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701

Northern Arizona University
Purchasing Policy and Procedure

Fixed Assets


POLICY:

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

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.

PERSONAL COMPUTERS/PERIPHERALS

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.

LAND/BUILDINGS

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 repair items.

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:

  1. Freight charges.


  2. Sales/use taxes.


  3. Installation, assembly and testing charges.


  4. Title search fees, recording fees and other closing costs.


  5. Grading, filling and clearing of land.


  6. Assumption of liens and delinquent taxes.


  7. Attorney's and architect's fees.


  8. 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

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 control supervisor.

PROCEDURE:

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 Technology Services.

Physical Inventory

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 department’s assets in tag number order.

The property control staff member assigned to the inventory shall:

  1. Inventory each piece of equipment, checking the listing and verifying the list information.


  2. Correct any incorrect information, and update for missing information.


  3. 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.


  4. Update the location for any equipment on loan from another department or moved to another location.


  5. Make a "missing list" for all equipment which could not be located and send it to the responsible department representative.

The department shall:

  1. Search for equipment on the "missing list."


  2. Notify property control of equipment that has been found.


  3. 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 as follows:

Periodic Inventories

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 GOVERNMENT CONTRACT

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

  1. Lost
    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 inventory.


  2. 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 available.
    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.


  3. Impaired
    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.


  4. Destroyed
    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 University’s insurance, the department shall also notify the Risk Management Department as for 2. above.

DOCUMENT RETENTION

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.