POLICY TITLE: Carnegie Mellon University Property Management Policies and Procedures
DATE OF ISSUANCE: This policy was originally issued to campus in October 1987 as Organization Announcement 291-B, the Manual of Property Management Policies and Procedures. Information was most recently updated in February 2007.
ACCOUNTABLE DEPARTMENT/UNIT: Property Accounting Services. Questions on policy content should be directed to the manager of property accounting services, ext. 8-2099.
ABSTRACT: Contains policies and procedures regarding property: owned by the university; acquired by Carnegie Mellon and funded under a sponsored research grant or contract; furnished by the U.S. Government or other sponsors and being used as part of a research grant or contract with Carnegie Mellon; owned by other parties (vendors, faculty, staff, agencies, etc.) but being used in a facility owned or leased by Carnegie Mellon.
Property Accounting Forms
The Government requires the University to procure, use and control property in accordance with Federal laws, executive orders, instructions from the Federal sponsoring agency and any special instructions contained in the specific grant or contract. It is Government policy to rely upon the University's internal written procedures, subject to evaluation and approval. In addition to the policies relating to Government owned equipment as described in the ìManual of Property Management Polices and Procedures,î listed below are fifteen functional areas which require contractor compliance in accordance with the ìDepartment of Defense (DoD) Manual For The Performance Of Contract Property Administrationî (section 4161.2-M). The Office of Naval Research (ONR) reviews these fifteen areas during a Property Control System Analysis (PCSA), which is conducted biennially. ONR is Carnegie Mellonís cognizant agency that insures that Government property is utilized appropriately.
This manual sets forth policies and procedures for Carnegie Mellon University with regard to:
Carnegie Mellon's Property Accounting Department (Property Accounting) has developed a property management system which provides for assurance of valid data, user support and complete audit trails for inspection by internal departments and external agencies. Property Accounting also has established the policies and procedures incorporated into this manual to control, protect, preserve and maintain all property for which Carnegie Mellon has responsibility. These policies and procedures comply with all applicable government regulations, including United States Office of Management and Budget (OMB) Circulars A-21 "Cost Principles for Educational Institutions," A-110 "Grants and Agreements with Institutions of Higher Education," and the Federal Acquisition Regulation (FAR). Carnegie Mellon's centralized property management system includes:
Each department is directly responsible for the control, use and security of capital movable and fixed assets in its possession. In accordance with this responsibility, each department is to have a formally appointed Property Officer to provide the main line of communication between the department and Property Accounting. The Department Property Officer and others who are directly involved in equipment purchasing and inventories should be familiar with the university policies and procedures as contained in this manual.
The Department Property Officer should be a business manager or staff assistant who reports directly to the department head. Responsibilities of the Department Property Officer include the following:
3. Enforce compliance within the department with the university policies and procedures as contained in this manual.
4. Assist Property Accounting in locating new equipment which requires tagging.
5. Record the movement and disposal of equipment on the forms provided by Property Accounting, and advise Property Accounting regarding such changes.
6. Assign or schedule responsible department personnel to assist with physical inventories.
7. Inform Property Accounting of any space adjustments in the Department Property Officer's areas.
Property is covered by the university's all risk insurance policy, with a $25,000 deductible applicable to each loss. The university has established an internal insurance pool for movable asset losses which are less than $25,000. The annual charge for each department to participate in the pool is based on the total original cost of the department's movable assets in the Property Accounting Services each year as of April 30th. If a single piece of equipment has a cost greater than $25,000.00, only the first $25,000.00 is included in the pool cost calculation. The charge is assessed at the beginning of the following fiscal year and covers all movable assets acquired during that fiscal year provided that Property Accounting has the required information to enter the assets into its system. This includes any items obtained without any General Ledger entries being involved, such as donated items or items on loan. For these, it is the department's responsibility to promptly notify Property Accounting in writing. Exhibit A, Donated Item Receiving Report, is to be used for donated items. Exhibit B, Non-Carnegie Mellon Movable Equipment/Furniture, is to be used for items on loan.
The conditions under which a claim will be paid are as follows:
8. Theft loss has been reported immediately to Security.
9. Each loss is subject to a $250.00 deductible unless the equipment is protected by an electronic security system.
Conditions under which claims will not be paid:
10. Thefts from unlocked rooms and other unsecured areas such as hallways, loading docks, etc.
11. Thefts of donated or loaned equipment which has not been promptly reported to Property Accounting upon receipt.
12. Thefts of equipment from off-campus locations if Property Accounting has not received prior notification that the item has been properly authorized for off-campus use.
The Office of Risk Management should be contacted for any further details pertaining to insurance.
13. Individual items of furniture or equipment, with an original cost of $5,000.00 or more and a minimum useful life of 2 years, are capitalized and charged to the appropriate movable asset account number (see Exhibit C - General Ledger Account Numbers). Original cost includes the cost of the item, less any applicable discounts, plus any delivery charges and cost of installation. All of these costs are recorded as having been incurred on the asset's acquisition date. The cost also includes any modifications, attachments, accessories, or auxiliary apparatus (accessories) which are acquired with the item and are necessary to make the item usable for its acquired purpose. Such accessories acquired after the capitalized item and with costs less than $5,000.00 are not capitalized and are charged to non-capital account number 8905.
14. The acquisition document for an accessory with an original cost of $5,000.00 or more, which is to be inserted into an existing movable asset, must state the Carnegie Mellon asset number or original purchase order number for the existing movable asset. If this information is not provided, the accessory will not be capitalized regardless of its value.
1. Departments are to use Exhibit D, Request for New Center or Account Number, to request a fabrication or project account number. Include the title, begin and estimated end dates, center(s) involved, separate dollar totals budgeted for labor (fabrications only), supplies and capital equipment to be charged to the fabrication project account, as well as appropriate authorized signature(s). Send Exhibit D to Property Accounting.
2. Property Accounting will assign a fabrication (project) account number and an asset number tag after obtaining the written approval (where applicable) of the Office of Sponsored Research (centers 1-4XXXX and 1-5XXXX) on Exhibit D. Where applicable, the Office of Sponsored Research will contact the requesting department if a fabrication account number is not approved.
Property Accounting will send a copy of Exhibit D to the requesting department, the Office of Sponsored Research (where applicable), and Accounting. Property Accounting (and the Office of Sponsored Research, where applicable) will monitor the activity in the fabrication (project) account and investigate deviations from the information provided on Exhibit D.
All items acquired, as well as all labor involved in the fabrication (project), are charged to the fabrication (project) account number by the department. If any capital equipment items are included, they are to be clearly identified as such on the purchase orders, bills of sale, or journal entries. For those capital equipment items, Property Accounting will assign individual asset number tags.
For a capitalized fabricated (project) unit, the acquisition date is the date of the first cost. Other costs are subsequently added to the original cost as incurred, but the acquisition date is not changed.
Any items known to have been part of a fabrication account, but the center numbers are not now known, are listed in the PAS in center 1-91111.
16. Donated items, with a fair market value of $5,000.00 or more per item and a minimum useful life of 2 years, are capitalized. The fair market value of each item is used as its "original cost" in the PAS and recorded as a "gift-in-kind," charging the appropriate movable asset account number.
1. The fair market value is $5,000.00 or more, as determined by the Purchasing Department, and
2. The lease transfers ownership of the property to Carnegie Mellon by the end of the lease term, or
3. The lease contains a bargain purchase option, or
4. The lease term is 75% or more of the estimated economic life of the leased property, or
5. The present value of the rental or minimum lease payments equals or exceeds 90% of the fair market value of the leased property.
The Manual of Purchasing Policies and Procedures provides guidance in determining "lease vs. buy" decisions. Government regulations permit lease or rental costs to be part of cost recovery if (a) the rates are reasonable at the time of the decision to lease or rent, and (b) the cost recovered does not exceed the purchase price on the date the property was leased or rented.
18. Repairs are not normally capitalized but charged to account number 8272. However, repair costs of $5,000.00 or more may be capitalized if they extend the item's useful life 2 years or more beyond its original life. This fact (if applicable) must be stated on the purchase order by the ordering department.
1. Demolishing or dismantling equipment (charge account number 8500).
2. Rearrangement, transfer or moving of capitalized items from one university location to another, including costs incurred in dismantling, transporting, reassembling and reinstalling such items in a new location (charge account number 8500).
3. Warranty costs or maintenance contracts (charge account number 8277).
21. Existing buildings and new construction are capitalized (Building Class Codes 010 through 099).
22. Additions and renovations to buildings must be (a) greater than $5,000.00 for individual items, or (b) project costs of at least 20% of the total building cost or $100,000.00, whichever is lower. Examples of renovations are as follows:
1. Adding additional square footage to an existing building.
2. Remodeling an existing building, including floor covering, etc.
3. A completely new heating, cooling or plumbing system.
4. Extending wiring or plumbing to an area previously without such.
Replacements or repairs that maintain or restore a building are not capitalized. For example, the cost of replacing worn sections of a roof are not capitalized, but the cost of replacing an entire roof is capitalized. Thus, a capitalized replacement is the total replacement of a unit with a new unit that serves the same purpose and has approximately the same expected useful life as the unit being replaced.
Building costs are not reduced for materials, carpeting, etc., removed during building renovations unless a specific line-item in the PAS can be identified as being removed.
The university switched from use allowance to depreciation for cost recovery of movable assets beginning July 1, 1986. Depreciation is calculated by the straight-line method - i.e., an equal amount of the original cost per year over the life of the asset. Depreciation is calculated from the day of acquisition to the day of disposal. In addition, the university switched from use allowance to depreciation for cost recovery of fixed assets beginning July 1, 1988. While both groups employ the straight-line method, when calculating depreciation for fixed assets, the half-year convention is utilized whereby a half-year of depreciation is taken for the fiscal year of acquisition and a full year taken for each subsequent year except for the final year, when the final half-year is taken.
Building acquisition costs are normally recovered at the rate of 2% per year based on a 50-year useful life standard. Equipment acquisition costs are normally recovered at the rate of 6 2/3% per year based on a 15-year useful life standard. In some cases, exceptions to these useful lives may be authorized by the government. This recovery commences the beginning of the fiscal year of acquisition for equipment or the first fiscal year that a building is substantially complete. It stops at the end of the fiscal year of disposal.
A purchase order, placed by the university in accordance with the Manual of Purchasing Policies and Procedures, normally initiates the purchase or procurement of property. All purchase orders and changes to purchase orders submitted each day are reviewed by Property Accounting for items meeting capitalization criteria or to be included in the PAS for other reasons within the following categories:
a. Items charged to capital furniture, equipment or software account numbers 8913, 8916 and 8919.
b. Items charged by ordering departments to rentals and leases account number 8252 for equipment having a purchase price of $5,000.00 or more, as determined by the Purchasing Department.
c. Items charged by Facilities Management Services to repair and maintenance account number 8272 for equipment having an estimated purchase price of $5,000.00 or more.
d. Items charged to non-capital equipment and furniture account numbers 8905 and 8906 if the items are the same as or similar to other items previously acquired for more than $5,000.00.
e. Items on trial or loan (for more than 90 days) having a purchase price of $5,000.00 or more, as determined by the Purchasing Department. Departments are to use Exhibit B, Non-Carnegie Mellon Movable Equipment/Furniture, to notify Property Accounting of the receipt of such items. A copy of Exhibit B is to be given to the owner.
Each item ordered must have its noun description on the purchase order. The building, floor, and room number where the item is to be used should also be included. In addition, where there are multiple lines of items, the purchase order should note if any of the items will be used together. (For example, items 2 and 4 will be used with item 1.) The "requested by" space on the purchase order should include the name of the person who will receive the item. Blanket purchase orders may not be used for any of the categories noted above (a thru e) except for rentals and leases. Purchase orders involving trade-ins must show the cost of the new item less the trade-in amount, and the Carnegie Mellon asset number of the trade-in. (See trade-in procedures in Section X under Disposal or Re-use of Movable Assets for further information.)
Property Accounting resolves any exceptions, where necessary, with the ordering department. Copies of the purchase orders are then made for Property Accounting's file. These copies are reviewed quarterly to investigate purchases which are not being cleared in a reasonable time.
Each day Property Accounting reviews vendor invoices being processed by Accounts Payable for capitalization criteria and account number errors. Copies of all invoices affecting the PAS are matched and checked against copies of purchase orders being held in Property Accounting's "open" file. The date of expense of the invoice is determined via Accounts Payable or other Accounting Department computerized records. The date of expense and the account number charged are then marked on the invoice copy for entry into the PAS.
When a copy of an invoice is obtained by Property Accounting, a tag is assigned to each item. The tag's pre-printed asset number is written on Property Accounting's copy of the purchase order and the tag is attached to the document. Each item for which title remains with the government has a "Property of U. S. Government" tag also attached to the document. The data is then entered into the PAS and the document package is put in Property Accounting's file for tagging at a future date.
At the time that an ordering department approves an invoice for payment, that department must provide the following information to Property Management for each movable asset acquired:
1. Building and room location where the item is to be used.
2. Serial Number of the item, where applicable.
3. Line Number on the purchase order for the item.
This information is to be sent promptly to Property Accounting via one of the following means:
4. Copy of the Purchase Order or Invoice.
5. Written memo.
6. Other means approved by Property Accounting.
b. Journal entries:
Copies of journal entries affecting movable assets are sent daily by Accounting to Property Accounting. These journal entries must indicate the Carnegie Mellon asset number of the movable asset involved, or the original purchase order number. If this information is not provided, the journal entry will be returned to the department which prepared it. Accounting also provides data to Property Accounting relating to any entries affecting fabricated equipment account numbers. After this data is entered into the PAS, the applicable documents are then filed under the Carnegie Mellon University asset number in Property Accounting's "closed" file.
c. Work orders:
If alterations or renovations to a building are not part of a capital project, a department submits a work order requisition to Facilities Management Services (FMS). Facilities Management Services submits a purchase order to Purchasing for any necessary materials and movable assets. The purchase order indicates the FMS work order number. Property Accounting makes a copy of the purchase order and requests a copy of the completed work order from FMS. Any labor and materials associated with the installation of movable assets are charged by FMS to the requisitioning department's center and account, as are the costs of the movable assets. If the cost of a movable asset, including the cost of labor and materials for installation, is $5,000.00 or more, Property Accounting prepares a journal entry to capitalize the item. This charge is to the requisitioning department's center and account number 8916. The credit is to the requisitioning department's center and account number originally charged by FMS. Copies of the purchase order, work order and journal entry are then processed for tagging and filing as noted in paragraph a. Invoices.
Donated movable assets ("gift-in-kind") are included in the overhead cost recovery calculation for sponsored research. Therefore, it is beneficial to all Carnegie Mellon University personnel that these assets are properly recorded on a timely basis.
25. Where a vendor invoice is not involved:
The donee department completes Exhibit A, Donated Item Receiving Report, and sends the form to Property Accounting. Property Accounting notes whether a response is needed from Development, and then forwards a copy to the Records Section of the Development Department. Development prepares either Exhibit E, Gifts in Kind from Individuals, or Exhibit F, Corporate Donations of Property, and sends the form to the donor to obtain and document a fair market value or appraisal value for the item(s). Development also sends a copy of the form to Property Accounting if requested on Exhibit A. If the donor is the government or other sponsor, Property Accounting sends a copy of Exhibit A to the Office of Sponsored Research. The Office of Sponsored Research notifies the cognizant Government Property Administrator of the receipt of such items. The donor returns Exhibit E or Exhibit F to Property Accounting. If any donated item noted on the form qualifies as a capital asset, Property Accounting makes a copy of the returned form and matches the copy with its filed copies of Exhibits A, E or F. Property Accounting sends the original of the donor's returned Exhibit E or F to Development.
Where movable assets are involved, if the donor does not return Exhibit E or F within one month, Property Accounting obtains the fair market value from the Purchasing Department and enters those amounts into the PAS. When the donor's completed form is received, appropriate adjustments are made to the PAS where necessary.
26. Where a vendor invoice is involved:
Property Accounting sends Exhibit F, Corporate Donations of Property, to the vendor. The donation may be one of the following:
a. The invoice states that the gross cost has been reduced by an "allowance" or includes other information which indicates the vendor is treating a portion of the item as gift-in-kind. The item purchased is recorded on the PAS (if the item's total unit value is $5,000.00 or more) at net cost plus the gift-in-kind amount.
b. Carnegie Mellon receives a "free" item when one or more similar or dissimilar items is purchased. An example of a "similar" item would be a department's purchase of 5 computers at their normal Carnegie Mellon price, while receiving a 6th one at no extra cost. An example of a "dissimilar" item would be a department's purchase of a copier at its normal Carnegie Mellon price, and also receiving a typewriter at no extra cost. The normal Carnegie Mellon price of the typewriter is over $5,000.00. Procedures are as follows:
2. The free item is recorded on the PAS as a gift-in-kind if the item's unit value is $5,000.00 or more. The item is recorded at the net unit cost of the purchased item if similar and known, or at fair market value obtained by Property Accounting from the Purchasing Department.
c. It is the responsibility of Property Accounting to notify Development at the close of each month concerning any gift-in-kind items where a vendor invoice is involved.
27. It is the responsibility of Property Accounting to reconcile its records monthly concerning all gift-in-kind items with Development's report of "Details of Gifts Received for Fiscal Year to Date." At the end of each fiscal year, Property Accounting prepares a report summarizing all gift-in-kind items and provides copies of the summary to Accounting and Development.
a. Property Accounting prepares journal entries monthly for any non-capital gifts in kind as noted below:
Items are charged to one of the following accounts:
1. 5-00000-2401 - Non-capital gifts-in-kind - rare books, manuscripts, non-capital equipment and furniture.
2. 5-00000-2402 - Non-capital gifts-in-kind - art objects and costumes.
Items are credited to the following account:
3. 5-90000-8905 - Those items that were charged to 5-00000-2401 or 5-00000-2402 and exist in a campus building other than Mellon Institute.
4. 5-90001-8905 - Those items that were charged to 5-00000-2401 or 5-00000-2402 and exist in Mellon Institute.
b. Property Accounting prepares journal entries monthly for any fixed asset gifts-in-kind as noted below:
Items are charged to the following accounts:
1. 5-00000-21XX - Utilities and Building-related Assets (the Xs identify the building).
Items are credited to one of the following accounts:
á 5-90000-8901 - Those items which exist in a campus building other than Mellon Institute.
á 5-90001-8901 - Those items which exist in Mellon Institute.
It is the responsibility of the Principal Investigator of the project to (1) initiate the necessary papers for obtaining sponsor-furnished property, and (2) provide information required to establish and maintain university records. These papers and information are sent to the Office of Sponsored Research. It is the responsibility of the Office of Sponsored Research to obtain any prior approval authorizations from the sponsor concerning Carnegie Mellon University-purchased property. It is the responsibility of the Principal Investigator to prepare Exhibit G, Equipment Screening Report, for any Carnegie Mellon University-purchased property for use with government contracts. Government regulations require such screening to determine that "the need cannot be met with property already in the possession of" Carnegie Mellon.
The procedures are as follows:
University-wide pre-purchase screening is required for equipment purchases of $100,000.00 or more per item. Exhibit G is to be used for this screening process. This form is sent to Property Accounting. The completed form, with a list of comparable items, is returned within 3 working days to the requestor for investigation. If equipment identified is similar and available for shared use, a Shared Use Agreement, Exhibit H, may be prepared and completed if desired or required by the lender. Copies of Exhibit H are provided to the borrower, lender, the Office of Sponsored Research and Property Accounting. If the screening process does not identify similar equipment for shared use, the screening request form (Exhibit G) is attached to the purchase order and sent to the Purchasing Department. Property Accounting's list of comparable items, with notes as to the requestor's review, is attached to the ordering department's copy of the purchase order and kept on file there.
The Office of Sponsored Research sends a copy of Exhibit D, Request for New Center or Account Number, (or other written notice) to Property Accounting for each sponsored project that involves any capital equipment acquisitions. The Office of Sponsored Research uses the "Additional Information" space on Exhibit D to state whether title to the equipment is to be vested in the university or the sponsor. Property Accounting maintains these forms in a file by center number. All copies of purchase orders which indicate center numbers for sponsored research (1-4XXXX or 1-5XXXX) are checked against the file for proper authorization, including title information, prior to being put in Property Accounting's open purchase order file. The title information is noted on the copies of the purchase orders for subsequent data entry into the PAS. If government-titled equipment is authorized for transfer to a center other than that for which it was originally acquired, Property Accounting will make the change in its PAS but no entries will be made in the General Ledger. To the extent of any inconsistency between these procedures and the terms of a sponsor grant or contract under which property is provided, the terms of the grant or contract shall govern. Carnegie Mellon is directly responsible and accountable for all sponsor property in its possession, unless otherwise provided by the grant or contract. This includes sponsor property in the possession or control of a subcontractor. Subcontractors are responsible to comply with Carnegie Mellon's Property Accounting policies and procedures where applicable, unless the subcontractors have approved systems of their own.
The Principal Investigator is the custodian of the project property and is directly responsible for its use, maintenance, and protection. Title to project property rests with the sponsor or Carnegie Mellon in accordance with the terms of the grant or contract. It is the responsibility of the Office of Sponsored Research to submit property inventory reports to sponsors as required by the grant or contract.
Property Accounting maintains lists of surplus equipment available from the government. These lists are available for review in the Property Accounting Office, 407 South Craig Street, by all departments of the university. Any surplus equipment obtained from the government, for use other than on a research contract, is entered into the PAS with center 1-50000. Government restrictions may apply to particular items regarding their title, use and disposal.
Purchase orders are the normal basis for acquiring fixed assets as well as movable assets. All purchase orders and changes to purchase orders for fixed assets, submitted each day, are reviewed by Property Accounting for those items charged to account number 89XX as well as capital building account 5-8XXXX-8XXX. This includes all building costs associated with new construction, additions, and renovations to be capitalized. Each item ordered must have the noun description of the item on the purchase order.
Property Accounting gathers copies of purchase orders, invoices and any applicable journal entries to fixed asset accounts. Any exceptions, where necessary, are resolved with the ordering department. The documents are then put into Property Accounting's construction-in-progress fixed assets files. In account 5-8XXXX-8XXX, the first "X" in the 5-8XXXX center number is the fiscal year in which the project is initiated. The other three Xs in the center number indicate the particular project. The Xs in the account number identify the kind of expense. Each 5-8XXXX center number remains in effect for the life of the project in order to accumulate all related costs.
When a capital project is substantially completed so that the area(s) of the buildings involved may be used for the purposes intended, all costs are totaled by account number. Those totals (except for movable assets accounts 8913 and 8916) are used by Property Accounting to prepare the necessary entries to capitalize the costs and enter the data into the fixed PAS. The documents are then put into Property Accounting's closed files.
Standard reports for fixed assets provide (a) original cost and depreciation or use allowance amounts on individual records, summarized by building; (b) a listing of current year capital additions to new and existing buildings; and (c) a listing of current year deletions of buildings.
Property Accounting personnel are responsible for the placement of Carnegie Mellon asset tags on movable assets when they are received. Any movable assets for which title is held by the government (Fund Codes G or E) also receive "Property of U.S. Government" tags. Departments receiving items may notify Property Accounting of the purchase order number by phone to arrange for tagging. In addition, a department, at its request, may enter into an agreement with Property Accounting whereby the department does its own tagging under Property Accounting's supervision in conformity with the university's property management policies and procedures.
If an item to be tagged cannot be located by the ordering department or Property Accounting, a red sticker is put on the purchase order or other source document for Property Accounting's files. The department's inventory list will have a "not tagged" message with each of these unlocated items.
Procedures for affixing tags are noted on Exhibit I, Locations of Tags on Movable Assets. As a general rule, tags are placed on all movable assets. This includes any equipment or furniture with a unit cost of $5,000.00 or more and a useful life of 2 years or more which is being used by Carnegie Mellon personnel and which:
Such equipment is tagged and listed in the Carnegie Mellon University PAS for insurance, security, and control purposes, but not capitalized. Exhibit B, Non-Carnegie Mellon Movable Equipment/Furniture, is used to record these items and report them to Property Accounting and a copy is given to the owner.
Pre-numbered tags are used on most assets. However, unnumbered tags are used with items having a value less than $5,000.00 but considered the same as or similar to another item previously acquired for more than $5,000.00 (for example: terminals, printers, etc.). The purpose of this is to eliminate the need for Property Auditors to spend time with department personnel during physical inventories to determine why the item is not tagged. These items are not capitalized or listed in the PAS; they are charged to account 8905 or 8906.
Maintenance of all government property is the responsibility of the Principal Investigator. Maintenance of all other sponsor and Carnegie Mellon University property is the responsibility of the Departmental Property Officers and their personnel. This includes returning warranty cards as well as regular or periodic maintenance such as lubrication, cleaning or calibration. Maintenance should be performed in accordance with sound industrial practices and the terms of the grant or contract. Appropriate maintenance schedules may be determined by consulting equipment technical manuals. Carnegie Mellon's maintenance program also includes the inspection of buildings by Facilities Management Services personnel at periodic intervals to assure detection of deterioration and the need for repairs.
Records of maintenance actions performed, and any deficiencies discovered as a result of inspections, are to be maintained by the persons responsible for maintenance. Maintenance costs are not capitalized.
The Property Accounting Services and Indirect Cost offices are responsible for accounting for the allocation of space to departments within each Carnegie Mellon University academic, research and administrative building. Every room of these buildings is identified as to the using department, the function within the room, the room use code, the room area and other associated information. Space information is used for cost accounting, indirect cost distribution, property inventories, planning and analysis.
For consistency among the space, movable assets and fixed assets records, Property Accounting assigns and maintains all building and room numbers. (See Exhibit J for building numbers.) Contractors or FMS personnel are responsible for physically placing those room numbers on doors, etc.
Property Accounting conducts periodic space reviews of the academic, research and administrative buildings. Any space changes reported by Department Property Officers are entered into the Space database.
At a minimum, physical inventories are conducted in every department every two years. In preparing to inventory a department, the Property Auditor gathers and reviews:
The inventory covers all rooms assigned to the department. Room numbers and room shape are checked to the floor plan of the building and the room classification list. Also, any exceptions concerning the locations of radiation and/or chemical exposure are reported to the Environmental Health and Safety Manager. Movable asset ownership is checked with the responsible room occupant. All other information on the inventory listing is verified, marking any changes necessary. Any items that are found in a room and that appear to meet the criteria for capitalization, but not listed on the PAS, are recorded on separate data entry forms (Exhibit L, Physical Inventory Form).
When the physical inventory is complete, the Property Auditor works with the department Property Officer to clear the exception lists. One type of exception is an item found but not listed in the inventory. If reasonable efforts fail to produce a purchase order or other original document, the department Property Officer provides a memo to Property Accounting estimating the item's acquisition date, original cost, condition, center and origin. If it is determined that the item is to be capitalized, an inventory tag is put on the item. The item is then entered into the PAS as an inventory adjustment. The following center numbers are used as applicable:
1-5XXXX (applicable contract)
1-4XXXX (applicable contract)
1-41000 (if contract not known)
1-50000 (if contract not known)
If it is determined that the cost is less than $5,000.00 and not to be capitalized, an unnumbered tag is put on the item and the exception list is noted accordingly.
If, however, a purchase order or other original document is located, and it is determined that (a) the item was improperly expensed at the time of acquisition, and (b) an adjustment cannot be made in the Accounting records to capitalize the item, then the item is tagged and entered into the PAS as an inventory adjustment, using the information on the original document.
If an item has a numbered tag on it but is not listed in the inventory, and investigation indicates that the item has been tagged incorrectly (item under $5,000.00 and not to be capitalized; etc.), the numbered tag is removed by the Property Auditor. No adjustment is made in the Accounting records. If there is any possibility that the item could be questioned in subsequent inventories as to whether it should be tagged, an unnumbered tag is put on the item. Unlocated items are coded "U" in the qualifier field on the PAS. Any items unlocated after 2 consecutive physical inventories (using the 1985-1987 cycle as the first) are treated as inventory adjustment disposals. The date of the latest physical inventory is recorded with each asset in the PAS. All physical inventory documents are filed by department in the Property Accounting Department and retained for 2 physical inventory cycles. A report of exceptions (items unlocated, as well as any items not in use) is sent to the department head after review with the department Property Officer. The department head is to submit a written response within 30 days of the Property Accounting report date. After updating the PAS for any changes provided by the department head, Property Accounting then sends a final report to the appropriate dean and senior management.
According to the Internal Revenue Service (IRS), scientific equipment donated to Carnegie Mellon by manufacturers for research, experimentation or research training may not be transferred to other parties by Carnegie Mellon in exchange for money, property, or other services. Other donated equipment may also be restricted as to disposal. In addition, a donee organization who sells, exchanges or otherwise disposes of charitable deduction property within three years after the date of receipt of the property must report the information on IRS Form 8282 (Exhibit V). It is Property Accounting's responsibility to submit this completed form, where required, to the IRS and the donor.
Subject to the terms of the grant or contract, Carnegie Mellon may be liable when shortages of government property are disclosed or when government property is lost, damaged or destroyed, or when there is evidence of unreasonable use or consumption of government property as measured by the allowance provided by the terms of the grant or contract, the bill of materials or other appropriate criteria.
The Office of Sponsored Research reports all cases of loss, damage or destruction of government property in Carnegie Mellon's possession or control to the Government Property Administrator as soon as such facts become known or when requested by the Property Administrator. The report contains all factual data on the circumstances surrounding such loss, damage or destruction. For any Carnegie Mellon subcontractors with government property in their possession or control which is accountable under a grant or contract, Carnegie Mellon requires the subcontractors to report all instances of loss, damage or destruction of such government property to Carnegie Mellon's Principal Investigator who advises the Office of Sponsored Research and Property Accounting.
It is the Office of Sponsored Research's responsibility to submit to the government all final reports and requests for authorization to dispose of government property upon completion of a grant or contract. The Office of Sponsored Research notifies Property Accounting of the final disposition of the property by written memo so that the items may be removed from the PAS.
In order to comply with these and other Carnegie Mellon requirements, departments must notify Property Accounting concerning any property which is idle, no longer usable, damaged beyond repair, or which the department is disposing. For those movable assets being sold to parties outside of Carnegie Mellon, the best possible price is to be obtained. Assets must be sold on an "as-is, where-is" basis.
The forms and procedures for reporting the required information for the 10 types of disposals are given below:
Use this form in preparing reports #1 through 6 listed below. In all cases the department Property Officer enters the applicable information in the top "Department Report" section of the form. Other sections of the form are completed as noted below. The form is sent to Property Accounting, which obtains disposal restrictions and signed approval from the Office of Sponsored Research if a sponsor center number (1-4XXXX or 1-5XXXX) is involved. Disposal restrictions are recorded in the "Remarks" section of the form.
Property Accounting reviews the "asking price" in comparison with the item's age, condition and current book value (original cost less accumulated depreciation).
The form is then returned to the department's Property Officer for the following action:
Department disposes of the asset and retains Exhibit M in its files.
Department completes the "Disposal" section at the bottom of the form. Copies of the form are given to the acquiring party and Property Accounting. The dollar amount received is credited to account number 8916 (equipment), 8913 (furniture) or 8919 (software). (The amount of the sale is recognized in the depreciation calculations, if applicable, for this asset.) If a sponsor center number is shown on the form, Property Accounting sends a copy of the form to the Office of Sponsored Research.
For those assets disposed through a cash sale or trade-in (see Disposal #3 below) the following entries are prepared by Property Accounting:
Department attaches the form to the purchase order being used to acquire the new asset. Department sends both documents to Purchasing to complete the trade-in and new acquisition.
Department uses the same procedure as in #2 above.
Department uses the same procedure as in #2 above.
Department retains Exhibit M in its files.
Exhibit B is used to notify Property Accounting whenever equipment or furniture owned by anyone other than Carnegie Mellon, the government, or other sponsors or agencies, is brought to any room owned or leased by Carnegie Mellon. Whenever the owner removes the item from any Carnegie Mellon location, the department Property Officer notes that fact on his/her file copy of Exhibit B, signs and dates the copy and sends a copy to Property Accounting.
Property acquired on a research grant or contract belongs to Carnegie Mellon, the government, or another sponsor. However, when the Principal Investigator's grant or contract is transferred to another institution, the sponsor provides direction for the property to be transferred.
The Principal Investigator prepares Exhibit N, Equipment Transfer Request, and obtains the department head's written approval for the release of the listed assets. Exhibit N is then sent to the Office of Sponsored Research for approval. The Office of Sponsored Research forwards the form to Property Accounting, which then conducts a physical inventory of all property approved for transfer. Property Accounting removes the Carnegie Mellon asset tags, signs Exhibit N to release the property, gives a copy to the Principal Investigator and to the department's Property Officer, and adjusts the PAS accordingly. Property Accounting also sends a copy of Exhibit N to the Office of Sponsored Research. It is the responsibility of the Principal Investigator to pack and ship the items to their new location.
The department using the asset is responsible to report lost or stolen items immediately to the Campus Police.
Campus Police prepares Exhibit O, Department of Security Incident Report, with the assistance of the Property Officer and the person reporting the missing asset. The details include the item's Carnegie Mellon University asset number, description, model #, manufacturer, serial number, building and room location, and the signature of the Property Officer. A copy of the completed form is sent to Property Accounting. If a sponsor center number is shown in the PAS for the missing item, Property Accounting sends a copy of the form to the Office of Sponsored Research.
If the asset is to be sold to another department, the selling department prepares a journal entry, including the Carnegie Mellon University asset number.
If the asset is being given to another department, the donor department sends a memo to Property Accounting, with a copy to the Property Officer of the receiving department.
Departments having movable assets for disposal or desiring used items may advertise in the 8-1/2 x 11 News or on the Carnegie Mellon market b-boards. In addition, departments may contact Property Accounting concerning "wanted" items that may be available in other departments as recorded in the PAS.
An asset having been disposed has a disposal code and disposal date in the PAS, and depreciation or use allowance is calculated, if appropriate, through the day in which the asset is disposed. The database of actual life history for disposed assets may be used to check the estimated life associated with each class of assets in the PAS.
The government requires that certain records be retained at least 4 years. These include purchase orders, accounts payable records, invoices, journal entries, paid checks, receiving reports, work orders for maintenance and other services, inspection reports, equipment records and some payroll records. Microfilming may be used for this recordkeeping. For further details, refer to the Federal Acquisition Regulation (FAR).
A. At the close of each calendar month Property Accounting prepares a report of all data entered during the month into the PAS. This report is reconciled with the Accounting Department's report of all capitalized entries in the General Ledger.
B. At the close of each fiscal year, depreciation is calculated on all applicable movable and fixed assets by department and building. A report is then prepared of all assets by department and building, showing the annual depreciation values by asset and total by department and building.
o Charge 5-90000-8911 (net investment in plant - building disposal) or
o Charge 5-90000-8915 (net investment in plant-equipment/furniture disposal) for the original cost of the asset and
o Credit 5-00000-22XX (to credit the building for the original cost at the asset's acquisition - XX is the building number - Exhibit J.)
D. At the close of each fiscal year Property Accounting prepares a report of all movable and fixed assets (exclusive of disposals) by building. The difference between the current and previous fiscal year totals by class code and building are used as follows to capitalize the assets:
o Charge 5-00000-2XXX (the Xs identify the type of property and the building - see Exhibits J and P)
o Credit 5-90000-89XX (campus buildings) (the Xs identify the General Ledger account number involved in the asset's acquisition - Exhibit C) or
o 5-90001-89XX (Mellon Institute)
In addition, reports are prepared for all movable assets added during the fiscal year with transaction code "9" (no General Ledger entries involved), by fund code.