Purchasing Policy and Procedure
The investment of public funds in capital assets such as
land, buildings, improvements, vehicles, furniture, machinery
and equipment must be adequately safeguarded. To safeguard
this investment, the University has established control procedures
and a fixed asset tracking system.
Capital equipment is defined as an acquisition costing $5000
or more with a projected lifetime of two (2) or more years.
ACCOUNTING FOR UNIVERSITY PROPERTY
The property control supervisor shall be responsible for
accounting for property and ensuring that all departments
within the University comply with the accounting requirements.
All personal computers purchased as a package (invoice contains
only a total bottom line cost) must be tagged with one asset
number that has the total actual cost of the complete unit
assigned to it.
All land and building acquisitions shall be capitalized regardless
of cost. Land improvements are capitalized regardless of cost.
Building improvements, lease-hold improvements, and improvements
other than buildings, having a total project cost of $5,000
or more shall be capitalized. Improvement projects with a
cost of less than $5,000 are classified as maintenance and/or
ACQUISITION AND INITIAL VALUATION
The University's fixed assets are initially recorded at cost.
"Cost" includes all normal and necessary expenses
incurred to make the asset ready for its intended use. These
ancillary costs include, but are not limited to:
- Freight charges.
- Sales/use taxes.
- Installation, assembly and testing charges.
- Title search fees, recording fees and other closing
- Grading, filling and clearing of land.
- Assumption of liens and delinquent taxes.
- Attorney's and architect's fees.
- Building permit fees.
Interest costs associated with long-term obligations (such
as contracts or lease-purchase agreements) are not ancillary
costs and should be accounted for separately.
Donated assets are recorded at fair market value.
At the end of the fiscal year, the total cost of acquisitions
made during the year, which are added to the Master Fixed
Asset List, must be reconciled to the total capital expenditures
for the year. This is done jointly by Property Control and
the Comptroller's office. This will help ensure that all items
have been included on the list.
Physical inventory as used herein consists of the sighting,
tagging, describing, recording, reporting the property concerned,
and reconciling the property so recorded and reported with
the fixed asset system. The University must perform a physical
inventory annually. For reliable results, the physical inventory
shall be carefully planned out and supervised by the property
Identification of University Property
Capital equipment items must be tagged or otherwise identified
as University property. The assigned identification tag number
must be recorded on the fixed asset listings. Some non-capital
equipment, such as computer peripherals, are also tagged to
facilitate tracking for maintenance service through Computing
A physical inventory must be conducted every year by the
property control supervisor with appropriate changes entered
on both the equipment listings and the fixed asset system.
The fixed asset system records the asset, cost, funding source,
date of acquisition/disposal, and location of the asset and
identification number, for all capital equipment. The equipment
listings must be updated annually for acquisitions and disposal.
Property Control shall notify the responsible person in the
department of the date the physical inventory will start,
and an approximate time for completion.
A listing shall be prepared showing all of the departments
assets in tag number order.
The property control staff member assigned to the inventory
- Inventory each piece of equipment, checking the listing
and verifying the list information.
- Correct any incorrect information, and update for missing
- Record equipment which is not tagged and which is either
of value in excess of $5000 or which is data processing
equipment which should be tagged and listed.
- Update the location for any equipment on loan from another
department or moved to another location.
- Make a "missing list" for all equipment which
could not be located and send it to the responsible department
The department shall:
- Search for equipment on the "missing list."
- Notify property control of equipment that has been found.
- For equipment that cannot be found a Property Control
Authorization (PCA) form (Property
Administration) shall be completed with appropriate
approvals to remove the items from the fixed asset listing.
(See also "Equipment Lost, Stolen or Destroyed.)
The movement of fixed assets during the inventory-taking
period shall be limited, if an accurate count is to be obtained.
The transferring of movable equipment will not be permitted.
The University must develop a current Fixed Asset Listing
just prior to the start of the inventory. Each asset located
by physical inspection will be scanned for its barcode, which
will record in the fixed asset system that it has been located.
A reconciliation report will be generated on an exception
basis. Any assets located but not found on the listing will
be added to the listing. Assets contained on the listing but
not physically located will be identified in the asset report
and the department will be notified using a "missing
list." The inventory listing will be completed and may
be requested by the department head, for review.
After the inventory is completed and reviewed, the physical
inventory listings shall be reconciled to the fixed asset
listings by the Comptroller or designee. All additions, deletions
or changes documented as a result of the physical inventory
must be recorded on the Fixed Asset System.
ASSETS LOCATED AT REMOTE SITES AND FACILITIES
A remote site is defined as an NAU affiliated office/site
located off-campus as opposed to an off-campus loan of equipment
to an individual. If possible, the asset is to be tagged prior
to leaving campus and all appropriate information recorded,
including address of where asset is to be located and contact
person for further information.
If an asset has been delivered to an off-campus site before
it has been tagged, the "responsible person" listed
on the requisition is contacted to provide the name, address
and/or phone number for the remote site. After obtaining make,
model and serial number, a NAU property control tag is issued
to those in custody of the asset, to be applied to the item.
At the same time, a Departmental Certification Form (Exhibit
701B) is sent for signature and kept on file in the Fixed
Asset Office. If a remote site has a large number of assets
acquired over a period of time, new acquisitions will be added
to the existing list to eliminate the need for a new Departmental
Certification letter for each purchase made.
PHYSICAL INVENTORY OF PROPERTY OWNED BY THE FEDERAL GOVERNMENT
The minimum requirements for the physical inventory of government
property in the possession or control of the University are
Property Control, in consultation with the Office of Sponsored
Projects, will periodically take a physical inventory of government
property (except materials issued from stock) in its possession
or control. Such periodic inventories are normally limited
to assets valued over $1,000. The type and frequency of physical
inventories and the procedures therefore are as established
by the University and approved by the Government Property
Administrator. In establishing the type and frequency of inventories,
consideration is given to the University's established practices,
type and usage, and of the government property involved. Frequency
and extent of physical inventories normally will not vary
between contracts being performed by the University. However,
inventories may vary with the types of property being controlled.
Generally, government property will be inventoried at the
same time as other property in the same location or department.
A complete physical inventory must be taken by the Property
Control department, in cooperation with the sponsoring department,
as and when required by the terms of the governing contract.
PHYSICAL INVENTORY UPON TERMINATION OR COMPLETION OF A
Immediately upon termination or completion of a government
contract, in coordination with the Custodial Department and
the Office of Sponsored Projects, the Property Control Department
will perform a physical inventory. This inventory will be
adequate for disposal purposes as well as for identifying
the government property at the time of the termination or
completion of the contract. The Office of Sponsored Projects
will request disposition instructions from the sponsoring
agency. In submitting a final inventory to the sponsoring
agency, the University certifies that all equipment which
was furnished to the University by the government for use
on the contract, or for which the University has been or will
be reimbursed by the government, is included in the inventory,
or was expended in performance of the work called for by the
contract. This termination notice will be coordinated with
the Office of Sponsored Projects.
WAIVER OF INVENTORY
The requirement for physical inventory of government property
at the completion of a contract may be waived by the Property
Administrator when the University is authorized to use the
property on a follow-up contract. In such instances, the University
will provide a statement indicating a transfer of record balances
has been made and, in lieu of preparing formal inventory lists,
the University accepts responsibility and accountability for
those balances under the terms of the following contract.
LISTINGS FOR DISPOSAL PURPOSES
Standard items that have been modified may be described on
listings for disposal as standard items with a general description
of the modification. Items shall be described in sufficient
detail to permit a potential user to determine whether they
are of sufficient interest to warrant further inspection.
RESULTS OF INVENTORIES
The University must submit to the Federal Property Administrator
a listing which properly identifies all discrepancies disclosed
by physical inventory and a signed statement that physical
inventory of all or certain departments (accounts) of government
property was completed on a given date and that the official
property records were found to be in agreement with the physical
inventory except for discrepancies reported. The listing and
signed statement shall be furnished with a minimum of delay
at the completion of the physical inventory.
QUANTITATIVE AND MONETARY CONTROL
As directed or required by proper authority, the University's
reports summarizing the results of physical inventory action
are prepared on both a quantitative and monetary basis; by
category of property.
EQUIPMENT LOST, STOLEN OR DESTROYED
Each department must report lost, stolen or destroyed nonexpendable
material to Property Control within ten (10) days after discovery
of the loss. Property Control shall record the loss and assist
the department by providing information for police reports
or insurance claims through Risk Management
The department must complete a PCA form (Property
Administration) with as much information as possible,
indicating that the item is lost or was not found during
- Assets Believed to be Stolen
The department must file a report, with as much information
as possible (make, model, serial numbers, purchase order
number), to the NAU Police Department. Property Control
can provide necessary information if given the type of equipment
and last known building/room or AREA/ORGN and fiscal year
of purchase when the Property Control number is not readily
The department shall also notify the Risk Management Department.
Risk Management will require a copy of the original purchase
order, which may be obtained from Purchasing Services.
The department shall then complete a PCA form to remove
the asset from the fixed asset system. The Police Report
number must be included in upper right corner of the form.
A capital asset is considered impaired when its service utility has declined significantly and unexpectedly. Such events or changes in circumstances that may be indicative of impairment include evidence of physical damage, enactment or approval of laws or regulations or other changes in environmental factors, technological changes or evidence of obsolescence, changes in the manner or duration of use of a capital asset, and construction stoppage. A capital asset generally should be considered impaired if both (a) the decline in service utility of the capital asset is large in magnitude and (b) the event or change in circumstance is outside the normal life cycle of the capital asset.
When assets are unintentionally destroyed due to fire, flood,
human error, etc., or when obsolete equipment is utilized
as a source of parts for other similar units, a PCA form
shall be completed by the department. If the asset has been
intentionally destroyed due to vandalism or criminal activity,
then a police report is required. The only exception to
the requirement for a police report is for vehicles damaged
in a traffic accident.
If the destruction will be claimed against the Universitys
insurance, the department shall also notify the Risk Management
Department as for 2. above.
The property control supervisor will retain all documentation
supporting the physical inventory. All fixed asset records
and other pertinent records shall be retained for a minimum
of three (3)yearsbeyond the asset's disposal date in accordance
with records retention guidelines and schedules approved by
the Department of Library, Archives, and Public Records.