Fixed Assets

To provide procedures that will insure conformity in the gathering of information and the eventual discernment of that information on a District-wide basis while efficiently employing the resources and time of the District’s employees.

The District shall maintain financial records on the Fixed Assets in accordance with generally accepted accounting principles and federal regulations.

These procedures will allow the Board to be in compliance with the objectives as stated in the Lone Star College System Policy Manual, Sections CDB & CP (Local) & CAL (Legal).

The scope of this section is to outline specific procedures necessary to maintain appropriate stewardship pertaining to the Fixed Assets of the District. These procedures will identify and outline the specific functions to be performed, the regularity that those functions must be performed and the designated responsible individuals involved from both the College and District Business Offices.

The Vice Chancellor for District Services or designee shall serve as the Fixed Asset coordinator of the District. Accordingly, he or she shall be responsible for reallocating or disposing of surplus equipment.

Detail Fixed Asset records are maintained by an accountant in the District Accounting Department. This person is responsible for full coordination of the Fixed Assets system and for working with the Coordinator, Internal Audit and responsible persons at all locations.

The Coordinator, Internal Audit is responsible for supervising the annual physical inventory.

Every location has a Physical Plant Manager who has the responsibility of overseeing the physical placement and movement of Fixed Assets at their location.

Assisting the Physical Plant Manager is the Receiving Clerk who has the responsibility of recording the receipt of all Assets (in accord with the Purchase Requisition system), tagging them appropriately with the District’s asset numbering system and recording their ultimate physical placement.

It is the stated fixed asset policy of the District (Section CDB) to:

• Comply with generally accepted accounting principles.

• Comply federal regulations pertaining to grants.

• Maintain appropriate stewardship of fixed assets.

• Maintain preventive maintenance records and warranty information.

• Furnish records for risk management.

• Plan for asset replacement or enhancement.

• Identify assets that can be shared or utilized by other departments.

Each Fixed Asset Unit must possess all of the following characteristics:

1. It retains its original shape and appearance with use.

2. It is non-expandable. If the article is damaged or some of its parts are lost or worn out, it is usually more feasible to repair it rather than to replace it with an entirely new unit.

3. Each individual unit represents an investment of $1000 or more.

4. The repair of a capital item is not classified as a fixed asset unless the repair is in excess of $1000 and substantially extends the life of the asset.

5. It does not lose its identity through incorporation into a different or more complex unit or substance.

6. It must be usable for more than one year.

It shall be the policy of the District to comply with generally accepted accounting principles as promulgated by the Governmental Accounting Standards Board. It is not the procedure of the District to recognize depreciation on fixed assets.

The master inventory records are kept at the District Office by a designated accountant. However, the Physical Plant Manager at each location must have records to aid in the monitoring of such assets. Information concerning all additions, deletions and changes must flow through the District office in order to insure the accuracy of the Fixed Assets register.

Fixed Assets are segregated in the "8000" series General Ledger Object Codes, as outlined in the table below:

1. All Fixed Assets shall be marked with a pre-numbered adhesive "Bar Code" (see an example in the Forms at the end of this section). These Bar Codes can be ordered from the Accountant, Fixed Assets at the District office. Additionally, all equipment purchased with grant funds must receive a special Grant Equip "red tag" (see an example in the Forms at the end of this section).

2. Location of Bar Codes and Tags

1. Tags shall be uniformly placed on similar types of property, in a visible location, but in a manner that will not mar the appearance of the property.

2. Marks shall be placed on a metal surface whenever possible.

3. The following locations are recommended for placing identifying tags on common items of property:

   1. Desks - On the left inside of the pedestal or leg, in a manner that will permit the identification tag to be seen from the office chair.

   2. Tables - On the leg or side rail.

   3. Chairs - Back of the seat support.

   4. Files, Lockers, Shelving - In the top front corner.

   5. Office Machines - By the manufacturer’s label or the electrical connection.

   6. Upholstered and Decorative Furniture - At any convenient position where the tag or mark will not detract from the appearance of the item.

1. All Equipment must be purchased from the budget currently approved for that location for the fiscal year.

2. Requisitions for equipment must be made through the Purchasing Department by means of a Purchase Order (see an example in the Forms at the end of this section). These requests will follow the Purchasing Guidelines as set forth in the Purchasing section of this manual.
   Please Note: Items with "Unit Costs" less than $1000 are NOT Fixed Assets and will be charged back to the originating location in another expense account.

3. The Purchase Order is kept at the receiving location by the Receiving Clerk.

4. When the item(s) is received, the Receiving Clerk stamps the goldenrod copy of the Purchase Order with a Fixed Asset stamp (see an example in the Forms at the end of this section).

5. The Receiving Clerk will affix the "Bar Code" (see an example in the Forms at the end of this section) to the item immediately upon receipt and record the Bar Code number, Building/Room where item will be located and any other pertinent data (serial #’s, etc.) on the Fixed Asset stamp.

6. This goldenrod copy is then forwarded to the Accountant, Fixed Assets at the District office for entry into the Fixed Assets system (see an example in the Forms at the end of this section).

An internally designated reserve fund in the Current Funds Group is set aside for the repair or replacement of major capital items and will continue to accumulate additional funds annually from non-mandatory transfers and interest income at an annual rate equal to one percent (1%) of one-third of the total asset valuation, excluding inventory and sites. The Board of Trustees shall approve all projects proposed for the Building, Grounds and Equipment: Maintenance and Replacement Fund.

1. Equipment is purchased according to the procedures outlined in "Current Budgeted Equipment", above in item 10.4.1.1, 2-6, except that all equipment purchased under a Grant must be approved by the Director of Resource Development, in advance.

2. In addition to the Bar Code, a Grant Equip "red tag" (see an example in the Forms at the end of this section) must be affixed to the equipment, adjacent to the Bar Code, at the time of receipt.

3. Prior approval by the Director of Resource Development is required for sales or usage of grant equipment for any purpose other than its original purpose. Many grants restrict the sale and/or specify the usage of equipment purchased with grant funds.

1. The movement of fixed assets from one location to another within the District must be recorded by means of a Move Order Form (see an example in the Forms at the end of this section). This form must be signed by the head of the department releasing the property and the head of the department receiving the property. Additionally, a copy must be sent to the College Business Office which will make a note of the transfer in their "physical plant" records and forward the form to the Accountant, Fixed Assets for the official transfer.

2. Items transferred from one department to another will be transferred at the original cost at the date of purchase.

3. Please Note: If a Grants Equip "red tag" is affixed to the item, the Director of Research Development must be contacted before the item is moved. Some Grants restrict the usage of the equipment purchased under the grant for specific purposes.

1. Excess equipment can generally be classified into three categories:

   1. Serviceable equipment that is excess to the needs of the department as the result of technological changes or modifications in curriculum concept or instructional procedures.

   2. Worn out or broken equipment which would cost more to repair than can be justified.

   3. Worn out or broken equipment which can be economically repaired.

2. When a serviceable major equipment item becomes unnecessary to the needs of a department, a Report of Excess Property Form (see an example in the Forms at the end of this section) should be prepared and submitted to the College Business Office. This form should identify the kind, bar code number, location, and condition of the property.

3. The College Business Office forwards a copy of the Report of Excess Property Form to the Accountant, Fixed Assets. At annual intervals, or as determined by the Manager, General Accounting, a list shall be circulated to all locations. The College Business Office shall coordinate the transfer of property according to the movement procedure outlined above whenever practicable, or offer for sale or trade-in on the equipment.

4. Please Note: If a Grants Equip "red tag" is affixed to the item, the Director of Research Development must be contacted before the item is sold. Some Grants restrict the usage of the equipment purchased under the grant for specific purposes or require that funds generated from the sale of such equipment be allocated for specific purposes.

5. If it is determined that no other location has a use for the property or equipment, the property or equipment will be scheduled for auction after seeking Accountant, Fixed Assets approval.

6. This auction will be coordinated by the Purchasing Department and notice of this auction should be made known to all of the other locations at least one month prior to the actual auction date. Any College or Department interested in acquiring the property must respond within this time period.

7. If the value of any property, equipment, or lot of property to be sold is estimated to be over $5,000, the sale shall be advertised at least one time in at least one newspaper in the general vicinity where the property is located by the Purchasing Department or the Agent selected to sell the property.

8. Proceeds from the sale of the property will be turned over to the Accountant Fixed Assets, who will insure proper receipting. The fee assessed by the agent for this service will be paid from these proceeds.

9. Unserviceable property, which has little or no value, must be listed on a Scrap and Salvage Form (see an example in the Forms at the end of this section) and forwarded to the Accountant, Fixed Assets for removal from the Physical Assets Inventory system. This property may then be sold for scrap or disassembled for parts.

1. It is the responsibility of each employee to exert the utmost care and attention to safeguarding the property of the District.

2. If an employee suspects that a theft has occurred, the loss should immediately be brought to the attention of the employee’s supervisor, who should then notify Security.

3. Security will conduct an investigation on any reported loss of major equipment and will report findings and recommendations to the College President.

4. The College President will determine the disposition of each case.

5. Security will investigate all losses and make reports to the appropriate authorities. All stolen property must be reported to the local police. Theft of any items procured with federal funds must be reported to local enforcement agencies and to the FBI.

6. The College Vice President for Administrative Services must be contacted for removal of the item from the Physical Plant List, who, in turn, will notify the Accountant for fixed assets to make the removal on the General Ledger system. The Scrap and Salvage Form (see an example in the Forms at the end of this section) may be used for this notification.

1. The annual physical inventory will be supervised by the Vice President for Administrative Services and verified by the Coordinator, Internal Audit. They will be assisted in this effort by the Physical Plant Manager at each location and the Accountant, Fixed Assets.

2. The Accountant, Fixed Assets will provide a detail inventory listing (see an example in the Forms at the end of this section) of all property on hand to the Physical Plant Managers. This list will show:
   
   1. Asset Description
      
   2. Bar Code #
      
   3. Room Number
      
   4. Serial Number, where available
      
   5. Purchase Order #
      
   6. Building

3. The data contained in the detail inventory listing shall be verified by a campus-wide physical count of property at a time designated by the Coordinator, Internal Audit.

4. All items in an area, room, shop, or lab are to be identified and noted on the physical list.

5. Non-barcoded items should be added to the list with all pertinent data (description, location, manufacturer, serial #, etc.) to enable the Accountant, Fixed Assets to research and determine if the original value is at least $1000.

6. The annual inventory will necessitate the opening of desks, filing cabinets, etc., so that each item valued at over $1000 can be identified and listed on the print-out.

7. No items should be removed from the area until a total inventory is complete.

8. If more than one decal number is listed on a piece of equipment, all decal numbers should be listed on the print-out.

9. Items listed on the print-out that should be omitted shall be lined out with explanation indicating the reason for elimination, including:
   
   1. Lost or stolen
      
   2. Worn out or disassembled
      
   3. Item moved to another location (indicate new location)
      

   Please Note: Any items above that were not previously accounted for and are now being reported as missing will be included in a report to the College President and the Accountant, Fixed Assets.

10. Equipment should not be deleted from the print-out until it can be determined that the equipment cannot be located in any other location. Room numbers on the print-out should be changed to reflect all new locations.

1. Bar Code Example

2. Grant Equipment Tag Example

3. Purchase Order

4. Fixed Asset Stamp

5. Fixed Assets Detail Physical Inventory List

6. Move Order Form

7. Report of Excess Property

8. Scrap and Salvage Form

9. List of Property To Be Auctioned