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Capital Asset Management System Standard Operating Procedures


SUBJECT: Physical Inventories
SOURCE: Capital Asset Management, FMS
ORIGINAL DATE
OF ISSUE:
February 2004
DATE OF
LAST REVISION:
October 2009
CSOP NO: 4.0
RATIONALE: Physical inventories are completed to:
  • secure university assets,
  • verify location for compliance with OMB Circular A110, and
  • assist organizations with effective management of capital equipment.
CSOP: "A physical inventory of equipment shall be taken and the results reconciled with the equipment records at least once every two years. Any differences between quantities determined by the physical inspection and those shown in the accounting records must be investigated to determine the causes of the difference." (Reference U.S. Office of Management and Budget: Circular A110) 1.

To ensure compliance, the State Board of Accounts annually selects an audit sample. In addition, federal agencies request equipment lists for auditing purposes on a regular basis.

Each organization is responsible for inventorying those assets capitalized under their organization code in the Financial Information System (FIS).

  1. Inventory Process for Each Campus
  2. Untagged Assets not on Equipment List
  3. Untagged Assets on Equipment List
  4. Inventory Scheduling
  5. Loans, Transfers, and Audit
  1. Inventory Process for Each Campus

  2. Bloomington: The Campus Capital Asset Office will contact the organization's inventory representative to schedule the inventory date. On the day your inventory is to start, a representative from the organization will pick up the Trakker(s) and Capital Asset Office personnel will train the inventory representative on the use of the Trakker(s).

    Indianapolis: The Campus Capital Asset Office will contact the organization's inventory representative to schedule the inventory date. On the day the inventory is to start, the Capital Asset Office personnel will deliver the inventory Trakker(s) for the organization. The Capital Asset Office personnel will train the inventory representative on the use of the Trakker(s).

    South East, North West, Kokomo, South Bend and East: The Campus Capital Asset Office will contact the organization's inventory representative to schedule the inventory date. On the day the inventory is to start, a representative from the Campus Capital Asset Office will come to each organization and scan the tags for the organization.

  3. Untagged Assets not on Equipment List:


  4. If an untagged asset with a value of $5,000 or more is found, and is not on the equipment list, the inventory representative should report the item to the Campus Capital Asset Office. The Campus Capital Asset Office will need to know how the equipment was acquired by the organization (i.e., Gift, Transfer-in or IU Purchase). The following information describes how each acquisition method will be handled.

    Gifts
    Gifts of capital assets occur either by a donation to the IU Foundation or by a direct donation to an IU organization. The University Capital Asset Office creates gift assets through reports received from the IU Foundation. If a gift asset is not currently on your inventory we need to first determine if the gift has been reported to the IU Foundation.

    Transfers-in
    Transfer-in capital assets are those assets received from an external organization (unusually another university) or government surplus. The following information is needed by the University Capital Asset Office to create the assets:

    • Account Number ( owner account)
    • Source of Acquisition
    • Manufacture
    • Description
    • Location (campus, building, room)
    • Fair Market Value
    • Payment Account Number ( this account will have income/expense posted to it)

    IU Purchase
    If the equipment was purchased through the IU procurement system we will need the purchase order number to research why the item was not capitalized. It may be that the equipment was expensed incorrectly. Assets that were expensed incorrectly in a prior fiscal year are added to the asset database as "Found." If the error occurred in the current fiscal year a General Error Correction can be issued to correctly capitalize the asset. Another possibility is that asset was retired in error. If this is the case, the retired asset will be re-created as found only if the asset has a net book value greater than or equal to the capitalization threshold. If the net book value is below the capitalization threshold, the IU tag will be removed, and the asset will not be created.

  5. Untagged Asset on Equipment List


  6. If an asset is missing the IU tag number, contact the Campus Capital Asset Office to acquire a new tag for the equipment. The Locating Maintenance screen in FIS can be used to update the tag number. Retrieve the asset number and enter the new tag number in the field titled "New IU Number." Be sure to click on the save button before exiting the screen.

    When Trakkers are returned to the Capital Asset Office, two reports may be generated by Capital Asset Office personnel.

      Bar-code Error Document- identifies problems encountered during the scan. When uploading the Trakker file, any records that do not pass validity checks against the asset database are sent to an Inventory Error Document. This document is normally forwarded to the organization for correction of the errors.

      Inventory Reconciliation Report -Inventory Reconciliation Report - lists equipment not scanned. Inventory reconciliation is the process of completing a physical inventory by resolving assets not scanned, or unable to be scanned by the Trakker. The report will include items generated from the Inventory Error Document that were not resolved before the reconciliation report is run. When these assets are located, the Capital Asset System can be updated using the Location Maintenance screen, or the Capital Asset Maintenance screen.

  7. Inventory Scheduling

    Organizations will need process the reconciliation report and return the signed inventory certification letter prior to May 31st to their Campus Capital Asset Office.

    The scheduled start date for any organization will be no later than the average number of days given to reconcile the inventory prior to May 31st.

    Example "Latest Possible Start Dates" for a Fiscal Year:
    Total Number of Assets in Inventory Average Number of Days Required to Reconcile Inventory Latest Possible Start Date
    1-100 15 days May 8th
    101-500 30 days April 24th
    501-2,000 60 days March 24th
    2,001 - Over 90 days February 1st

    The Certification Letter denotes that all equipment is present and accounted for, or the necessary documents have been issued to update the asset database.

    Certification Letters must be signed by the Fiscal Officer. The Fiscal Officer will be held accountable for accuracy of the inventory in the event of an audit.

  8. Loans, Transfers, and Audit

  9. All capital assets on loan should have a current Equipment Loan Document in the Financial Information System (FIS).

    (See Financial Policy I-140 Off Campus)

    Asset Transfers or Retirements must be processed with in 30 days of equipment movement.

    (See CSOP 2.0 Asset Retirement )
    (See CSOP 3.0 Asset Transfer)

    If the organization's assets are selected for an audit, the organization will be expected to locate the assets for physical inventory inspection. The audit will be coordinated with the Campus Capital Asset Office.

    (See Financial Accounting Policy 1-170 Custody and Initial Physical Confirmation of Capital Moveable Equipment)
DEFINITIONS: Capital Assets must have an acquisition value of at least $5,000 and a useful life expectancy of one year or greater.

Equipment. The term "equipment" includes delivery equipment, office equipment, machinery, furniture and fixtures, factory equipment and similar fixed assets.

Trakker is a handheld data collection terminal used to scan the IU tag number affixed to equipment.

CROSS
REFERENCE:
(See CSOP 2.0 Asset Retirement )
(See CSOP 3.0 Asset Transfer)
(See CSOP 8.0 Capitalization of Moveable Equipment)
(See Financial Accounting Policy 1-170 Custody and Initial Physical Confirmation of Capital Moveable Equipment)
RESPONSIBLE
ORGANIZATION:
Organizations that purchase and maintain capital equipment.
1Uniform Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations.

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