Part 16. Inventory Control and Property Management
Policy Number: 16.3
Issued by: Office of Accounting
Date Issued: September 20, 2005
Approved By: K. Hegarty, VP & CFO
16.3 REMOVAL OF EQUIPMENT FROM THE INVENTORY
A. General
The cause for removal of equipment from a departmental
inventory will usually be in one of the following categories:
- Equipment transferred to another department with or without charge
- Sale of equipment
- Trade-in of equipment
- Equipment transfers to Surplus Property
- Equipment to be discarded
- Equipment lost or stolen
- Equipment missing for two fiscal years or longer
- Cannibalized equipment
B. Equipment Transfer
1. Departmental Transfer Without Charge
This policy applies when equipment is to be transferred from one University department to another, including Surplus Property. A Capitalized and Controlled Asset Removal and Transfer (CCART)/NT1 electronic document must be used to effect the change.
The CCART electronic transfer is a web-based system designed to expedite the equipment transfer process using NT1 electronic documents created by the department owning the equipment. NT1 documents are processed through the department's electronic routing and final approved by the department receiving the equipment. The transferring department will remain accountable for the equipment until the NT1 electronic transfer document has been final approved by both the transferring and receiving departments.
Under the following circumstances, the NT1 electronic document will be routed for approval to the Property Manager (Controller) prior to transfer to Surplus and requires written justification in the Comments section of the CCART document indicating why the item is being disposed of:
- The depreciated value of the equipment is $10,000 or greater.
- The historical value of the equipment is $75,000 or greater.
2. Departmental Transfer With Charge
Department heads may negotiate a transfer of equipment
to another department with charge. The amount to be charged for the
equipment is determined and agreed to by the two departments. However,
if a sale has not been arranged with any specific department, but
the department head desires to transfer equipment with charge, the Property Manager (Controller) or designee shall be notified by memorandum of the items available
for transfer.
A list shall be prepared and be sent to the Property
Manager or designee with the following information for each item:
- Description
- Acquisition cost
- Year acquired
- Price expected
- Condition
- Inventory number
Departments will be notified by the Property Manager
or designee with a Surplus Equipment memorandum circulated to the campus.
If another department offers to purchase an item, an
Inter-Departmental Transfer (IDT) voucher shall be used to effect
the transfer. The IDT shall include the inventory number and the number
and date of the voucher that originally paid for the item. If no other
University department offers to purchase the equipment, it may be
offered for sale to an outside agency or individual by following the
procedure described under 16.3 C, Sale of Equipment.
3. Transfer to Another State Agency (Interagency Transfer)
Approval of the Property Manager (Controller) or designee must be obtained prior to the transfer of any University equipment to another state agency or institution. A written explanation for the transfer, along with any charges that will be assessed for the equipment, must accompany a Request for Transfer of Equipment form. The following information must be provided for each item to be transferred:
- Complete description of the property to be transferred
- Condition of the equipment
- Cost of the equipment
- Current location
- Date acquired
- Depreciated value
- Inventory numbers
- Reason for transfer
- Source of the equipment (new, used, surplus, etc.)
- Whether the equipment is carried on federal or University inventories
If the equipment is transferred, the University inventory plate shall be removed and sent to Inventory Services. The department shall notify Inventory Services in a letter providing the following information:
- Inventory number
- Date of transfer
- Description of each item
- Amount received for each item, if any, and deposited with the Office of Accounting
- Contact person at the state agency to which the equipment was transferred
When the item is transferred through the State Property Accounting system by the accepting agency, Inventory Services will remove the equipment from the department's inventory listing.
4. Transfer to an Out of State Agency
Approval of the Property Manager (Controller) or designee must be obtained prior to the transfer of any University equipment to an out of state agency or institution. A written explanation for the transfer, along with any charges that will be assessed for the equipment, must accompany an Inventory Removal Request form. The following information must be provided for each item offered for sale:
- Description
- Inventory number
- Date of acquisition
- Inventory value
- Condition
- Price
- Depreciated value
- Reason for transfer
For international transfers, the Inventory Removal Request must first be approved by the Office of Sponsored Projects for export controls. Upon approval from the Property Manager or designee, the department head will conduct negotiations for any equipment for which the out of state agency will be charged (equipment not paid for with a 26 account). Approval will only be granted if the Property Manager or designee agrees that the price is reasonable.
If the equipment is transferred, the University inventory plate shall be removed. The department head shall notify Inventory Services in a letter providing the following information:
- Inventory number
- Date transferred
- Description of each item
- Amount received for each item, if any, and deposited with the Office of Accounting
The letter of notification and the inventory number plate, if there is one, for each item transferred shall be sent to Inventory Services.
C. Sale of Equipment
Monies received from the sale of property originally purchased by an auxiliary or service department will be credited to that department. Proceeds from the sale of equipment purchased with state funds will normally be returned to the State Treasury. Proceeds from the sale of equipment acquired from Government excess property sources will be deposited into an account administered by the Executive Vice President and Provost.
The sale or transfer of data processing equipment to employees of the
university is prohibited as per Board of Regents Rules Regulation Part
II Chapter VII Sec.7.3 Disposal of Surplus or Salvage Data Processing
Equipment. University
of Texas System Board of Regents' Rules and Regulations, Series
80201.
Surplus or salvage data processing equipment, as defined by Texas Government
Code Chapter 2175, Surplus and Salvage Property Guidelines. For disposal
exceptions for Institutions of Higher Education, see the Texas State
Government Code Chapter 2175.304.
Some sources restrict the sale or transfer of equipment; therefore, it is essential to ensure that the University is not precluded from such disposal.
1. Departmental Sale of Equipment with Estimated Value of Less Than $25,000
This policy applies to sales of equipment by University departments, including Surplus Property. Approval of the Property Manager (Controller) or designee must be obtained prior
to the sale of any University equipment to an outside agency or individual.
A written explanation for the sale must accompany an Inventory Removal Request Form. The explanation and form must be submitted for special handling of property to the Office of the Controller. Approval must be granted prior to any removal of equipment, solicitation for sale, or receipt of offers of sale. The
following information for each item offered for sale must
be provided:
- Complete description of the property to be disposed
- Condition of the equipment
- Cost of the equipment
- Current location
- Date acquired
- Depreciated value
- Funding source of the original acquisition
- Inventory numbers
- Reason for sale
- Source of the equipment (new, used, surplus, etc.)
- Whether the equipment is carried on federal or University inventories
Upon approval, the department head will conduct negotiations
for the sale. Approval will only be granted if the Property Manager or designee agrees that the price is reasonable.
If the equipment is sold, the University inventory plate
shall be removed. The letter of notification and the inventory number plate, if there is one, for each item sold shall be sent to Inventory Services along with the following information:
- Inventory number
- Date sold
- Description of each item
- Amount received for each item and deposited with the Office of
Accounting
2. Departmental Sale of Equipment with Estimated Value of $25,000 or More
In addition to the requirements detailed in section C.1 of this policy, sale of equipment with an estimated value of $25,000 or more requires that the Property Manager (Controller) evaluate the request in conjunction with the Purchasing Director to determine if there are potential advantages to advertising the equipment for sealed bids or advertising the equipment in online auctions. The decision will be based on the condition of the equipment, the market value of similar or like equipment, and the potential to reap a higher dollar return than placing the property in a scheduled quarterly live auction.
D. Trade-in of Equipment
When equipment is traded in on new equipment, a description of the item
to be traded in, including the inventory number, shall be shown in the
requisition for each purchase of new equipment. The same information shall
appear on the purchase voucher. Before an item of equipment is relinquished,
the inventory number plate must be removed and sent to Inventory Services.
E. Equipment to be Discarded
Extraordinary care must be taken in discarding equipment no longer needed.
When equipment becomes obsolete, damaged, broken beyond reasonable repair,
or otherwise considered to be useless to a department, the department
head shall have a Capitalized and Controlled Asset Removal and Transfer (CCART) document prepared for transfer
of the items to Surplus Property. The completed form
should be signed by the appropriate official and sent to Surplus Property,
which will arrange to have the equipment picked up. The property control
plate or inventory number tag must be left on each item. The equipment
shall be transferred to Surplus Property in the best
condition possible; parts must not be removed, nor shall any piece of equipment
be cannibalized prior to transfer.
If the best interests of the University can be served by the removal
of parts from an item of equipment before a transfer is made, the department
head shall recommend to the Property Manager (Controller) that cannibalization be approved,
with the understanding that the item is being dismantled in order that
parts might be used to construct or repair other equipment. The actual
cannibalization shall not be undertaken until the approval of the Property
Manager or designee has been obtained. The residue, including the property tag, shall
be transferred to Surplus Property.
If the Property Manager or designee authorizes the removal of the equipment from
the departmental inventory, the department will be notified with an approved
copy of the Inventory Removal Request form or the Report of Transfer of Equipment form.
Worn, obsolete, unserviceable, and otherwise useless equipment shall
not be disposed of by any other procedure. If for any reason the transfer
is not finally effected, the department will be notified. If it is not
practical or economically feasible to transfer unserviceable or obsolete
property to Surplus Property, departments must not arbitrarily discard
such items. The Property Manager or designee must be advised of the circumstances
and the department's recommendation for disposal.
F. Lost or Stolen Property
When a department head becomes aware that an item of equipment is missing,
a diligent search shall be continued until the item is found or until
it is established that the equipment is lost or has been stolen.
Stolen property must be reported to the proper police authorities within
48 hours of identifying that a theft of personal property has occurred.
For stolen equipment, the department head shall submit a letter of justification
on departmental letterhead, an Inventory Removal Request form, and a copy of the written report by the proper police authorities
to Inventory Services.
Equipment that has been "lost" is often found or reappears after a period
of time. Therefore, before requesting that equipment be removed from the
departmental inventory, the department should continue to look for lost
items for two years, or two inventory cycles. At the end of the two-year period, any items marked as missing will be programmatically removed.
The University may be penalized for excessive lost or stolen property
as outlined in Article IX, Section 9.03 of Senate Bill 1 from the 77th
Legislative Session 2002-2003 Biennium (see Legislative Budget Board publications for further information). To ensure that the university
as a whole is not penalized for the deficiencies of individual departments, each department whose total lost and stolen property has a depreciated value in excess of 2% of the department’s total depreciated inventory value as of the end of a fiscal year, will be assessed a penalty of 50% of the excess of 2% of the department’s depreciated total inventory.
The penalty will be assessed at the main unit level (xxxx-0000). A letter will be sent to the Budget Office
instructing them to reduce the department's budget by the amount of the
penalty for that fiscal year. If a department recovers or accounts for
lost or missing property to the satisfaction of Inventory Services in the Office of Accounting, these funds shall be restored.
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