Policy: 502-University Titled Property
Date:
08/07/01
(Last updated: 03/10/2010)

A Guide for Managing Capital Equipment

University of Wisconsin - Madison
Division of Business Services
Accounting Services
Property Control
21 N. Park Street, Suite 6101
Madison, WI 53715-1218
Telephone (608) 265-7830
Email property@bussvc.wisc.edu

Table of Contents


Property Control is responsible for recording all capital equipment acquired by the Madison Campus to ensure that movable equipment is accounted for in accordance with State and Federal regulations.  Secondary responsibilities include maintaining the capital inventory database and reporting database information as required.

Accurate recording and maintenance of personal property records is essential in order to assure safeguarding of assets, financial accountability, compliance with generally accepted accounting principles, compliance with State and Federal property requirements, adequate insurance coverage and loss settlement and greater utilization of personal property already on hand.

Visit our WEB Page at http://www.bussvc.wisc.edu/acct/propcont/prophome.html

STATISTICS: (as of June 30, 2009)

Capital Equipment Records on System (Active)

65,574

Value of Equipment on System (Acquisition Cost)

$693,852,252

Federally Funded Equipment Records (Acquisition Cost)

$16,527,473

Gifts-in-Kind (Declared Value of Active Records)

$30,330,973

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WHY WE KEEP EQUIPMENT INVENTORY RECORDS:

1. Regulation:

A. State and Federal regulations support the requirement for a good capital equipment management system.

A1. Chapter 36.11 of the Wisconsin Statutes charges the Board of Regents to adopt rules for the management, care and preservation of all property under its jurisdiction.

A2. Federal Office of Management and Budget Circular A-110 prescribes uniform standards governing management of property furnished by the Federal Government.

A3. College and University Business Administration (CUBA) Manual states - "Property, plant and equipment controlling accounts should be supported by accurate and complete inventory records.

2. UW System Requirement:

A. Each UW System institution is required to have in place a Capital Equipment Control Program designed to fulfill System Administration reporting requirements. These requirements are spelled out in the System Financial Administrative Policy (F33).

B. Each institution is required to report the book value of its capital equipment inventory to System Administration Financial Reporting as of June 30 each year.

3. Good Business Practice:

A.Good business practice recognizes the need for control of assets. This control, in part, leads to a greater utilization of equipment already on hand and tends to reduce equipment purchasing duplication.

4. Risk Management:

A. Risk Management uses data from the Inventory system to provide System Administration with an itemized listing of all movable capital equipment each spring. The value of capital equipment on the Inventory System is used by UW System Administration.

B. Accurate equipment inventory information is essential in order to assure adequate insurance coverage and loss settlement. The inability to provide such information may result in the denial of the University's claim for reimbursement.

5. Financial Reporting:

A.UW-Madison must report the value of its capital equipment including books and library materials for inclusion in the University of Wisconsin System Annual Financial Report.

6. Indirect Cost Studies:

A. The Capital Equipment Inventory Management System must be able to provide accurate information required for calculating the equipment use charge as part of the Federal Overhead on ferderally funded programs.

7. Budget Office:

A. The Capital Equipment Inventory Management System provides information to support funding requests for capital equipment replacement and to demonstrate uses of funding provided for capital equipment.

8. Federal Reporting Requirements:

A. The Federal Government treats the University equipment records as the official Government property records. The Government requires these records to reflect accurately the most current property information. This property information is used to produce the interim and final property reports required for all Federal grants and contracts.

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PROPERTY OWNERSHIP:

Title to or ownership of all property acquired by the University of Wisconsin is vested in the Board of Regents. The only exceptions to this policy includes gift funds where the sponsor retains title to the property acquired under the agreement, or, in the case of federal funds, where the sponsoring agency retains title to the property. In these cases, the Board of Regents assumes custodial ownership of the property. Under no circumstances does equipment become the property of University faculty or staff.

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DEFINITIONS:

Capital Equipment

Effective July 1, 1997, capital equipment is defined as any individual item costing $5,000 or more and having a useful life of at least one year.

Component Parts

A component part can be defined as any item which cannot stand alone and is considered an integral part and an enhancement to an existing piece of equipment.

Component parts costing $5,000 or more should be capitalized provided the item has a useful life of one year or more. Use the proper 4XXX series expense account code.

Component parts costing less than $5,000 should not be capitalized, unless the component is considered to be part of the original fabrication of capital equipment (See Fabrication).

Repair or replacement parts are not considered components and should not be capitalized. This includes all goods or services that do not add enhance the original equipment.

Enhancement

An item which materially and permanently increases the value of the equipment item being enhanced (See Component Part). Enhancements should be capitalized only if the cost is $5,000 or more and the useful life is one year or more.

Departmental Property Administrator

The Departmental Property Administrator (DPA), formally known as the Inventory Contact Person, is an individual in a department or division who serves as the liaison between their department/division and Property Control. This individual is normally appointed by the Chair or Director and assumes the DPA duties in addition to their position responsibilities.

The DPA plays a key role in Property Control's effort to ensure University compliance with University System, State and Federal property guidelines. DPA responsibilities can vary greatly from department to department, depending on the position held by a DPA or the degree of management support and authority given to this individual.

The basic DPA responsibilities include: (1) answer questions from Property Control relating to departmental equipment, (2) receive and process Equipment Acquisition Form (EAF), (3) coordinate completion of departmental physical inventories, and (4) provide contact point for property audits conducted by University, State and Federal officials.

Ideally, the DPA should act as the departmental authority in all matters pertaining to capital equipment management. The DPA should have the authority to establish and implement policy and procedures within their respective department to ensure departmental compliance with current property requirements. The DPA should report all changes in their department's equipment status and should coordinate disposal of departmental property.

Please keep Property Control advised of any changes in your Departmental Property Administrator so we can maintain a current mailing list. Report changes to 608-265-7830 or amy.rognsvoog@wisc.edu.

Fabrications

All fabricated equipment meeting the capitalization definition must be inventoried and reflected in the Capital Inventory Management System. You can fabricate equipment yourself or have equipment fabricated by another department. (See Office of Research and Sponsored Programs, Notice 82-3 issued January 21, 1982. Copies can be obtained by calling 608-262-3822.)

When the completed value of a fabricated item is estimated to be $5,000 or more, the item should be treated as capital equipment and all parts for the fabrication should be ordered as capital. Use the proper 4XXX series expense account code.

Please note: When writing a requisition for items which will be assembled into a single piece of equipment, you can assist us by indicating this information on the requisition. For example: Parts for fabrication of Voice Analyzer System. Issue 1 decal.

When writing multiple requisitions to order parts for fabrication of an item, indicate what is being fabricated on the original requisition and reference the decal number assigned to the item and/or the original requisition number on all subsequent requisitions for the project. For example: Parts for fabrication of Voice Analyzer System. Decal U585674, Req 448G884.

When fabricating equipment for external or internal resale, all parts for the fabrication should be coded to a 358X expenditure code. University department's buying fabricated equipment internally should code their purchase to the appropriate capital account code provided the item meets the definition of capital equipment.

As previously stated, repair or replacement parts are not considered components and should not be capitalized. This includes all goods or services that do not add enhance the original equipment.

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INFORMATION ON EQUIPMENT ACQUISITIONS:

Property Control normally does not receive information on equipment acquisitions until the items have been received and the invoice, in the case of purchased equipment, has been paid. A capital equipment inventory record is created and entered on the University's Capital Equipment Inventory Management System using information from the following sources.

  1. Wisconsin Data Mart (WISDM) reports on SFS data.
  2. Vendor Invoices from Accounting Services.
  3. Access into the Automated Purchasing System.
  4. Copies of External and Internal Requisitions.
  5. Gift-in-Kind Transmittal Forms from Research Administration.
  6. Federal Excess Property Transfer Forms.
  7. Equipment information received directly from departments.

Property Control tries to gather as much information as possible in order to adequately and completely describe the equipment acquired. Quite often Property Control must rely on DPA’s and other departmental staff to clarify equipment description problems and provide additional information.

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EQUIPMENT ACQUISITION FORM (EAF):

Once an equipment record has been entered on the Capital Equipment Inventory Management System, an Equipment Acquisition Form is printed and sent with the inventory decal to the department responsible for the property. The EAF is addressed to the Departmental Property Administrator designated by the department. The DPA should affix the decal to the piece of equipment, verify the information printed on the form, add additional information as necessary, sign and promptly return the form.

The following information must be indicated on the EAF to ensure a complete inventory record:

  1. 1. Accurate and complete description of the equipment.
  2. Manufacturer's name, model number, and serial number.
  3. Location of the property (Building, Wing, Room Number)
  4. Name of the person responsible for the property (possibly, but not necessarily the DPA).

DATA MAINTAINED FOR EACH EQUIPMENT ITEM:

  1. Complete equipment description, including equipment condition.
  2. Manufacturer's name, model and serial number.
  3. Location (Building, Wing, Room)
  4. Date acquired.
  5. Acquisition cost.
  6. Fund, Project, Activity, Expense Account (4XXX) - identify multiple funding sources.
  7. UDDS - Both funding and using departments.
  8. Requisition number.
  9. Inventory decal number.
  10. Name of person responsible for equipment.
  11. Vendor code and name.
  12. Identification of holder of title for Federally funded equipment.
  13. Identification of non-Federal sponsors retaining title to equipment.
  14. Disposition information.

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DISPOSAL OF EQUIPMENT AND SUPPLIES:

All University surplus property must be declared to SWAP for disposal. See Purchasing Policy Paper #18.  A Surplus Property Pick-Up Request Form will need to be completed and submitted to SWAP prior to disposal. SWAP is located at 1061 Thousand Oaks Trail, Verona, WI 53593.

DISPOSAL OF FEDERALLY-OWNED PROPERTY REQUIRES PRIOR APPROVAL FROM PROPERTY CONTROL.

TRADE-IN OF EQUIPMENT:

When trading equipment against a purchase, departments must contact the purchasing agent for that commodity and complete a Surplus Property Evaluation Form. See Purchasing Policy Paper #18.

TRADE-IN OF GOVERNMENT-OWNED PROPERTY REQUIRES PRIOR APPROVAL FROM PROPERTY CONTROL.

Please note: When trading in equipment, you must indicate on your requisition, the decal number and serial number of the item(s) being traded. This will assist Property Control in deleting these records from your inventory file. The requisition on which you reference the trade-in must be charged to a capital expenditure account code.

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EQUIPMENT INVENTORY DATABASE MAINTENANCE:

Property Control updates equipment inventory records as information is received. Our goal is to keep the inventory file as current as possible. To accomplish this, we depend on your department's cooperation in promptly reporting all changes in equipment status. This includes changes in ownership and location (including transfer of equipment to SWAP (Surplus Services), equipment that has been stolen, traded, junked or returned to the vendor for credit. Also, please update property control on equipment that has been transferred to another department. Notify Property Control when equipment has been exchanged or repaired and there is a change in serial and/or model numbers. New inventory decals may be required on exchanged or repaired equipment.

You can provide the information to us in memo form, e-mail or by using a Property Transaction Form. Please provide the decal number of the equipment as well as a brief description including serial number. Explain what needs to be updated. Send all information to Property Control, 21 N. Park St, Suite 6101.

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WHO'S WHO IN PROPERTY CONTROL:

Amy Rognsvoog, Property Control Manager

Develop, record and maintain information about UW-Madison capital equipment in accordance with University System, State of Wisconsin, Federal policies. Develop and implement UW-Madison Campus policies and procedures to ensure University compliance with these capital equipment policies. Processes ad hoc requests for Capital Inventory System Data. Compiles data and completes Federal and non-federal grant property reports. Coordinates classification and entry of capital equipment inventory records; administers Equipment Acquisition Form (EAF) process; coordinates physical inventories; conducts DPA training; coordinates vehicle record entry and vehicle file maintenance;Processes requests to loan University equipment to other institutions; processes requests from faculty members moving to another institution to permanently transfer capital equipment.

Amy Wilson, Director of Asset Management

Administers creation and maintenance of capital equipment inventory records in accordance with University, State and Federal requirements. Processes equipment transfer requests and Government-owned property transactions.

Property Control Email: property@bussvc.wisc.edu

Property Control Manual (December 2009)