General Procedures Manual

(Revised-November 2016)

  1. General

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    1. Purpose

      To establish general procedures for the management and control of capital equipment owned by or in the custody of the Pennsylvania State University (hereinafter referred to as the University); and to satisfy the requirements of the federal government regarding control over University capital equipment

    2. Definition of Capital Equipment

      Capital Equipment is equipment which has an acquisition value of $5,000 or more and a normal life expectancy of one year or greater. Equipment costs include: item itself, freight, installation, upgrades, training and net book of a traded-in asset. Repair or replacement items are not capitalized.

    3. Responsibility

      The responsibility for the management and control of capital equipment has been assigned to the Office of the Corporate Controller, Property Inventory Department (hereinafter referred to as Property Inventory).

  2. Acquisitions

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    1. Introduction

      The University acquires ownership or custody of equipment through several methods; purchases, gifts, leases, fabrication and miscellaneous additions. Each method, and its control procedure, is explained below.

    2. Preaquisition Screening

      The University has policies and procedures for federally-funded capital equipment pre-acquisition screening certification in accordance with regulations. See Federally Funded Capital Equipment Preacquisition Screening Certification and Instructions [1]. See Policy Number CR2055 [2].

    3. Purchase

      1. Notification of University transactions from the Pennsylvania State Property and Supplies or Department of General Services are received directly from Procurement Services.
      2. The Office of Administrative Information Services (AIS) prepares daily and monthly listings based on Object Classification Codes for Capital and Non-Capital Equipment purchases. These listings are transferred to the Electronic Document Distribution System (eDDS) where Property Inventory can view or print through the use of an internal imaging system called INTERVIEWER (aka DocFinity). Certain detailed purchase order information is obtained through Procurement Services e-Buy+ system.
        1. Listings are divided into three separate groups:

          1. General Accounts (10010 Funds)
          2. Special Accounts (Six digit account)
          3. Restricted Funds
        2. A copy of the object code listings for Capital Equipment identifies ownership using the following codes:
          1. UNIV University Owned
          2. GOVT Government Owned
          3. ADVN Advance Fund (To be determined)
          4. COMM Commonwealth Sponsor Owned
          5. INDS Industrial Sponsor Owned
          6. NONE Equipment Not Authorized
          7. UNK Unknown (To be determined)
          8. SPAR SPON Prior Approval Required
          9. COND Conditional Title to PSU
        3. Purchasing Documents:
          1. After the listings for all capital equipment object codes has been reviewed, the administrative support assistants (A.S.A.'s) are given copies of all documents that need to be located, tagged and entered into the Integrated Business Information System (IBIS) Property Inventory System. To complete this process may take up to ninety days except at the beginning of any new fiscal year.
          2. All documents with a unit value of $5,000 or more purchased on non-capital object codes are reviewed to verify that items were not miscoded as non- capital. If miscoded items are found, Property Inventory will journal voucher them into the appropriate capital equipment object code. The A.S.A.'s are given copies of the documents that need to be located, tagged and entered into the IBIS Property Inventory System.
          3. Equipment may be purchased by the Office of Physical Plant (OPP) while building or renovating structures. When this account is billed to the appropriate budget, an OPP Billing Statement is produced. Property Inventory personnel analyze these statements for capital expenditures. Equipment items identified are tagged and entered into IBIS.
    4. Gifts

      The Property Inventory Department is notified of gifts received throughout the University by the Gift Report and Transmittal Form, G1.46 [3].

      The forms are analyzed for capital equipment. If an item meets the criteria, it is tagged and added to the asset records of the University. The gift form for each item added to the asset records is assigned a unique number by Property Inventory. This number is included with the information that is added to the online IBIS system.

      University Policy FN03, “Substantiation, Disclosure and Accountability for the Receipt of Contributions from Non-Governmental Sources,” details the gift processing steps for all areas of the University.

      Since the Tax Reform Act of 1984, regarding the Gift-In-Kind to Universities, the Property Inventory Department has been tracking this type of gift. A copy of the 8283 Form is kept on file with the Gift Form in the Property Inventory Department.

    5. Lease

      Leased equipment is capitalized if it meets one or more of the criteria in Financial Accounting Standards Board, FASB 13.

      1. The lease transfers ownership of the property to the lessee by the end of the lease term…
      2. The lease contains a bargain purchase option…
      3. The lease term is equal to 75 percent or more of the estimated economic life of the leased property…
      4. The present value at the beginning of the lease term of the minimum lease payments… equals or exceeds 90 percent of the excess of the fair value of the leased property…

      Once a lease has been determined to be a lease-purchase, the full value of that equipment is capitalized in the initial year. Purchase requisitions and installment payments for equipment acquired under a lease purchase agreement as defined above should be coded 715, object classification code for lease purchases. Asset will be depreciated over the term of the lease.

      Property Inventory has developed an internal form to record the necessary information for each lease-purchase. A completed copy of each form is forwarded to Financial Reporting who will set up the debt and amortization schedule. See Lease Purchase Worksheet [4].

    6. Fabricated Equipment

      A department wishing to fabricate capital equipment must first request permission from Property Inventory to use object classification code 705 – Fabrication of Equipment. Property Inventory reviews the request verifying that equipment can be purchased on specified budget/fund and assigns a Fabrication Number. Guidelines for Use of 705 are distributed to the custodian, Administrative Area’s financial officer and any other necessary personnel. See Guideline for Fabrication of Capital Equipment [5].

      Equipment fabricated by the Office of Physical Plant (OPP) is reported on the OPP Billing Statements. Property Inventory personnel analyze these statements for capital expenditures.

      As with other acquired equipment, a tag number is assigned to the fabricated item and is physically placed on the equipment, when possible for identification. See Section II.H. The value of the project is added to the asset records.

      The Applied Research Laboratory at Penn State utilizes a Fabricated Equipment Questionnaire/Request Form to assist them in identifying all needed information prior to submitting their request to the central property office for approval. See ARL PSU Fabricated Equipment Questionnaire [6].

    7. Miscellaneous Additions

      Miscellaneous additions allow for inventory adjustments and occur as a result of the following:

      1. Capital equipment reported as non-capital in equipment in a previous fiscal year. The adjustment would be completed on a journal voucher.
      2. Other equipment purchased on incorrect object codes and found in another fiscal year.
      3. Lease-purchase equipment.
      4. Fabricated equipment.
      5. Net book value from an asset being traded for a new item.
    8. Tagging

      Equipment acquisitions are assigned an inventory tag number. This number becomes the control in our Integrated Business Information System data base (IBIS). Where possible, a permanent tag with the assigned number is physically attached to the equipment for identification. Equipment that cannot be tagged, such as artwork, radioactive equipment, etc.; or equipment that has not been seen by Property Inventory personnel; or items temporarily assigned tag numbers; is identified on numerical listings by one of two Condition Codes.

      1. Condition Codes. Condition Codes list.
        • W Number Assigned – Tag not on item.
        • Z Number assigned – Equipment not yet tagged (Temporary).
      2. Currently, there are six types of tags used by Property Inventory. See Equipment Tag Examples [7].
        1. Penn State University Equipment Tag: A white tag with a black bar code and number, used for University owned equipment. The words, “Penn State,” are printed on the tags in black.
        2. Government Furnished Equipment Tag: A red and white tag with a black bar code and number is used for US Government owned equipment. The words, “PENN STATE-GOV’T” are printed on the tag in black within the red area of the tag. In addition to this tag, we have a red and white tag without a black bar code and number. This tag is available to use on accessory items needing identified as Government Owned.

          Prior to 2004, the white Penn State University Equipment Tag with the bar code and a separate red and silver tag with a red Nittany Lion logo and the words, “U.S. Govt. Owned,” were used. These tags remain on some Government Owned equipment.

        3. Sponsor Owned Equipment Tag: A yellow and white tag with a black bar code and number is used for Sponsor owned equipment. The words, “PENN STATE- SPONSOR” are printed on the tag in black within the yellow area of the tag.

          Prior to 2004, the white Penn State University Equipment Tag with the bar code and a separate yellow and silver tag with a yellow Nittany Lion logo and the words, “Sponsor Owned” were used. These tags remain on some Sponsor Owned equipment.

        4. Equipment Not Capitalized Tag: This is a white tag with no logo, or printed number. The words, “PROPERTY OF PENN STATE,” are printed in black on the tag. It can be placed on non-capital equipment upon request of the Administrative Area. It can also be placed on former capitalized items that are currently being cannibalized.
        5. UII Tag: This tag is required for Department of defense awards that have the Department of Defense FAR Supplement (DFARS) clauses 252.211-7003 and 252.211-7007 in which property meeting the criteria exist.

          The red and yellow tags on equipment, because of their color and wording, help alert equipment custodians and other Penn State personnel that they cannot transfer, repair, replace, dispose, etc. of Government or Sponsor Owned equipment in the same manner as University-owned equipment.

          Each tag number is assigned an Administrative Area number that denotes the area of responsibility. See Assigned Administrative Areas [8]. A.S.A.'s tagging responsibilities are assigned by Administrative Area.

          Numbering sequence for the basic tag is eight numerical bytes and one alpha byte. The alpha byte is used to designate items such as:

          1. Cost On – multiple funds purchased item or it was paid over multiple fiscal years
          2. Trade In – a tagged item was traded in and there was net value left on the traded in item
          3. Upgrade – the main item was upgraded
          4. Accessory – items that add value, usually purchased to aid in the usage of the item
        6. Penn State Insurable tag: A blue and white tag with a black bar code and number. This tag is assigned when a Government or Sponsor asset was donated to the University or a gifted asset financial value can't be validated.
  3. Equipment Records

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    1. Computer Database

      Equipment records are kept and maintained by Property Inventory on a computerized database that was developed internally by Administrative Information Service (AIS). Equipment information on the database is available for inquiry to all University personnel with access to the IBIS system.

      The inventory tag number is the control for the database. However, information can be searched by various other elements such as manufacturer name, building number, item description, etc.

      Multiple programs have been developed to generate listings for equipment reports. Ad hoc reports can also be run against the database to generate listings in other formats as needed.

      Currently, a File Transfer Protocol, FTP file, is sent daily to a Sequel Server in the Office of Financial Information Services (FIS). FIS provides the Corporate Controller’s Office with computer programming support. Property Inventory utilizes these files in Microsoft Access to facilitate miscellaneous report requests.

    2. Source Data: Ownership and Location

      Much of the information used to update the database comes from transfer forms. These forms are sent to Property Inventory any time equipment is transferred from one location to another. This is the same form used for equipment disposals and can be done manually and/or electronically via IBIS (preferred method). See Report of Disposition or Permanent Transfer of Tangible Assets [9]. For temporary relocation of tangible assets see [10]Report of Temporary Relocation of Tangible Assets [11]. [10]

      Journal Vouchers (JVs) and Interdepartmental Charges and Credits (IDCCs) are also a source of information. These forms are used to transfer the payment for equipment from one budget to another. As a result, equipment may be transferred to a different administrative area; fund sources, ownership, etc. may also change. The monthly listings described in the Purchasing section include these JVs and IDCCs. They are analyzed to verify the transactions and the Property Inventory System is updated accordingly.

      At the end of each physical inventory, any changes discovered are updated on the database. These changes may involve room numbers, building numbers, custodians, etc.

    3. Custodians

      The person who uses a particular piece of equipment is named the custodian on the database for that item. The custodian is verified/updated during physical inventories or when notified by the Administrative Area. On government contracts/grants the custodian may also be referred to as the Principal Investigator or PI.

      Property Inventory also receives a listing, from the Office of Human Resources, of personnel who have ended their employment with the University. The listing is compared with the equipment database. If items of equipment are assigned to an individual on the list, the administrative area is notified and asked to update Property Inventory as soon as a new equipment custodian is identified. Property Inventory then updates the database.

      Custodians are normally the person responsible for verifying the receipt of the purchase, the safe storage and use of the equipment, as well as making sure the item is being used and maintained properly.

    4. Equipment Condition

      There are two fields on the screen for condition code (Cond. Code). Condition Code 1 and Condition Code 2 are both one byte fields. Both are alphanumeric fields. See Equipment Codes [12]. Most of the categories are self-explanatory.

      Condition Code N4 is assigned to equipment that has been received and not put into use. There may be instances where a project’s start-up may be delayed after the equipment has arrived. Any equipment that has been put into storage is also denoted by a 4 in the second condition code. Additionally the item will have the start depreciation indicator set to "N" for No. This marking will not allow depreciation to calculate until the item is put in service and is being utilized.

      When the listing is made for Facilities and Administrative cost calculations, any item with condition code 4 as the second condition code is not included. Therefore, a list is sent yearly to the Administrative Area notifying them that items remain a condition code 4. The Administrative Area has the responsibility to notify Property Inventory when the equipment is in use or taken out of storage.

    5. Equipment At University Locations Off-Campus

      1. The physical tagging of equipment located at the Commonwealth Campuses, Colleges, and Other Sites is the responsibility of personnel at the Off-Campus Location. Property Inventory assists the personnel at the off-campus locations with the procedures associated with tagging equipment and inventorying.
      2. After receiving and reviewing the monthly lists described in the Purchasing Section (II.C.2.a,b,c), Property Inventory personnel review the documentation and assign a virtual tag number to each equipment item. The items are then put into IBIS with the appropriate coding.
      3. Property Inventory then prepares a Tagging Information Form. The form and voucher are copied. The originals are sent to the proper contact person at the off-campus location. The campus contact completes the information required and physically tags the piece of equipment and returns the completed Tagging Information Form to Property Inventory. See Tagging Information Form [13].
      4. The copy of the Tagging Information Form and the purchasing document are placed in a pending folder. If the forms are not received on a timely basis, the campus contact is telephoned or emailed to verify receipt of the forms and to see if the item has been tagged and the Tagging Information Form was returned to Property Inventory. Once returned from the campus, the forms are then placed in the fiscal year completed folder.
      5. When Property Inventory receives completed Tagging Information Forms, the fictitious numbers are removed from the database and replaced with the real tag number. Any additional information indicated on the Tagging Information Form is also updated at this time.
      6. If equipment is received at an off-campus location for which there is no voucher or information form, the responsible equipment personnel at the off-campus location will use a copy of the Tagging Information Form to report the item to Property Inventory.
    6. Equipment At Non-University Locations

      The University has developed a policy, FN14 [14] , concerning the usage of University equipment at Non-University locations titled, “Request for Authorization to Use University Tangible Assets at a Non-University Location [15]”.

      When Property Inventory receives a completed form, a unique number is assigned to each form. This number is preceded by the letters OC (Off Campus) and both the OC and the number are placed in the Department Cross Reference field in IBIS on the appropriate tag number.

      Prior to any physical inventory, Property Inventory personnel review the inventory list for any off campus forms. They then verify with the custodian that the item remains at the off campus location.

      A listing of these forms are provided to the Administrative Area’s Budget Executive and Financial Officer at the end of each physical inventory with a listing of all the equipment assigned to this area for their review.

    7. Disposals

      TYPE I – Disposals reported to Property Inventory by departments on the “Report of Disposition or Permanent Transfer of Tangible Assets" form or Government forms DD250, DD1149 or other may be supplemented in lieu of DISP form.

      TYPE II – Equipment items that are not located by A.S.A.'s or the department personnel during physical inventories. After a thorough review, the decision to write off the items is made by the person in charge of the Administrative Area, Property Inventory, or their designate.

      TYPE III – Prior year corrections.

      TYPE IV - Insurable Only Items - Used only for items having a "Y" entered in their Insurable Only field. This indicates the item is no longer active, as an Insurable Only item, and therefore, should not be included in the Insurable Only reports. There is no change to the Insurable Only field. It should continue to be set to "Y".

  4. Physical Inventories

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    1. Purpose

      Physical inventories are taken by Property Inventory personnel to verify all pertinent equipment information such as location, serial and model numbers, custodians, etc. Inventories are also taken to verify the existence and use of equipment that is on the IBIS equipment database. Due to the nature of movable assets, a physical check is needed to keep track of equipment and to verify that procedures are being followed. Property Inventory may also inventory the equipment in new buildings when they are occupied. A physical inventory may also be required of equipment items at new facilities that are acquired through gifts or purchases.

    2. Frequency

      A physical inventory is taken every two years of capital equipment located in Colleges, General Administration and other areas applicable to sponsored programs.

      The Applied Research Laboratory at Penn State conducts annual Government physical inventories and utilization audits.

    3. Method

      1. Approximately two times a year at University Park campus a pre-inventory meeting is scheduled. Equipment custodians, Financial Officers and Facility Coordinators are invited to attend. They are encouraged to alert their faculty and staff that Property Inventory will be conducting a physical inventory and ask them to help locate the various equipment items and work with the Property Inventory staff.
      2. One week prior to the inventory start date, a listing is generated by tag number within building and room for each building to be inventoried. A pre-inventory meeting for Property Inventory personnel is held to discuss any problem areas, construction/renovations being conducted, review the list and make appointments where necessary.
      3. A.S.A.'s visit the area to be inventoried, scanning all tagged items, moving floor- by-floor, room-by-room until the entire building is completed. Equipment with a value of $5,000 or more, found without a tag is noted on PSU Inventory Information Sheet. Property Inventory personnel will research this item to determine why it has not been tagged, how it was acquired, documentation, cost and other pertinent information. If the item has a value of $5,000 or more, the item is then tagged and added to the database. The PSU Inventory Information Sheet [16] is also used to record any unusual circumstances, for example, locked doors, storage cabinets unlocked in public areas, inability to enter a lab due to an ongoing experiment, etc.
      4. A.S.A.'s will download the information from the barcode readers to an Excel template. The information will be reviewed for accuracy and any necessary changes made. The information is saved in a pre-established format.
      5. The Supervisor or Assistant Supervisor of Property Inventory will review the saved data for consistency, errors, etc., making any necessary changes. The saved data will then be downloaded to an Access database template. After running a query to establish that the tag exists in the IBIS database and that no duplicate tags exist, the data are then uploaded to a file that will update the IBIS system. This uploading process can occur only once a day. The upload will update changes to the building, room, user ID and last inventoried date fields in the IBIS system. This established procedure creates a report in eDDS that lists the tag numbers with the old and new data fields.
    4. Unlocated Equipment List

      Items on the inventory listing that are not located during the physical inventory are printed on an unlocated equipment report. This report is sent to the Facility Coordinator or Financial Officer of the Administrative Area. The Administrative Area personnel conduct their own search for the unlocated equipment.

      1. If items are located, the Administrative Area will update the location and other information about the item on the report by using the boxes provided on the listing.

        After the department has responded with their verification and location updates, Property Inventory staff, administrative support assistant (A.S.A.), will then attempt to physically validate their findings. PI staff will review and determine if a meeting/escort is needed to validate the item(s) existence/location. Only two attempts will be made to validate. Normally only one A.S.A. is needed to accomplish this process and has 45 working days to complete. After the A.S.A. validates, their initials and date are to be placed next to the tag number on the missing report. Items not easily accessible (off campus locations at University Park, Commonwealth Campuses, Research Centers) due to the lack of transportation, the departments noted findings will be accepted and recorded. If Property Inventory staff can’t validate locations, based on correspondence with the department, the item(s) will be marked as unlocated in IBIS. A “U” will be placed in the unlocated field.

      2. If the Administrative Area is also unable to locate the missing items, the Dean, Administrative Officer or designee determine whether the items were disposed of and will authorize Property Inventory to write off the items from the University’s financial records.
      3. Items deemed un-located by the department or items for which no information is returned to Property inventory are marked as un-located in the equipment database.
    5. Final Listing

      After the completion of the physical inventory when all the equipment paperwork has been finalized, including the updating of the returned Unlocated Equipment List, an updated list is generated. This listing is then emailed to Administrative Officer or Dean, the Financial Officer and other appropriate Administrative personnel. Included with the updated listing is a detailed report of items written off by the Administrative Area and a listing of items that are located at non-University locations.

  5. Reports

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    1. Financial

      The fiscal year for the University ends on June 30.

      After all equipment acquisitions and dispositions via all methods have been entered on the IBIS database, various computer listings are generated.

      Information from the listings is used to compile equipment financial reports. These reports are provided to the Financial Reporting Office that prepares the Audited Financial Statements of the Pennsylvania State University.

      During the year-end closing, two procedures known as Invent 16 and Invent 17 are run. Invent 16 deletes type 3 disposals from the database because they are corrections from a previous year(s). Invent 17 locks all values for equipment by tag number within specified dates on the database. Both Invent 16 and Invent 17 create an archival file.

    2. Insurance

      From the financial reports, figures are obtained for the value of equipment in each University building. The values are used by the Risk Management Office. They prepare the reports for replacement cost.

    3. Department Listings

      Many departments request listings of the equipment assigned to them. Our current computer system, FTP File and Access Data base allows such listings to be generated. Property Inventory can provide many requested listings to the departments electronically. Departments may view the seventeen browse screens which are available to be browsed by personnel in any University Department who have access to the on-line IBIS system. Browse Screens [17].