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Handbook of Business Procedures

Date published: 
Last revised: 
Issued by: 

Feb. 17, 2005
Dec. 10, 2015
Inventory Services

 

Part 16. Inventory Control and Property Management - Table of Contents


16.2. ACQUISITION OF EQUIPMENT



A. Purchase of New Equipment

1. Ownership

All equipment and material items purchased with University of Texas at Austin monies are property of the university. Ownership for items purchased with private and federal funds is determined by a governing document such as an award or a contract. If title to an item does not rest with the university, the university is still responsible for the caretaking of the item and liable for the item until it is returned to its owner.

2. Asset Threshold

Expenditures for items with a unit cost meeting the State Property Accounting (SPA) Process User’s Guide guidelines for capital equipment shall be coded as capital equipment. Expenditures for items that meet the criteria set by SPA for controlled equipment must be coded as controlled equipment. Visit the SPA Process User’s Guide for a current listing of capitalization thresholds as well as a listing of items that are considered controlled.

3. Costs Included in Asset Value

Freight and shipping charges associated with acquiring a capital asset must be included in the asset's value as well as all modifications, attachments, accessories, or apparatuses necessary to render the asset usable for service. The total value determines whether the item is expensed, controlled, or capitalized. Warranty costs and service agreement costs are expensed if the warranty costs or service agreement costs are listed as separate line items on the purchase order or invoice. Otherwise, warranty costs and service agreement costs are added to the value of the asset.

4. Assets Purchased with Federal Funds

There are additional guidelines to be followed when purchasing items with government funds. Prior to the purchase of equipment, the project director should screen available equipment to ascertain whether existing equipment will meet the requirements. The authority to purchase equipment is determined by the contract or grant. Project directors and departmental purchasing personnel must be sufficiently familiar with the provisions of the contract or grant to ensure that purchases are not made until approval is obtained from the sponsoring government agency. An accountant from Contract and Grant Services monitors each federal contract and grant account. One of the accountant's specific duties is to ensure that approval has been obtained from the government agency prior to the purchase of equipment.

When overages, shortages, or damages are discovered upon receipt of government-furnished property, the project director shall provide a written report to Contract and Grant Services within 10 days of receipt of the property. This report must contain sufficient facts and pertinent data to enable Contract and Grant Services to comply with the required reporting procedures of the sponsoring government agency. For overages, shortages, or damages relating to contractor-acquired property, the above steps should be taken and contact should be made with the university's Central Receiving facility as prescribed by their procedures.

5. Vehicles

Newly purchased vehicles and electric carts (costing $5,000 or more) received by Fleet Management Services in Parking and Transportation Services are tagged by Fleet Management Services. Self-tagging departments are not responsible for tagging these items but must still supply Inventory Services with the tagging detail. Note: Attaching property control plates or tags, or otherwise marking capital or controlled items to indicate university ownership is required by state law. For information about the sale and purchase of vehicles, refer to 16.4.1. Vehicle Title Transfers.

B. Rent/Purchase - Lease/Purchase - Installment Payment

Property items acquired on a rent/purchase, lease/purchase, or installment payment basis must be added to the departmental inventory at the total value of the purchase when the initial payment is made or when the property has been received. These items will be inventoried in the same manner as direct or outright purchases.

C. Fabrication of Equipment

1. General Overview

Fabricated equipment is defined as a unique one-of-a-kind item that is built or assembled from individual parts or materials by or under the direction of university personnel. The completed item of fabricated equipment may have, but is not limited to, a single power source and may result as a stand-alone item. Fabrications are created by assembling a number of components (manufactured or custom made) to produce a piece of equipment that meets unique research specifications. Most fabrications are sponsor-funded and therefore have a number of compliance requirements related to acquiring and tracking individual pieces of equipment in an assembled fabrication.

All services purchased for equipment fabrication must be used in the fabrication process and become a permanent part of the end product’s value. All items purchased must become a permanent part of the end product’s value as well, unless they are destroyed during testing or consumed in fabrication. The completed item of fabricated equipment must have a useful life of at least one year and must be classified as either a capital or controlled asset per SPA guidelines. Once the fabricated equipment is completed, the department must notify Inventory Services so it can be added to their inventory.

2. Subaccounts

To consolidate the various expenditures involved in fabricating items of equipment, Contract and Grant Services has established fabrication subaccounts for use in each agreement affected. If an item of equipment is going to be fabricated, the project director must advise the university accountant of the particular contract or grant involved so they can jointly agree on the appropriate subaccount number. It is then incumbent upon the project director to maintain a record system that will reflect the significant costs directly related to the construction of the fabricated item.

3. Cost of Materials

Costs of materials and supplies used in fabricating equipment shall be accounted for using the 1832 object code. The costs of contract labor directly related to fabrication are included in the transactions using the 1832 object code, but not the cost of in-house (UT Austin) labor. Those cumulative costs, as determined by the project director, will become the cost of record for the fabricated equipment item. When a fabrication subaccount has been established for a particular contract, other subaccounts must not be used to purchase materials, parts, etc. for the fabricated equipment.
If different equipment items are going to be fabricated, the project director must keep the costs for each item segregated and properly allocated. To facilitate this segregation, a limited number of different subaccounts can be established for the costs of the different fabricated items. If, however, the different items being fabricated work as an integral unit or system when finished, the same subaccount number may be used. The department producing the fabrications is encouraged to maintain a detailed spreadsheet that allocates all of its qualifying expenses to specific projects.

4. Transfer of Cost

Departments/Centers frequently maintain bench stocks of commonly used components and replacement parts. Because these items are purchased in quantity, they are more economical than special ordering similar items. Consequently, researchers use them in the interests of expediency and economy. Costs of these items must be determined and transferred by an Interdepartmental Transfer (IDT) voucher from a departmental revolving account to the fabrication subaccount. In some cases, the use of these materials and supplies may be minimal; therefore, it may be difficult or not feasible to ascertain their costs. When such costs are insignificant or cannot be determined, they should not be transferred to the fabrication subaccount. The project director shall determine this. The basic policy is to identify and properly assign the costs of all materials and supplies used in the fabricated product. Refer to the Inventory Services prepared fabrication training at the link below for further details.

Fabrication Training

D. Noncash Gifts to the University

Noncash gifts to the university are added to inventory upon formal acceptance by the University Development Office. The value of such items is an appraised or fair market value as provided by the donor. The official acceptance of all gifts on behalf of the university is governed by the University of Texas System Board of Regents Rules and Regulations Series 60101 and UT System System-wide Policy UTS138 Gift Acceptance Procedures.

E. Equipment Transferred to the University

There are two types of equipment transfers that come into the university.

  • Interagency Transfers, or transfers from another state agency such as Texas Department of Transportation, University of Texas M.D. Anderson, Texas Tech University, etc., to The University of Texas at Austin.

  • Transfers in from a Non-Texas State Agency, or private institution, such as Stanford University or Baylor University. These transfers usually occur as a result of a principle investigator (PI) coming to the university or for equipment that is not being received by the University Development Office.

The transferring entity must send a property transfer receipt form for the property manager to sign signifying receipt of the item(s). Once the transfer has been confirmed by the receiving department, the property manager signs the form , retains a copy for university records, and returns the form to the sending entity. Once the transfer has been approved by the property manager, the department needs to either schedule an appointment with Inventory Services by emailing INVtagging@austin.utexas.edu for the items to be tagged or send the tagging information to Inventory Services within the 10 or 30 day timeline depending on the ownership of the item(s).

F. Tagging

Self-tagging departments must affix a barcode numbered property tag to the property (or assign an inventory number for intangible or art items) and submit the required information to Inventory Services at INVselftag@austin.utexas.edu for processing within 30 days of paying for the capitalized or controlled item. If the property is U.S. Government-owned, then it must be tagged and the information received by Inventory Services within 10 days of acquiring the property. Departments that do not tag their own equipment must send a tagging request to INVtagging@austin.utexas.edu as soon as equipment is received.

 


Office of Sponsored Projects

Central Receiving

 

Part 16. Inventory Control and Property Management - Table of Contents