Procedure CR2068 - Property Inventory Recording, Tracking, and Depreciation
Office of the Corporate Controller
Policy Steward facilitating procedure: Associate Vice President for Finance and Corporate Controller
Table of Contents:
- EQUIPMENT (TANGIBLE ASSETS)
- Physical Inventory
- Physical Inventory Process Summary
- Building and Improvements Other Than Building (IOB)
- BUILDING DEPRECIATION RULES
- AUDIT COORDINATION - FINANCIAL AND PROCEDURAL
- RECORD RETENTION
- CONTACT INFORMATION
- CROSS REFERENCES
Property Inventory (PI), a division under the Corporate Controller reporting to the Director of Financial Reporting, Cost Analysis and Property Inventory, has the responsibility of recording, tracking and reporting University buildings and improvements, and capitalized equipment. They have a computerized system to assist in these tasks which is accessible by the University Community via the Integrated Business Information System (IBIS) and Microsoft software applications. Property Inventory has detailed procedures to cover daily and cyclical activities. This guideline outlines the steps taken to comply with policies of the University and Federal granting agencies (specifically Uniform Guidance 2CFR 200 Sub Part D Property Standards 200.436 and 200.439 ).
Equipment acquired by the University is processed via one of the following documents:
- Gift Reporting and Transmittal Form (see GURU)
- eBuy or Purchase Order (or electronic " REQR " through IBIS and other IBIS controls, (i.e. Special Request for Check ( SRFC ), Report of Cash Receipts ( ROCR ) and Journal Voucher ( JV ))
- Report of Tangible Assets Acquired by Consignment, Lease or Loan (see GURU)
- Commonwealth of Pennsylvania Department of General Services purchase order
- Office of Physical Plant (OPP) Project/Job billing process
- Government - via Department of Defense DD1149 or DD 250 forms
These documents result in an entry to the Property Inventory data base to record the addition of tangible assets to University records. Capital equipment acquired is grouped under one of the following University Object Codes:
- 0705 PSU Capital Equipment Fabrication Projects
- 0710 Non-Computer Equipment Purchases $5,000 and over
- 0711 Equipment, Non University Titled
- 0712 Capital Federal Equipment (Government Title)
- 0715 Lease/Purchase Agreements
- 0716 Software $100,000 or more
- 0781 IT End User Devices $5,000 & Over
- 0782 IT Networking Devices $5,000 & Over
- 0783 IT Peripheral Devices $5,000 & Over
- 0784 IT Servers $5,000 & Over
- 0785 IT Storage Devices $5,000 & Over
- 0786 IT Video Devices $5,000 and Over
Property Inventory reviews the following object codes to determine if any purchases should be reclassified as capital equipment:
- 0374 Maintenance DIRECT BILLED by OPP
- 0452 Software up to $100,000
- 0457 ARL use only
- 0459 Non-Computer Equipment Purchases $1000 to $4999
- 0480 NOT TO BE USED
- 0481 IT End User Devises Less Than $5,000
- 0482 IT Networking Devices Less Than $5,000
- 0483 IT Peripheral Devices Less Than$5,000
- 0484 IT Servers Less Than $5000
- 0485 IT Storage Devices Less Than $5,000
- 0486 IT Video Devices Less Than $5,000
- 0487 IT Services Provided by External Vendor
- 0488 IT Hardware and Software Maintenance
- 0489 IT ICS-ACI SERVICES
Those items valued at $5,000 or more and have a useful life of one or more years are recorded into the Property Inventory (PI) data base.
Transfer and/or disposition of tangible assets are communicated to Property Inventory via one of these forms for PI to adjust their records appropriately:
- Report of Disposition or Permanent Transfer of Tangible Assets (" DISP " in IBIS)
- Request for Authorization to Use University Tangible Assets at a non-University Location (available on GURU)
- Department of Defense - DD1149 or DD250 forms
These documents are used to adjust the PI data base as appropriate during the year as activity takes place. Disposition through Lion Surplus requires that a " DISP " be prepared before the equipment 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 as a Type 1 Disposition.
At least once every two years ( Uniform Guidance 2 CFR 200.313 (d) (2) specifies appropriate times), Property Inventory prepares a tab listing by administrative area of all tangible assets currently on the data base. PI staff search the respective areas to locate each tangible asset listed. The inventory procedures are normally conducted by building, however: the College of Agriculture and others may conduct by administrative area only. Other department resources will be utilized to confirm assets are still being utilized, for example; OPP/Business Services vehicle registration and maintenance database.
During the inventory procedures if an outdated inventory tag is present, PI 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 procedure, 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 assets current location. The information stored in the scanner is then uploaded to IBIS and the asset record is given an updated inventory date. At the conclusion of this phase of the inventory, the "unlocated" tangible assets are noted in the PI record, and a new list is made showing the missing equipment by administrative area. This list is forwarded to the appropriate Facilities/Equipment Coordinator with a cover letter explaining the process, and requesting to have the administrative area search their respective locations to find any of the "missing" items. After the department verifies that item(s) were located, PI staff will attempt to validate their findings.
Items not found 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. PI will then update records to identify the equipment as being a Type 2 Disposal.
During the inventory procedures, the Property Inventory Assistant Supervisor along with department staff prepares equipment 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 Financial Officers, Facility Coordinators, Safety Officers and other key department personnel. Equipment listings are handed out, Inventory process presented, and an open discussion with attendees is conducted.
Property Inventory staff conducts the equipment inventory at University Park, excluding the Applied Research Laboratory (ARL) and Electro Optics Center (EOC). 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 IBIS 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 administrative area search their respective locations to find any of the unlocated items. The departments have 30 days to locate the unlocated items, if after 30 days the item(s) are not located the asset record will be marked with a "U" for unlocated.
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 assets. 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.
Physical Inventories at the Applied Research Laboratory (ARL) and the Electro Optics Center (EOC) are completed by accounting or property control employees within the mentioned departments. Consistent with other areas, the Property Inventory department provides a complete listing of active assets. ARL may utilize the University's bar code scanners to record the inventory results and EOC conducts the inventory by using the provided hard-copy listings and Property Inventory then updates the official property records.
Federal or Sponsored funded equipment purchases are reviewed for ownership. If the University has full or conditional title to the asset(s), an appropriate fund source is assigned to each asset record so depreciation expense is removed from the Financial and Administrative (F&A) calculations.
Depreciation charges are made against the value of equipment for financial statement purposes, and for inclusion in the facility and administration rate for application in the conduct of governmental and industrial grants and contracts using University tangible assets. Tangible Assets classifications and their respective useful lives are as follows:
|CLASS CATEGORY||USEFUL LIFE YEARS (7/1/2011)|
|C||COMPUTER AND RELATED||5|
|I||LEASED/MISC ADDTNS - 1 YR||1|
|J||LEASED/MISC ADDTNS - 2 YRS||2|
|K||LEASED/MISC ADDTNS - 3 YRS||3|
|L||LEASED/MISC ADDTNS - 4 YRS||4|
|M||LEASED/MISC ADDTNS - 5 YRS||5|
|N||LEASED/MISC ADDTNS - 6 YRS||6|
|O||LEASED/MISC ADDTNS - 7 YRS||7|
|P||LEASED/MISC ADDTNS - 8 YRS||8|
|Q||LEASED/MISC ADDTNS - 9 YRS||9|
|R||LEASED/MISC ADDTNS - 10 YRS||10|
|U||LEASED/MISC ADDTNS - 11 YRS||11|
|V||LEASED/MISC ADDTNS - 12 YRS||12|
|W||LEASED/MISC ADDTNS - 13 YRS||13|
|X||LEASED/MISC ADDTNS - 14 YRS||14|
|Y||LEASED/MISC ADDTNS - 15 YRS||15|
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 IBIS separately and reflected on final Cost Analysis reports.
Beginning in 2011, HCA Asset Management, LLC (formerly Hirons and Associates) was engaged on a yearly basis to review and categorize building, building additions, and building renovations into the appropriate components. Other unique roles are noted below:
- Additionally any building or building addition/renovation that had not reached its economic useful life and therefore had remaining net asset value was then analyzed and componentized over the remaining new economic useful life.
- New buildings, building additions, or building renovations are componentized.
- Any gifted, purchased or otherwise obtained building will be given an economic useful life of 20 or 40 years or less, depending on the age and/or structure of the building.
- Small utility sheds purchased at home improvement stores or other vendors will have a 15 year useful life. Object Code 805 should be used for these types of purchases.
- Leased structures deemed Capital will be depreciated over the life of the original lease term. Relevant components are noted below:
|DELETED OR DEMOLISHED||1|
|HEATING VENTILATION AC||23|
|FIXED EQUIPMENT - 15||15|
|FEDERAL FUNDS - BUILDING||25|
|FEDERAL FUNDS - EQUIPMENT (HCA)||7|
|BUILDING - ORIGINAL (15)||15|
|BUILDING - ORIGINAL (20)||20|
|BUILDING - RENOVATION||20|
|BUILDING - RENOVATION (15)||15|
|BUILDING - ADDITION||40|
|NETWORKING - TELECOM||10|
|FIXED EQUIPMENT - 12||12|
|FIXED EQUIPMENT - 20||20|
|FIXED EQUIPMENT - 10||10|
|FIT OUT LEASE - 3 YEARS||0|
|FIT OUT LEASE - 4 YEARS||4|
|CAPITAL LEASE - 5 YEARS||0|
|FIT OUT LEASE - 8 YEARS||0|
|FIT OUT LEASE - 9 YEARS||9|
|CAPTIAL LEASE - 10 YEARS||10|
|CAPITAL LEASE - 11 YEARS||11|
|FIT OUT LEASE - 12 YEARS||12|
|CAPITAL LEASE - 14 YEARS||14|
|FIT OUT LEASE - 15 YEARS||15|
|FIT OUT LEASE - 18 YEARS||18|
|FIT OUT LEASE - 19 YEARS||19|
|CAPITAL LEASE - 23 YEARS||23|
|CAPITAL LEASE - 28 YEARS||28|
|LEASE BUY OUT - 23||23|
|JUST TO BALANCE||25|
- Use a 40 year life for Fire proof buildings - "B" Building (PRIOR TO FY 2001). May be used at other companies
- Use a 20 year life for Non-Fireproof buildings - "C" Building (PRIOR TO FY 2001). May be used at other companies.
- Salvage value of "0" for all buildings.
- Buildings under construction should not be depreciated at all until the building is placed in service (occupied).
- Department of General Services (DGS) buildings will be added to the depreciation records as they are occupied.
- The College of Medicine uses a straight line method of depreciation for buildings, building additions, and building renovations.
- Use a 20 year life for all IOB items.
- Use a "0" salvage value for all IOB items.
- Each separate fiscal year will account for a renovation/addition.
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.
Record retention must be managed in accordance with Policy AD35 - University Archives and Records Management , and records schedules approved by the Records Management Advisory Committee, Office of General Counsel, and Office of the President. These retention requirements are the University's retention criteria, either derived or based upon federal, state, and local statute or regulations, industry standards, and business needs. Retention beyond recommended time periods require justifiable reasons and warrant review by the Records Management Officer or designee. All documents must be maintained in such a manner so as to provide ease of access for review, and to provide a suitable audit trail for all transactions.
- Documents subject to a Legal Hold (see AD35, Legal Hold). A legal hold will remain in effect until it is released in writing by the Office of General Counsel.
- Documents under audit or review, either internally or externally. The retention period extends until released by the Corporate Controller's Office. The Financial Officer will be notified regarding any accounts which are under audit; the Financial Officer will be responsible for contacting the department.
Additional questions may be directed to the University Archivist or the Records Management Officer.
For questions, additional detail, or to request changes to this procedure, please contact the Associate Controller.
- Policy AD22 - Health Insurance Portability and Accountability Act
- Policy AD35 - University Archives and Records Management
- Uniform Guidance 2 CFR 200.313 Equipment
- Uniform Guidance 2CFR 200 Sub Part D Property Standards 200.436
- Uniform Guidance 2CFR 200 Sub Part D Equipment and Other Capital Expenditures 200.439
- Blue/White Shredding Program
Date Approved: 2/2/16
Most recent changes:
- Revision 2 - dated 12/17/15 (Title changed resulting in entire procedure revision)
- Revision 1 - dated 09-22-99 (Revised per object code/dollar level/asset classification changes)
- Original - dated 03-26-93