Financial Services
Policies and Procedures - Financial Services
Policy 7.8 - Fixed Assets
Introduction
The Fixed Assets Section of the Office of Accounting Services is responsible for the bar code tagging and physical inventory of the University's capitalized fixed assets, along with the maintenance of the related accounting and control records which document equipment, land and buildings acquired and donated to the University. This information is used in the computation of overhead rates, the computation of adequate insurance coverage and the computation of losses by fire or theft. The Fixed Assets Section is located at Campus Supply Store, 804 Oakland Avenue, telephone 334-5938.
On March 13, 1996, effective for the fiscal year ended June 30, 1996, the North Carolina Office of the State Controller issued Memorandum 96-11 which established a $5,000.00 minimum threshold for reporting fixed assets on university financial statements. Land purchases and land donations are not subject to the $5,000 threshold - all land additions are capitalized.
The term capitalized fixed assets consists of land, improvements to land, easements, buildings, building improvements, vehicles, machinery, furniture, equipment, works of art and historical treasures, infrastructure, and all other tangible or intangible assets that are used in operations and have a normal life expectancy of more than two years.
Capitalized assets are recorded at the historical cost for purchases assets and at the fair market value on the date of the give for donated assets. Notification is received through the Office of Special Accounting for donated gifts-in-kind.
The cost of a capitalized fixed asset includes shipping charges, legal fees, setup costs, and component units in addition to the purchase price, all of which together must equal at least $5,000. Fixed assets to be capitalized must be properly coded on the purchase requisition using the appropriate capitalized fixed asset expenditure account codes. Departments should not use the capitalized fixed asset expenditure account codes when the purchases are not capitalized fixed assets.
In accordance with the Office of the State Controller mandates, software purchased or developed for internal use, library books, and other library materials will not be capitalized or recorded on the Fixed Assets System.
As of July 1, 2001, depreciation (the allocation of the total acquisition cost of a fixed asset over its estimated useful life) began to be calculated on capitalized fixed assets. The University elected to use the straight-line method with the half-year convention and assumed salvage value of zero. Land, certain land improvements, contstruciton-in-progress, and inexhaustible works of art, historical treasurers and similar assets are not depreciated.
Each department is responsible for safeguarding all assets purchased by his or her department, regardless of cost. Each department is also susceptible to internal and external audit verifications of fixed assets.
Land and Land/Site Improvements (Nondepreciable)
Acquired land is recorded at the purchase price plus additional costs such as legal and recording fees, surveying fees, damage payments, and land/site improvements that ready land for its intended use and produce permanent benefits. Examples of land/site improvements are excavation; fill and grading; removal, relocation, or reconstruction of property of others, such as railroads and telephone and power lines; and the construction of retaining walls.
If land and building are acquired as a single parcel, the value of the land should be determined separately from the building and recorded as land. Donated land or land that is obtained by means other than purchase, is recorded at fair-market value based on appraisal at time of acquisition. Land is treated as a fixed asset regardless of its cost, which may include the following: purchase price, legal and title fees, surveying fees, appraisal and negotiation fees, and damage payments.
Buildings
Buildings are valued at the purchase price or construction cost. Cost should
include all charges applicable to the building (i.e., broker's fees, architect's
fees, etc.). Permanently attached fixtures to the building (i.e., heating and
ventilation systems) should be included in the cost of the building.
Donated buildings should be inventoried at the appraised fair market value
at the time the building was donated. Capital Improvement Fund acquisitions
are inventoried when all construction costs are paid. Prior to this time, capital
improvement costs are accumulated as construction-in-progress.
Infrastructure
Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems. Land and land improvements must be capitalized separately from road system infrastructure.
Road systems are designed for motor vehicle travel and should not be part of the State Department of Transportation (DOT) road system. Road costs should include the costs of pavement, culverts, lighting systems, drainage systems, guardrails, markings, traffic control devices, signage, bridges, tunnels, and other buildings that are an ancillary part of the road system.
Utility systems include, but are not limited to, water distribution systems, sanitary sewer collection systems, natural gas systems, electrical distribution systems, and telecommunications/fiber optics systems that are independent of a single building.
Other Structures and Improvements
Other structures and improvements include, but are not limited to, landscaping that does not produce permanent benefits (see Land and Land/Site Improvements); towers; tanks; wells; fences; parking areas (including parking lots and parking decks); sidewalks; curbs and gutters; irrigation systems; general signage; pedestrian bridges; paved paths; fountains and swimming pools.
Machinery and Equipment
This account subgroup includes machinery and equipment with a normal life expectancy of more than two years. Examples of these assets are: furniture; equipment; and motor vehicles and motorized equipment.
Fixed Asset Identification--Property Tags
A numbered bar code tag identifies items recorded in the Fixed Assets System.
The bar code system has been installed to facilitate the physical inventory
process. Maintaining a positive identification of assets is the primary purpose
of tagging. Tagging is important to:
· Provide an accurate method of identifying individual assets as University
property,
· Aid in the taking of the physical inventory,
· Control the location of all physical assets, and
· Provide a common ground of communication for both the Fixed Assets Section
and the assets' users.
Based on the University's capitalization policies, the Fixed Assets staff determines which items should be assigned a bar code tag number and added to the Fixed Assets System. The Fixed Assets staff is responsible for physically placing the bar code label on the front or other easily accessible area of the asset to facilitate scanning with the hand held scanning unit. Under no circumstances should anyone take an item off campus before the Fixed Assets staff has properly tagged it. If a department needs an item tagged immediately, they should contact the Fixed Assets staff at 334-5938.
The asset record includes information such as description, department, manufacturer, serial number, location, budget code, fund number, purchase order number, check number, cost, commodity classification code and date acquired. Non-numbered tags are available to departments for identifying additional equipment that is not recorded on the Fixed Assets System. Departments are encouraged to maintain an in-house inventory of all equipment items purchased, regardless of whether the item is recorded on the Fixed Asset System. Fixed Asset records are verified annually for accuracy by the State Auditors.
Assets purchased with Contract and Grant funds become the property of the University and must be bar code tagged and recorded on the Fixed Assets System accordingly. Any equipment purchased with Contracts and Grants funding requires the approval of the Contracts and Grants Officer before the equipment is transferred to other agencies or off-site locations.
Annual Inventories
Each department head is responsible for safeguarding all assets purchased by his or her department. The Fixed Assets staff will conduct a physical inventory of capitalized items annually.The Fixed Assets Section needs the cooperation of departmental personnel in accomplishing the physical inventory task and will attempt to minimize the time demanded of them. The Fixed Assets staff will send inventory worksheets listing all bar coded assets to the department head, along with instructions for the department head's designee so that he or she can properly prepare for the physical inventory. The designee should locate all items, update the inventory worksheet data and return it to the Fixed Assets Section within ten business days. Once the Fixed Assets staff has recorded these changes on the Fixed Assets System and printed an updated physical inventory worksheet, they will arrange with the designee a date and time for the physical inventory. The designee should be prepared to escort the Fixed Assets staff to each item, to make arrangements for lap top computers to be brought to the office, and to have access to locked offices, classrooms, or labs.
Upon completion of the physical inventory, the Fixed Assets staff will update the Fixed Asset System as needed and send a "missing" items schedule and a final inventory printout to the department head. On a monthly basis, the Fixed Assets staff will prepare and send "missing" asset reports to the appropriate Vice Chancellor or Provost. If the Vice Chancellors and Provost are unable to locate the missing items, the Fixed Assets staff will record these "missing" items as disposed on the Fixed Assets System prior to June 30th.
The following specific fixed asset forms must be prepared by the department, signed by the department head, and submitted to the Fixed Asset Section whenever the custody of a fixed asset is to change:
Form FA-13 Equipment Disposal
Form: Returned, Traded, Junked, And Surplused Assets
Form FA-14 Equipment Transfer Form:
Transfer of a fixed asset
Form FA-16 Agreement for Equipment
Located Off-Campus: Asset taken off campus.
DISPOSAL OF FIXED ASSETS
To dispose of an asset, the responsible department must complete Form FA-13, Equipment Disposal Form, whenever the custody of the fixed asset changes due to the item being surplused, returned to vendor, junked or traded. The department head must sign Form FA-13. If the asset is to be surplused, the department should send a copy of Form FA-13 to Warehouse Services and Surplus Property personnel at 2900 Oakland Avenue (so that they will collect and dispose of the asset) and send the original to the Fixed Assets Section at Campus Supply Store, 804 Oakland Avenue (so that it will be recorded as disposed on the Fixed Assets System).
The sale of fixed assets is not permitted by individuals or departments. Departments should contact Warehouse Services and Surplus Property personnel at 334-5927 with questions about disposing an asset.
Returned/Exchanged Assets
If the department returns an asset which has been bar coded to the vendor, the department should complete an FA-13 Equipment Disposal Form and attach a copy of the credit memo or check received from the vendor. If the department exchanges an asset that has been bar coded for a replacement asset, the department should complete an FA-13 Equipment Disposal Form and attach a copy of the documentation for the transaction so that the old asset can be properly disposed and the new asset can be bar coded.
Traded Assets
A replacement asset may be acquired when an existing asset is traded to the vendor as partial payment on the new item. The Purchasing Office must approve the item being traded. See Purchasing Policy 20 for instructions. The department must submit a completed Form FA-13 Equipment Disposal Form for these trade-ins to the Fixed Assets Section at Campus Supply Store, 804 Oakland Avenue.
Junked Assets
When an asset is considered to have no useful value to any department at the University, it may be retained by the department for parts. However, the department must submit an original Form FA-13, Equipment Disposal Form to the Fixed Asset Section which will record the disposal on the Fixed Assets System.
Surplused Assets
When an asset is considered to have no useful value to any department at the University, it may be surplused by the department. The asset may or may not have value to someone other than the University. The department must submit an original Form FA-13, Equipment Disposal Form, to the Fixed Asset Section, which will record the disposal on the Fixed Assets System. The department must also submit a copy of this form to Warehouse Services & Surplus Property section, which will collect and physically dispose of the asset. Regardless of cost, all University property must be disposed through University Warehouse personnel. Under no circumstances should anyone remove University property tags and/or dispose of any fixed assets belonging to the University.
Stolen Assets
According to General Statute 114-15, if any state property has been stolen, the employee discovering the suspected theft must report the theft to his/her supervisor within 24 hours. The supervisor must notify the head of the department within the next 24 hours. The department head should notify the University Police at the University of North Carolina at Greensboro within the following 24 hours. The University Police should be notified as soon as possible, but no later than three days from the day of discovery.
The department must send a copy of the University Police report pertaining to a theft to the Fixed Asset Section. Upon receipt of the police report, the stolen item is disposed on the Fixed Asset System.
Missing Assets
A missing asset is any asset which is not found during the physical inventory process and for which documents have not been forwarded to the Fixed Asset Section for transfer or disposal.
Upon completion of the physical inventory, the Fixed Assets staff will update the Fixed Asset System as needed and send a "missing" items schedule and a final inventory printout to the department head. If the department subsequently locates a missing item, they should request that the Fixed Assets staff scan the item and delete the missing notation on the Fixed Assets System. On a monthly basis, the Fixed Assets staff will prepare reports of missing items by division and will send the reports to the other respective Vice Chancellors or Provost. The Fixed Assets staff will record these missing items as disposed on the Fixed Assets System by June 30th if the Vice Chancellors and Provost are unable to locate the missing items for his/her division.
Real Property Demolition
The director of Facilities Design and Construction will always know when structures need to be demolished and the date of demolition. The director of FD&C will usually not be aware of the conditions of acquisition or the last value that was assigned to the structure. The director of FD&C should notify the Vice Chancellor for Business Affairs of the intended structure demolition and the proposed date.
Recording Disposed Assets
Except for stolen and missing items, the Fixed Assets staff will record an
asset disposal when a properly completed and signed Equipment Disposition Form FA-13 is
received. This form must be signed by the department head. The
Fixed Asset System includes a file of disposed assets as inactive items on
the Master File. The Master File is a listing of all University property, which
meets the Capitalized Fixed Asset criteria. The Fixed Asset Section maintains
the Master File. Entering the appropriate codes on the Disposal Screen moves
the item to inactive. Disposed assets remain on the Fixed Asset System until
purged. If a department has any questions about a previously disposed item,
please contact the Fixed Asset Section.
Transfer of Fixed Assets
Transfers are defined as the movement of equipment from one department to another. If the department does not change, it is only a location change. If the equipment is purchased with Contracts and Grants funding, the approval of the Contracts and Grants Officer is required before the equipment is transferred to other agencies or off-site locations. When a department has equipment for which it no longer has a need, but another department within the University may make use of the equipment, it may be transferred from one department to the other using FA-14, Equipment Transfer Form.
Fixed Asset Items Located Off-Campus
Because equipment purchased by the University is to further its educational mission and office space is provided to its faculty and staff, Fixed Assets should generally remain on campus. If it becomes necessary for equipment to be taken off campus, the department should fill out and sign the Form FA-16 Agreement for Equipment Located Off-Campus. This form must include the item tag number, description, serial number, manufacturer, equipment cost, date of removal, expected return date, the employee who has custody of the equipment, and the off-campus location (address). The employee taking the equipment off campus must sign the agreement which includes this note: "As a University employee user of the equipment listed on this form, I agree to return the equipment when requested and to complete a new Form FA-16 if I still have the equipment in my possession at the annual inventory date. While signed out to me, if the equipment is lost, stolen or not returned when requested by the Department or Fixed Assets, I agree to repay the equipment's fair market value." Under no circumstances should anyone take an asset off campus before it has been bar coded. The department can request that an asset be bar coded immediately by calling 334-5938. Removal of university equipment for off-campus use without department head approval may result in the individual being prosecuted for misappropriation of state property and/or larceny.
The employee user and the department head must sign a new Form FA-16 during the physical inventory process each year. The confirmation must reaffirm that the original reasons the item was located off campus are still valid and that the department head continues to acknowledge his or her responsibility for the item.
Please note: some items require the Adobe Acrobat PDF Reader, which can be downloaded from the Adobe web site.