Docstoc

ADMINISTRATIVE PROCEDURE

Document Sample
ADMINISTRATIVE PROCEDURE Powered By Docstoc
					                                     ADMINISTRATIVE PROCEDURE
                                                                                         6/6/2011




                                            Fixed Asset Procedure


Categories of Fixed Assets

       1. Land -Land as well as the costs incurred in preparing the land for its intended purpose. These
          costs include, but are not limited to, purchase costs, real estate commissions, closing costs,
          razing existing structures and clearing land. Excludes any land improvements. Land is not
          depreciated.
       2. Land Improvements –Sidewalks, landscaping, lighting, fences and signage.
       3. Infrastructure –Roads, parking lots, sewers, water lines and cabling.
       4. Buildings – Costs associated with the purchase or construction includes all building
          components. If bond funding is used the bond issuance cost is included as well as any
          capitalized interest.
       5. Building Improvements (repairs and renovations) –Improvements which extend the useful life of
          the building, or substantially changes the use of the original space, or the improvement
          expands the total space of the building. Routine repairs and maintenance are not capitalized
          and are charged to the operating expense in the period in which they occur.
       6. Equipment – A tangible piece of personal property that has a useful life of more than one year.
          Costs capitalized include all costs of purchase and those costs associated with delivery,
          transportation, and insurance while in transit, installation costs, and other similar costs. Fixed
          equipment includes any equipment affixed to the building such as fume hoods, autoclaves etc.
          Moveable equipment includes office furniture, laundry and cafeteria equipment, vehicles, golf
          carts etc.
       7. Software –With a useful life of greater than one year.
       8. Library Collection – Periodicals, texts, journals, books of reference and other books for use in
          the Library.


       Definition of Fixed Asset Criteria
       Fixed assets are defined as items with a purchase price of $5,000 or more and a useful life of more
       than three years; donations with an estimated or appraised market value of $5,000 or more and a
       useful life of three years or more are also included. Items representing construction in progress are
       not recorded as a fixed asset until the construction or renovation is complete. All costs associated
       with the project will be capitalized, these costs include but are not limited to; architect fees, project
       management fees, utility usage exclusive to the project, engineering fees, surveys, permit fees,
       design fees, material and supplies, construction costs.

       Acquisition/Addition of Fixed Assets
       The college follows the same procurement policies and procedures for the purchase of equipment
       and other fixed assets as it does for the purchase of any other goods or services. This procedure
       addresses the requirements for fixed assets and does not address specific regulation related to
       approval and authorization of building construction or capital projects.

       The Purchasing Department is responsible for recording all newly acquired equipment classified as
       a fixed asset into the College’s Fixed Asset System. The Purchasing Table in Banner Finance
       provides the information for items paid via purchase orders, which meet the $5,000 threshold and
       account code criteria.




                                                                                                              1
  Fixed Asset Procedure
                                   ADMINISTRATIVE PROCEDURE
                                                                                      6/6/2011




     The Purchasing Department will maintain a supply of fixed asset tags which are numbered
     consecutively. During the process of transferring requisitions to purchase orders, The Purchasing
     Department will assess the information on the requisition and determine if the item being ordered
     qualifies as a fixed asset based on the aforementioned criteria. The Purchasing Department will
     assign a fixed asset tag number and list the number, item location, and item purchase price on the
     purchase order. College staff will not be permitted to purchase fixed assets using a College
     procurement credit card. Nevertheless, the Purchasing Department will monitor credit card
     transactions and investigate any transaction that appears to involve fixed assets. Should a fixed
     asset be purchased with a College procurement credit card, the Purchasing Department will contact
     the Unit that placed the order, obtain the required information: item description, vendor, quantity,
     location, purchase price and charge code, and assign a fixed asset tag number. Donations and
     purchases made directly by the Foundation are not included.

     Once a month Purchasing will check the fixed asset tagged purchase orders to confirm an invoice
     has been entered against the order. Only after an invoice has been entered will Purchasing enter
     the fixed asset into the Fixed Asset System and provide a copy of the purchase order containing
     the fixed asset tag number to the fixed asset accountant. Purchasing will forward the metal fixed
     asset tag to Central Receiving along with a copy of the purchase order. Once a month Purchasing
     will review procurement credit card purchases for purchases of fixed assets. Purchasing will
     confirm receipt of the item with the ordering Unit. Purchasing will enter the data into the Fixed
     Asset System, provide a copy of the data and the fixed asset tag number to the fixed asset
     accountant and provide a copy of the data and the metal fixed asset tag to Central Receiving.

     Purchasing will enter the following information into the Fixed Asset System for each fixed asset: tag
     number, item description and model, date of invoice as the acquisition date, vendor, purchase order
     number or procurement card transaction number, quantity, purchase price, charge code, location,
     owner as the ordering Unit, and expected usable life.

     The fixed asset accountant is responsible for recording all non-equipment related fixed assets into
     the fixed asset system. The accountant reviews specific areas of the general ledger relating to
     capital projects and large expenditures in specific account codes for potential capital purchases.
     Each item is analyzed to determine if it meets the capitalization guidelines and to which category it
     belongs. An entry is made to post the qualifying items to both the fixed asset system and the
     general ledger. Donations that come through the Foundation are recorded to the related fixed
     asset category and as gift income.

     Purchasing and the fixed asset accountant will reconcile the fixed asset system for equipment to
     the general ledger on a quarterly basis.

     Purchase of computers, computer related equipment and software must be approved by ITS prior
     to purchase.

     Tagging
     Equipment identification tags are affixed to each asset at the College unless it is not physically
     practical.

     Working with the ordering Unit, the Central Receiving is responsible for placing the fixed asset tag
     provided by the Purchasing Department onto the equipment.




                                                                                                            2
Fixed Asset Procedure
                                   ADMINISTRATIVE PROCEDURE
                                                                                      6/6/2011




     All items that meet the capitalization criteria are recorded as fixed assets regardless of the funding
     source as most grants allow you to keep any equipment purchased. If the granting agency
     requests the equipment be returned, we will reverse the capitalization entry.

     Disposal or Transfer of Fixed Assets
     The safeguarding and use of all fixed assets assigned to a particular unit is the responsibility of unit
     head. Items no longer needed require the completion of a Fixed Asset Disposal Form which should
     be submitted to Purchasing. Purchasing is responsible for recording any disposals or transfer of
     equipment in the Fixed Asset System and will notify the fixed asset account to adjust the general
     ledger accordingly. All other disposals of fixed assets will be recorded by the fixed asset
     accountant.

     Unallowable Disposal and Transfers
            Equipment may not be disposed of or transferred without the approval of the Director of
            Purchasing. Equipment identified for disposal may not be taken by College employees for
            personal use.

     Allowable Disposals and Transfers
             Stolen Assets- The unit director is responsible for contacting Public Safety and retaining a
             copy of the incident report. A copy of the incident report must be sent to the Purchasing.

             Destroyed Assets- Loss due to fire, flood etc. must be reported to the Risk Manager on the
             Fixed Asset Disposal Form. Risk Manager will notify Fixed Asset Accountant.

             Surplus Property-
             When a Unit no longer needs a fixed asset, the Unit must contact the Director of
             Purchasing and provide a listing of the asset(s). The Director of Purchasing, in conjunction
             with the Unit head and the Director of Facilities, will determine if the asset should be
             transferred to another College Unit, held by the College for use at a later time or declared
             surplus property and donated, sold or discarded via the College’s trash removal or
             recycling programs.

             Fixed assets sold by the College must be sold in accordance with the State College
             Contracts Law, N.J.S.A. 18A:64-78 Sale of Surplus Personal Property. The Director of
             Purchasing in conjunction with either the Unit head or Director of Facilities or Controller, will
             determine the current fair market value of the asset. If the value is equal to or greater than
             the public advertised bidding threshold, the asset shall be sold in accordance with N.J.S.A.
             18A:64-78. The College may accept sealed bids from College employees as part of this
             public sale. If the value of the asset is below the public advertised bidding threshold, the
             College may sell the item without advertising to a private buyer as long as the buyer is not
             a College employee or a family member of the College employee. The College may sell
             surplus property without advertising to another State of New Jersey college or university or
             to any State of New Jersey agency, municipality or to the United States Federal
             Government. Buyers of College surplus property must complete and return the Surplus
             Property Sale Release form to the Director of Purchasing.

             The College may donate surplus property to nonprofit organizations which are approved by
             the State of New Jersey Division of Purchase and Property Surplus Distribution and



                                                                                                              3
Fixed Asset Procedure
                                   ADMINISTRATIVE PROCEDURE
                                                                                     6/6/2011




             Support Services. Organizations receiving the donated surplus property must complete
             and return the Surplus Property Donation Release form to the Director of Purchasing.

             Before the surplus property is sold, donated or disposed, the Unit Director must complete
             the Fixed Asset Disposal form and return it to the Director of Purchasing. The Director of
             Purchasing will mark item as disposed in the fixed asset system and forward the completed
             form to the Fixed Asset Accountant.

             Before any surplus computer equipment is sold, donated or disposed, the equipment must
             be cleaned of all data by the College’s ITS Department in accordance with the State of new
             Jersey guidelines for disposal of computer equipment.


             Transfer to other College Departments-
             Before fixed assets are transferred to another College Unit, the Unit Director must complete
             the Fixed Asset Disposal form and return it to the Director of Purchasing. The Director of
             Purchasing will change location in the fixed asset system.


             Trash- Unit Director is to submit the Fixed Asset Disposal Form to the Director of
             Purchasing. The Director of Purchasing will mark item as disposed in the fixed asset
             system and forward the completed form to the Fixed Asset Accountant.

             Trade-in for new equipment- Unit Director is to submit the Fixed Asset Disposal Form to the
             Director of Purchasing. The Director of Purchasing will mark item as disposed in the fixed
             asset system and forward the completed form to the Fixed Asset Accountant.

     Depreciation of Fixed Assets
     The College uses the Straight-line method for all depreciable fixed assets (land and construction-in-
     progress are not depreciated). Equipment purchased during the fiscal year will be depreciated
     beginning in the fiscal year in which it was purchased. Building, improvements and infrastructure
     will be depreciated beginning in the first year it is put into use. Useful lives are based on the table
     below.

     ITEM                                                                 USEFUL LIFE
     Equipment                                                              3-10 years
     Land improvements                                                       20 years
     Buildings and improvements                                            20-50 years
     Infrastructure                                                         7-50 years


     Fixed Asset System
     The College’s Controller and Purchasing Director are responsible for the coordination,
     development, and implementation of policies and procedures that comprise the fixed asset system.
     This system facilitates good business practices and internal controls over the acquisition, disposal
     and inventory information of the College’s fixed assets. Responsibility for maintaining the integrity
     of the asset data in both the general ledger and the Fixed Asset System lies within Business
     Services and Purchasing.




                                                                                                          4
Fixed Asset Procedure
                                  ADMINISTRATIVE PROCEDURE
                                                                                    6/6/2011




     The Fixed Asset System is a stand alone software system used to record and track fixed assets
     and provides management with information to effectively manage and control the fixed assets of the
     College. This system contains all demographic information about fixed assets including tag
     number, ownership, locations, cost, model number, serial number etc., acquisition and disposal
     dates. The Fixed Asset System allows the College to comply with audit reporting requirements.
     Updating the Fixed Asset System on a timely basis to record changes in status, location or
     demographic information about fixed assets is the responsibility of the Fixed Asset Accountant.

     This system tracks capitalized fixed assets. Capitalized assets have a purchase price or
     estimated/appraised value of $5,000 or more and a useful life five years or more. These assets are
     recorded in the College’s financial statements. Assets with a purchase price or
     estimated/appraised value of less than $5,000 are considered expendable assets are not recorded
     as a fixed asset.

     Ownership of Fixed Assets
     All fixed Assets (land, buildings, fixed and moveable equipment and infrastructure) are owned by
     the College and not by a specific individual, unit or division. The College has sole ownership of all
     equipment acquired regardless of source of funding or method of acquisition except where the
     equipment has been acquired through sponsored projects where granting agency retains title, short
     term loan from another institution, or leased equipment.

     Inventory of Fixed Assets –Unit Directors are responsible for conducting an annual inventory of
     assets in their departments based on departmental listings of inventory provided to unit directors on
     an annual basis. The unit director is responsible for ensuring that the information regarding the
     asset is correct and updated. Inventory listings should be signed off on by the unit director and
     forwarded to the Purchasing. Any discrepancies should be indicated on the inventory form.




                                                                                                        5
Fixed Asset Procedure

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:15
posted:9/5/2011
language:Albanian
pages:5