Property Management Procedures
III. Property Management Procedures
Upon acquisition, the Department Property Administrator is responsible for all University property in his or her possession or control in accordance to applicable University rules and procedures. The Department Property Administrator is responsible for all government property in his or her possession or control in accordance with the terms of the grant or contract, including property provided under the grant or contract, which may be in the possession or control of a subcontractor. Sources from which government property may be furnished or acquired:
Agencies of HHS, DOD, NSF, DOE, or Other Contractors
Government property may be shipped to a contractor from government installations or other government contractors. The contractor shall become responsible for the property upon delivery of the property into his/her custody or control. The Property Management Office shall furnish the contractor with necessary documents to accurately reflect the transaction. Note: If required by federal grant terms, the DPA must obtain the Government Contracting Officer’s approval prior to purchasing equipment with federal grant funds.
Direct Purchase by the Contractor
Direct purchases by the contractor, for which reimbursement as a direct item cost is to be requested, are subject to a determination by either the Office of Grant and Contract Accounting (Charles River Campus) or the Office of Research Administration (Medical Campus) that the items are allocable to the contract involved and are reasonably necessary. The pertinent contractual provisions relating to passage of title shall govern ownership rights of the property.
Receiving is the first step in establishing physical accountability for property at Boston University. The process ensures that the correct equipment is received and is in good working order. Receiving, and accepting equipment in a timely manner, directly affects warranty periods for assets. If goods are damaged, the period for processing any liability claims is affected.
Procedure for Receiving Property
Each shipment is checked according to the following conditions:
- Was the shipment delivered to the correct destination?
- Is there external package damage?
- Does the package contain all necessary documentation, such as a packing list?
- Is this the exact item described on the PO?
- Was the correct quantity of items shipped?
- If the invoice is included, is the correct dollar amount indicated?
- Are all components included?
- Are all items and components in good condition?
- Were any items received that were not ordered?
One of the most important tasks assigned to the Department Property Administrator is identifying newly acquired capital or sponsor-funded equipment with the appropriate tags and recording information about the equipment and placing this information in the Property Management System. This system is the University’s subsidiary ledger for equipment. No other system may be used as a means of officially documenting property for the University.
Reasons for an Official Campus (University)-wide Record Boston University requires a single official property record in order to track:
- Compliance with required financial reports to the sponsor
- Accurate accounting and budgeting for equipment at the University
- Inventory movement, utilization, status, and disposition of equipment
- Property-related requirements for contractual agreements
- Tracking donations
D. Tagging Equipment
How Proper Tagging Assists in the Physical Inventory Process
When an Asset ID number is assigned to an item, a Property Management Administrator will affix a bar-coded Asset ID label to the front of the item. When it is not possible to affix the Asset ID label to an item, the Asset ID will be maintained in the Property Management Office. In either case the Property Management Office and the Department Property Administrator should identify items that belong to the government as government-owned property.
The identification tag that is placed on each piece of equipment allows a Property Management Administrator to view the identification number on the tag quickly and efficiently, with minimal disruption to the workplace and users of the equipment. Boston University has thousands of pieces of capital equipment that must be inventoried every two years. Inventory time spent by a Property Management Administrator is significantly decreased when he or she does not have to investigate whether or not the equipment is capital. Ensuring that all assets in your department are identified with the appropriate tags prior to a scheduled inventory facilitates this. Proper tagging is beneficial to the department because it reduces the amount of reconciliation a Property Management Administrator has to perform. A few minutes spent identifying equipment properly can save hours of reconciliation.
E. Movement/Transfer of Equipment
Movement versus Transfer of Equipment
When property is relocated from one area to another, such as a change of building, or moved to an employee’s home and title remains with Boston University, it is defined as “movement”. If you are changing the accountability of equipment between departments, it is considered movement, whether the asset physically moves or not. Back-up documentation should be retained in this type of transaction. There may be use restrictions on equipment that was donated or funded by a sponsor. Once the Department Property Administrator approves the interdepartmental transfer (accountability changes between departments), he or she must update the Property Management record. Please note that internally transferring equipment between departments is movement, not disposition, and the Moveable Capital Equipment Management Form should not be processed.
Equipment Transfer from Boston University
A “transfer” occurs when moveable capital equipment is permanently moved from Boston University to another entity. When a faculty member departs Boston University with moveable capital equipment Property Management must be notified 60-90 days prior to the departure date. Moveable capital equipment owned by Boston University, the federal government, or other institution must be identified if being transferred. Equipment originally funded by a sponsor or donated, may have specific restrictions. The transfer of equipment by any member of the faculty requires the Department Chair’s approval. Property Management will make available a list of moveable capital equipment to be reviewed by the Department Chair and the transferring faculty member. The Department Chair must forward an approval letter of the transfer and equipment to Property Management. Property Management will initiate a release statement and forward the necessary information to all related individuals. The transferred equipment will be removed from the Property database and the General Ledger. Research Accounting must also be notified of any faculty member transferring.
Use of Boston University Equipment Off Campus
When equipment is used off campus (e.g., an employee’s home), 100% of equipment use must benefit Boston University or the sponsored project for which the property was acquired. How this movement is documented will be determined by the length of time the equipment will be off campus.
If the equipment will be off campus less than thirty (30) days, logging the movement in a sign-out log will suffice.
Movement Without Exchange of Funds
This should be recorded on the Property Management System by either sending a memo or e-mail message to the Property Management Office, with the following information:
- Asset ID number; brief description of item; old and new building and room numbers; old and new unit and department numbers; and, former and current responsible person (custodian).When a major move is planned (e.g., the entire department), the department should contact the Property Management Office for assistance prior to the move. The Property Management Office will inventory equipment using a bar-code reader to guard against loss during the transition.
Transfer of Ownership with Exchange of Funds
When ownership is transferred to another department in exchange for payment, a journal entry transaction is required. Payment should be credited to object code 0983 (Expense Recovery) of the “selling” unit-department source and debited to object code 0929 (Misc. Expense) of the “purchasing” unit-department source. Note: Approval from the Office of Grant and Contract Accounting or Office of Research Administration is required prior to transferring grant-funded equipment and for charging grant funds.
Proper care, handling, and storage of property are required to ensure maximum use and availability. The proper care and maintenance of equipment can result in considerable savings to Boston University. When equipment is no longer needed by one department, you may wish to make it available to other departments rather than store it, or process it for disposal. Sponsor-funded equipment that is not needed by a department should be promptly processed for either transfer or disposal.
For many sponsored projects there are specific restrictions regarding property use. Government-owned property normally is restricted to use on the project for which it was provided. Property acquired with federal grant funds and titled to the University may be used on federally sponsored projects other than the acquiring project. Contact either the Office of Grant and Contract Accounting (Charles River Campus) or Office of Research Administration (Medical Campus) if you are unsure about priorities for use. In addition, property in the custody of Boston University is not to be used for personal business.
The University will utilize contractor-agency or government-owned property received or acquired under Contracts/Subcontract Administrator’s orders only for the purpose of fulfilling the contract/subcontract requirements. These items must be kept in good condition; the University will provide normal maintenance and repair. Property will be disposed of only as directed by the Property Management Office. Property and material that will either deteriorate or corrode through exposure to air, moisture, or other elements during fabrication, assembly, and storage periods must not be stored in outdoor areas.
A single official property record is the most efficient way to:
- Ensure consistent, complete record keeping
- Comply with both Research Sponsors and the IRS for financial reporting
- Allow for both accurate accounting and budgeting for the University
- Track movement, utilization, status, and disposition of equipment
- Provide information from which to negotiate the indirect cost rate on equipment
- Provide depreciation reports
- Conduct accurate physical inventories
Department Property Administrators are responsible for organizing and storing paper records related to capital assets and sponsor-owned property in their area. These are referred to as “supporting documents” and are used for reconciliation and audit purposes. One method of organization is to establish an individual file for each piece of capital property, sorted by Boston University I.D., requisition number, or type of equipment. Please note that Department Property Administrators are not required to keep paper copies of on-line documentation. A typical file should include the following:
- Acquisition document
- Approval of purchase, if sponsor requires it
- Any maintenance or warranty agreements
- External screening, if sponsor requires, (i.e., Certificate of Non-Availability [CNA])
- Shipping records (for example, vendor packing lists)
- If donated equipment, make sure the Property Management Office has copies of all documents prior to purging the file
- Untaggable asset file: Print out the Property Management record if equipment is physically untaggable. Place tag on this record so that Property Management Administrators can easily view that piece of equipment. When the asset is disposed, move this document to a “disposal” file.
Record Keeping for Government Furnished Property:
In addition to the above, please retain:
- Shipping Document: Bill of Lading or letter of transfer
- Department of Defense Form 1149 (for used equipment) or any other government form provided.
For disposal of government furnished property, please retain:
- Approval letters from the sponsor
- Repair, maintenance, and calibration records
Record Retainment Time Frames
Financial and property records, supporting data, statistical records, or any document pertinent to an agreement should be retained for a period of three years after submission of the final payment, or three years after disposition of the property, whichever is later. This also applies to subcontractors.
There are exceptions to the above guideline. If any litigation, claim or audit is started before the three-year expiration period, the records must be retained until all litigation, claims, or audit findings have been resolved.
H. Physical Inventories
The purpose of a Physical Inventory is to verify the existence, current utilization, and continued need for capital equipment owned, donated, furnished, or otherwise accountable to Boston University, as well as government-owned property. A Physical Inventory involves the Property Management Office, the Department Property Administrator, and other departmental personnel. In addition, Internal Audit may review and audit the Physical Inventory process.
Boston University is required to conduct a complete Physical Inventory of its capital equipment and government-funded property every two years. In addition, inventories may be conducted at the close of a sponsored agreement, or as needed to fulfill property administration responsibilities.
What Happens on Inventory Day
A typical Physical Inventory will involve the following activities:
- One or more Property Management Administrators will arrive at the prearranged time
- Property Management Administrator(s) and department escort will meet and visit the first scheduled location
- A Property Management Administrator will view each Asset ID barcode tag
- Key information that is verified for each asset:
- model number
- year manufactured
- serial number
- Assets that require tagging are tagged and inventory data is documented
- Appropriate use of government tag as it relates to title vestige is verified
The Inventory process will proceed more efficiently, which saves time for the department being inventoried, if:
- knowledgeable guides/escorts are provided
- equipment users expect minor interruptions while assets are scanned
- equipment users expect assets may be shifted or moved in order to see tags, model numbers, etc.
- ready access to all department areas is provided
Various federal agencies require particular Property Status Reports. These reports are generated from data maintained in the Property Management System.
Government agency regulations require that the DD Form 1662 (Department of Defense Property in the Custody of Contractors) be filed annually. The report covers the year ending 30 September and must be submitted to the Office of Grant and Contract Accounting by 16 October of the year being reported. The NASA Form 1018 must be filed annually for the period ending 30 June and must be submitted to the Office of Grant and Contract Accounting by 16 July of the year being reported, even if there is no property to report. The Department Property Administrator is primarily responsible for ensuring that the contractor’s property control system, including written procedures and practices, provides for the reasonably accurate preparation, contractor validation, and timely submission of the DD Form 1662 to the Office of Grant and Contract Accounting.
J. Subcontractor Control
The Office of Sponsored Programs (Charles River Campus) and Office of Research Administration (Medical Campus) are responsible for initiating subcontracts. Purchase orders are established in the procurement system to control and manage the accounting activity relative to subcontracts.
A copy of the subcontract agreement is provided to the Property Management Office whenever equipment or fabricated equipment is a line item in the subcontract agreement.
At award closeout, Property Management sends a request to the subcontractor for a property report and or assurance that equipment purchased under the subcontract is used in accordance with the terms and conditions of the subcontract agreement. Equipment is defined as any article of non-expendable, tangible property that has a useful life greater than or equal to one year and a cost greater than or equal to $5,000. The Property Management staff may conduct an onsite review if the subcontractor’s response is found to be insufficient or unacceptable.
The Department Property Administrator is responsible for monitoring the proper use and condition of both University and government property in his or her possession.
For federally sponsored equipment, material consumption is considered to be unreasonable when consumption exceeds amounts supported by bills of material, material requirement lists, or similar material planning documents. If the federal government determines that consumption of federally sponsored equipment is unreasonable, the University department may be required to reimburse the sponsor.
L. Contract Property Closeout
Upon notification from the Office of Grant and Contract Accounting that a grant or contract has expired, Property Management will initiate a final physical inventory.
The provision of the property clause in the contract will be reviewed to determine where title to the property will remain. If authorization has been received to continue using the property under a succeeding grant/contract, Property Management’s records will need to be modified to reflect this change. Without such authorization, the normal contract closure process will be as follows:
- Property Management will prepare from its records an inventory listing all government property accountable under the grant/contract.
- The grant/contract expense statement, located in the Office of Grant and Contract Accounting, will be checked for the total dollar figure of all property purchased under the grant/contract. This figure will be reconciled with the total value of the property listed on the inventory with adjustments made if the figures do not agree.
- The inventory will then be sent to the Department Property Administrator of the grant/contract for his/her review. Once the Department Property Administrator determines that the inventory includes government property under the contract, Department Property Administrator will affix his or her signature and return the inventory to the Property Management Office.
- Once Property Management is in receipt of the verified inventory, and a determination of the property’s needs has been made, Property Management will submit the inventory to the proper agency with the appropriate request (title transfer, disposition instruction, etc.) relating to the property’s future status.
- For government-owned equipment, DD form 1662 is due within 60 days after the grant closeout. For NASA grants, NASA Form 1018 is due within 60 days after the grant closeout.
When equipment is sold, stolen, traded in, scrapped, donated to another institution, destroyed, returned to the vendor, or otherwise made unavailable to the University, it is the responsibility of the Department Property Administrator to notify the Property Management Office by submitting the Moveable Capital Equipment Management Form prior to any disposal. Please note that stolen property must be immediately reported to the Boston University Police, Office of Risk Management, and the Office of Property Management.
Sale/Transfer to Another Institution or Individual
- The Director of Procurement must approve the sale or transfer of non-sponsor-funded equipment to another institution or individual in advance. The item will be listed in the monthly publication Purchasing News and will be bid to the University community and interested third parties by a Senior Buyer (with priority given to other University departments).
- Sale or transfer of grant/contract-funded equipment (bought on grants/contracts with source numbers ending in -5, -6, and -7) to another institution or individual must be approved in advance by the director of Procurement. The sale or transfer of these items must also be reviewed and approved by the Property Management Office and the Office of Grant and Contract Accounting (Charles River Campus)/Research Administration (Medical Campus) to ensure compliance with grant regulations. The equipment may have to be made available to another department on Boston University’s campus, or another institution, through screening other in-house contracts.
- The credit or payment for equipment sold outside the University should be credited to object code 0839 (Misc. Income) in the account that incurred the expense. For grant/contract-funded equipment (purchased on account numbers with source numbers ending in -5, -6, and -7), credits or payments will be deposited in an unrestricted account, and funds should be used as specified by the granting agency.
- Trade-ins will be treated in the same manner as an item sold to an individual. Object code 0839 will be credited and object code 0930 will be debited for the amount of the trade-in if the trade-in value is $1,000 or greater. This will allow purchased assets to be recorded at their full value in the property system.
The term excess equipment is used to describe a piece of equipment that is no longer used or does not benefit a project or person. Any excess equipment, whether it is Boston University funded or sponsor funded, should immediately be considered eligible for disposition. The goal is to provide an opportunity for maximum utilization of assets. If the excess equipment is Boston University funded, the Procurement Office can notify other Boston University departments that this equipment is available for use through Purchasing News. If you wish to “advertise” in this manner, please contact the Procurement Office at 617/353-2370.
Re-utilizing assets can save both Boston University and sponsors a great deal of money. If re-utilization is not possible internally, proceed with disposition immediately.
There is no storage facility for department-owned equipment. If a usable item is no longer needed, the Office of Procurement will advise the department regarding the disposition of the item. It is the Department’s responsibility to notify the Property Management Office of the final disposition of equipment.
N. Journal Entries/Corrections
When items are incorrectly charged to object code 0930, the Property Management Office will adjust the charge to the proper object code via the Accounts Payable system. A telephone call, fax or an e-mail will be sent to the department explaining the correction. The Office Property Management policies, as cited in this manual, are consistent with the definitions listed in the Accounting Object Code booklet.
When a department processes a journal entry to transfer equipment to a different unit-department source, the Property Management Office notes this and the Property Management System will reflect the change.
O. Moveable Capital Equipment Management Form
All items charged to a capital equipment object code will be recorded in the Property Management System. When equipment is acquired through gift, loan, or other means that do not involve the Accounts Payable system, the department should submit a Moveable Capital Equipment Management Form to the Property Management Office. The Moveable Capital Equipment Management Form should also be used to record disposed items in the Property Management System.