FINANCIAL AND ADMINISTRATIVE PROCEDURES
ACQUISITION OF EQUIPMENT Procedure: 11 - 020
Issued By: USNH Controller Approved by:
A. SUMMARY OF ADMINISTRATIVE PROCEDURE
This policy explains the manner in which equipment acquisitions are recorded within the USNH Property Control System. All items of equipment acquired with USNH funds, including grant and contract funds, will be capitalized (carried as an asset in the USNH general ledger) and monitored in the USNH Property Control system. Ownership may vest with a sponsoring agency or with USNH, but USNH capitalizes and tracks all equipment within the Property Control System regardless of ownership.
1. Definition of Equipment. As of July 1st 2005 all items with a purchase price of $5,000 or more and having an estimated useful life of more than one year are defined by USNH as equipment. Items which may meet the equipment definition but are not considered equipment are: works of art, library acquisitions, carpeting, and goods purchased for resale.
2. Responsibility (See the exclusions section below for additional information.)
a. Departments are responsible for the initial determination that a purchase meets the equipment definition, for charging the expense to the appropriate funding source (Banner fund/org). to properly maintain and safeguard all assets in their possession, to report loss, damage or disposal of all assets promptly and to participate in a bi-annual physical inventory of all assets under their control.
b. USNH Property Control is responsible for reviewing all USNH purchases to assure the consistent application of USNH policies and procedures, to provide for proper recording and reporting of all USNH assets, including equipment, for tagging movable assets as appropriate, to track USNH asset location and to perform an a bi-annual physical inventory of all USNH assets in cooperation with departmental custodians.
c. The Office of Sponsored Research is responsible for notifying Property Control of equipment ownership terms for each grant and contract.
Components of Equipment Acquisitions
1. Screening for Existing Equipment. This process is required before the purchase of new equipment funded by federal grants and contracts. See USNH Procedure 11-021, Screening for Existing Equipment.
2. Procurement Information. The documentation related to the purchase of all equipment should contain the following specific information to facilitate the evaluation of the asset for appropriate useful life, data entry, tagging/bar-coding and the inventory process:
a. A clear description of the equipment, which is not just the vendor’s catalog number. Supporting documentation must clearly state the description of the item(s). For example, "XT-235" is not an appropriate description, however, “Electron microscope", "Dell Pentium computer" would be satisfactory. This information should be provided in the commodity description field on the invoice at data entry if at all possible.
b. The name of the project director, primary user or whoever is directly responsible for the equipment, this will be the person designated as the custodian.
c. The location where the equipment is normally housed. Campus, building name and room number are required.
d. If something is being added to an existing piece of equipment, such as an internal disk or memory upgrade for a computer, a reference to the tag/barcode number, permanent tag number, purchase order number or invoice number of the original item is needed. This can be provided in the document text or noted on the invoice directly.
e. The 7400 series of account codes must be used for capital equipment purchases. All items coded to these accounts should meet the definition of equipment (see A.1 above) with the exception of the following:
Grants Trans Cap Eq $3K-$4,999
This code is reserved for grant equipment purchases of between 3k and 5k only. These items will not be capitalized; this is to preserve the reporting of expenditures based on pre-7/1/2005 contract requirements.
Cap Equipment-Flight Parts
Expenses that meet the flight part criteria will not be capitalized and do not meet the definition of equipment. This account code again preserves the reporting requirements of certain awards.
Capitalized Equipment Adjustment
This account code is used by USNH Financial Services for adjustments required for financial statement purposes only. There are no capital entries or assets associated with activity in these codes
f. Use the document text field to enter additional notes or further description such as number of installment payments, progress payment terms, if fabricated equipment project, the project name, etc.
3. Cost of Purchased Equipment: The total cost of a piece of equipment includes the initial accessories or auxiliary aparatus which are necessary to make it usable. It may also include costs normally considered supplies such as:
a. shipping and delivery charges or freight;
b. installation, training, and set-up charges not included with the purchase price but necessary for use of the equipment;
c. significant improvements, repairs, or upgrades to the equipment which either significantly extend its useful life or increase its market value;
d. cables, mounting apparatus or other items that are required to enable use of the equipment but are not included in the purchase price.
e. Operating system software purchased with a computer and other original software license contracts included in the initial purchase price. This does not include any annual maintenance for any of this software – those costs are normal operating expenses.
Any of these costs must be noted in the documentation to be properly capitalized as part of the equipment total purchase cost. This is particularly critical when payment is made via multiple documents within the system.
4. Tagging/Bar-coding: See USNH Procedure 11-023, Tagging/Bar-coding of Equipment.
5. Inventorying: See USNH Procedure 11-040, Inventorying of Equipment.
Types of Equipment Acquisitions
1. Standard Equipment: Equipment that is generally stand-alone, is not part of any other asset either by connection or construction, is conventionally purchased through normal USNH procurement processes and meets the definition of equipment defined in A.1 above.
2. Fabricated Equipment: Equipment that is constructed by USNH which, when complete, meets the definition of equipment in A.1 above but is composed of multiple items some of which may not meet the capital equipment requirements individually. This type of asset can not be purchased off the shelf. See USNH Procedure 11-022, Fabricating Equipment, for the appropriate handling of items being constructed.
3. Furnished Equipment: Furnished Equipment is loaned by a sponsor to USNH for use on sponsored activities. Title is generally retained by the sponsor, unless USNH receives written notification of title transfer from the sponsor. Property Control must track all furnished equipment and file annual reports on government owned equipment. To enable this, all furnished equipment should be reported to Property Control by the department receiving the equipment, using the Externally Furnished Equipment Form USNH 11-020F. See Preparation of Furnished Equipment Form USNH 11-020F for assistance in completing the form
4. Equipment Gifts: Contact Property Control and your campus advancement office regarding appropriate handling of gift-in-kind items meeting the definition of equipment in section A.1 above.
5. Betterment to Sponsor-Titled or Personal Equipment: USNH funds should not be used to partially purchase a piece of equipment, or to purchase any betterment to any item that is not owned by USNH. When title vests with a sponsor they could demand that the item be returned at grant or contract termination. USNH funds may not be used to repair, upgrade, or enhance personally owned equipment.
6. Professorships: Equipment purchased with professorship funds is the property of USNH and not the personal property of the faculty member. As such, the item should be recorded as an equipment purchase, tracked in the fixed asset system and be available for tagging and inventory.
7. Trades: Equipment to be traded in for a new piece of equipment must first be posted as surplus property to ensure it is not needed by another USNH department. See Procedure 11-030 and contact the applicable Purchasing office for assistance with the surplus notification process. Once approval for the surplus trade has been received, Property Control must be notified. Notification should include information such as tag/barcode number and serial number of equipment traded, purchase order number of both items, description of both items, and cost of both items.
1. Associated Costs: The following associated costs will not be considered equipment expenses:
a. software not bought as part of an original system (these items should be charged to supplies; account codes in the 711 or 715 range),
b. licenses and maintenance agreements (these items should be charged to maintenance account codes in the 716 range);
c. demolishing or dismantling equipment;
d. moving items from one USNH location to another.
However, repair costs may be included in equipment if the repair will add more than one year to the item's useful life or the cost significantly increases the value of the equipment (see B.3.c Cost of Purchased Equipment above).
2. Fixed Equipment: Items which become part of a building are not recorded as equipment, but are capitalized as part of the building they become part of. This includes items such as fume hoods, carpeting, built-in furnishings, fire systems, etc. Please contact USNH Financial Services with questions on affixed equipment.
3. Flight Parts: Flight parts are prototypes or deliverables bought on federal contracts. These items are not capitalized as they do not meet the useful life test. As noted above, account code 740010 is used for flight part expenditures.
4. Leased Equipment: See USNH Procedure– 8-115, Leases and Rental Agreements for proper definition and management of leased equipment.