BUSINESS AND SUPPORT SERVICES
The purpose of this procedure is to set forth the guidelines for the physical and reporting control of the College’s assets, including accountability over the assets, meeting financial reporting needs, and generating asset management information.
ROLES AND RESPONSIBILITIES
The major responsibilities each party has in connection with the Capital Assets Procedures are as follows:
The Comptroller is responsible for the establishment and maintenance of an adequate fixed asset accounting system that allows for the proper presentation of plant assets in the financial statements and the overall safeguarding of fixed assets.
The Staff Accountant is responsible for ensuring the fixed asset accounting system is being properly maintained, including the identification of capital assets, accurate use of codes, determination of useful lives, reconciliation to the general ledger, and financial reporting. This includes updating the fixed assets inventory and notifying the Comptroller regarding any inventory changes, evaluating loss, damage destruction, disposal, theft, trade-ins, sale, and/or transfer of College assets and providing recommendations with regard to the disposition of these assets, review and posting of depreciation through the Fixed Assets Program on an annual basis, and the reconciliation of the fiscal year additions in the Fixed Assets Program to the general ledger on a quarterly basis. The Comptroller and the Grants Accountant will be notified before taking any action on fixed assets that are purchased with federal funds that are deemed to be lost, damaged, destroyed, or scheduled for disposal.
The Mailroom Clerk is responsible for:
- Providing the Staff Accountant with the necessary documentation to review assets invoiced as equipment (capitalized and non-capitalized) for final determination as a fixed asset;
- The proper tagging of all movable equipment;
- Providing department heads with current records of the property for which they are responsible;
- Updating the fixed assets inventory and notifying the Staff Accountant regarding any inventory changes;
Purchasing/Accounts Payable ensures account codes are classified correctly for equipment, capital assets, and grants on purchase requisitions and invoices.
All Department Heads are responsible for:
- Reading and understanding the Fixed Assets Procedure;
- Maintaining current inventory records for all in-use fixed assets within their assigned department.
- Assuring property is given proper care and protection and is used for official purposes only,
- Ensuring that College property is used only in the conduct of official College business;
- Notifying the Staff Accountant whenever fixed assets are transferred/acquired, sold, donated, destroyed, stolen, lost or otherwise disposed of by using the Transfer Equipment Form found on Navarro College Website;
- Identifying and reporting to the Staff Accountant any surplus property which is usable but not needed in his/her area, or which is beyond economic repair and therefore needs to be disposed of;
- Assisting in updating taking physical inventory lists for their department.
Capital Assets, which include furniture and equipment, collections library books, buildings, land, and other improvements, are deemed by Navarro College as assets with a cost or value equal to or greater than $5,000 at the date of acquisition, and an expected useful life of more than one year. Capitalized fixed assets are acquired for the use in normal operations and are not for resale. All capitalized fixed assets are entered into the Fixed Asset Management Program, RCI Technologies, Inc.
Assets costing below $5,000 that are considered controlled items are expensed in the fiscal year of purchase and are not capitalized but maintained through the Fixed Asset Management Program, RCI Technologies, Inc.
Costs incurred to keep a fixed asset in its normal operating condition that do not extend the original useful life of the asset or increase the asset’s future service potential are not capitalized. These costs are expensed as repairs or maintenance.
CLASSIFICATIONS OF CAPITAL FIXED ASSETS
Capital fixed assets are items that are:
- Permanent in nature, tangible durable (economic useful life greater than one year);
- Held for purposes other than investment or resale; and
- Have a cost that equals or exceeds certain thresholds established by the College in accordance with state and federal guidelines (where federal, state, or local policy conflicts the more stringent of the policies shall be applied).
Capital fixed assets include equipment (both movable and fixed), land, land improvements, buildings, building improvements, technology equipment and infrastructure.
Equipment consists of property that does not lose its identify when removed from its location and is not changed materially or expended in use. Sub-classes in this account include computer equipment, audiovisual equipment, office equipment, athletic equipment, recreational equipment, lab and research equipment, appliances, medical equipment, food service equipment, buildings and ground equipment, heavy equipment, musical instruments, vehicles, furniture, and fixtures.
Land is the solid part of the earth’s surface whether improved or unimproved. The land account should include all land purchased, leased, donated, or otherwise acquired by the College. Purchased land should be carried on the records at cost. Donated land should be recorded at the appraised market value of the land at the time of its donation.
Land Improvements include excavation, fill and grading, removal, relocation, or reconstruction of property, add telephone and power lines, and the construction of retaining walls.
Buildings are roofed structures used for the permanent or temporary shelter of persons, animals, plants, or equipment. The buildings account includes the value of all buildings at purchase price or construction cost by campus location. When buildings are constructed, all identifiable direct costs are included in the valuation. Direct costs include labor, material, and professional services to construct the building, together with insurance, interest and other costs incurred during the period of construction to ready the building for its intended use.
Building Improvements are improvements made to existing buildings. Any renovation or alteration to an existing building that adds useful space to the structure or extends the facility’s useful life will be considered a capital asset. Conversely, improvements that do not add useful space to the structure, or extend the facility’s useful life will be considered maintenance and repair.
Technology Equipment consists of long-lived capital assets that normally are technological in nature and are the basis of the College’s information/connectivity infrastructure. Technology equipment includes all hardware, software, and cabling associated with College wide systems. Software licenses, maintenance fees, and donations to the College should not be capitalized.
Infrastructure consists of long-lived capital assets that normally are stationary in nature and normally can be preserved. Infrastructure assets include roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems.
VALUATION OF CAPITALIZED EQUIPMENT
The valuation of equipment, whether purchased or fabricated, is based on unit cost. The total unit cost is determined by the sum of:
- The cash disbursed (purchase price less applicable discounts plus applicable transportation and installation charges) for each unit’
- The net book value of any assets given in exchange; and
- The present value of any liability incurred.
If the equipment is acquired by gift, the valuation is the fair market value at the date of the gift, if determinable. Otherwise, an appraised value is used. If acquired by loan (usually from a grant or contract sponsor), the value assigned to the equipment by the sponsor will be used.
GIFTS IN KIND
Gifts of donated capital equipment that meet the $5,000 threshold and have a useful life greater than one year should be added to the fixed asset program to ensure an accurate accounting of all College owned equipment. If a department directly receives a gift in kind they should inform the Staff Accountant immediately.
The Staff Accountant will provide detailed information of gifts in kind to the Comptroller upon receipt of the gift or through a quarterly report submitted to the Comptroller.
ACQUISITION OF EQUIPMENT
The acquisition of equipment starts with the creation of the purchase order. All orders for equipment must be submitted to the Purchasing Department. The purchase order should itemize the equipment being purchased and not be put as one unit or as “as per quote#…”
Purchases are subject to fund availability and budget limitations.
After budget approval, all equipment is purchased in accordance with the Purchasing Procedure and Budget Procedure of the College.
Maintaining a positive identification of assets is the primary purpose of tagging. Tagging is important to:
- Provide an accurate method of identifying individual assets,
- Aid in the annual physical inventory
- Control the location of all physical assets,
- Aid in the maintenance of fixed assets, and
- Provide a common ground of communication for both the Finance Office and the assets’ users.
Generally, anything that falls into any one of these categories is considered a controlled item and needs to be tagged:
- Computers and Laptops, printers, monitors, scanners, fax machines
- Audio Visual Equipment
- Items bought with grant monies
Other equipment above $1,000 such as kitchen, musical instruments, health and fitness, or office machines. Assets not needing a tag are:
- Land Improvements
- Mainframe Software
When tagging equipment, consistently place asset tags in the same location on each similar type asset. If possible, the tags shall be accessible for viewing. Place the tag where the number can be seen easily and identified without disturbing the operation of the item, which will assist with the physical inventory. For equipment where tags may become unreadable or fall off due to location of the tag, environmental exposure, or otherwise, the equipment will be tagged by engraving the equipment or using metal asset labels or permanent ink marker.
Caution: Do not tag artwork, sensitive technical equipment, or other items where tagging will affect its function, value, or the ability to return it under warranty. For vehicles the tag shall be on each vehicle title. The Staff Accountant must maintain a file for all untaggable assets.
Depreciation is the allocation of the total acquisition cost of a fixed asset over its estimated useful life.
Land, certain land improvements, construction-in-progress, works of art, historical treasures and similar assets are not depreciated.
Depreciation of fixed assets is computed on a straight-line basis over their estimated useful lives. The expected life of the asset is based on the recommended table form the Texas Higher Education Coordinator Board:
|Other Improvements||20 years|
|Library Books||15 years|
|Furniture and Equipment||5-10 years|
MAINTENANCE OF ASSETS
In order to maintain an adequate fixed asset accounting system that allows for overall safeguarding of fixed assets, the Fixed Asset program requires periodic update and maintenance to remain current and valuable. Additional fixed asset acquisitions, transfers, sale of surplus, disposal and corrections must be entered into the system in a timely manner. It is imperative that those responsible comply with this document to establish and maintain accurate fixed asset records.
PHYSICAL INVENTORY OF EQUIPMENT
The Staff Accountant will provide Department Heads with a listing of all reportable property by departmental area at least once each year. Using the listing of reportable property as a basis, a joint inventory will be conducted by the Department Head and the Mailroom Clerk. In addition, a physical inventor will be conducted annually with a rotation to reach each campus once every four years. Advance notice will be given to individual departments regarding specific dates. The purpose of a physical inventory is to verify the existence and condition of equipment and ensure the accuracy of college accounting records.
Discrepancies will be noted and investigated by the Staff Accountant. The results of the inventory, including unresolved discrepancies, will be reported to the Comptroller.
Lost or stolen property must be reported as soon as the loss is known. In the case of known or suspected theft, the Department Head must send a written report to the Comptroller and notify Campus Security.
DISPOSITION OF ASSETS MOVABLE EQUIPMENT
The Mailroom Clerk is responsible for changing the status of records when the disposition of assets occurs. In general, surplus or obsolete equipment may be disposed of by transferring to another department, discarding, donating, or selling the asset. When selling, donating, or disposing of assets, the department responsible for the asset must complete the Equipment Transfer Form. This form should be sent to the Staff Accountant notifying the Comptroller of the department’s disposition of the asset. The Staff Accountant will provide the approvals necessary to proceed with the disposition of the asset and the Mailroom Clerk will send a work order to the Maintenance department requesting pickup of surplus or transfer equipment.
MOVEMENT OF ASSETS MOVABLE EQUIPMENT
In the event an asset is to be moved from one location to another or from one department to another an Equipment Transfer Form must be completed and submitted to the Staff Accountant. Under no circumstances should any College owned property be moved without prior consent.
Once the form has been received by the Staff Accountant and obtains the Comptroller approval signature the Fixed Asset program will be updated with the change. Submitting this form will ensure that inventory listings provided to the Departments are accurate.
SALE OF SURPLUS EQUIPMENT
The Vice President, Finance and Administration is responsible for the sale of all items (both equipment and supplies) to be sold by the College, excluding items sold by an office or department as a part of their regular responsibility (e.g., Cosmetology).
With approval of the Comptroller, the College may directly transfer materials or equipment that can be used for instructional purposes to a public school or school district, assistance organization, or state agency at a price or for other consideration or no consideration that the College and the other entity determines appropriate. The Grant Accountant will comply with Uniform Grant Guidance 200.313(c)(1)(i) and (ii) and 200.313 (d) and will contact the awarding agency for specific disposal instructions for disposal of equipment purchased with federal funds.
Competitive, written bids shall be required on all sales transactions amounting to $50,000 or more. On sales amounting to less than $50,000, bids shall be taken at the discretion of the Vice President, Finance and Administration.
Approved: October 2, 2015
Revised: June 26, 2018