The University of Memphis
To establish responsibility for University equipment, provide for better utilization of equipment, facilitate the physical inventory, better establish insurance requirements, and ensure proper accountability.
Items acquired by purchase, gift or assembly that possess all the characteristics listed below. Further assistance with defining individual items may be obtained by contacting the Accounting Office - Financial Reporting section.
Equipment is further categorized as either Capital Equipment or Sensitive Minor Equipment.
Single item costing five thousand dollars ($5,000) or more. Generally, items costing under $5,000 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. Capital equipment is recorded in the University’s financial statements and depreciated using a straight line basis over a useful life ranging between 5 and 20 years.
Sometimes an item may have some of the characteristics of equipment, but does not fully meet the University’s definition of movable equipment. The most common situations where a misclassification occurs include supplies and materials, fixed equipment, and replacement parts.
|Sensitive Minor Equipment|
Particularly vulnerable to theft and has a cost between $1,500.00 and $4,999.99. Examples of items that may be viewed as sensitive minor equipment include: boats, boat motors, boat trailers, cameras, canoes, computers, audio and video equipment, microscopes, oscilloscopes, vector scopes, and other scientific equipment.
All weapons, regardless of cost, should be considered sensitive minor equipment.
Period during which an asset is expected to be usable for the purpose it was acquired. It may or may not correspond with the item’s actual physical life or economic life.
|Equipment Account Codes|
T-tag (also identified as “O-tag”, temporary tag) – A temporary tag that is assigned by the Fixed Asset System.
Permanent tag assigned by the Accounting Office - Financial Reporting section. This is placed on each piece of equipment. Also known as P-tag, permanent tag, PTAG_Code.
|Responsibility for Equipment|
GENERAL - Vice Presidents, Vice Provosts, Deans, Directors, Department Chairs 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.
ACKNOWLEDGEMENT OF RESPONSIBILITY - Each official to whom equipment is assigned will acknowledge receipt and accept responsibility for the item. Signatures on Transfer Vouchers, Receiving Reports, or approval through the Fixed Asset Workflow system will serve to establish custodial responsibility. Officials should secure documentation relieving them of responsibility when items are removed from their area of responsibility.
OWNERSHIP - Ownership of equipment items acquired by the University of Memphis rests with the State of Tennessee, even though the items are purchased from departmental funds or from special equipment appropriations or are acquired by gift or contract.
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. A Request for Off-Campus Use of Equipment form must be completed for any other usage or removal from campus, including release to a faculty's or employee's custody. This form must be approved by the department chair/activity head level or higher and forwarded to the Accounting Office – Financial Reporting section.
University property removed from campus is not insured by the University unless such removal is specifically approved by the Tennessee Department of Treasury, Division of Risk Management. To request insurance coverage for University equipment removed from campus, contact the Accounting Office – Financial Reporting section.
Property must be safeguarded, maintained, and returned in the same conditions as received with due consideration given to normal wear and tear. Property lost or damaged through negligence will be paid for by the person(s) determined to be responsible for such loss or damage. It is the department’s responsibility to ensure the equipment is returned upon termination of the employee. Another Request for Off-Campus Use of Equipment form should be completed upon return of equipment.
INDIVIDUAL RESPONSIBILITY - Within a department or activity a designated 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/responsibility, a method of recording responsible individual should be established.
ACCOUNTING OFFICE, PROPERTY SECTION - The Financial Reporting section of the Accounting Office is responsible for maintaining a computerized equipment inventory record, assigning decals to new acquisitions, reporting insurable values, and coordinating other aspects of the equipment inventory control program. Departments and activities should contact Financial Reporting for guidance, assistance, and information relative to the equipment inventory program.
DEPARTMENTAL EQUIPMENT INVENTORY REPRESENTATIVE - Each department or activity with assigned equipment will designate one individual as the "Equipment Representative". This individual will coordinate equipment inventory matters with Accounting Office - Financial Reporting 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 equipment inventory requirements. The department/activity head is ultimately responsible for the correctness of inventory confirmations and other equipment matters.
|Inventory and Control System|
The University maintains a centralized Fixed Asset System for all capital equipment and sensitive items. Based on the account code indicated on purchase orders, transfer vouchers or journal vouchers, the Fixed Asset System may create a temporary tag (T-tag) for the item. The Accounting Office - Financial Reporting section will contact the department to assign a permanent decal number and obtain pertinent asset information (serial number, model and location). Financial Reporting will convert the T-tag to the P-tag in the Fixed Asset System and update the asset information.
While the University currently requires all capital equipment and sensitive equipment (costing between $1,500 and $4,999) to be tagged and maintained in the Fixed Asset System, departments should take every precaution to safe guard all state property, regardless of cost, at all times. The department may contact the Accounting Office - Financial Reporting section for assistance in developing an internal inventory maintenance method. Departments may utilize the Banner Fixed Asset system to track items that are less than $1,500 and a separate report can be produced for U of M internal verification only.
Equipment that is not considered capitalized or sensitive may be maintained/tracked in the Fixed Asset System by utilizing a unique account code titled “Controlled Equipment under $1,500”. This service is provided for the convenience of departments and only upon departmental request (via use of controlled equipment under $1,500 account code). These items will not be part of the annual inventory confirmation. For further information contact the Accounting Office - Financial Reporting section.
|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.
LOST, STOLEN, OR DESTROYED - When an item has been identified as lost, stolen or destroyed, it must be reported immediately to Police Services on a Report of Lost or Stolen Property form. Refer to UM1777, Lost or Stolen University Property for further information.
TRADE-INS - When a trade-in is desired, the department must notify the Accounting Office – Financial Reporting section. Financial Reporting will facilitate the transaction with Procurement and Contract Services.
SURPLUS ITEMS - When an item is no longer in use in the department, the department is required to surplus the equipment (see UM1816, Disposal of Surplus Property for additional information). A work order is completed for all equipment to be picked up by Physical Plant. For active inventory items, the department should request the transfer and work order through the Fixed Asset Workflow system. University-owned computers and portable devices or media must have all confidential and official University data erased from the computer or portable device or media prior to its transfer out of University control, and/or destroyed, using current best practices. Decals are to remain on the equipment.
CANNIBALIZATION - "Cannibalizing" is combining the usable parts of two items to make one workable unit. If the equipment is no longer being used by the department, the department may decide to remove parts in order to use these parts for other equipment items. Requests for cannibalization of equipment should be made through the Fixed Asset Workflow system.
ZERO VALUE - If equipment has reached its normal useful life, but is still being used by the department, the department may zero value the equipment. The department should request the removal through the Fixed Asset Workflow system. Decals should be maintained on the equipment, but marked “ZV” with a permanent marker. Departments should take every precaution to safe guard all state property, regardless of cost, at all times. The department may contact the Accounting Office - Financial Reporting section for assistance in developing an internal inventory maintenance method.
|Donation of Equipment to the University|
Donation of equipment to the University is coordinated through the Office of Development. A Gift-In-Kind Acceptance Form providing a description of the item, the department receiving the equipment, and the value of the item is forwarded to the Accounting Office. The equipment will be tagged and added to the Fixed Asset system.
|Grants and Contracts Purchases|
Equipment purchased from grant funds will be tagged and inventoried. Title to and final disposition of equipment purchased from grant funds may vary depending upon the terms of the grant. The source of funds, particularly Federal funds, will be identified as part of the equipment inventory record.
|Rented or Leased Equipment|
In some situations, it is more economical for the University to rent or lease equipment rather than to purchase it. Further assistance may be obtained by contacting the Accounting Office - Financial Reporting section.
|Works of Art|
Works of art, historical treasures, and other similar assets should be capitalized whether held as individual items or as a collection. These can include, but are not limited to paintings, works of art on paper, photography, sculptures, maps, manuscripts, recordings, film, artifacts, textiles, and other memorabilia.
These items with a cost (or fair value at the date of donation) in excess of $5,000 will be capitalized at their historical cost or fair value at the date of donation. Any collections already capitalized at June 30, 1999, will remain capitalized and any additions to such collections will be capitalized.
Collections that meet all of the following criteria will not be capitalized:
Software with a cost of $100,000 or greater should be capitalized and amortized. Furthermore, management, in consultation with the Controller, may determine it is meaningful to capitalize certain software costing less than $100,000. Capitalized software costs will include external direct costs of materials and services consumed in developing or obtaining internal-use computer software. Training costs are not internal-use software development costs and should be expensed as incurred. Data conversion often occurs during the application development stage. Data conversion costs should be expensed as incurred. Internal costs incurred for maintenance should be expensed as incurred.
Amortization should begin when the computer software is ready for its intended use, regardless of whether the software will be placed in service in planned stages that may extend beyond a reporting period. Computer software is ready for its intended use after all substantial testing is completed. Software should generally be amortized over a period of 10 years and its useful life evaluated periodically.
UM1816, Disposal of Surplus Personal Property
UM1838, Insurance – Property, Liability and Other
UM1828, Reimbursement and Responsibility for the Loss or Damage of University Property Due to Negligence
| ||UM1772 -- Revised February 3, 2017|
UM1772 - Issued: July 23, 2014 - supercedes procedure number 2D:01:01H
|Academic||Finance||General||Human Resources||Information Technology||Research||Student Affairs|
| || || || || |