Biennial Physical Inventory Program

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Nov 18, 2013 (3 years and 9 months ago)

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Biennial Physical
Inventory Program


Capitalized Asset

M
anagement

May 2, 2012

Controller’s Office

On
-
Line Training


Controller’s Office

Physical Inventory
-

Purpose

The maintenance and tracking of UC
-
owned capitalized assets
is the concern of every UCSF employee. Capitalized assets
are tangible property that are not permanently attached to the
building, have a one year or greater useful life expectancy, and
a unit cost of $5,000 or greater (including sales tax, delivery,
and start up accessories and supplies).

Such assets, even if of no further utility to the department or
deemed obsolete,
still hold value
. It can be transferred to
another department which can defer the purchase of similar
equipment, sold to the public or recycled for cash.

The Physical Inventory Program allows for a structured and
phased approach in measuring UCSF’s performance in the
safeguarding of capitalized assets. It tests the strength of
current procedures and processes. Further scrutiny of the
efficacy of methods currently utilized for asset management
and control comes by way of internal and independent audits.

INTRODUCTION

Controller’s Office

Physical Inventory


Purpose (Cont.)

The UCSF Physical Inventory Program calls for a campus
-
wide physical inventory every two years. Under the direction
of Capitalized Asset Management (CAM), department asset
custodians are notified of the due dates when the physical
inventory must be submitted.

Using a list provided by CAM, the department or program’s
asset custodian embarks on a search of the listed items and
any other equipment item that may meet the criteria of
capitalized equipment. When in doubt, the custodian can
contact CAM to make a determination. The basic steps
include:


INTRODUCTION


Locating capitalized assets and reporting to CAM the current
status and any information that needs to be added or updated,


Removing from the active inventory capitalized assets that
cannot be found after a reasonable amount of effort, and


Adding to the inventory found capitalized assets that were
previously reported lost, scrapped or discarded.

Controller’s Office

What is At Stake?



Federal funding

requires system
-
wide compliance with
asset management policies and procedures


Certification

as a Federally compliant research facility is
contingent on adherence to established guidelines


UC Office of the President financial reporting

requires
up
-
to
-
date inventory information


Campus Facility and Administration (F&A)

rate is
affected and


Insurance payments

in case of loss, theft, or disaster
hinges on substantiation of location recorded in the system.


INTRODUCTION

Controller’s Office

Stakeholders

INTRODUCTION


The Regents, University of California
, title holder for all
UC assets


Department Heads and Principal Investigators,
assigned
responsibility under UCOP BUS
-
29 for the care,
maintenance, recordkeeping, physical inventory, control
and disposition of inventorial equipment


Capitalized Asset Management

(CAM), charged with
overseeing the asset management and control process at
UCSF



Department Capitalized Asset Custodians,

appointed by
the department and authorized by CAM to care for the day
-
to
-
day asset management and control functions.


Sponsors
(funding agencies), responsible for monitoring
compliance with Federal regulations governing use and
care of capitalized assets.

Who are the stakeholders? Essentially, all of us. However, the
principals who have the strongest vested interest in the successful
implementation and execution of the Physical Inventory Program
are:


Controller’s Office

Asset Management Primer:

What is a Capitalized Asset?


Single unit


Freestanding


Non
-
expendable (depreciation greater than 1 year)


Cost equal to or greater than $5,000.00, including taxes,
freight, installation and start up accessories and supplies.

CAM assigns a
property number

for an item that constitutes a
capitalized asset (see side bar). CAM enters in the PeopleSoft
database a brief generic description, make, model, and class type
selected from the UCOP equipment useful life index (
EUCLID
).
CAM assigns asset to the custody code provided on the purchase
order (P.O.) or obtained from department custodian if not stated on
a P.O.

CAM emails announcement of the newly
-
recorded asset to the
department custodian providing general details including the
property number.

CAM subsequently mails the property number decal and
questionnaire requesting serial number, and building and room
location.

The new asset is not recognized (i.e. capitalized) as an
addition to the active inventory until an invoice has been received
and a voucher ID issued.

Property Number


a 9
-
digit UCSF
property identification
number (not unlike a
Social Security
Number).

The
1st two

digits
represent the last 2
digits of the year of
acquisition; the
2nd
two

represent the
campus code in
reverse (20 = San
Francisco), and the
last five

digits
uniquely identify the
asset by order in
which the numbers
are assigned. The
property tag issued
by CAM includes
UCSF organizational
entity, barcode and
the property number.

Capitalized assets are tangible objects that meets the following criteria:

DEFINITION

Controller’s Office

Capitalized Asset Management (CAM)

CAM is a
part of UCSF Controller’s Office
-

Capital
Accounting section. It is responsible for
:


Organizing and implementing the campus
-
wide biannual
physical inventory,


Monitoring campus
-
wide adherence to University policies
and guidelines,


Maintaining inventory controls and accountability systems,


Maintaining a database of asset information in the
PeopleSoft Enterprise Online Financial System,


Capitalizing assets purchased, leased, donated or
transferred to UCSF,


Reviewing and approving asset transfers to other UCSF
departments, UC campuses or non
-
UC entities,


Reviewing and approving the disposal of excess property
in accordance with applicable policy and regulations and


Providing consolidated reporting to UCOP and other
funding agencies.



DEFINTIONS

Controller’s Office


Conducts the biennial physical inventory.


Acts as the primary contact between Capitalized
Asset Management (CAM) and the
department/unit.


Serves as subject matter expert (SME) within
the department to address capitalized asset
matters.


Monitors department compliance to insure that
University policies and procedures and Federal
and State laws and regulations are met.


Reviews asset data via the WebLinks Financials
online reporting tool to insure inventory
information are accurate, current and reflects
inventory as used in the department.


Authorizes various types of asset transactions
including intercampus transfers and disposals in
behalf of the organizational unit represented.

DEFINITIONS

Custody Code


a 4
-
digit
code issued by CAM at the
request of the department.
The custody code is tied to
a department code as it
reflects the campus’
organizational structure.
Each custody code requires
a custodian who is
responsible for tracking the
assets. In order to assure
that assets are assigned to
the correct custody code,
the custody code should be
listed on all purchasing
documents, including
requisitions, purchase
orders, and check requests.
To request a new custody
code, the department
submits a CMF.

Department Capitalized Asset Custodian

The Capitalized Asset Custodian is the person within an
organizational unit that is designated to fulfill the following
responsibilities for inventorial assets assigned to his/her custody
code(s):

NOTE: A department requests appointment of an asset custodian by submitting
a Custodian Maintenance Form (CMF).

Controller’s Office

DEFINITIONS

The asset custodian prepares an
EIMR

and submits to CAM requesting change to
equipment status including:


Surplus Disposal


Transfer to another UCSF department or campus


In
-
Place Sale


Destroyed/Cannibalized


Donation to Outside Non
-
Profit


Not Found

Custodian can approve the form in any of the following manners:


Sign the form in the space provided and either fax, scan
-
and
-
email, or mail to CAM;


Stamp a digital signature and email with the form’s email function (click green
button on bottom left); or


Have custodian’s supervisor sign off when custodian is not available.

For after
-
the
-
fact transactions, furnish supporting documentation such as a pickup slip, bill
of lading, receipt or, for trade
-
ins, purchase order or acknowledgement of acceptance
(emailed from vendor or printed on vendor stationary letterhead).

Equipment Inventory Modification Request
Form (EIMR)

Controller’s Office

Asset Disposal

An
EIMR

must be submitted whenever equipment is to be removed from
a department’s active inventory.

In all cases, if the asset was purchased on an
active

Federal grant, the
granting agency needs to be informed and acknowledgment provided in
the form of an email or letter on official stationary.


Assets may be retired or transferred from department inventory under the
following circumstances:


Surplus Removal.

Picked up by CLS Distribution & Storage
(Distribution) at the request of the department. To initiate Distribution
pick up, custodian places the request
online

and prepares an EIMR
form itemizing surplus assets and sends to CAM for processing.
When an item is physically removed and signed for by Distribution,
asset will be transferred to Distribution’s custody code 0141.


Lost.

Provide brief explanation of efforts made to locate in the EIMR
Remarks

Section.


Stolen.

EIMRs reporting stolen equipment MUST include a police
report case number. A copy of the police report itself is not required.


Transferred
to another UCSF department or to another UC Campus.
The custodian (and equipment manager if to another campus) needs
to authorize acceptance.


DEFINTIONS

Controller’s Office

Asset Disposal (Continued)


Destroyed or cannibalized

for parts. Provide explanation of circumstances
in the EIMR
Remarks

Section.


Donated

to a non
-
profit or educational institution. The following steps need
to be taken:


Requesting agency
submits request on official letterhead for specific asset(s);


Department

provides memorandum signed by department head and dean justifying
donation as cost effective vs. other means of disposal;


Department custodian
submits signed EIMR with supporting documents to CAM;


CAM

reviews, approves and submits request to Distribution for review; and


Distribution

gives approval where appropriate.


In
-
Place Sale.

The following steps are observed:


Custodian submits to CAM an

EIMR

noting bidders and asking prices in
Section III
.


CAM reviews, approves and forwards a copy of the EIMR to Distribution’s manager
who will collaborate with the department to insure the best return for value and that
best business practices are adhered to.


Buyer tenders payment to Distribution.


Distribution issues sales voucher and buyer, with voucher in hand, takes possession
of asset.


Distribution retains the first $300.00 to defray expenses and may deduct for other
direct expenses relating to the transaction.


Distribution credits the net proceed to the fund/DPA provided by the originating
department.

DEFINTIONS

Controller’s Office

Physical Inventory Process


Custodian can find out when their physical inventory is
due by going to the Controller’s Office website at:
http://controller.ucsf.edu

and looking in Capital
Equipment & Accounting,
Procedures and Job Aids

tab.


Just 45 working days prior to the due date, CAM will send
an email notification to the custodian and cc’d to the
department head.

PROCESSES

Controller’s Office

Physical Inventory Process (Continued)


Custodian can find out when their physical inventory is
due by going to the Controller’s Office Capital Equipment
& Accounting web page,
Procedures and Job Aids

tab.


Just 45 working days prior to the due date, CAM will send
an email to the custodian and cc’d to the department
head.

PROCESSES


Custodians and department heads should review the
email and attachments immediately and report
inaccuracies and/or discrepancies.


If the incumbent custodian has left or is no longer
assigned to that role, a
Custodian Maintenance Form

should be immediately submitted.

Controller’s Office

Physical Inventory Process (Continued)

The notification email will include the
following attachments:


List of Assets


List is arranged first by building
code/room number, then by property tag
number and furnished in both PDF and
Excel file formats.


Instruction Sheet


Link to online tools



Tools include schedules, forms, building
code lists, comprehensive information
and instructions and other resources
helpful toward a successful completion.

PROCESSES

Building Code


an up
-
to 8
-
digit alpha/numeric
code. The first four digits
represent the building.
The remaining digits
represents the room
number [
Example:

3008341A = HSE Room
341A]. Off
-
site locations
are assigned 2800000 (in
the United States) or
2900000 (abroad). For
non
-
UC locations, the
asset custodian should
provide detailed address
information including
building name and/or
number, room number,
institution, street address,
city/state and country.
Building code lists are
available at the
Controller’s Office
website. Look in Capital
Equipment & Accounting /
Procedures & Job Aids.

Controller’s Office

1.
Physically verify that the following attributes on record matches what is
shown on the equipment and report discrepancies:

a)
Property Tag Number
-

Property tag number is the number on the barcode
sticker. Property tag number may not be changed.

b)
Serial
-

If a serial number is included on the list, the custodian should
compare it to the actual serial number. If the serial number is inaccurate or
missing from the list, the custodian should note what it should be.

c)
Location
-

The location should include both the 4
-
digit building
c
ode and
the room number to assure compliance with Federal regulations (e.g.,
"2415425" for MCB Room 425).

d)
Description
-

The description should match the item. If it does not, the
change should be noted as a correction.

2.
Make sure that tags are barcoded and affixed on the equipment where they
can be clearly visible. Request new tags from Capitalized Asset
Management (CAM) if needed.

3.
Report to CAM on an EIMR equipment that has been transferred to UCSF
from another institution or came to UCSF by some other means, but did
not get added to inventory.


Provide all available information to CAM including manufacturer's name,
manufacturer's model number, serial number, description, cost, DPA and
Fund, custody code and location.

Physical Inventory Process (Continued)

PROCESSES

Controller’s Office

Physical Inventory Process (Continued)

4.
Submit an EIMR

form to report equipment that cannot be found or to be
transferred to another custody code.

5.
Identify equipment that cannot be tagged (e.g., autoclavable items) and
provide records to verify the physical inventory was conducted. This
can be a binder with tag and information and/or digital photographs.


PROCESSES

Controller’s Office

Physical Inventory Process (Continued)


CAM enters the changes to PeopleSoft and emails to the
custodian the Final Capitalized Assets Report.


Custodian reviews the information. If accurate, the
custodian will sign and date the accompanying report
certification.


Custodian forwards the certification and report to the
department head for review and sign off. The original
completed copies are first faxed to CAM (or scanned and
emailed) and then sent through campus mail.


Controller’s Office

Physical Inventory
-

Audit


All submittals for a particular month are subject to a random sampling audit
within 60 calendar days of month of submittal.


CAM randomly selects 10% of the asset population sent in during the targeted
month.


CAM emails custodian with a list of assets to be verified through field audit.


A CAM team member and the department asset custodian, by appointment, travels
to the location specified in the physical inventory findings to confirm accuracy of
reported data.


An error rate of 10% or less of sample population constitutes a successfully
-
completed physical inventory.


An error rate of greater than 10% requires a second random sampling audit.


If the second audit is unsuccessful, all custodial departments submitting physical
inventories for the target month will need to re
-
take their physical inventories.

PROCESSES

Controller’s Office

Physical Inventory


Summary

The departmental physical inventory is considered
complete when:


Custodian returns listing with corrections;


CAM enters corrections and sends the updated
inventory report to custodian;


Custodian and department head signs off that the
inventory report is accurate and complete;


Statistical sampling audit (inside of 60 days)
produces 10% or fewer errors.


PROCESSES

Controller’s Office

Physical Inventory


Process Flow Chart


PROCESSES

Controller’s Office






X. PHYSICAL INVENTORIES


A. BIENNIAL INVENTORY


1. Responsibilities of the Custodial Department


a. At least every two years, the custodial department must make a physical
inventory of all University Inventorial Equipment, Government Inventorial
Equipment, Other Government Property, and Other Inventorial Items.



2. Responsibilities of the Equipment Management Department


a. The Equipment Management Department shall make reasonable efforts
to ensure that departments comply with the physical inventory requirements
above. When such efforts are unsuccessful, the cognizant Vice Chancellor
shall be informed of all departments that are over 90 days delinquent in
completing their physical inventories. Such information shall include the
department name, the name of the department head and the count and
dollar value of the items involved.



C.
RESULTS OF INVENTORIES


1. Discrepancies


Discrepancies discovered during the physical inventory process must be
properly documented and reported to the Custody Department to the
Equipment Management Office. The Equipment Management Office must
update the official records accordingly, and may conduct additional
investigations, and make recommendations to prevent future discrepancies.


BUS
-

29
-

Management and Control of University Equipment
(Extracts)

REFERENCES

Controller’s Office

CHAPTER II

OFFICE OF MANAGEMENT
AND BUDGET CIRCULARS AND
GUIDANCE*




215
-
34 (3) A physical inventory of equipment shall be
taken and the results reconciled with the equipment
records at least once every two years. Any differences
between quantities determined by the physical inspection
and those shown in the accounting records shall be
investigated to determine the causes of the difference.
The recipient shall, in connection with the inventory, verify
the existence, current utilization, and continued need for
the equipment.


215
-
34 (4) A control system shall be in effect to insure
adequate safeguards to prevent loss, damage, or theft of
the equipment. Any loss, damage, or theft of equipment
shall be investigated and fully documented; if the
equipment was owned by the Federal Government, the
recipient shall promptly notify the Federal awarding
agency.


REFERENCES

* U.S. Government Regulations

Controller’s Office

Ingredients for a Successful Inventory

Realistically assess at the start how much time is needed and allot that time.
Factor in time that may be needed to investigate missing items. Get started
right away and give the inventory special attention to ensure you do not fall
short of compliance due to procrastination and/or proceeding at a "fits
-
and
-
start" pace.

Since UCOP (see
BUS
-
29
) holds the department head ultimately responsible
for the integrity of a department's asset records, discuss the project with your
immediate supervisor at the very beginning. The importance of the
undertaking can thus be clearly understood by all parties concerned, a plan
of attack can be developed collaboratively, and the appropriate amount of
resources can be allocated to bring the physical inventory in on time.

Start reviewing the inventory records before the official start date (
schedule
posted on Web
). Verify what truly belongs in your department’s inventory and
investigate what appears questionable. Description, location and other minor
changes can be submitted to CAM at any time via
email
). Lost, destroyed,
discarded or otherwise disposed of assets should be reported through a
signed Equipment Inventory Modification Request form (EIMR). Thus, when
the physical inventory lands on your doorstep, you will be able to launch with
a relatively clean start.

When sending back your findings to CAM, include
both

building and room
number for each item. Since an audit will be conducted via random sampling,
the auditor would need to know in advance exactly where to go to find the
items selected.

Departments should have an asset custodian in place to immediately take
charge. If incumbent custodian had relinquished the role and a new asset
custodian is not in place, there will be unnecessary delays as someone else
who can assume the responsibility can be identified and brought up to speed.

REFERENCES

Controller’s Office


All’s well that ends…


A successful physical inventory is contingent upon:


CAM and the departments partnering to produce
trained and empowered custodians,


Awareness of all resource tools readily available for
custodians,


Effective communication between custodians and
CAM.

EPILOGUE

Controller’s Office


Where’s the Help?



Asset Custodian Training Workshops
held quarterly


Controller’s Office Website
Capital Equipment & Accounting
web page


FAQs


Policies


Procedures & Job Aids


Training


Forms


Contacts


Department Asset Custodian Manual
handed out at the
workshops and available for viewing or printing from Controller’s
Office website


WebLinks Asset Management Report
(AM) module accessed for
current equipment information



Desktop Training Program,
one
-
on
-
one training for asset
custodians. CAM sends a team member at department’s invitation
to discuss the responsibilities of the position, how to access online
resources and any unique challenges the custodian faces.


Controller’s Office Monthly Electronic Newsletter

EPILOGUE

Controller’s Office

Who Can I Call?



CAM personnel
are available to answer questions and provide
information


Controller’s Office website


Capital Equipment & Accounting web page

Contacts

tab






EPILOGUE

Controller’s Office

THE END

The End