University of California San Francisco

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University of California

San Francisco

Capitalized Asset

Management

Policy

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C A P I T A L A C C O U N T I N G - A S S E T M A N A G E M E N T

Capitalized Asset Management Policy

Controller’s Office - Capitalized Asset Management http://controller.ucsf.edu/capital Mission Center Building 1855 Folsom Street, Suite 425 San Francisco, CA 94143-0812 415.502.2657 ph

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1. INTRODUCTION

The purpose of Capitalized Asset Management (CAM) is to:

• Enact and enforce the policies and procedures for the management and control of inventorial equipment owned by or in the custody of or under the control of the University of California.

• Satisfy Federal, State, and University requirements with respect to the control and maintenance of inventorial equipment as defined, for which the Regents of the University of California are responsible.

• Establish a relationship with the various campus departments that allows for a flow of information that enables the department custodian and CAM to comply with policies, procedures, and practices through:

o maintaining adequate inventory controls and accountability systems or the property under its control

o continuously surveying the property under its control o performing the care and handling of excess property

o transferring or disposing property in a prompt manner in accordance with the authority delegated and regulations prescribed

RESPONSIBILITIES

The Capitalized Asset Management Group’s basic operational responsibilities are:

• Creating and maintaining a database of information on all the capital equipment owned by, donated to or loaned to UCSF

• Insuring the integrity of the information in the database

• Providing necessary reports of this information and coordinating equipment audits requested by outside agencies

• Acting as the final authority should there be question on whether an item is an asset as defined in BUS-29

The function of CAM is to fulfill the obligation of UCSF as a responsible

contracting party ethically and provisionally required to provide stakeholders with

best value by avoiding undue risk, optimizing processes and minimizing waste.

Other indications of best value include: • Reliable financial data

• Using asset effectively and efficiently

• Maintaining a highly trained, skilled, and knowledgeable asset management work force that makes sound decisions in the safeguarding of University assets.

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2. DEFINITIONS

Agreement – A legal document that commits parties to a project involving work in exchange for funding. The term agreement includes contracts, grants, cooperative agreements and purchase orders.

Asset Tag: The tag is a barcoded label approximately 1” x 1-1/2” furnished by CAM. Each tag has a unique property identification number printed under the bar code. Asset tags should be affixed to the equipment immediately upon receipt to an area that is readily visible (usually at the front).

CAAN/Location: In order to complete the physical inventory, it is necessary to include the location of the equipment. Facilities Management provides location codes that are required by UCOP and are used by CAM to identify buildings and room numbers.

Capitalized Asset Management (CAM): This is the department at UCSF Controller’s Office responsible for creating and maintaining asset records; establishing value of equipment; insuring compliance with federal, state and University; reporting expenditures for equipment to federal, state and private funding agencies; and providing information to auditing agencies.

(http://controller.ucsf.edu/capital/)

Contracting Officer – The duly authorized individual delegated by an appropriate Government authority to make an agreement, and thereafter administer the agreement, on behalf of the Government.

Custodial Department – That department or unit of a University location charged with responsibility for the tracking, care and maintenance of the equipment. Custody is assigned at the time of purchase, but may be transferred to another consenting department via an EIMR.

Custodian: The role of custodian is assigned by the Business Head. The custodian should be assigned to the same department code as the unit and should be an employee of the University who is familiar with the equipment, the location and the unit’s function.

Custody Code: A 4-digit code issued by CAM at the request of the department to assign custodial responsibility for UC-held assets. The custody code is assigned and tied to the department code as it mirrors the campus’ organizational structure. Each custody code requires a designated individual to act as custodian. In order to assure that equipment is assigned to a correct custody code at the time of

purchase, the custody code should be listed on all purchasing documents including requisitions, purchase order, and check requests.

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Environmentally Preferred Products (EPP) – Products or services that have a lesser or reduced effect on human health and the environment when compared with competing products or services that serve the same purpose. Such products or services may include, but are not limited to, those that contain recycled content, minimize waste, conserve energy or water, and reduce the amount of toxics

disposed or consumed.

Equipment Inventory Modification Request (EIMR): Form required by CAM to make any modification ton existing inventory record.

http://controller.ucsf.edu/capital/files/EIMR.pdf

Government – Federal government of the United States of America, unless otherwise specified (e.g., "State Government").

Inventorial Equipment – Non-expendable, tangible, personal asset with an acquisition value of $5,000 or more, and which has a normal life expectancy of more than one year.

Materiel: Equipment, apparatus, and supplies.

Personal Property: Any movable item subject to ownership; materiel but not real property.

Physical Inventory: In order to be in compliance with University, State and Federal regulations, each department is required to physically locate each piece of

equipment under their custody every two years. The tag number, serial number, manufacturer’s name and model number, location and CAAN must be verified at the time of the inventory. CAM schedules departments on a staggered basis and launches the physical inventory on a two-year cycle.

Principal Investigator (PI): The academic or administrative staff member

responsible for initiating and conducting an extramurally-funded research, training, or public service project.

Property Number: All capitalized and inventorial equipment at UCSF, no matter who has title, has an identification number associated with it. This number is printed and noted with a barcode on the asset tag. The UCSF Number is a nine-digit number that identified the follow:

 The first pair of digits indicates the calendar year the equipment was acquired,

 The second pair of digits identifies the campus that originally acquired the equipment, and,

 The last five digits designate the sequential placement of the equipment in the Equipment System.

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As an example, tag #052000543 is assigned to an item purchased in 2005 (05) by UCSF (20) and is the 543rd piece (00543) to be added to the Equipment System that year.

Sensitive Asset –

(1) Asset potentially dangerous to the public safety or security if stolen, lost, or misplaced, or that shall be subject to exceptional physical security,

protection, control, and accountability. Examples include weapons, ammunition, explosives, controlled substances, radioactive materials, hazardous materials or wastes, or precious metals; or

(2) Asset with a unit acquisition value of less than $5,000 that is otherwise not categorized as inventorial equipment, but that may require the safeguards provided by the inventorial process. Items in this category are not listed as capital assets but are included in the local campus inventory. The category includes, but is not limited to: firearms; items acquired under extramural awards that set a dollar limit of less than $5,000 for inventorial items; and theft-sensitive items such as computers, laptops, PDAs, cameras, projectors, audiovisual equipment and other similar items.

Software: A set of computer programs, procedures, and associated documentation concerned with the operation of a data processing system.

• When software is purchased at the same time as the piece of equipment with which it is to be used, and its purchase is required for the functioning of the piece of equipment, its value is included in the total value of the

equipment.

• If the software is purchased for an existing piece of equipment, upgrading its programming the purchase is considered to be a replacement/ supply and is not added to the value of the equipment.

Sponsor – Any external entity, either an institution or an individual, which provides funding for a project conducted by UCSF.

Stakeholder – Any individual, group or organization having a valid interest in the asset management process; stakeholders include UCSF, its Office of the President and individual campuses, laboratories and hospitals, Capitalized Asset

Management, Custodial Departments, University faculty, staff and students, the Government, the State of California and all external Sponsors.

Strategic Sourcing – A purchasing strategy for UCSF that aims to consolidate and streamline the purchasing power of the multiple UCSF campuses, laboratories and hospitals to obtain greater cost efficiencies in its procurement contracts.

Subagreement – A purchase contract issued by UCSF to another entity, under an extramurally-funded prime agreement, in order to implement a portion of the scope of work.

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Total Cost of Ownership – The full cost of a purchase, including not only the purchase price but also transaction and administration costs, shipping and delivery, installation and set-up, training, implementation, resource consumption, productivity, risk and liability, useful life, maintenance, warranty, replacement parts, and disposal (re-use, return, trade-in, recycling or removal as waste).

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3. SCOPE

This document applies to inventorial equipment and other assets managed by Capitalized Asset Management Office at University of California San Francisco (UCSF). It includes inventorial equipment and other assets currently in the care, custody or control of UCSF as well as future acquisitions. The Government will use University of California’s asset management system to monitor Government inventorial equipment and other assets accountable to The Regents of UC under Government agreements.

In cases where UCSF is a Subrecipient to a prime contractor, this Capitalized Asset Management Policy will be followed in management of the assets, and will be in effect for such Subagreement.

4. PURPOSE

This document summarizes UCSF’s policy for managing all inventorial equipment and other assets under its care, custody or control. UCSF’s asset management system employs best business practices to meet the performance requirements driven by all stakeholders’ need to control, protect, preserve, and maintain their investment.

5. PROCESS OWNERSHIP

Capitalized Asset Management is responsible for maintaining and improving its asset management processes and for supporting implementations. Capitalized Asset Management provides the mechanism for sustaining on-going asset management process activities such as process assessment and revision of applicable policies and procedures. Capitalized Asset Management is an agent for process change by providing a mechanism for systematic evolution and improvement of the asset management process.

This Capitalized Asset Management Policy will be reviewed periodically and updated as necessary.

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6. LIFE CYCLE OUTCOMES

Life cycle outcome defines a distinct phase of an asset’s life cycle and the related activities performed by UCSF to ensure that inventorial equipment is prudently managed. 1. Acquisition 2. Receipt 3. Records 4. Physical Inventory 5. Reports 6. Utilization 7. Maintenance 8. Disposal

Self-assessment and metrics are applied periodically to demonstrate effective asset management and continuous improvement in each of these areas.

The following narrative addresses the intent of Capitalized Asset Management relative to the life cycle outcomes. The outcomes are grouped into the asset lifecycle, as follows:

Outcome 1 – ACQUISITION

Capitalized Asset Management will ensure policies, procedures and systems are in place to ensure that acquisitions of inventorial equipment and other assets are authorized consistent with UCSF accounting practices and compliant with terms and conditions of Sponsored Project(s) where applicable.

Inventorial equipment and other assets will be valued in accordance with Generally Accepted Accounting Principles. Valuation of inventorial equipment will include the purchase price and all ancillary charges necessary to place the asset in its

intended location and condition for use. Ancillary charges will include costs that are directly attributable to asset acquisition, such as freight and transportation charges, site preparation costs, and professional fees. Donated items of

inventorial equipment will be reported at their estimated fair value at the time of acquisition plus ancillary charges, if any.

Equipment may be acquired through different methods and from various sources, but no matter how it is acquired it must be recorded and tracked through UCSF’s CAM and financial systems.

Purchase Order (PO): Most equipment acquired by a campus department will be through the purchasing process. When a PO is received in CAM and the item is identified as inventorial equipment, a property number is assigned to the

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equipment. The property tag is sent to the department custodian with a simple form asking for confirmation of the basic data and a request for serial number and location information for the item being tagged.

Borrow: Equipment borrowed by the University from other institutions, agencies or

campuses with a replacement value of $5,000 or more should be added to the department inventory in order for it to be included in the University self-insurance program.

Capital Lease: A capital lease is a written contract issued by Procurement to purchase personal or real property with scheduled specific installment payments during the life of the contract. Title to the property remains with the lessor until the total contract amount has been paid. The University has the right to take possession of the property at the end of the contract or earlier subject to payment of any outstanding principal and the buyout amount specified in the contract.

Unique characteristics of a capital lease or installment purchase lease include: • Specific beginning and ending dates

• Interest rate stated and fixed for life of lease

• Almost always has a buyout amount (sometimes $1.00) • Amount of installment payment noted on contract

• Period of lease is at least 75% of estimated economic life of equipment • Present value of lease payments at least 90% of fair market value of

equipment • Non-cancelable

• Value of contract $100,000 or greater (may cover just one item or several items with unit cost $5,000 or greater).

Fabrication: Equipment that is being assembled with components from different

sources and the value with direct cost of labor and materials totaling or exceeding

$5,000 is fabricated equipment. To receive capitalized asset status, department custodian should report on an Equipment Fabrication Request form and attach a copy of the funding award page referencing the fabrication and a budget breakout of costs and vendor sources:

CAM identifies and tracks the equipment under fabrication throughout the fabrication cycle. Fabrication progress is recorded periodically, either as it occurs or on a predetermined cycle not less than once per year. When the fabrication is substantially complete, CAM records acquisition to inventory. However, if the

completion date of the fabricated equipment is indeterminate, CAM may code the

purchases using account code 52606 and record on the equipment records at the time of the purchase.

The cost assigned to the equipment is the total of all materials, supplies, and services from outside vendors or authorized recharge activities. For capitalization purposes, departmental labor, travel, payroll expenses and overhead must not be

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Manual, Chapter P-415-32). Fabricated equipment is recorded using acquisition code 32 (Fabrication).

Found: Equipment found without an assigned UCSF property tag number and not traceable to an asset record in the asset management system may be added to the inventory with a new UCSF property tag number issued if:

• Ownership is not known or acquisition documents clearly establish asset is property of University of California.

• Comparable equipment had a purchase price of $5,000 or greater when new.

• It meets the criteria for what constitutes capitalized equipment.

Gift: Outside sources such as manufacturers, philanthropic organizations, and private parties often donate equipment to UCSF. Gifts should be transacted through the Office of Research and Gift Administration. A property tag will be issued when CAM receives notification from the Coordinator of Gifts Acceptance. Loan from a UCSF Department: Departments may receive equipment loaned from other UCSF departments, from other UC Campuses, or from outside institutions. CAM should be notified when equipment is received from an institution outside UCSF. If the equipment comes from an outside institution, CAM will issue a

property tag in order to allow the equipment to be tracked, insured, and maintained during its life at UCSF.

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Outcome 2 – RECEIVING

UCSF will establish processes to facilitate the controlled receipt of all inventorial equipment.

For purposes of establishing control of all inventorial equipment in the care, custody or control of UCSF, the Custodial Department will verify and document receipt of all such inventorial equipment and promptly provide CAM with pertinent asset information including serial number and exact location (i.e. building and room number).

IDENTIFICATION

All inventorial equipment in the care, custody or control of UCSF will receive a barcoded property tag from CAM after order is placed with vendor. In addition to UCSF-assigned markings, Sponsor-assigned markings will be affixed per the terms and conditions of the agreement. Where practical, identification will be physically affixed to the asset. UCSF identification number will be used as the basis for establishing custodial records of inventorial equipment. Unique Identification (UID) of Government asset will be applied consistent with the requirement of the agreement, where applicable.

Outcome 3 – RECORDS

Asset Management System Records

UCSF has established an Asset Management System to maintain complete, current, and auditable records for inventorial equipment in the care, custody or control of UCSF.

Each inventorial equipment asset management record will contain at a minimum, the following information, unless otherwise stated in the agreement:

1. Asset description 2. Asset classification 3. Manufacturer 4. Model number

5. Acquisition Date and Acquisition Document Reference Number 6. Acquisition cost (actual or estimated)

7. National Stock Number (if needed for additional item identification and/or tracking

8. Unique-item identifier or equivalent (if available and necessary for individual tracking)

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10. Posting reference and date of transaction 11. Date placed in service

12. Disposition

Records of sensitive asset will be established in accordance with the terms and conditions of the agreement. UCSF will make available source data for inventorial equipment and other assets as may be required by the agreement. Records will be retained in accordance with agreement terms and/or UCSF records disposition schedule.

Outcome 4 – PHYSICAL INVENTORY

UCSF will conduct biennial physical inventories of all inventorial equipment in the care, custody or control of UCSF. Physical inventories of Government-owned inventorial equipment will also be conducted biennially, unless otherwise specified in the agreement. Custodial Departments are responsible for conducting physical inventories under the direction of CAM and subject to verification by CAM. As specifically required, physical inventories will also be conducted upon agreement completion or termination.

The inventory process is comprised of: 1. Planning/Scheduling

2. Data verification and collection 3. Reconciliation

4. Reporting

5. Certification of Completion

The accuracy and completeness of the physical inventories submitted by Custodial Departments will be subject to review and audit by Capitalized Asset Management. This review and audit may include various sampling techniques, including

statistical, stratified, judgmental, purposeful or other sampling or testing methods. Reporting of physical inventory results will be submitted as required by the

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Outcome 5 – REPORTS

Capitalized Asset Management will ensure that all internal reports (including, but not limited to, physical inventories, inventorial equipment value reconciliation, and total campus inventory and custodial code reports submitted annually to UC’s Office of the President) are submitted accurately and in a timely manner.

Capitalized Asset Management will ensure that all contractually-required reports of Government or other Sponsor inventorial equipment and other assets are

submitted accurately and in a timely manner. Such reports will include: 1. Annual and Final Reports of inventorial equipment

2. Reports of Discrepancies

3. Lost Damage Destruction and Theft Reports 4. Reports of physical inventory results

5. Reports of audit and self assessment results 6. Reports of corrective actions

Outcome 6 – UTILIZATION

Primary responsibility for the proper utilization of inventorial equipment and other assets rests with the Custodial Department.

Government inventorial equipment and other assets, whether furnished or

acquired, will be used for the purpose for which it was acquired or as authorized. It will be declared excess and disposition instructions requested when no longer contractually required. Rent-free, non-interference use will be requested as needed.

Outcome 7 – MAINTENANCE

Primary responsibility for the proper maintenance of inventorial equipment and other assets rests with the Custodial Department.

Custodial Department will perform maintenance to the degree necessary to maximize the useful life of inventorial equipment and other assets in its care, custody or control. Maintenance is not required for items in disposal.

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Outcome 8 – DISPOSAL

Only equipment for which the University holds Clear Title can be disposed of without the written permission of the title holder.

Gifts may not be disposed of for a minimum of 24 months after receipt. Failure to follow this rule may result in loss of tax deduction for the donor.

Equipment that has been determined to be in excess should be processed within the University system.

Equipment which has a valuation in excess of $10,000 will be offered for sale on the UCSF campus and all other University of California locations prior to being available for public sale.

When it has been determined that the excess material is of no immediate use within the University system, it may be disposed of in one of the following ways, whichever is considered to bring the HIGHEST NET RETURN OR BENEFIT to the University:

• Disposal through CLS Distribution & Storage. Departments wishing to excess equipment, requests the pickup of this materiel by entering a request

online. If equipment has a property number assigned to it, department must submit a completed EIMR to the CAM. CAM verifies UCSF title and funding source, and forwards the request to the Surplus Department. The Surplus Department contacts the requester and arranges for pick up.

• In-Place Sale. Departments may request assistance in disposing of excess equipment without moving the materiel to Campus Distribution at Oyster Point. The process is initiated by submitting a completed EIMR noting that an in place sale is requested. CAM verifies title to the item and fund source, and emails a copy of the EIMR form to the department and to the surplus department. Campus Distribution determines Fair Market Value and works with department to consummate the sale. When the sale has been

completed, Campus Distribution will send the sales voucher to CAM so that the equipment can be removed from inventory.

• Trade-in: This is conducted through a purchase order for acquisition of new equipment,

• Donation to an organization outside the University: This is allowed if the market value of the materiel is below the costs required for handling, record keeping, storage and other expenses associated with trade or sale; the transfer to a non-profit institution or group would be in the best interests of the University and serve the public good, and specific prior review and approval of the Campus Distribution Surplus Manager.

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• Sale/Transfer in Conjunction With Faculty Transfer to an Outside

Institution: Department will contact Campus Distribution to determine fair

value of each asset. Recipient institution should issues a purchase order or equivalent document itemizing the assets to be obtained with the amount offered for each item. If the fair value and amount on PO matches, departing faculty member drafts a written request to transfer the material and includes the following:

 Specific list of the property including property numbers, descriptions, and original unit costs;

 Reason for the sale (or transfer);

 Name of the designated recipient institution; and

 Justification for transferring rather than leaving or selling the material.

If a no-cost transfer is desired, the following regulations apply:

 No-cost transfers shall be permitted by exception only, and only with the approval of the CAM Equipment Manager.  Except where prohibited under the terms of an award (open

or closed), or in cases where an entire open award is transferred to the recipient institution, the University reserves the right to disallow no-cost transfer requests and reserves the right to sell all property to the recipient institution at fair value.

The request should be approved by each of the following:  Department Head

 Dean

 Director, Sponsored Projects or designee (if open award)

Asset Closeouts

Upon notification of agreement completion or termination involving Government inventorial equipment or other assets, whether furnished or acquired, the following actions will be promptly performed by, or under the direction of, Capitalized Asset Management:

1. Physically inventory asset for disposal purposes, if requested by the Contracting Officer or other authorized representative

2. Investigate, report, and resolve LDDT (Lost Damage Destruction and Theft) cases

3. Report excess/residual Government inventorial equipment or other assets where disposition instructions do not exist in the agreement 4. Comply with disposal instructions and adjust asset record accordingly

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5. Submit final report, as needed 6. Issue asset closeout certification

7. PROCEDURES

Capitalized Asset Management will maintain procedures adequate to ensure the effectiveness of its asset management system. All-inclusive, comprehensive, step-by-step procedures are contained in the available on the Controller’s Office

website.

8. SELF-ASSESSMENT

Capitalized Asset Management will perform self-assessments to evaluate the effectiveness and efficiency of its asset management system. These self-assessments will be utilized to determine the outcomes to review.

Self-assessments will be performed and results made available to the Government or other Sponsors upon request. As a result of these self-assessments,

improvements may be made and significant deficiencies corrected and documented.

9. REFERENCE DOCUMENTS

• Capital Equipment & Accounting Training & Job Aids

• Accounting Manual, Chapter P-415-32

• ASTM E2279-03 Standard for Establishing the Guiding Principles for Asset Management

• ASTM E2452-10 Equipment Management Process Maturity (EMPM) Model

• BUS-29, Management and Control of University Equipment

• BUS-38, Disposition of Excess Property and Transfer of University-Owned Property

• FAR Part 1.102, Statement of the Guiding Principles for the Acquisition System