FIXED ASSETS Presented by : Aaron Helfenberger and Karen Worthy Reporting & Fixed Assets Our goal is to educate you on the processes, procedures, and everyday activities of the Reporting & Fixed Assets office. Agenda • What is a fixed asset and why is it important? • How is a fixed asset acquired? • How do you maintain and dispose of fixed assets? (FORMS) • Annual Inventory • Individual Responsibilities What is a Fixed Asset? A fixed asset is defined as University property such as land, buildings, and equipment, with a total cost equal to or greater than $5,000, and a useful life of two or more years. EXCEPTION: Software must be over $100,000 Examples of Fixed Assets Buildings Campus Vehicles Infrastructure Equipment Art Collections Expanded Definition Total Costs = purchase price + other costs incurred to place the asset in its location and condition for use Shipping/delivery costs Installation/set up fees Interest costs, legal fees, etc. incurred during the construction of an asset (i.e. buildings) DOES NOT APPLY: Service contracts Extended warranties Maintenance Costs Maintenance costs are expenses incurred to keep assets in normal operating condition and to help maintain the original use of the asset. Maintenance costs do not extend the life of an asset beyond the expected useful life. Examples: repairs, replacement parts, painting, service agreements, etc. MAINTENANCE COSTS = FIXED ASSET Capitalization & Depreciation A fixed asset becomes ‘capitalized’ when it is recorded on the financial statements as an asset. A fixed asset is ‘depreciated’ by allocating the cost of the asset over its useful life. Straight line method (total cost-salvage value/useful life) NOT depreciated: land, certain land improvements, construction-in-progress, works of art/historical treasures UNC Charlotte Total Assets ($1,444,209,946) UNC Charlotte TOTAL ASSETS = $1,444,209,946 as of 6/30/13 Endowment Investments $66,538,488 4% Other Investments & Assets $14,374,343 1% Cash, $328,969,656 23% Fixed Assets $1,018,489,762 71% Receivables $15,837,697 1% Fixed Assets Expenditures UNC CHARLOTTE TOTAL FIXED ASSETS $1,200,000,000 $1,000,000,000 $1,018,489,762 $893,141,364 $800,000,000 $810,994,573 $690,030,002 $600,000,000 $606,261,328 DOLLAR AMOUNT $550,369,185 $400,000,000 $499,044,421 $460,723,941 $200,000,000 $0 2006 2007 2008 2009 2010 2011 2012 2013 UNC Charlotte Fixed Assets by Type UNC CHARLOTTE FIXED ASSETS BY TYPE $1,018,489,762 as of 6/30/13 General Infrastructure $151,652,648 Construction in Progress $118,000,334 Buildings $655,172,579 Machinery & Equipment $49,027,705 Art & Collections $30,029,293 Land $7,331,270 Computer Software $7,275,933 Facts and Figures Approximately 4,995 capitalized fixed assets As of June 30, 2013, total fixed assets were $1,018,489,762 or approximately 71% of UNC Charlotte’s total assets University fixed asset expenditures have increased by 85% in the last 5 years The Fixed Assets office Implement and follow policies set by the Office of the State Controller Follow FIT Standards issued by UNC System Ensures fixed assets are: properly acquired accounted for maintained disposed of Policy Statement #601.15 CONTROL AND MANAGEMENT OF UNIVERSITY EQUIPMENT & OTHER PROPERTY Available at http://legal.uncc.edu/policies/up-601.15 (formerly policy # 79) Highlights: Fixed assets definitions Responsibilities for each level of staff involved with fixed assets Obligated to comply with fixed assets procedures Supplemental Procedures to Policy #601.15 highlights: Requirements during Annual Inventory Process for lost and stolen assets Fixed Assets Website How is a fixed asset acquired? Capital Improvement Projects (Budget Office) Entering requisitions in 49er Mart Question # 1 The $3,000 repair of the heating element on the pretzel cart is a fixed asset. TRUE OR FALSE Answer # 1 The $3,000 repair of the heating element on the pretzel cart FALSE, IT IS A REPAIR Question # 2 The one year service contract that costs $22,000 for tuning the concert piano is a fixed asset. TRUE OR FALSE Answer # 2 The one year service contract that costs $22,000 for tuning the concert piano FALSE, IT IS A SERVICE CONTRACT Question # 3 What is not included in the total cost of a fixed asset? A. Shipping B. Installation C. Extended Warranties Answer # 3 What is not included in the total cost of a fixed asset? A. Shipping B. Installation C. Extended Warranties Question # 4 Which one of these is a capitalized fixed asset? A. Equipment B. Land C. Art D. Buildings E. All of the Above Answer # 4 Which one of these is a capitalized fixed asset? A. Equipment B. Land C. Art D. Buildings E. All of the Above Fixed Asset Requisition Problems Problems with descriptions and quantity Problems with lack of information in Internal Notes Problems with account codes Example 1 Poor Requisitions (Example 1) • Problem With Example 1: Unclear Description (GEM e4) • Solution: Enter Layman’s Term Description in Internal Notes or attach Internal Document providing information. Example: Electric Vehicle • Reason: Informs Fixed Assets on what the asset is and assigns an identifiable name for Inventory purposes. 49er Mart Example 1 - Corrected Example 1 - Corrected Example 2 -Server Poor Requisitions (Example 2) Poor Requisitions (Example 2) • Problem With Example 2: Assets are being purchased out of one account when multiple accounts should be used • Solution: When purchasing assets, be sure to purchase each asset out of its proper account • Reason: When proper accounts are not used, expense accounts are incorrect and financial statements will be inaccurate. Example 2 - Corrected Example 2 - Corrected Example 2 - Corrected 49er Mart Example 2 - Additional Example 3 Bioreactor Poor Requisitions (Example 3) Poor Requisitions (Example 3) Poor Requisitions (Example 3) • Problem With Example 3: No reference to the related items included in the asset. Non-capital items appear to be purchased out of the incorrect account. • Solution: Reference the items included in the asset. Example: (Items 1-8 all make up one asset - Bioreactor) • Reason: Not referencing all items included in the asset allows the asset to be capitalized below its true value. Example 3 - Corrected Fixed Asset Account Codes Account Codes (continued) Maintenance Contracts/Service Agreements: Contracts between the University and a vendor specifying a level of ongoing support for a product or piece of equipment. Maintenance agreements often cover a one-year or longer time period. Account Codes (continued) Support Services: Services purchased from independent contractors or external organizations for professional and consultative personal services. These services are needed for maintenance and/or ongoing operations and cannot be provided by the current staff. Such services are normally procured when there is no maintenance contract or service agreement to fall back on. An example of this type of expense would be payment for support services related to software when there is no maintenance contract or service agreement in place. Account Codes (continued) Repair & Maintenance Services: A one-time or short-term agreement between the University and a vendor to remediate a problem with a product or piece of equipment. Often the agreement rate is based upon an hourly labor charge plus parts and supplies. Both parts and labor are recorded in the same account. Note that repairs are corrective and restorative following wear and deterioration; maintenance is preventive and anticipatory. Account Codes (continued) Software Accounts: - Software is only capitalized if over $100,000. Any software purchased under $100,000 is coded as non-capital. Account Codes (continued) Software Accounts - Software is only purchased out of a software account if it is software that can be installed and operated on multiple assets, including replacement assets, if the original equipment fails. - If an asset is purchased and software is purchased with the asset that can only operate with the related asset, then the software will be purchased out of the same account as the equipment. Capital Project Account Codes Account 948020 948030 948040 948050 948110 948120 948130 948140 948150 948160 948170 948180 948200 948210 948220 948230 948240 948250 948260 948270 948310 948320 948330 948340 948341 948350 948360 948370 948380 948390 Description Bldg Contingency Reserve - Cap Bldg Planning Expenses - Cap Bldg Design Contracts - Cap Bldg Commissioning Agent - Cap Bldg General Contracts - Cap Bldg Electrical Contracts - Cap Bldg Plumbing Contracts - Cap Bldg Masonry Contracts - Cap Bldg Roofing Contracts - Cap Bldg Erosion Control - Cap Bldg Mechanical Contracts - Cap Bldg Landscaping - Cap Bldg Grade/Fill/Clear - Cap Bldg Asbestos Removal - Cap Bldg HVAC Contracts - Cap Bldg Refrigeration Contracts - Cap Bldg Elevator Contracts - Cap Bldg Fire Protection Contracts-Cap Bldg Telecom Contracts - Cap Bldg Testing/Boring - Cap Bldg Legal Fees/Advertising - Cap Bldg Construction Site Survey - Cap Bldg Project Inspection Fees - Cap Bldg Miscellaneous Costs - Cap Bldg Fixed Equipment - Cap Bldg Acquisition Costs - Cap Bldg Legal/Recording Fees - Cap Bldg Appraisal Fees - Cap University Contingency - Cap Construction Contingency - Cap Account 948520 948530 948540 948610 948620 948630 948640 948650 948660 948670 948680 948700 948710 948720 948730 948740 948750 948770 948810 948820 948830 948840 948850 948910 948950 948960 948970 Description Other Contingency Reserve - Cap Other Struct-Planning Expense - Cap Other Struct-Design Cont - Cap Other Struct-General Cont - Cap Other Struct-Electrical Cont - Cap Other Struct-Plumbing Cont - Cap Other Struct-Masonry Cont - Cap Other Struct-Roofing Cont - Cap Other Struct-Erosion Control - Cap Other Struct-Mechanical Cont - Cap Other Struct-Landscaping Cont - Cap Other Struct-Grade/Fill/Clear - Cap Other Struct-Asbestos Removal - Cap Other Struct-HVAC Cont - Cap Other Struct-Refrigerate Cont - Cap Other Struct-Elevator Cont - Cap Other Struct-Fire Protection - Cap Other Struct-Testing/Boring - Cap Other Struct-Legal/Advertising- Cap Other Struct-Construct Survey - Cap Other Struct-Project Inspect - Cap Other Struct-Miscellaneous - Cap Other Struct-Telecom - Cap Land Acquistion Costs - Cap Land Improvements - Cap Land Legal/Record Fee - Cap Land Appraisal Fees - Cap Requisition Reminders! Enter an understandable asset description Use the correct account codes for each line item Utilize Internal Notes to communicate all important asset related information. 49er Mart Requisition Question # 1 You just purchased a microscope for $6,200. Which account code will you use? A. 942220 PC/Workstation/Printer Non-Capital B. 944540 Science Equipment > 8 year life Capital C. 940501 Office/Reception Capital D. 944010 Science Equipment Non-Capital Answer # 1 You just purchased a microscope for $6,200. Which account code will you use? A. 942220 PC/Workstation/Printer Non-Capital B. 944540 Science Equipment > 8 year life Capital C. 940501 Office/Reception Capital D. 944010 Science Equipment Non-Capital Question # 2 You just purchased software for an i-Security Server that costs $8,600 and the software can operate on multiple servers. Which account should you use? A. 942560 Software–Servers Capital B. 942060 Software-Servers Non-Capital C. 927340 Maint Contract–Server Software D. 942040 Software-Mainframe Non-Capital Answer # 2 You just purchased software for an i-Security Server that costs $8,600. Which account should you use? A. 942560 Software–Servers Capital B. 942060 Software-Servers Non-Capital C. 927340 Maint Contract–Server Software D. 942040 Software-Mainframe Non-Capital Question # 3 You are purchasing a server. Along with this server, you are purchasing a 1 year support agreement for $7,000 to address any complications. Which account code should you use for the support agreement? A. 928320 Repairs/Maint-Servers B. 920300 Consult Fee Server Support Services C. 942230 Server Equipment Non-Capital D. 927350 Maint Contracts-Servers Answer # 3 You are purchasing a server. Along with this server, you are purchasing a 1 year support agreement to address any complication for $7,000. Which account code should you use for the support agreement? A. 928320 Repairs/Maint-Servers B. 920300 Consult Fee Server Support Services C. 942230 Server Equipment Non-Capital D. 927350 Maint Contracts-Servers Question # 4 The printer you previously purchased is not functioning correctly now. A service agreement was never purchased for this equipment. Today you called the vendor for technical assistance and were charged $250. What account code should you use? A. 928320 Repairs/Maint-Servers B. 920250 Consult Fee PC/Printer Support Services C. 942230 Server Equipment Non-Capital D. 927350 Maint Contracts-Servers Answer # 4 The printer you previously purchased is not functioning correctly now. A service agreement was never purchased for this equipment. Today you called the vendor for technical assistance and were charged $250. What account code should you use? A. 928320 Repairs/Maint-Servers B. 920250 Consult Fee PC/Printer Support Services C. 942230 Server Equipment Non-Capital D. 927350 Maint Contracts-Servers Fixed Assets Forms 1. Equipment Disposition/Transfer Form 2. Fabricated Equipment Form 3. Off Campus Location Form 4. Trade-In Form 5. Transfer Approval Form Fixed Assets Equipment Disposition/Transfer Form For assets that are: - Surplused - Stolen (plus Police Report) - Traded-In - Transferred - Lost/Missing (plus statement of attempts to locate) - Custodian name change - Room/building change Capital Fabricated Equipment Fabricated Equipment is defined as tangible property that is built or assembled from individual parts that have a combined cost of $5,000 or more and a useful life of 2 or more years. Fabricated Equipment Form This form must be completed when a department begins to build an asset that will be fabricated. It must be forwarded to the Fixed Assets department. Fabricated Equipment Spreadsheet Second, the department will keep track of each item that is attached to the fabrication using the Fabricated Equipment Spreadsheet. Use the Fabricated Equipment account code 944085. Reference name of the project in the internal note (49er Mart) Complete and return to us on June 15 for each fiscal year. Off Campus Location Form To be used when an asset is located off campus Risk Mgmt signature is only required if department obtains insurance. Examples: Equipment used at the NC Research Campus in Kannapolis Backup servers located in another state Off Campus Location Form page 2 Trade-In Approval Form revised 4/15/2009 Fixed Asset Trade-In Approval Form Before completing this form, please read the instructions located in the Instructions Tab. This form is to be completed by the responsible department and forwarded for signatures. When all signatures are obtained, please send finalized form to the Fixed Assets Office, Reese Building, 4th Floor. WE ARE REQUESTING APPROVAL TO TRADE-IN THE FOLLOWING ITEM (TO BE FILLED OUT BY DEPARTMENT) Name of Equipment: Description of Item: University Tag #: Original Purchase Price (Total): Date of Purchase: Current Condition: Vendor Offering Trade-In Allowance: Name of Replacement Item: Description of Replacement Item: Please give a brief statement indicating the advantage to trade-in versus other disposal options: 4 signatures are required Department Request (Department Head) Printed Name Date Phone: Signature To be completed in addition to Disposition/Transfer Form TO BE COMPLETED BY PURCHASING OFFICE Total Cost of Replacement Item: Amount of Trade-In Allowance: Final Purchase Price: Purchasing Office Request Printed name Date Phone: Signature Fixed Assets Officer Approval Printed Name Phone: Signature State Surplus Property Officer Date Transfer Between Agencies Approval Form To be completed in order to transfer fixed assets to and from the University To be completed in addition to Disposition/Transfer Form Grant Transfer Approval Form To be completed with the Transfer between Agencies Approval Form and sent to the Office of Grants & Contracts Administration (formerly Research Cost Management) Needs Vice Chancellor of Business Affairs approval Grant Property Grant property that costs over $5,000 is bar coded and accounted for by the Fixed Assets department Purchases of equipment from grant funds must be made under established purchasing policies AND follow the terms and conditions of the grant If a grant has additional requirements related to its fixed assets, contact the Office of Grants & Contracts (formerly Research Cost Management) to ensure all obligations are met Under no circumstances can grant property be transferred without the written approval of the Vice Chancellor of Business Affairs See Policy# 601.12 for more information: (formerly policy # 56) http://uncc.edu/policies/up-601.12 Gift Property Gift property that costs over $5,000 is bar coded and accounted for by the Fixed Assets department Acceptance of gifts should be coordinated with the Vice Chancellor for Advancement Always view the equipment before accepting it See Policy# 602.2 for more information: (formerly policy # 28) http://uncc.edu/policies/up-602.2 Tagging Tag has a bar code and six digit number Per FIT Standards, assets must be tagged within 60 days of invoice payment date All fixed assets are physically tagged except for buildings, infrastructure, land, and mainframe software. Annual Inventory Inventory is conducted from August to June Department liaisons will receive email notification from our office and will have 6 weeks to complete Check your assets listed before Inventory Control comes to verify them Custodian is responsible for making all assets available during inventory Annual Inventory (cont.) • Inventory Control department will physically check 100% of department’s assets • Strongly recommended that laptops be tracked at the department level • After physical inventory, we will send you an updated list for your department head to sign and return to us within 10 business days. Department Inventory Report Printed name of Inventory Clerk: 2012-2013 Inventory ORG Code: Departm ent Name: 12800 Receiving & Stores Departm ent Contact: Printed name of Department Contact:Ron Greer Round: F = Found By Signing, I confirm that there are no changes to the listed assets other than those noted on this form Ron Greer Phone Number: (704) 687-0369 Total Inventory Value: $243,625.93 CORRECTIONS Noted Below (when applicable) Other Changes as Noted (Including Clearer Result of Description)... Physical [For example: "MFKR s/b Inventor Location should Custodian Name should Kawasaki & serial # s/b y (see key at top be… be… QB0744-832] right) NF = Not Found Signature of Department Contact: Required to be obtained by Inventory Control prior to leaving the department [email protected] # of Assets: Inventory Key: Aug Rnd 1 S = Surplus (requires Disposition Form) ST = Stolen (requires Disposition Form and Police Report) 15 Information Currently in Fixed Asset System Asset # Location 0000516 27 RS0000 0000549 47 RS0000 0000650 38 RS0000 0000679 30 RS0000 0000726 43 RS0000 0000777 29 RS0000 0000784 77 RS0000 0000802 41 RS0000 0000807 90 RS0000 0000812 20 RS0000 0000812 21 RS0000 0000812 22 RS0000 0000812 23 RS0000 0000821 51 RS0000 0000828 80 RS0000 Description MFKR Utility Vehicle Club Car CLBCAR Van Ford Minivan FORD Pickup Truck DODGE RAM Pickup Truck 1 Ton Cab W/Lift Gate &Rails DODGE Forklift TOYOTA Model AcquisCustodia ition Date Acquisition Cost Custodian Name n Status EMPLO 6,825.04Greer, Ronald P. YEE EMPLO 15,850.09Greer, Ronald P. YEE EMPLO 14,474.41Greer, Ronald P. YEE 3B6MC36511M5 40652 (PM-6368) RAM 2001/03/12 F150 PL 9835 2005/05/20 (S-10) Star Va 2007/04/30 (PK-6536) 2008/03/06 EMPLO 23,645.12Greer, Ronald P. YEE EMPLO 24,152.03Greer, Ronald P. YEE EMPLO 10,500.00Greer, Ronald P. YEE EMPLO 13,782.00Greer, Ronald P. YEE EMPLO 14,947.00Greer, Ronald P. YEE EMPLO 33,158.00Greer, Ronald P. YEE 2009/05/13 EMPLO 8,724.00Greer, Ronald P. YEE 2009/05/13 EMPLO 8,724.00Greer, Ronald P. YEE 2009/05/13 EMPLO 8,724.00Greer, Ronald P. YEE Sterling 67461 1FTYR10DX5PA 56298 1FTRF12W85N B60974 LS4BAB3D06GI 22651 JLSBBE1S17K0 00757 Mag LKHNC1CH69A T10357 (RS-1) T-Mag Mag LKHNC1CH89A T10358 (RS-2) T-Mag Mag LKHNC1CHX9A T10359 T-Mag (RS-3) Mag LKHNC1CH69A T10360 (RS-4) T-Mag 2009/05/13 P005V03624J 2011/01/28 EMPLO 8,724.00Greer, Ronald P. YEE EMPLO 39,848.00Greer, Ronald P. YEE 2012/05/30 EMPLO 11,548.24Greer, Ronald P. YEE 2005 Pickup Truck FORD Pickup Truck Tiger Star Cargo Van Box-Style Diesel Powered Truck Commercial Grade Utility Vehicle (TMag) Commercial Grade Utility Vehicle (TMag) Commercial Grade Utility Vehicle (t_mag) Commercial Grade Utility Vehicle (TMag) Serial # 9534454852 (S-2) 1995/04/06 1FTDA14U2TZB 35238 (74403-R) Aeros 1996/05/29 1B7HC16Y31S7 51807 1500 (PM 4241) 2000/05/22 FORD Tiger Commercial ForkliftHYSTER Kawasaki Mule 4000 2 Passenger Utility Vehicle KAWASAKI 7FGU25 2003/02/25 (7505) RANGER 2005/01/28 H90FT 1AFCP16CB502 825 MULE 4000 Final Inventory Report (needs signature!) Missing Assets A missing asset list is compiled during the Annual Inventory. The Fixed Asset department will email departments a list of assets that were missing. University departments confirm if assets have been found or not. Inventory Control re-verifies any assets that have since been found. Final missing assets are forwarded to the Vice Chancellor of Business Affairs, Department Heads, and Internal Audit. They are also included on the State Bureau of Investigation Report. Department Head Responsibilities Take adequate precautions to ensure that arson, damage, theft, embezzlement, or misuse of any asset is prevented. Comply with University, State, and Federal policies and guidelines regarding inventory verification, inventory disposal, and reporting lost or stolen inventory. Upon a change in management, conduct an internal review and account for all assets (Recommended by FIT as “Best Practice”). Property Liaison Responsibilities Assist with tagging of assets and Annual Inventory Locate department assets before your scheduled inventory verification Notify Fixed Assets department of changes in the status of assets (i.e. stolen, lost, location change, missing/defaced tag, transfers, surplus, traded in) (Use Fixed Asset Equipment Disposition Form for this) Accountability Fixed Assets have become more scrutinized in recent years during state audits Not following correct policies and procedures leads to audit findings Could lead to restrictions on how we spend state funds! Question # 1 If you have equipment/supplies you no longer need and use, you can give it away to another department or state agency for their use by sending them an email to tell the to come pick it up. TRUE FALSE Answer # 1 If you have equipment/supplies you no longer need and use, you can give it away to another department or state agency for their use by sending them an email to tell the to come pick it up. TRUE FALSE Question # 2 A Fixed Asset Equipment Disposition / Transfer Form should be completed when you: A. No longer need or can use equipment B. Want to transfer equipment or supplies to another department C. An asset cannot be located during annual inventory process D. You want to loan equipment to another institution, agency, etc. E. All of the above Answer # 2 A Fixed Asset Equipment Disposition / Transfer Form should be completed when you: A. No longer need or can use equipment B. Want to transfer equipment or supplies to another department C. An asset cannot be located during annual inventory process D. You want to loan equipment to another institution, agency, etc. E. All of the above Question # 3 During the inventory process, the department liaison should: A. Know the location of every asset listed on their department’s report B. Accompany Inventory Control as they verify the list of assets C. Make any corrections or additions to the inventory list D. All of the above Answer # 3 During the inventory process the department liaison should: A. Know the location of every asset listed on their department’s report B. Accompany Inventory Control as they verify the list of assets C. Make any corrections or additions to the inventory list D. All of the above Question # 4 If more than one purchase order is being used to build one asset that will total $5,000.00 or greater you must complete a ______________ form and forward to Fixed Assets before fiscal year end. A. Disposition Transfer Form B. Off-Campus Equipment Agreement C. Fabricated Equipment Form D. Trade-In Approval Form Answer # 4 If more than one purchase order is being used to build one asset that will total $5,000.00 or greater you must complete a ______________ form and forward to Fixed Assets before fiscal year end. A. Disposition Transfer Form B. Off-Campus Equipment Agreement C. Fabricated Equipment Form D. Trade-In Approval Form Important Takeaways All employees are responsible for protecting the University’s property Use correct account codes and give full descriptions of assets for requisitions in the internal notes section in 49er Mart Assets must be tagged within 60 days of invoice payment date When applicable, complete the correct Fixed Assets forms and forward to us Prepare for your Annual Inventory Visit our website: http://finance.uncc.edu/controllers-office/reporting-fixed-assets/ Reporting & Fixed Assets Office Reese Building Kendra Cooks Controller Tony Georges Financial Reporting Mgr. (704) 687-5755 Kim Seamans Vacant Financial Reporting Accountant Sr. Financial Reporting Accountant (704) 687-5780 (704) 687-5752 Aaron Helfenberger Karen Worthy Fixed Assets Officer Fixed Assets Accounting Tech. (704) 687-5753 (704) 687-5754 Questions?