PROCEDURE CR2068 PROPERTY INVENTORY RECORDING, TRACKING, AND DEPRECIATION
Systems and Procedures
A Division of The Corporate Controller's Office
IN
Last Revision: 10/07/2021

Procedure CR2068 Property Inventory: Recording, Tracking, and Depreciation

Process Owner: Property Inventory, a division of Office of the Corporate Controller

Policy Steward facilitating procedure: Associate Vice President for Finance and Corporate Controller

Table of Contents:


GENERAL:

In accordance with Policy FN14 Use of University Tangible Non-Capital Property, Capital Property, Supplies, and University Services, Property Inventory, a division of the Office of the Corporate Controller, has the responsibility of recording, tracking and reporting University buildings and improvements, and capitalized property, including the Applied Research Lab (ARL). The College of Medicine (COM) has their own department responsible for tracking and recording COM property. Property Inventory has a computerized system to assist in these tasks which is accessible by the University community via the Systems of Integrated Management, Budgeting, and Accounting (SIMBA) and Microsoft software applications. Property Inventory has detailed job-aids to cover daily and cyclical activities. This procedure outlines the steps taken to comply with policies of the University and Federal granting agencies (specifically Uniform Guidance 2 CFR 200.436 Depreciation, 2 CFR 200.439 Equipment and other capital expenditures, and Federal Acquisition Requirements (FAR) 52.245-1 Government Property).

Penn State Health and its subsidiaries and Penn College of Technology, each having their own property inventory processes, are exempt from the requirements of this procedure.

DEFINITIONS:

PROCEDURE:

TANGIBLE PROPERTY, FACILITY PROPERTY, AND NON-TANGIBLE SOFTWARE:

Property acquired by the University is processed via one of the following documents:

See Procedure CR2055 Preacquisition Screening of Federally-Funded Capital Property before purchasing or transferring Federally-Funded Capital Property.

The above referenced documents result in an entry to the Property Inventory data-base within SIMBA to record the addition of tangible property to University records.

COM capital property activity is posted to 53309990 EQ-C-COM Capital Assets at the time of purchase. It is manually added to the asset database involving a transfer between this GL account and the appropriate GL account from the list above.

Those items valued at $5,000 or more and have a useful life of one (1) or more years are recorded into the Property Inventory data base.

Transfer and/or disposition of tangible assets are communicated to Property Inventory via one (1) of these forms for Property Inventory to adjust their records appropriately:

These documents are used to adjust the Property Inventory data base as appropriate during the year as activity takes place. Disposition through Lion Surplus requires that an Asset Transfer and Retirement form be prepared within SIMBA before the property can be handled by Lion Surplus staff.

For items being permanently transferred, the location and custodian responsible for item are adjusted on the data base. For items disposed by the department, a disposition code, date and disposition number are added to the record (see Procedure CR2019 Accounting for Capital and Non-Capital Property (Equipment and Facilities).

To notify Property Inventory of all tangible property received by the University by consignment or loan and for all government-owned and/or sponsor-owner vehicles acquired by the University, use the Report of Tangible Property Obtained by Consignment or Loan form. Tangible property loaned to the University by staff members should be reported using this form for the purposes of identifying it as property of the owner and to avoid confusion and investigation of untagged tangible assets by the Property Inventory Department.

For items being transferred to a non-University location, the Request for Authorization to use University Tangible Property at Non-University Locations form must be completed.

Do not use the Accountability Transfer Form to transfer property (see Procedure CR2004 Accounting for Transfer of Items of Value (except property)). The Accountability Transfer Form is only used when transferring documents or currency.

TYPES OF IDENTIFICATION TAGS:

Along with the virtual SIMBA asset identification number, the following six types of physical identification tags (Exhibit "A") are currently used for identification and are affixed to the tangible property by Property Inventory:

Departments are responsible for maintaining inventory records for items not physically tagged with an inventory identification tag. Departments having Curators will have the property tag given to them to be included in their official records.

METHOD OF TAGGING TANGIBLE PROPERTY:

University Park:

Capital acquisitions are assigned a bar-coded tag, the number of which is used to identify that item in the computer database. A business area number is also assigned to denote the area responsible for each piece of property, along with a department custodian name. Tags are distributed to the Administrative Support Assistant (ASA) in charge of the corresponding business area.

As each Inventory ASA prepares to tag property, they review the applicable documents (copies of Shop OnLion documentation, POs, Non-PO Invoice, etc.) for the property items they have been assigned to tag. Each document is stamped with a hand-stamp (Exhibit "C") which labels the headings for the following information: tag number, building number, room number, item name, model, serial number, manufacturer, custodian, and business area. As much of this information as possible is recorded from the documents before actual tagging of property. The ASA than sorts the documents by location of the property according to building.

The Inventory ASA contacts the business area liaison to set up time to accomplish the actual tagging. When the ASA tags the acquisitions, they will take with them the tags and pre-stamped documents (Non-PO Invoice, PCard documentation, etc.). The business area liaison will assist in locating the property for the ASA. A tag is selected for the item being tagged, based on ownership of item. The tag is attached to the item in plain view and where it can be easily accessed by the bar-code scanner for subsequent inventory taking. Any information not previously recorded on the pre-stamped documents is completed by the Inventory ASA.

After the physical tagging is complete, the ASA updates the SIMBA asset record with the applicable information needed for federal and University financial and inventory reporting.

SIMBA maintains the records of all capitalized property acquisition. This information is used in determining the depreciation charge; to assist in generating the financial statements; and in determining the amount of insurance coverage required.

Non-University Park Locations:

Tagging property at Non-University Park Locations is done similarly to the procedure for tagging property at University Park, except for the actual, physical tagging. Property Inventory ASA prepares a copy of each document and sends the copes along with an Equipment Tagging Information Form/Non-University Park Locations (Exhibit "D") and proper tags, if needed, to the appropriate contact person at the Non-University Park location. Property Inventory assigns a block of pre-numbered tags to each of the University's Commonwealth campus locations for use as needed.

The contact person completes the information needed on the Equipment Tagging Information Form (Exhibit "D") and physical tags the piece of property. After completing the form, it is returned to Property Inventory at University Park. Property Inventory updates the information in SIMBA.

NOTE: The procedure described for tagging property at Non-University Park locations may be used in certain instances at University Park if Property Inventory personnel are not able to tag the property personally due to the off-site location of the property.

PHYSICAL INVENTORY PROCESS:

Tangible Property:

At least once every two years (Uniform Guidance 2 CFR 200.313(d) (2) specifies appropriate times), Property Inventory prepares a tab listing by business area of all tangible property currently in the data base. Property Inventory staff search the respective building to locate each tangible property listed. The inventory procedures are normally conducted by building, however; due to the specific nature of federal program requirements, the College of Agricultural Sciences and ARL may conduct by business area only. Other department resources will be utilized to confirm property is still being utilized. For example; Office of Physical Plant (OPP)/Business Services may need to confirm a vehicle within the College of Agricultural Sciences is still being utilized using the vehicle registration and maintenance database. When normal business conduct is interrupted for long periods (i.e., pandemics, declared state of emergency) departments may have to conduct their business area's inventory and document their findings back to Property Inventory for database updating.

During the inventory process if an outdated or defective inventory tag is present, Property Inventory staff will apply a new tag and record the new number appropriately. All financial information is copied to the newly assigned tag.

During the inventory process, a pre-inventory reference list is marked - either an item is found and marked appropriately, or is not seen/located and marked as "unlocated." An inventory bar code scanner is used to record the property's current location. The information stored in the scanner is then uploaded to SIMBA Property Inventory database and the asset record is updated with the inventory date. At the conclusion of this phase of the inventory, a new list is made showing the missing property by business area. This list is forwarded to the appropriate Facilities/Equipment Coordinator with a cover letter explaining the process and requesting to have the business area search their respective locations to find any of the "unlocated" items. After the department verifies that item(s) were located, Property Inventory staff validate those findings prior to removing them from the unlocated property list.

Unlocated items will not have their inventory date updated and if the item is not found during the next physical inventory, the department will receive a final notice that the item(s) will be written off. Property Inventory will then update records to identify the property as being a Type 4 Disposal - Write-Off.

During the inventory process, the Property Inventory Assistant Supervisor along with department staff prepares property listings for each building that is scheduled to be inventoried. After the lists have been reviewed for accuracy regarding custodian spelling and other typographical errors, a pre-inventory meeting is held with appropriate staff from each building being inventoried. Normal attendees are Business Area Financial Officers, Facility Coordinators, Safety Officers and other key department personnel. Property listings are handed out, inventory process presented, and an open discussion with attendees is conducted.

Property Inventory staff conducts the property inventory at University Park, excluding ARL. Electronic bar code scanners are used to validate the location of each item. After retrieval of information via scanner, the data is uploaded to the SIMBA Property Inventory database and given an updated inventory date. An unlocated listing is generated and forwarded to the appropriate Facilities/Equipment Coordinator with a cover letter explaining the process and requesting that the business area search their respective locations to find any of the unlocated items. The departments have 30 days to locate the unlocated items.

Physical Inventories at Commonwealth Campuses and other off-campus locations are conducted by designees of each location. Property Inventory supplies each campus with a listing of their active property. The campus then returns the listing with updated information and Property Inventory staff updates the database. Campuses are inventoried every two years by dividing the Commonwealth in half, East/West. One half is inventoried each year.

COM is responsible for conducting their own physical inventories and have their own established practices.

Physical inventories at ARL are completed by ARL accounting or property control employees. Consistent with other areas, the Property Inventory department provides a complete listing of active property. ARL may utilize the University's bar code scanners to record the inventory results and conducts the inventory by using the provided electronic listings and Property Inventory then updates the official property records.

Federal or Sponsor funded property purchases are reviewed for ownership. If the University has full or conditional title to the property, an appropriate fund source is assigned to each property record so depreciation expense is removed from the Facility and Administrative (F&A) calculations.

Facility Property:

The Office of Physical Plant Space Management Department, using Lion Space, conducts on-site audits of University Park and Commonwealth Campus locations to ensure structures still exist. OPP program leaders also inform Property Inventory when structures are being razed to make room for a new structure.

SIMBA maintains the records of all capitalized property acquisition. This information is used in determining the depreciation charge, to assist in generating the financial statements and in determining the amount of insurance coverage required for facility property.

DISPOSITION OF PROPERTY:

General Information:

Capital property which is disposed of in any manner must be property recorded on the Asset Transfer and Retirement Form in SIMBA. The tag must also be removed and returned to Property Inventory.

Government/Sponsored property tagged with a red or yellow tag may not be disposed of until Property Inventory is notified. Any item with a red tag is government-owned and cannot be disposed of without specific permission from the government. All government markings must also be removed from the property before returned to the government or when abandoned to the University. Any item with a yellow tag is sponsor-owned or placed by consignment or loan with the University. Disposal of a gift item so tagged must be reported to the donor and the Internal Revenue Service (IRS) on Non-cash Charitable Contribution Form 8283 if disposal occurs within three (3) years of the date of receipt of the gift (refer to the Assistant Treasurer's Office and to IRS Regulations for more information).

The Equipment Condition Codes (Exhibit "B") provides a list of condition codes, ownership codes, acquisition type codes, as well as the disposal codes (see below) used by Property Inventory within SIMBA..

Types of Disposals:

There are nine (9) ways in which the disposal of property is categorized by Property Inventory. Each category is represented on the data base by a specific Disposal Code as follows:

  1. TYP1 Disposal sent to salvage - Disposals that are reported by department on the Asset Transfer and Retirement form within SIMBA and sent to LION Surplus. Refer to University Policy BS15 Disposal and Purchase of Obsolete, Surplus or Scrap University-Owned Equipment, Supplies, and/or Materials and Procedure BS2011 Lion Surplus Operations including Sales Store
    NOTE: If there is an exchange of money between departments, an IO or JE must reflect these amounts.
  2. TYP2 Disposal Cannibalized - Disposals that are reported by department on the Asset Transfer and Retirement form in SIMBA that have been cannibalized (used for parts and need to be removed from the asset {IS THIS THE CORRECT WORD?] record)
  3. TYP3 Disposal Recycled - Disposals that are reported by department on the Asset Transfer and Retirement form in SIMBA that are to be sold for scrap
  4. TYP4 Write Off - Used to retire property that has been missing from inventory for two (2) inventory cycles
  5. TYP5 Prior Year Correction - Used to make prior year corrections and to delete a record from the database
  6. TYP6 Trade In - Used to dispose of property that has been traded in
  7. TYP7 Returned to Sponsor - Used to dispose of property that has been returned to the sponsor
  8. TYP8 Sold - Use to indicate property that has been cold outside of being sent to LION Surplus
  9. TYP9 Returned to Vendor - Used to dispose of property that has been returned to the vendor

Disposition of Facility Property:

When facility property assets are sold, razed, or partially demolished, the SIMBA asset record and any sub-asset numbers will be deactivated by using one of the same disposal codes.

DEPRECIATION:

Tangible Property Depreciation:

Depreciation charges are made against the value of property for financial statement purposes, and for inclusion in the F&A rate for application in the conduct of governmental and industrial grants and contracts using University tangible property. Tangible property classifications and their respective useful lives are as follows:

Building and Improvements Other Than Buildings:

Buildings:

Buildings are capitalized at accumulated cost of construction (or transfer cost if purchased, or fair market value if donated).

All federal monies that are used to pay for any new building, IOB, or renovation project are excluded from F&A calculations. Federal monies are recorded in SIMBA separately and reflected on final Cost Analysis reports.

Property Inventory staff review several special Internal Order (IO)numbers on a monthly basis and categorize building, building additions, and building renovations expenses into the appropriate components lives. Other unique roles are noted below:

Relevant components are noted below (appearing in alphabetical order):

Improvements Other than Buildings (IOB):

VIOLATIONS:

Violation of a financial policy and/or procedure should be reported to your supervisor, unit manager, Human Resources representative, and/or office responsible for the policy and/or procedure. Where those resources are inadequate, you may choose to make an anonymous report through the Penn State University hotline by calling 1-800-560-1637.

AUDIT COORDINATION - FINANCIAL AND PROCEDURAL:

The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area. Audits relating to sponsored activities or other audits performed by external auditors may also be performed. The Financial Officer would also be responsible for working with the external auditor and/or a central university officer related to these procedures.

UNIVERSITY RECORDS RETENTION AND DISPOSITION:

University Records retention must be managed in accordance with Policy AD35 University Archives and Records Management and retention schedules approved by the Records Management Advisory Committee, Office of General Counsel, and Vice President for Administration. These records retention schedules are derived from - or based upon - federal, state, and local statute or regulations, University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.

Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. If the disposition method for University Records states "Review by Archives" on the records retention schedule, the employees responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center.

Exceptions to the practice are as follows:

To safeguard the privacy of individuals, records that Personally Identifiable Information (PII), as defined in University Policy AD53 Privacy Policy, or student records, as defined in University Policy AD11 Confidentiality of Student Records, must be destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see Policy AD53 Privacy Policy.

Additional questions may be directed to the Office of Records Management.

EXHIBITS:

CONTACT INFORMATION:

For questions, additional detail, or to request changes to this procedure, please contact the Manager, Property Inventory.

CROSS REFERENCES:


PROCEDURE STATUS:

Date Approved:

January 31, 2022

Most Recent Changes:

Revision History: