THE UNIVERSITY OF MEMPHIS OPERATING PROCEDURE SUBJECT: Inventory and Control Program for University-Owned Equipment PROCEDURE NO.: 2D:01:01H DATE: July 1, 1994 SUPERSEDES PROCEDURE NO.: 2D:01:01H DATED: April 1, 1991 A. PURPOSE "Equipment" as used in this Procedure includes furniture and similar items. The provisions of this Procedure are applicable to the inventory, use and control of all University equipment. The purposes of the equipment inventory and control program are to establish responsibility for equipment, provide for better utilization of equipment, facilitate the physical inventory, better establish insurance requirements, and comply with state policy. B. RESPONSIBILITY FOR EQUIPMENT 1. GENERAL. Vice presidents, deans, directors, department chairmen and activity heads are responsible for the custody, maintenance, and reasonable security of all equipment purchased for, or assigned to, their respective department or activity. All University employees should be concerned with the proper care and security of any equipment which they use or observe. 2. ACKNOWLEDGEMENT OF RESPONSIBILITY. Each official to whom equipment is assigned will sign some form acknowledging receipt and acceptance of responsibility for the item. Signatures on Transfer Vouchers, Receiving Reports, or Equipment Transaction Records will serve to establish custodial responsibility. Officials should secure written receipts relieving them of responsibility when items are removed from their area of responsibility. 3. OWNERSHIP. Ownership of equipment items acquired by The University of Memphis rests with the State of Tennessee. This is true even though the items are purchased from departmental funds or from special equipment appropriations or are acquired by gift or contract. Equipment may be reassigned by proper authorities at any time. 4. LOANS AND REMOVAL FROM PREMISES. University equipment is to be used only for University activities; personal use is not authorized. When equipment is removed from the campus for repair, etc., a receipt should be secured. Any other usage or removal from campus, including release into a faculty member's or employee's custody, must be authorized in writing at the department chairman/activity head level or higher and a copy of the authorization forwarded to the Property Section of the Accounting Office. University property removed from campus is not insured by the Uni- versity unless such removal is specifically approved by the State Director or Risk Management. To request coverage for University equipment removed from campus, contact Mr. Ulysses Campbell, Assistant to the Director of Finance. 5. INDIVIDUAL RESPONSIBILITY. Within a department or activity some individual should be responsible for each item of equipment. The individual who has responsibility for each item should be subject to determination based on written acknowledgement in the event a loss occurs. For items that are subject to regular changes in the assignment/responsi- bility, a method of recording who has responsibility should be established. 6. ACCOUNTING OFFICE, PROPERTY SECTION. The Property Section of the Accounting Office is responsible for maintaining a computerized equipment inventory record, affixing decals to new acquisitions, reporting insurable values, and coordinating other aspects of the equipment inventory control program. Departments and activities should contact the Property Section for guidance, assistance, and information relative to the equipment inventory program. 7. DEPARTMENTAL EQUIPMENT INVENTORY REPRESENTATIVE. Each department or activity with assigned equipment will designate one individual as the "Departmental Equipment Inventory Representative". This individual will coordinate equipment inventory matters with the Property Section and carry out control responsibilities as assigned by the department/activity head. The representative should be either the department/activity head or a person within the department who fully understands The U of M equipment inventory requirements. The department/activity head is ultimately responsible for the correctness of inventory confirmations and other equipment matters. 8. LOG OF SERVICE CALLS/EQUIPMENT MAINTENANCE RECORDS. The Departmental Equipment Inventory Representative should maintain a log of service calls/equipment maintenance records which documents the date of service, servicing vendor, type service performed, cost (if any), and purchase order number. University Operating Procedure No.: 2D:03:05B, Contractural Maintenance Service Agreements for University Owned Equipment, should be consulted for more information. By maintaining the service log, departments will be able to maintain information on maintenance and repair costs and frequency of malfunction or repairs; the University will thus have the data necessary to determine the cost effective- ness of maintenance agreements for various types of equipment, and will also be able to determine when the useful life of the equipment has expired. C. INVENTORY AND CONTROL SYSTEM 1. DECAL NUMBERS. Basic control and identification of an equipment item is usually accomplished through a serially-numbered metal decal attached to the equipment item. Some items do not have decals affixed because of the type of item; if possible, the number is etched or painted on the item. 2. ADDITIONS. The Property Section of the Accounting Office is responsible for affixing a decal as soon as possible after the item is acquired. The Property Clerk will contact the department to obtain the building and room number where the item is located. The Property Section will visit each building at least once each month to affix decals to those items the location of which has been identified. 3. DELETIONS FROM INVENTORY. Equipment can be deleted from the inventory only by following the procedures discussed in Section E. It is not acceptable to cross out an item from the annual physical inventory confirmation listing. "Cannibalizing", or combining the usable parts of two items to make one workable unit, is allowed only upon authorization by the next level of authority. 4. TRANSFERS. Transfers between departments will be accomplished by means of an Equipment Transaction Record. When a transfer is made, the department receiving the equipment will indicate the new location and forward the original copy of the Transaction Record to the Property Section. Signatures should always be secured when equipment is transferred or released to any other department or activity. 5. REPORTING CHANGES. Notification of new locations should be sent to the Property Section immediately upon transfer of items between buildings (these are needed immediately for proper insurance coverage on contents). Transfers between rooms are not required to be reported to the Property Section until annual confirmation. Some data items may be changed if the department desires; by notifying the Property Section. When major relocations, transfers, or new acquisitions are undertaken, departments should contact the Property Section. Special procedures can frequently be arranged to minimize the effort of inventory records maintenance. 6. ANNUAL PHYSICAL CONFIRMATION. A physical inventory of all equipment (including equipment temporarily located off-campus) will be made annually. Equipment listings, instructions and other necessary materials for the inventory will be produced each year and sent to department chairmen and activity heads. 7. INVENTORY INFORMATION. The information items listed below are maintained in the Property Section and are available for use in the identification and location of University equipment. a. Building numbers. b. Standard room numbers for areas which do not have actual room number designations. c. Codes for the various types of equipment. d. Source of funds for equipment acquisition. e. Equipment description abbreviations. D. DEFINITIONS Equipment, for this program, is defined as those items which possess all the characteristics listed below. Further assistance in the defining of individual items may be obtained by contacting the Property Section of the Accounting Office. 1. Movable - not built in or permanently attached to a building or structure. 2. Non-expendable - not consumed with use - more feasible to replace parts and/or repair than to replace the item. 3. Durable - has useful life of more than one year. 4. Unique - retains identity even when incorporated into a different or more complex unit. 5. Has a relatively high unit cost - five hundred dollars ($500) or more. Generally, items costing under $500 will be excluded unless a specific determination is made to include them, for example, when the item is part of an initial purchase of a data processing system. E. DELETION OF EQUIPMENT Deletions from the equipment records are necessary when items are lost, stolen, destroyed, traded, sold, become unserviceable or obsolete, or are declared surplus to departmental needs. 1. LOST, STOLEN, OR DESTROYED items must be reported immediately to the Security Office on a "Report of Lost or Stolen Property" form, available from the Security Office. The Security Office will forward a designated copy of the report to the Property Section. Refer to University Operating Procedure No.: 2D:06:03A, Lost or Stolen University Property for further information. 2. TRADE-INS. When a trade-in is desired, the department initiates an Equipment Transaction Record noting the decal number, general description, account number, and the words "trade-in". The relinquishing department signs Section A. The Record, along with a purchase requisition for the new equipment, is sent to the Purchasing Department. At the Director of Purchasing's discretion, based on know- ledge of University needs, the item may be traded. When the property is relinquished, the department sends its decal and the Equipment Inventory Record to the Property Section. The Director of Purchasing signs Section A of the Equipment Trans- action Record and prints "Trade-In" for account number, then forwards a copy of the purchase order and the signed Trans- action Record to the Property Section. With the above author- ization, the Property Clerk deletes the item from the equipment inventory. If the Director of Purchasing deems that it is more economically feasible for the University to keep the equipment in Stores Inventory (this is not surplus inventory), for subsequent reissue to another user, the Director initiates a Transfer Voucher reducing the department's equipment expense by the dollar evaluation of the used equipment. Dollar evaluation is established solely by the Director of Purchasing, based on the item's condition and disposal value. When the equipment is physically removed, the decal, the Equipment Inventory Record Card, and an equipment Transaction Record with Section A signed by both the department and Central Receiving are sent to the Property Section for deletion. Central Receiving should print "Stores Inventory" for account number in Section A. When the item is reissued from Stores Inventory to another University user, it is charged out at the original price on the Transfer Voucher plus costs of any repairs necessary to restore it to useable condition. 3. SURPLUS ITEMS. The department chairman or activity head notifies the Director of Purchasing by submitting an Equipment Transactions Record, including the completion of Section B. The Director of Purchasing will then direct Central Receiving to transport it to South Campus storage. The relinquishing department obtains the signature of the representative from Central Receiving, and forwards the executed document to the Property Section. 4. CANNIBALIZATION. Requests for cannibalization of equipment should be made to the next higher level of authority using an Equipment Transaction Record, including the completion of Section C. After the request is approved, the original of the Record, together with decals from the equipment items and the related Equipment Cards, should be forwarded to the Property Section of the Accounting Office. 5. ON SITE DISPOSAL. On some occasions equipment needs to be disposed of and the item does not have a salvage value worth the effort to try to salvage. In these cases the department should submit an Equipment Transaction Record including the completion of Section C. After approval by the next higher level of authority, the original of the Record, together with decals from the equipment, should be sent to the Property Section of the Accounting Office. 6. ZERO VALUE. Equipment items which have about reached their useful lives are frequently of limited value to the department or activity, but have enough value that the department desires to retain the item. If equipment items with only a nominal value will be retained, it is appropriate to remove them from the "equipment" classi- fication. In these instances, the department or activity should submit an Equipment Transaction Record with Section D completed. After the Record is approved by the Manager of Financial Reporting, the original of the Record, together with decals from the equipment should be sent to the Property Section of the Accounting Office.