to insure the two systems are in balance. The Fixed Asset Detail Report is
produced using a Microsoft Access Report through an ODBC connection to the
Banner Fixed Asset system. This report is compared to the FGRGLTA report
from the Banner Finance system for Fund 96000. This reconciliation is recorded
on an Excel spreadsheet and all variances (reconciling items) are researched and
documented on this spreadsheet.
For year-end reconciliation purposes, the following format is used:
Beginning Inventory
+ Additions During the year
- Deletions During the year
Ending Inventory
ACCOUNTING OFFICE – The Accounting Office is responsible for reviewing
the coding of fixed assets purchased; reviewing the monthly reconciliation;
performing the year-end reconciliation of Fixed Assets to the General Ledger;
and balancing depreciation expense and accumulated depreciation.
‣ YEAR END PROCEDURES –
1) April 1 – send reminder to all equipment custodians to notify Inventory
Control of all donated equipment received in the current fiscal year.
2) New Buildings and Repair & Rehab – review construction, R&R, and
unexpended plant fund accounts for completed projects, which should be
capitalized. Capitalized projects must meet the following criteria:
Total project expense exceeds $5,000
Project extends useful life of building
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New buildings are entered on the Banner Fixed Asset system as whole units
(not by building components) with the construction accounts using the
source for the appropriate capitalized cost. Capitalized R&R projects are
entered as components of existing buildings. The asset numbers assigned to
building and R & R projects must coincide with the Facilities and Planning
Office’s numbering scheme.
3) The final month end reconciliation for the fiscal year should be
completed by the second week of July in order to allow time to run the
depreciation calculations and feeds before the Banner Finance system is
closed for year end.
4) DEPRECIATION – The final procedure prior to the year end financial
closing is to run the depreciation calculations and feeds. These
processes are run in the following order:
a) Run the final extract FFPOEXT.
b) Perform the June reconciliation of Fixed Assets to General Ledger.
Follow up and resolve variances.
c) Request MIC copy Production to our Test environment.
d) Run FFPDEPR process in Test.
e) After Depreciation has posted to the ledger, reconcile depreciation
and accumulated depreciation.
f) After successfully running and balancing depreciation in the Test
environment, run the FFPDEPR process in Production. When
running FFPDEPR, save to the Eprint system.
g) Reconcile depreciation and accumulated depreciation in Production.
The Fixed Asset Manual can be referenced for a complete and detailed description of
how fixed assets are entered in the system, reporting capabilities and other operational
activities related to fixed assets.
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