Use and Maintenance of Moveable Capital Equipment

Reason for the policy

This policy provides guidance to assure that University assets are properly maintained and protected.

Primary guidance to which the policy responds

This policy responds to good business practices and Financial Accounting Standard Board (FASB) and Generally Accepted Accounting Principles (GAAP) requirements for recording and reporting capital assets and depreciation expenses. The federal regulations to which this policy responds include:

• FAR 52.245-1, Government Property, Parts 35, 45, and 52
• OMB Circular A-21: Cost Principles for Educational Institutions
• OMB Circular A-110: Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations (Relocated 2 CFR 215)
• OMB Circular A-133: Audits of States, Local Governments, and Non-Profit Organizations

  Roles and responsibilities

1. Controller’s Office

The Columbia University Controller’s Office is responsible for the maintenance of this policy and for responding to questions regarding the policy. Responsibility for capital equipment management is shared by two groups within the Controller’s Office: Capital Asset Accounting (CAA) and Research Policy & Indirect Cost (RPIC). This structure is designed to ensure both financial and government policies and procedures regarding equipment are addressed.

• Capital Asset Accounting (CAA)
  CAA is the primary group responsible for moveable capital equipment management at the University. The CAA Property Manager serves as the primary liaison to schools and departments for all capital equipment related processes and is responsible for ensuring compliance with Generally Accepted Accounting Principles and government regulations for capital equipment management at the University.
• Research Policy & Indirect Cost (RPIC)
  The overall responsibility of RPIC is to provide annual and final property reports for Government Owned/Furnished Equipment.

2. Custodial Departments

Chairpersons, deans and directors have general stewardship responsibilities for the maintenance and control of all property and equipment in their custody and control. A departmental equipment coordinator or equivalent is responsible for managing equipment at the departmental level. Principal investigators are responsible for the management of capital equipment under their sponsored agreements or during the course of the research they are conducting.

3. Procurement Services

Three areas in Procurement Services are involved in the capital equipment cycle: the Purchasing Department, Accounts Payable Department and the P-Card program.

• Purchasing Department
  Responsible for tracking and monitoring operating and capital lease data charged to Subcode 6117- Major Moveable Equipment Lease/Purchase.]
• Accounts Payable
  Responsible for providing Capital Asset Accounting (CAA) with quarterly reports of payment activity charges to Subcode series 61XX and 63XX to facilitate tagging and maintenance of the capital equipment inventory database.
• P-Card Program
  Responsible for monitoring moveable capital equipment purchases on the P-Card and providing quarterly reports to CAA for inventory tagging and maintenance of the capital equipment inventory database

Revision history

This policy was originally distributed in January 1983.

Who is governed by this policy

This policy applies to all individuals who have custody, use or control moveable capital equipment owned by the University, titled to the University, under the custody of the University, or for which the University is accountable to the federal government and other sponsors. Covered individuals include, but are not limited to, faculty, staff, students, contractors, consultants, those working on behalf of the University and/or individuals authorized by affiliated institutions and organizations.

Who should know this policy

Anyone who has custody, uses or controls moveable capital equipment owned by the University, titled to the University, under the custody of the University, or for which the University is accountable to the federal government and other sponsors.

Exclusion or special situations

None

Policy Statement

A. Acceptable Use

1. Institutional Use

University capital equipment is intended for institutional use and not for private purposes. Use may be additionally restricted by the terms of the award for which the capital equipment was acquired. Individuals requesting home use (for institutional purposes) of capital equipment must obtain the approval of the Principal Investigator and notify CAA of the particular capital equipment to be used at home. CAA will update the capital equipment database accordingly.

University Property

The custodial department should review the use of University capital equipment annually. Any capital equipment which is no longer needed should be reported to the CAA Property Manager.

Government Property

The custodial department and the principal investigator will restrict the utilization of capital equipment acquired for use under a specific grant or contract. When required, a record of current use of government capital equipment will be maintained. Capital equipment needs should be reviewed periodically.

The custodial department is responsible for the necessary care to maintain the condition of the capital equipment in order that the longest useful life is secured. Written approval must be obtained from the government property administrator prior to effecting any cost to the government for major repair or rehabilitation to government property.

2. Personal Use

Personal use of University assets is prohibited, except when approved by an authorized individual.

B. Bi-­‐annual Physical Inventory

Physical inventories validate the accuracy of the property accounting record, which ensures accurate financial reporting of University moveable capital equipment and accurate accountability and financial reporting of capital equipment not titled to the University. Custodial departments are required to work with CAA to conduct all required inventories.

C. Reporting Capital Equipment Status Change

The custodial department is responsible for notifying CAA whenever the status of moveable capital equipment changes. The Equipment  Inventory Adjustment Form should be used to report changes to the CAA Property Manager.

Following are examples of moveable capital equipment status changes with related codes to be noted on the Equipment Inventory Adjustment Form:

D. Physical Security

The custodial department is required to make adequate provisions for the physical security of capital equipment. Areas containing capital equipment should be kept locked after business hours or at other times when not in use. Special precautionary measures should be taken in the case of high value, portable capital equipment.

E. Capital Equipment Maintenance and Care

The custodial department is responsible for the necessary care to maintain the condition of the capital equipment in order that the longest useful life is secured. Written approval must be obtained from the government property administrator prior to effecting any cost to the government for major repair or rehabilitation to government property.

F. Reports to Government Agencies

When special reports covering capital equipment use and maintenance are required by a government agency, the principal investigator or head of the custodial department is required to track and furnish the CAA Property Manager with the technical data that is needed to meet the reporting requirements.

DEFINITIONS

Accountable Property: A term used to identify government property which is recorded in a formal accounting system and is controlled by an identification system and supporting records from its acquisition through disposal.

Capital Equipment: Capital equipment at Columbia University is defined as tangible, permanent item with a life of at least two years that is held for purposes other than investment or resale and has a value of $5,000. Capital equipment (also referred to as moveable equipment, property or capital assets) includes University property and government owned property.

Capital Lease: Leases are considered capital leases under any of the following circumstances:

• Ownership transfers to lessee at end of lease
• Lease contains bargain purchase option
• Lease period is at least 75 percent of its useful life
• Present value of lease payment is at least 90 percent of fair market value

Component Parts: Component parts are add-­‐ons and accessories purchased after the fact that either increase the useful life of the asset or add additional functionality. Component parts are considered capital assets.

Custodial Department: Custodial Department includes a school, department, center, or unit of the University having physical control of University capital equipment.

Deprecation: Depreciation is a method for allocating the cost of buildings and equipment over time. Generally accepted accounting principles and federal regulations dictate that the value of capital assets must be written off as an expense over the useful life of the asset. Depreciation expense is calculated in e-­‐Prais based on the asset’s estimated useful life.

Disposition: Disposition is the process of determining if capital equipment is an excess or an unusable asset. It is removed from inventory when it is no longer physically located on-­‐site. Examples of asset dispositions include sale, scrap, donation, etc.

E-Prais: Proprietary asset management software used by the University to account for all moveable capital equipment either owned by the University or owned by the government and other sponsors.

Excess Equipment: A term that describes the lack of use or benefit a piece of equipment can give to a project or person.  Any excess equipment, whether University funded or sponsor funded, should be considered eligible for disposition.

Fabrication: A fabrication is a one-­‐of-­‐a-­‐kind creation. Fabrications are created by assembling a number of components (manufactured or custom made) to produce a piece of equipment that meets unique research specifications. Most fabrications are sponsor-­‐funded and  therefore have a number of compliance requirements related to acquiring and tracking equipment in an assembled fabrication.

Found Equipment: Equipment discovered by a custodial department which does not appear on the University capital equipment inventory records. Custody of found equipment is assigned to the user department. The value will be estimated by Capital Asset Accounting of the Controller’s Office and the date found will be used as the date received.

General Purpose Equipment: Equipment which is not limited only to research, medical, scientific or other technical activities. General Purpose Equipment is not allowable as a direct cost to a sponsored project unless specifically budgeted for in the proposal or notice of award. Examples of general purpose equipment include office equipment and furnishings, air conditioning equipment, reproduction and printing equipment, motor vehicles, and computing equipment.

Gifts-in-Kind: The receipt of non-­‐monetary gifts given to the University.

Government Property: Government property includes all property owned or leased by the Federal government. Such property acquired under contracts with the University includes:

• Government furnished property: property in the possession of or acquired by the government and subsequently delivered to or otherwise made available to the University for use under specified contracts and grants.
• Contractor acquired property: property purchased or otherwise provided by the University for the performance of a contract, title to which property is vested in the government by virtue of its procurement with government funds.
• Excess government property: property which is no longer required by the holding Federal activity and is available to other Federal agencies or Federal contractors such as the University.
• Federal surplus property: property which has been screened by all Federal agencies and generally made available to eligible institutions through the State Agency for Surplus Property.

Loaned Equipment: Loaned equipment is equipment either borrowed by the University from an external agency or by one University department from another, or loaned by the University to an external agency or individual.

Minor Equipment: Includes tangible personal property having a unit cost of less than $5,000 and having a useful life of less than two years. Minor equipment at the University is not considered “capital equipment” and is subject to indirect cost. Minor equipment should be charged to Subcode series 62XX.

Obsolete: A term that means an item can no longer meet its intended purpose and is no longer useful to the University.

Personal Property: Personal property at the University is defined as any movable item subject to ownership which is not real property.

Replacement/Repair Parts: Replacement/repair parts are generally considered minor equipment and should be charged to Subcode 62XX. However, replacement parts may be charged to capital equipment Subcode 61XX or 63XX regardless of cost, if the item:

• extends the normal life expectancy of the asset by 2 or more years, or
• adds additional functionality or is an enhancement to the asset.

Special Purpose Equipment: Equipment which is used only for research, medical, scientific, or other technical activities and is allowable as a direct cost to a sponsored project.

Surplus Equipment: Item that is no longer needed or required.

University Property: Equipment purchased with non-­‐government funds, or acquired through private gifts or donations.