IV:04:01 Capital Assets Control

Definition

Capital asset defined for this policy is any nonexpendable personal property having a useful life of more than one year and costs $5,000 or more. The following list includes some of the costs that should be capitalized in the appropriate asset account:

  1. The original bargained acquisition price.
  2. Freight, insurance, handling, storage, and other costs related to acquiring the asset.
  3. Cost of installation, including site preparation, assembling, and installing.
  4. Cost of trial runs and other tests required before the asset can be put into full operation.
  5. Cost of reconditioning equipment acquired in a used state.

Responsibility

It is the responsibility of the budgetary unit head to control and monitor the assets located within their area. All employees should be made aware of the importance of the safekeeping of institutional property. The policies and procedures described in this document are to be considered minimum controls for capital assets. Additional controls should be implemented by the departments if considered necessary.

Purchases

All purchases shall be made in accordance with the College's policy IV:02:01 - Purchasing Procedures and Tennessee Board of Regents' policy 4-02-10-00 - Purchasing Policies and Procedures.

Receipt of Property

The department receiving the property is responsible for documenting the receipt of all items purchased and authorizing payment. The documentation of the receipt can be any of the following methods.

  • Packing Slip - can be used to verify receipt. Submit the signed and dated packing slip to the Business Office.
  • Electronic notification - e-mail documenting the receipt of items/services submitted to Business Office.
  • Receiving Report - completed and forwarded to the Business Office. Available on the VSCC website: http://www.volstate.edu/BusinessOffice/Forms.php.
  • Sensitive Items Costing Less Than $5,000

    Sensitive items shall be defined as items costing less than $5,000, easily transported and are at a high risk of theft or misappropriation, including personal use, resale or removal from a VSCC official location.

    Types of sensitive items include but are not limited to computer, audio/visual equipment, PDAs, weapons, or instructional/medical equipment. The tracking and monitoring of these items are the responsibility of the custodial department, with the exception of the tracking and monitoring of all computer and audio/visual equipment which is the responsibility of Information Technology Department. All items must be recorded upon acquisition including the identifying description, serial number and manufacturer. The Business Office may randomly audit selected items.

    Classification of Purchases

    Representatives of the Business Office will confer with the requisitioner to resolve any questionable classifications of purchases in order to provide for proper recording of the expenditure.

    Recording and Tagging Capital Assets

    The asset information is entered into the Fixed Asset Module upon payment. Each capital asset will be assigned an inventory number and tagged by the Business Office staff. The tag will remain on the item until such time as the item no longer located at an official college location.

    Deleting Equipment Inventory Items

    Generally, items will be deleted from the capital assets inventory list for the following reasons:

    1. Traded in
    2. Lost or stolen
    3. Transfer to other institutions and schools within the TBR system
    4. Transfer to other state agencies
    5. Sale to eligible political subdivisions of the state and other governmental entities
    6. Public auction, publicly advertised and held
    7. Sale under sealed bids, publicly advertised, opened and recorded
    8. Negotiated contract for sale, at arm's length; but only in those instances in which the availability of the property is recurring or repetitive in character, such as marketable waste products
    9. Donations to a public school or public school system
    10. Item destroyed by an appropriate method because it was determined not to be usable by the institution and has little or no salvage or other economic value.

    All disposals of items using methods 3 through 10 must be approved by the Vice President for Business and Finance or the Assistant Vice President for Business and Finance. This approval will serve as the authorization for the Business Office to record the removal of the item, after final disposition, from the capital asset inventory list and the general ledger. For item number 2, the appropriately completed property loss report submitted to the TBR will serve as authorization to remove the item from the inventory list and the general ledger.

    See TBR Policy 4:02:20:00 - Disposal of Surplus Personal Property for specific details related to disposal of surplus personal property.

    Donated Personal Property

    All donations of personal property should be accepted in accordance with the College's and Tennessee Board of Regents' policy concerning gifts to the institution. Unless otherwise designated as prescribed by the TBR's policy 4:01:04:00, only the President is authorized to accept gifts to the College. Donated items should be coordinated with the Foundation. The value to use in recording the gift-in-kind should generally be the lower of the fair market value on the date of the gift or the reasonable value of the gift-in-kind to the institution. The value to be used in recording the gift-in-kind must be determined by the department receiving the use of the item and approved by the President or his designee before being submitted to the Business Office. The appropriate ledger accounts will be charged with an expenditure equal to the value determined and an institutional revenue account will be credited. All donated capital assets must be tagged and inventoried.

    Surplus Property

    The Vice President for Business and Finance and/or the Assistant Vice President for Business and Finance is designated the authority for the disposal of surplus property, and the communications and procedures concerning the disposal of surplus personal property. The Director of Facilities is also authorized to coordinate the disposal of surplus property.

    When a department or division determines that the capital asset is no longer needed in their area, a Surplus Property Form can be obtained on the VSCC website: http://www.volstate.edu/BusinessOffice/Forms.php requesting items be removed from the department or division. The form is to be completed and forwarded to the Vice President of Business and Finance. If appropriate, the Vice President will notify other campus units of the availability of these items. If no interest is given, the Vice President for Business and Finance will forward the form to the Shipping & Receiving Department (Maintenance) requesting the items be removed to an appropriate storage area. The tag numbers should not be removed from the items.

    Upon removal of the item, the Shipping & Receiving Department must sign the surplus property form and send a copy to the Business Office to indicate the item has been moved to a proper area designated for surplus property. Upon receiving the completed form, appropriate accounting entries will be made by the Business Office to remove the item from the department's inventory listing and to designate such items as surplus property. The property will be disposed of as provided by TBR Policy 4:02:20:00.

    Physical Inventory

    A physical inventory of all capital assets is to be completed at least annually. An inventory listing is to be distributed to the custodians. Each item listed is to be located; tag number and description should be verified. All changes in location, condition code, custodian, etc.should be indicated on the inventory listing. The inventory lists are then approved by the Department Head and returned to the Business Office. The Business Office may, at its discretion, physically audit selected items.

    Movement of Property

    During the year when items are moved between rooms or areas of the college, a relocation form (Equipment Inventory Change Request), available at http://www.volstate.edu/BusinessOffice/Forms.php must be completed and forwarded to the Business Office so that inventory records can be properly updated. This will help eliminate location differences during the physical inventory. Also, any item, whether tagged or not, that is removed from VSCC or off-campus official locations must be recorded in the form. A copy of the form is to be sent to the Business Office and a copy is to be maintained by the budgetary unit head for auditing purposes. In the event of any personal use or any unauthorized removal from the official location of property, TCA sections 8-19-501 concerning shortages of state moneys or the unauthorized removal of state property would apply.

    Missing or Stolen Property

    State law requires that any official of any agency of the State of Tennessee having knowledge of shortages of state moneys or the unauthorized removal of state property report such shortages or removal immediately to the Comptroller of the Treasury. To comply with the law, employees should report, as soon as possible, in written form any capital asset not accounted for to the Vice President for Business and Finance and the Chief of Campus Police. The notification should include a description of the item, tag number and serial number if available. It is required that the Chief of Campus Police send the local law enforcement a police report detailing each missing item. The Vice President for Business and Finance must then file a property loss report with an attached copy of the police report to the Tennessee Board of Regents who will then file a report with the Comptroller's office. Therefore, all missing property reports, whether identified immediately or through an inventory review, must include a police investigation report or an explanation from the Vice President as to why no report is submitted. Missing capital assets can be removed from the college's records only after the above forms have been submitted by the Vice President for Business and Finance. Also, please refer to VSCC Policy I:01:05 Reporting Losses of College Property and Resources for additional details.

    Employee-Owned Items

    The College will assume no responsibility for employee-owned items. Such items must be removed when the employee ceases to be employed by the College.

    Personal Use

    Personal use of college property is prohibited.

    Federally Funded Property

    Property purchased with federal funds will be managed according to the property management standards in Circular No. A-110.

    Reconciliation

    The general ledger control accounts for capital assets must be reconciled with the fixed asset system at least annually before the accounting records for the fiscal year is closed.

    VSCC Source: July 5, 1989, October 14, 1991, April 26, 1994, December 30, 2002, President; January 28, 2009, President's Cabinet, April 26, 2010, President's Cabinet.