UW–Madison defines capital equipment assets as any individual item which has a per-unit acquisition or fabrication cost of $5,000 or more, is movable (not permanently affixed to a building), and has a useful life of at least one year. It does not include real property (land), most software, animals or library holdings. In fulfillment of its mission and compliance responsibilities, UW–Madison must maintain an accurate inventory system and procedures that safeguard assets, and assure financial accountability, reporting accuracy, adequate insurance, efficient utilization and appropriate disposition of all capital equipment.
UW–Madison defines capital equipment assets as any individual item which has a per-unit acquisition or fabrication cost of $5,000 or more, is movable (not permanently affixed to a building), and has a useful life of at least one year. It does not include real property (land), most software, animals or library holdings. In fulfillment of its mission and compliance responsibilities, UW–Madison must maintain an accurate inventory system and procedures that safeguard assets, and assure financial accountability, reporting accuracy, adequate insurance, efficient utilization and appropriate disposition of all capital equipment. Policy details are organized into capital equipment asset life-cycle stages: (I) acquisition of assets, (II) tagging and physical inventory tracking and (III) final dispositions. In addition, this policy includes detail on the Department Property Administrator role (section IV).
Acquisition of Assets
- All capital equipment asset purchases must be placed on institutional inventory records regardless of their funding source(s) or ownership title (Federal or University).
- Gifts in Kind (GIK) are non-monetary gifts, which if they meet the definition of capital equipment assets, must be added to institutional records. Book value must be based on a written estimated fair value of the GIK.
- With prior approval from their Division’s business office, departments hiring new research-related employees can execute a Transfer-In of existing capital equipment assets without purchase from the new hire’s former institution. Departments of new hires who negotiate a transfer-in of capital equipment asset(s) must notify their DPA and Property Control of the incoming item(s).
- With prior approval from their Division’s business office, departments hiring new research-related employees can purchase existing capital equipment from a new hire’s prior institution. Departments must requisition such purchases through Purchasing Services within the Division of Business Services.
- Fabricated capital equipment expected to cost $5,000 or more must be declared in advance to Property Control through a fabrication request so that a Fabrication ID number is established and referenced for all future qualified expenditures. Upon putting the fabrication into service, the asset’s responsible person must notify their designated DPA and Property Control so that the asset can be tagged and the accumulated value moved from a Fabrication in Progress account into a Capital Equipment account and begin depreciation.
- Upgrades (purchased or fabricated) costing $5,000 or more to existing capital equipment assets can be capitalized only if the upgrade results in one or more of the following:
- A substantial increase in the functionality of equipment which allows it to function or perform tasks that it was previously incapable of performing.
- A substantial increase in the efficiency of the equipment, that is, an increase in the level of service provided by the equipment. The record of the qualified upgrade must be linked to the original asset and its corresponding asset tag, but the upgrade will depreciate under its own separate schedule.
Tagging and Physical Inventory Tracking
- All capital equipment must be tagged with the appropriate asset ID tag (Federal or University-owned), and records completed in the central asset management system when the asset, whether purchased or fabricated, is put into service.
- Asset tags must be placed on a routinely visible location of the asset. Capital equipment that is designated as “untaggable” must still have inventory records completed in the central asset management system.
- Physical inventories facilitated by Property Control will be scheduled on an annual basis prior to the start of the fiscal year. The selection criteria for the physical inventories will follow UW System Administrative Policy 334.C. It is recommended that departments verify that all capital equipment for which it is responsible, can be located and is in use on an annual basis. Inventory records should be updated accordingly.
- Departments have up to 15 business days from the last physical inventory or audit to locate items if they were not found in their last documented location.
- An asset should be reported as lost only after a concerted effort has been made to find it. Property Control will remove items from active records as lost with a written request from the Department Chair/Dean or Director.
- In between physical inventories, the DPA must update asset records upon knowledge of any known capital equipment relocations or a permanent change of custody to another UW–Madison department.
- An asset loan agreement must be obtained through Property Control for any capital equipment asset placed at a non-UW–Madison location for 30 days or more.
- Departments must receive written approval from Property Control prior to disposition of capital equipment. Allowable retirement reasons and specific guidance for the dispositioning of capital equipment assets are outlined in a set of procedures. Disposition includes:
- Transfer to departing employee’s new institution with ongoing sponsored project
- Sell/move to departing employee’s new institution
- Return to vendor
- Deliver per contract
- Record-keeping error
- Unallowable dispositions
Department Property Administrator
- Every campus unit (school, college, administrative unit) must designate at least one Department Property Administrator (DPA). Property Control will formalize this designation through an agreement with the DPA and unit senior financial officer.
- The DPA must manage capital equipment for his or her individual unit(s) for the equipment’s entire lifecycle, from arrival on campus through final disposition. Personnel designated as DPAs must undergo training and certification, administered by Property Control.
Consequences for Noncompliance
Failure of any employee to comply with this policy may result in disciplinary action up to and including dismissal based on the severity of the action or non-action of the employee(s). Incidents related to fraud may be referred to the police for further investigation and action.
For DPA’s, consequences may also include revocation of their DPA agreement and reassignments of property administration duties.
Researchers should be mindful that failure to follow federal guidelines could result in loss of future research funding.
- Department Property Administrator (DPA): Serves as the liaison between their department/division and the Property Control Office for matters regarding capital equipment.
- Division Chief Financial Officer (CFO): Coordinates the designation of DPA(s) for their division and provides oversight and support to the DPAs in execution of their responsibilities.
- Office of Research and Sponsored Programs (RSP): Reviews project proposals on behalf of the Board of Regents, transmits proposals to providers of extramural support, and monitors fund expenditures by PIs. RSP provides Property Control with contract information specifically related to property (capital equipment) title, funding source(s), the dollar amount, and equipment relevant terms and conditions of the sponsored research.
- Property Control Office: Responsible for the overall management of capital equipment acquired by and assigned to the University of Wisconsin – Madison in accordance with current state and federal policies. Management duties include establishing and maintaining necessary records to ensure accurate accounting and reporting of all capital equipment in the possession of the University.
- Principal Investigator (PI): Responsible for initiating and conducting extramurally funded research, training, or public service projects. PI is responsible to generally ensure that all federally titled property is exclusively utilized to support research on the contract/grant under which it was acquired. PIs must also support the DPA in performance of their capital equipment asset management duties.
- Surplus with a Purpose (SWAP): Through DOA designated authority, is responsible for disposing of UW–Madison’s surplus property. Prior to sending capital assets to SWAP, DPAs must work with Property Control to ensure proper handling of the equipment, especially federally funded/federally titled property, hazardous materials, and other special cases.