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 Ellucian as part of the Banner product. The 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 $5000 or more and having a useful life of one 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. 1
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 $4999.99 or less and having a useful life of one year or more. Equipment (computer, printer, scanner, tablet, copier, art, firearm, licensed motorized vehicle: car, truck, trailer, golf cart, utility vehicles, etc.) 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 2
custodian at this time to be placed on the equipment. After the equipment manager 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. Disposals for computers should be sent to MIC. 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. 3
DONATED EQUIPMENT TO THE UNIVERSITY - for equipment acquired through donations. 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 an equipment manager, 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 4
useful life of a depreciable asset. Frequently, depreciable assets have little or 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 5
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. 6