Similarities and
Differences
Between Federal
Property Accounting
and Federal
Property
Management
Michael (Mike) Showers, CPPA
Shared Interest
PERSONAL
PROPERTY
FINANCE
ACCOUNTS FOR
MANAGES
NON-CAPITAL
ACCOUNTABLE
EQUIPMENT
NON-CAPITAL
EXPENSED
PP&E
CAPITAL EQUIPMENT
REAL PROPERTY
SUPPLIES AND
MATERIAL
CONSTRUCTION
IN PROGRESS
Differences Between Property Management
and Financial Accounting and Reporting
•
PROPERTY MANAGEMENT
– TYPICALLY DOES NOT
INCLUDE REAL PROPERTY
– PERSONAL PROPERTY
• ACCOUNTABLE
– 100% OF INVENTORY
ON RECORD
– 100% OF VALUE ON
RECORD
– USEFUL LIFE
CALCULATION NOT
DEPRECIATION
• SUPPLIES AND
MATERIAL
• DOES NOT INCLUDE
WORK IN PROGRESS
•
FINANCIAL
ACCOUNTING AND
REPORTING
– INCLUDES REAL
PROPERTY
– PERSONAL PROPERTY
• CAPITAL PP&E
– SUBSET OF
ACCOUNTABLE
– DEPRECIATED
• EXPENSED PP&E
• OPERATING MATERIAL
AND SUPPLIES
• WORK IN PROGRESS
SIMILARITIES
AND
SIMILARITIES
AND DIFFERENCES
IN
DIFFERENCES
IN GUIDANCE
GUIDANCE
Financial Management
Guidance
CFO Act
FASAB Standards/Accepted
Financial Standards
Agency Implementing Regulations
Local Operating Procedures
Property, Plant and Equipment
• Heritage Assets
• Stewardship Land
• CAPITAL General PP&E Example
– Equipment and Real Property Valued over
threshold (Agency discretion)
– Not for sale
– USEFUL LIFE > 2 YEARS
– ALTERNATE USE POSSIBLE
• EXPENSED PP&E
– Equipment and Real Property Valued under
threshold (Agency discretion)
Property Management
Guidance
40 USC
Federal Management
Regulation
Agency Implementing Regulations
Local Operating Procedures
Property Legal and Regulatory
• 40USC
– Maintain adequate inventory levels
– Catalog property
– Maintain adequate inventory controls and
accountability systems
– Survey to identify excess
– Promptly report excess
• FMR
– Limited to excess
Agency Property Regs
• HHS Logistics Management Manual
• NASA Procedural Requirements/Policy
Directives – 4000 series
• DoDI 5000.64 – Accountability and
Management of DoD Equipment and
Other Accountable Property
Recognition - Finance
• PP&E recognized (added to records):
“Title passes to the acquiring entity or
when the PP&E is delivered to the entity
or to an agent of the entity.”
Record Creation - Property
• Usually occurs after:
– Receipt, inspection and acceptance
• Title may transfer prior to receipt
dependent on FOB Point and contract
language
Contract Property Record
Creation
• FAR Government Property Clause 52.245-1
• Records are created on title transfer
• Title to contract property according to FAR Government
Property Clause 52.245-1 may occur at different times
– Government furnished property is always Government titled
– Contractor acquired property is generally titled to the Government at the
earlier of:
• Issued for Performance
• Processing Commenced
• Government reimbursement
– Title can be given to non-profit research and educational institutions
SFFAS 6 Value Definition
• Acquisition cost = Unit price + any other
costs associated with putting an item in to
performance (Transport, install, assemble)
• Present value or book value =
acquisition cost less depreciation
Different Value Definitions
• Federal Management Regulation (FMR)
– Normally used to create a property record
– Unit Price = the cost of the item itself
FMR 102-35.20 “Acquisition cost” means the original
purchase price of an item.
• DoD 5000.64 Acquisition Cost
– The amount, net of both trade and cash
discounts, paid for the property, plus
transportation costs and other ancillary costs.
Financial Equipment Definition
• Property, Plant, and Equipment
(SFFAS6) –
– Tangible
– Estimated useful life of 2 or more years
– Not intended for sale in the ordinary course of
business,
– Intended to be used or available for use by
the entity
FAR Equipment Definition
• Tangible item that is functionally complete for its
intended purpose
• Durable, nonexpendable,
• Not intended for sale,
• Does not ordinarily lose its identity or become a
component part of another article when put into use.
• Needed for the performance of a contract
• Excludes material, real property, special test
equipment or special tooling
Different Equipment Definitions
• Equipment (NPR Definition) - adds
– NASA personal property
– Configured as mechanical, electrical, or electronic
machines, tools, devices, and apparatuses
– Useful life of two years or more
– Not consumed or expended in an experiment
• DoD 5000.64 adds
– Has been acquired or constructed with the intention of
being used”
Accountable Equipment
Examples of INTERNAL PROPERTY REQUIREMENTS
• NASA, HHS, DoD
• Equipment valued at or over $5,000
• Any sensitive items
– DoD Sensitive = Statutory requirements, high
value, high tech, hazardous, and arms
– NASA/HHS = Subject to pilferage and
hazardous
Operating Materials & Supplies
• Inventory
SFFAS 3
– Items held for sale
– Excess, obsolete and unserviceable inventory
– Inventory held for repair
• Operating Materials and Supplies
(Consumeables)
• Stockpile Materials (held for emergencies)
• Seized, Forfeited and Foreclosed property
• Different Commodity Categories
Example Supply
Definitions/Categories
• Store Stock – To be consumed in regular business
• Program Stock – Items consumed in regular
business, spares, acquired for and held by a
particular operating activity
• Standby Stock – emergency supplies not
supported by consumption analysis
• Bench stock – locally maintained, small storage
areas used to immediately resupply production
activities
WORK IN PROGRESS
(COST ACCUMULATION)
LOGISTICS
MATERIAL FROM
STOCKS
TRANSPORTATION
PROPERTY
RECORD
RECEIPT AND
ACCEPTANCE
FINANCE
WORK IN PROGRESS
VALUES OF:
MATERIAL ISSUED
FROM STOCK
ACQUIRED MATERIAL
EXTERNAL LABOR
INTERNAL LABOR
OVERHEAD
CONTRACTOR OVERHEAD
TRANSPORATION
INSTALLATION
FINISHED PERSONAL
PROPERTY
ACQUISITION COST
OTHER SOURCES
PROJECT
INTERNAL LABOR
OVERHEAD
PROCUREMENT
ACQUIRED MATERIAL
LABOR
TRANSPORTATION
INSTALLATION
CONTRACTOR OVERHEAD
Oversight and Management
Control
Contract Property Requirements
• Based on Contract Language
– Contract Clauses
– Statement of Work
– Data Deliverables
• Contractors must manage ALL personal
Property, not just capital or accountable
property
• Contractors use their own systems to keep
records of property and their own
processes to manage it
Government Property Clause
FAR 52.245-1
• Provides Additional Definitions
–
–
–
–
Acquisition Cost
Equipment
Material
Property Records
• Requires contractors to maintain a system for the
management of ALL Government Property
–
–
–
–
–
–
Control
Use
Maintain
Preserve
Protect
Repair
Government Property Clause
FAR 52.245-1
• Is not intended to implement financial accounting or
reporting requirements
– Contractor records are “stewardship” or property records
– Government maintains any “fiduciary” or financial records
• Accounting and cost requirements are implemented in other
parts of the FAR
– Part 30, Cost Accounting Standards Administration
– Part 31, Contract Cost Principles and Procedures
Government Property Clause
FAR 52.245-1
• Defines 10 “outcomes” covers entire life cycle of
property
• Allows the Government to perform a Property
Management System Analysis (PMSA)
• Does not require perfection in cost contracting
– Cost contracts must only provide “best effort” to deliver
Government requirements
• Fixed price contractors must deliver the deliverable or
not be paid
– Property Management requirements are not deliverables
• Contractor performance is obtained through the PCSA
process and through enforcement of contract language,
e.g. changes in liability for loss
Financial Management Control
Structure
Agency Management
IG
CFO
Financial Management
Assurance Office
Financial Management Office
External Auditor
Internal Property Management
Control Structure
Agency Management
Property Management Officer
Property Custodian
User
Contract Property Management
Control Structure
Contracting Officer
Agency PA Management
Review
PA/Property Management System
Analysis
Contractor Self Assessment
Contract Requirements
Property Management System
Analysis
• Performed by the Property
Administrator
• Schedule based on risk to Governmen
• Utilizes standard review techniques
– Based on published, accepted ,methods
• DCMA guidance at:
http://guidebook.dcma.mil/34/index.cfm