Control and Management of University Property

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Policy Code: 
4162
Approval Authority: 
Vice Chancellor
Policy Type: 
Divisional Policy
Policy Owner: 
Administration and Finance
Responsible Office: 
Administration and Finance - 828.251.6742

I. Purpose

This policy defines responsibilities and provides guidance concerning management of University property (as defined below).

II. Scope

This policy applies to all employees of the University.

III. Policy

It is University policy to manage property (as defined below) in compliance with regulations set forth by the State of North Carolina.

IV. Definitions

University Property: Any tangible asset owned by the University. This includes land, buildings, general infrastructure, machinery, equipment, and artifacts owned by the University or within its custody of control that are for use in normal operations and are not for resale.

Fixed Assets: “Fixed Assets” are defined as an asset that is not consumable or expendable; it is movable, even though sometimes it is attached to other objects or buildings. Examples include, but are not limited to:

  • Furniture- desks, cabinets and bookcases
  • Office- calculators and shredders
  • Electronic Data Processing (EDP)- computers
  • Educational- scientific, medical, laboratory, etc.
  • Motor Vehicles- automobiles, trucks, utility vehicles
  • Other- athletic equipment, lawn mowers, etc.

V. Introduction

The Fixed Assets Department of the Controller’s Office is responsible for the tagging and physical inventory of the University’s capitalized fixed assets, along with the maintenance of the related accounting and control records which document equipment, land and buildings acquired and donated to the University. The Fixed Assets Department is located in Phillips Hall, One University Heights, telephone 251-6560.

Fixed assets are classified as capitalized items (items recorded in the University's asset accounts and depreciated over their useful life) and are acquired for use in the normal operations (i.e. not for resale). According to GAAP (Generally Accepted Accounting Principles), fixed assets should be recorded at historical cost or estimated historical cost. Cost includes purchase price or cost of construction plus any other charges incurred to place the asset in its intended location and condition or use. Examples of other charges include but are not limited to: legal and title fees; appraisal and negotiation fees; surveying fees; other closing costs; damage payments; land-preparation costs; demolition cost; architect and accounting fees; insurance premiums during the construction phase; transportation charges; interest cost incurred during construction of the asset. Notification is received, from the Development department to the University Controller for donated gifts-in-kind. The asset’s cost includes all payments required to place the asset in its intended state of operation.

Intangible assets should be capitalized according to the following thresholds:

  • $1,000,000- Internally generated computer software (application development costs only)
  • $100,000- All other intangible assets (including purchased or licensed computer software)

Intangible assets with a cost equal to or greater than the threshold and a useful life of two or more years should be capitalized. Assets costing below the threshold should be expensed.

Effective July 1, 2001, the Office of the State Controller has mandated that library books and other library materials will not be capitalized or recorded in the Fixed Assets System.

Effective July 1, 2001, depreciation (the allocation of the total acquisition cost of a fixed asset over its estimated useful life) will be calculated on capitalized fixed assets. The University has elected to use the straight-line method with a half year convention and an assumed salvage value of zero. Land, certain land improvements, construction in progress, and inexhaustible works of art, historical treasures and similar assets are not depreciated.

VI. Capitalized Fixed Assets

The term capitalized fixed assets includes land, improvements to land, easements, buildings, building improvements, vehicles, machinery, furniture, equipment, works of art and historical treasures, infrastructure, and all other tangible or intangible assets that are used in operations and that have a normal life expectancy of more than one year.

On March 13, 1996 the North Carolina Office of the State Controller issued Memorandum No. 96-11 which established a minimum $5,000 threshold for reporting fixed assets on university financial statements. This change was effective with the fiscal year ending June 30, 1996.

The Fixed Assets Department in the Controller’s Office has responsibility for identifying and recording capitalized assets on the Fixed Assets System. The cost of capitalized fixed assets includes shipping charges, legal fees, setup costs, sales tax and component units in addition to the purchase price, all of which together must equal at least $5,000.

The following information pertains only to capitalized fixed assets that are reflected on the University’s financial statements.

VII. Land (Nondepreciable)

Land is the real estate property held by the State. It can be acquired through a purchase or a donation. Land is entered on the Fixed Asset System if the total cost is $5,000 or more. Land valued below $5,000 is expensed; it is not capitalized. Since land is considered not to have a limited useful life and its salvage value is unlikely to be less than it acquisition cost, land is not depreciated. University officials can elect to record land valued from $500 to $4999.99 in the Fixed Asset System for control purposes only.

Purchased land should be entered at its cost. The cost includes its purchase price and any other charges necessary to purchase the land. The other charges include costs such as site preparation expenditures, professional fees, and legal claims directly attributes to the land acquisition. If land and building are acquired as a single parcel, the value of the land should be determined separately from the building and recorded in the land account. If land and a building are acquired together with the intent to demolish the building, the cost of demolishing the building would be capitalized as part of the cost of the land.

Donated land should be capitalized at the appraised market value at the time of donation.

VIII. Buildings

Buildings are structures that are permanent in nature and have an asset life of more than one year. They are subject to depreciation. For depreciation purposes, buildings will be assigned a useful life of 50 years (can be different if determined by Controller as long as estimated life is within the Office of State Controller’s approved range). According to G.S. 143-336, “State buildings mean all State buildings, utilities and other property developments except the State Legislative Building, railroads, highway structures, and bridge structures”.

Buildings valued at $5,000 or above are capitalized and recorded on the Fixed Asset System. Those valued below $5,000 are expensed; they are not capitalized nor depreciated for financial statement purposes. University officials can elect to record assets valued from $500 to $4,999.99 in the Fixed Asset System for control purposes only.

Buildings are valued at the purchase price or construction cost. Cost should include all charges necessary to put the building or structure in its intended state of operation (i.e. professional fees for brokers, attorneys, architects, appraisers, financial advisors, interest during the period of construction, etc.). Interest costs incurred are capitalized during the period of construction. Permanently attached fixtures to the building (i.e. heating and ventilation systems, roofs, plumbing, carpet, and electrical systems) should be included in the cost of the building.

Donated buildings should be capitalized at the appraised fair market value at the time the building was donated.

If using in-house resources such as labor, materials, and supplies from Campus Operations to construct or add on to the building, the costs are to be included as part of the cost of the asset. Capitalize the costs as if outside sources were used.

When an addition that exceeds the University’s capitalization threshold is constructed, it is added to the Fixed Asset System as a separate asset. If recorded on the Fixed Asset System, the addition will receive its own fixed asset number.

Maintenance expenses are incurred to keep assets in normal operating condition and to help maintain the original use of the building. Maintenance expenses do not extend the life of the building beyond the expected useful life at acquisition, nor do they increase the future service potential of the building. Maintenance costs are expensed and not capitalized. The costs are charged to repairs and maintenance.

When a renovation/improvement is constructed, it is added to the Fixed Asset System as a separate asset if it exceeds the University’s capitalization threshold. If recorded on the Fixed Asset System, the renovation/improvement will receive its own fixed asset number. Renovation and improvement costs are incurred to restore or improve buildings or other capitalized assets. Normally, these costs take place over an extended period. Care must be taken to distinguish maintenance and renovation/improvement costs.

The buildings are to be included in the annual inventory of the University. The inventory ensures that the University has the buildings recorded in its records.

The long-term construction costs of the buildings are paid from Capital Improvements (CI) fund codes. Costs are expended from CI fund codes while the building is under construction. Such costs would include architect fees, plumbing and electrical contracts, contractor fees, etc. Annually, the project to date expenditures (on the accrual basis) in the CI funds, less items capitalized, are recorded in the Construction in Progress account. The Fixed Asset Accountant and the University Controller will review the BD725 to remove any non-capital items or equipment included in a buildings cost.

After a building is inspected by the State Construction Office, the University receives a Letter of Acceptance from the State Construction Office. After receipt of this letter and when the building is ready for occupancy, the building is considered complete. At fiscal year end, the University reclassifies the amount from the Construction in Progress account to the fixed asset building account and issues the building a fixed asset number. This should be done regardless of whether the total Fund Code accounting for the asset has been closed out.

Modular work stations and cubical office installations are not capitalized unless the cost of the separate (individual) part is $5,000 or greater.

IX. Infrastructure

Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems.

Road systems are designed to for motor vehicle travel and should not be a part of the State Department of Transportation (DOT) road systems. Road costs should include the costs of pavement, culverts, lighting systems, drainage systems, guardrails, markings, traffic control devices, signage, bridges, tunnels, and other buildings that are an ancillary part of the road system.

Utility systems include, but are not limited to, water distribution systems, sanitary sewer collection systems, natural gas systems, electrical distribution systems, and telecommunications/fiber optics systems that are independent of a single building.

For the purposes of depreciation, infrastructure assets have a useful life of 50 years unless determined otherwise by the University Controller (based on OSC guidelines).

X. Other Structures

Other structures and improvements include, but are not limited to, landscaping that does not produce permanent benefits; towers; tanks; wells; fences; parking areas (including parking lots and parking decks); sidewalks, curbs and gutters; irrigation systems; general signage; pedestrian bridges; paved paths; fountains and swimming pools.

For the purposes of depreciation, other structures have a useful life of 50 years unless determined otherwise by the University Controller (based on OSC guidelines).

XI. Machinery and Equipment

This account subgroup includes machinery and equipment with a normal life expectancy of more that one year. Examples of these assets are: furniture; equipment; motor vehicles and motorized equipment.

For the purposes of depreciation all machinery and equipment assets have a useful life of 15 years unless determined otherwise by the University Controller (based on OSC guidelines). Exceptions to this are furniture with a useful life of 20 years; and EDP (Electronic Data Processing) equipment (computer related) with a useful life of 10 years.

XII. Gifts

Fixed assets received as gifts that meet our capitalization requirements will be tagged with a numbered Fixed Asset tag.

Items received through the University of North Carolina at Asheville Foundation that will be classified as University Property will be tagged once the Fixed Assets Officer receives the gift documents from the Foundation office and or the Development Office.

XIII. Responsibilities

Each department head is responsible for safeguarding all assets purchased for his or her department and assisting with the physical inventory process. Departments may maintain their own database or spreadsheet of assets to track their locations. Each department is also subject to internal and external audit verifications on a sample of fixed assets.

The Fixed Assets Department has responsibility for:

1) entering capitalized assets on the Fixed Assets Systems;

2) assigning and attaching an inventory tag to each capitalized asset a unique number;

3) physically inventorying all capitalized items annually.

Upon request, the Fixed Asset Department issues silver property tags to departments for items that are not tag and entered into the Fixed Assets System.

XIV. Fixed Asset Identification—Property Tags

A sequentially numbered blue tag identifies items recorded in the Fixed Assets System. Prior to July 05, blue tags were placed on items that were $2,500 or more. A new management policy went into effect on July 1, 2005. (See Disposal of Assets below).

Based on the University’s a capitalization policy, the Fixed Asset Officer and the University Controller determines which items should be assigned a blue inventory tag and added to the Fixed Assets System. The Fixed Asset Officer is responsible for physically placing the tag on the front or other easily accessible area of the asset to help facilitate the inventory process. Under no circumstances should anyone take an item off campus before it has been properly tagged by the Fixed Asset Office. If a department needs an item tagged immediately, they should contact the Fixed Assets Officer at 251-6560.

The asset record includes information such as description, department, manufacturer, serial number, location, fund number, purchase order number, check number, cost, and date acquired.

XV. Annual Inventory

Each department head is responsible for safeguarding all assets purchased by his or her department. An Accountant (not associated with Fixed Assets) will conduct a physical inventory of all capitalized items annually. The Accountant needs the cooperation of departmental personnel in accomplishing the physical inventory task and will attempt to minimize the time demanded of them. The Accountant will send inventory listings of all tagged assets to the department head so that he or she can properly prepare for the physical inventory along with a date the inventory will take place. The department head or designee should locate all the items before the agreed upon date of inventory. The department head or designee should be prepared to escort the Accountant to each item, to make arrangements for lap top computers to be brought to the office, and to have access to locked offices, classrooms, or labs.

Upon completion of the physical inventory, the Fixed Assets Officer will update the Fixed Asset System as needed and send a “missing” items schedule to the department head. If the department is unable to locate the “missing” items, the list will be forwarded to the appropriate Vice Chancellor. If he or she is unsuccessful in locating the items, notification should be made to the Internal Auditor and Campus Police. The Fixed Asset Officer will record these “missing” items as disposed on the Fixed Asset System when the Equipment Transfer/Disposal Form is received from the Vice Chancellor.

The University does a 100% inventory every year. If a significant change of events takes place such as change in a department head or moving a department or function from one building to another, the Fixed Asset Officer and the Controller will consider performing an interim physical inventory at the time of the change. This is a management decision and will be based on the risk factors involved.

XVI. Transfer of Assets

Any employee/department wishing to transfer Fixed Assets to another department is required to complete an Equipment Transfer Form. The appropriate vice chancellor’s (or designee’s) authorization must be received prior to the actual move.

If Facilities Management personnel are required to move the equipment, the executed form should be attached to a completed “Request for Service” (work order) form and forwarded to Facilities Management Customer Service, CPO#1100. Facilities Management personnel will not move items without proper authorization. Following the move, the Equipment Transfer Form will be forwarded to the Fixed Assets Officer by the University Surplus Property Manager. Note: Facilities Management may charge departments for services.

If other personnel are moving the Fixed Asset items, the person requesting the transfer should complete, date and sign the Equipment Transfer Form, obtaining the appropriate vice chancellor’s (or designee’s) authorization prior to the actual move, and forward the form to the UNC Asheville's Fixed Assets Officer, CPO#1422.

Transfers of equipment outside of the University to another University or State Agency must be approved by the State Surplus Office.

XVII. Surplus Property

If a department has Fixed Assets they wish to surplus, the department head should complete an Equipment Transfer Form, obtaining appropriate Vice Chancellor's (or designee’s) signatures. The form should be sent to the Surplus Property Manager, CPO#1100. If removal of such equipment from its present location is desired, a signed “Request for Service” (work order) should also be attached to the Equipment Transfer Form. The university Surplus Property Manager, whose office is in Facilities Management, will not approve removal of equipment items, list them as surplus, or otherwise dispose of Fixed Assets without proper authorization. Periodically, the Surplus Property Manager will publish a list of usable surplus items currently available to the campus. After an appropriate period, the items will be listed for sale through the State Surplus Property Agency. The Surplus Property Manager will notify the Fixed Assets Officer of the location and disposition of any surplused items that carry Fixed Asset decals by forwarding the Equipment Transfer Form.

XVIII. Lost or Stolen Property

All incidences of lost or stolen University property should be reported to Campus Police for investigation. However, if the items are Fixed Asset items an Equipment Transfer Form identifying the items as lost or stolen should be completed, signed by the appropriate vice chancellor (or designee). Any available information concerning the missing item should be entered in the “Description” section. Since the loss of the item causes loss of most identifying data, such as serial, model and tag (decal) numbers, etc., completion of the “Description” section is essential. Enter other available information concerning the loss of an asset in the “Remarks” section of the form (attach a supplementary sheet if necessary). The form should then be sent to the Fixed Assets Officer, CPO#1422.

XIX. Traded Items

An Equipment Transfer Form is need for Fixed Assets items that are traded in on other assets. If the asset traded for is an item that meets the University’s definition of a Capitalized Fixed Asset, the value of the new Capitalized Asset will be reduced by the trade in value reported on the invoice. Any trade-in must be approved by the State Surplus Office.

Procedures

A. Running of Fixed Asset Report: At least once a month, the Fixed Asset Officer runs a WebFocus report called Fixed Assets over $5,000. This report is located in the Finance ODS repository under the Systems Accountant’s shared reports. These reports includes all expense accounts and all fund numbers except those related to the Foundation and capital projects. (Capital projects are accounted for a year-end from the BD725). The Fixed Asset Officer reviews all new items on the report to determine if any items need to be capitalized. The Controller also reviews this report. If a piece of equipment over $5,000 is purchased from a grant fund, the Fixed Asset Officer will contact the Grant Accountant to determine if the item needs to be tracked as being Federally Funded.

B. Capitalized item documentation: Once the Fixed Asset Officer and Controller have identified items to be capitalized, the Fixed Asset Officer goes to Accounts Payable and makes a copy of the check as well as the attached invoice and other documentation attached. The Fixed Asset Officer then prepares the Fixed Asset Information Sheet.

C. Tagging of Fixed Asset: The Fixed Asset Officer will contact the department that the capitalized item belongs to and set a time to come and tag the item.

D. Adding to Fiscal Year Additions Worksheet: Once the item is tagged the Fixed Asset Information Sheet and supporting documentation are returned to the Fixed Asset Officer so that the item can be added to the Fiscal Year Additions Worksheet.

E. Year End: At the close of the Fiscal Year, the Fixed Asset Officer completes the CIP Worksheet based on the BD725 in addition to the reviewed monthly WebFocus report. The Fixed Asset Officer and the Controller determine what items need to be capitalized from capital projects. These items are then listed on the Fiscal Year Additions Worksheet. Once the worksheet is complete, the new additions are added to our Basset eDepreciation Software and to our Capital Asset Master Spreadsheet. A journal entry is prepared to add the new amounts into the appropriate fund/account in Banner. All amounts are reconciled to make sure all three systems are in balance. Depreciation is the calculated by using the Capital Asset Master Spreadsheet as well as the eDepreciation software. Once these amounts are verified, a journal entry is done to enter the amounts into Banner. All amounts are then reconciled to make sure all three systems are in balance.