Topics covered on this page are:
Acquisition of equipment
Department's responsibilities
iProcurement
When raising a requisition select an appropriate category code – non catalog items eg. %equipment. The track as asset box can be ticked at requisition level which will pull through to the Accounts Payable module.
It is the Department's responsibility to ensure that an asset is identified by ticking the "Track an Asset" box in the Accounts Payable module when a fixed asset is purchased.
When processing the purchase invoice it is important to review the distribution lines. The purchase invoice is entered in the standard way until the lines tab is reached where:
- an appropriate Transaction code/Expenditure Type is selected
- the 'Track as Asset' box is ticked
- the item's tag number is entered
Normally the value of an asset is the actual price paid i.e. the cost price less any normal discount plus any non-recoverable VAT.
If a distribution line for expenditure is moved it is important to ensure that after calculating tax the track as asset box is ticked as required.
The acquisition of equipment exceeding £1m must be notified to the Insurance Section within the Finance Division. Expenditure of £2m or above on capital items requires consent of the Planning and Resources Committee.
This ongoing process of correctly identifying assets at purchase is the key to the fixed asset system operating satisfactorily and is the main requirement for departments to follow. At the month-end the Finance Division carry out centralised procedures and accounting processes in the UFS fixed asset module.
Costs to be included in the value of an asset
- Any non-recoverable VAT (NB. only the net cost has the 'track as asset' box ticked. The system decides if VAT is required to be added.)
- Carriage/freight charges
- Installation costs (inc widening doors, strengthening floors etc)
- Import duties and VAT
Training on equipment use is not to be included in the value of the asset unless it is included as part of the installation package. Additionally, insurance costs, service contracts or warranties are not to be included in the value of the asset either.
Acquisition Scenarios
Purchasing an item that is less than £30,000 but which is part of a larger capitalised item?
This should be merged with the existing item and capitalised. Let the helpdesk know.
Purchasing numerous assets that total in excess of £30,000 but individually they cost less than £30,000?
Split the assets up into separate assets so they are not capitalised (or request that the Fixed Asset Helpdesk split them).
Equipment purchased under research contracts
Equipment purchased under research contracts are subject to the competition requirements detailed in Regulation 18 and Schedule 1, of the Financial Regulations 2012. As part of the award criteria the whole life time costs to the University of the equipment procurement must be considered.
Assets shared between departments
If an asset is shared between a number of departments, then each department's share will be recorded as a separate asset, with a note cross-referencing them all. In this situation contact the helpdesk.
Equipment received on loan
Where equipment is received on loan departments should have in place procedures to ensure that an appropriate agreement and insurance are put in place and that the equipment is returned in good condition.
Assets funded from more than one source
Each asset can only be assigned one asset category on the system; therefore an asset funded from more than one source of funds has to be split into a number of assets - each being allocated to the appropriate category. A note cross-references these asset numbers. Please speak to Fixed Asset Helpdesk in this situation.
Donated equipment
If an asset is given to the University then the financial records of the University should show this. The true nature of the transaction is that the University is receiving a donation from the supplier, as if it were a donation from any other third party to help pay for the goods or services. This donation needs to be reflected in the UFS.
If this situation occurs please inform the Fixed Asset Helpdesk, giving the following details:
- date received
- description of the goods
- best estimate of value
The Finance Division will then prepare the appropriate transactions to reflect the true nature of the purchase i.e. debit the cost of the fixed asset, adjust the fixed asset register and credit the appropriate deferred grant. This grant will then be written off over the same period as the asset cost.
Equipment purchased with a discount in excess of a normal trade discount
If a discount is given to the University over and above a normal trade discount then the financial records of the University should reflect the nature of the transaction and the true value of the asset. This may indicate for example, the supplier is offering a form of donation to the department.
If this situation occurs, enter the purchase invoice details as normal and tick the box, but also please inform the Fixed Asset Helpdesk, giving the invoice number and the value of the discount received over and above the normal discount given.
The finance division will then prepare the appropriate transactions to reflect the true nature of the purchase i.e. debit the cost of the fixed asset, adjust the fixed asset register and credit the appropriate deferred grant. This grant will then be written off over the same period as the asset cost.
Equipment purchased following an allowance been given for 'trade in'
See Part Exchanges under Disposal of Equipment
Deposit payments
If your supplier requests that you pay a deposit prior to the delivery of the equipment you will need your Head of Department's prior written consent for payments in advance of £10,000 or less. For payments in advance exceeding £50,000 the Director of Finance's advice and prior written consent is needed.
Once the required approvals have been gained the invoice should be entered into AP and the track as asset box ticked for the deposit line. Ensure that a clear description is included and contact the FA Helpdesk who will ensure that when we receive the item it is set up as an asset and all its payments are included and merged to reflect its total cost.
Assets owned jointly with an external third party
The supplier will normally agree to invoice each party separately for their proportion. Therefore, in AP you just tick the track as asset box as normal and the University will register the item as an asset and capitalise it as normal. However, for insurance purposes if the equipment is on our premises we must ensure it at its full market rate, so please put the full value in the comments field and inform the Insurance Team and Fixed Asset Helpdesk.
Equipment constructed within the department
Where an item of equipment is constructed for use by a department in either its teaching or research activities then it may need to be included on the fixed asset register depending on its value. Contact the Fixed Asset Helpdesk in this instance.
Refurbishment costs
If the refurbishment is undertaken by EM and hence Council approved then the costs will be included on the register as an addition to an existing asset. Please contact the Fixed Asset Helpdesk in the event if any asset related queries arising.
Monitoring and maintenance of equipment
Security of equipment
Heads of Departments should establish procedures to ensure that all items of equipment are adequately protected against loss and misuse.
Maintenance or improvements to equipment
When spending money on an existing asset it should be considered whether the asset is simply being maintained or improved.
- Expenditure on maintenance cannot and should not be capitalised.
- Expenditure of improvements should be capitalised.
Advice is available from the Fixed Assets Helpdesk.
Loaning equipment out
Where equipment is loaned out the Department must have procedures in place to ensure that an appropriate agreement and insurance are put in place and that the equipment is returned in good condition.
Temporary removal from University premises
Where a single article exceeding £50,000 or articles totalling in excess of £100,000 are temporarily removed from University premises the Insurance Section should be notified.
Equipment sharing
Some research sponsors encourage the sharing of more expensive items of existing equipment between peer institutions, with an appropriate charge for their use being made. This may, or may not involve in the removal of the item from the department and the guidelines above should be followed.
Further information is available from http://www.research-operations.admin.cam.ac.uk/
Disposal of equipment
Assets owned by the University, irrespective of funding source, remain the property the University until sold or destroyed -unless contracts with external sponsors specify otherwise.
Responsibility
Heads of Departments are responsible for the sensible disposal of surplus equipment. It should first be offered to other Departments, and only sold externally once it has been determined that the University no longer requires it.
- Reuse: either in the department or elsewhere in the University
- Sell: to maximise income
- Dispose: minimising cost
| NB - Consider including reference to old equipment removal/part exchange in the specification of new/replacement equipment. |
Disposal form
All disposals should be recorded on the University's fixed asset disposal form which can be found on the following link
Legislative requirements
Staff must take into consideration all legislative requirements before undertaking any disposal. These include, but are not limited to:
- the WEEE (Waste Electrical & Electronic Equipment) Regulations
- Health and Safety considerations:
- Equipment which may be contaminated with hazardous substances must be cleaned appropriately before being disposed of and a signed decontamination statement provided contact the Health & Safety Office. - Disposal of IT equipment
Transferring assets between departments
Unwanted equipment, furniture etc can be advertised on the University wide reuse platform: WARPit . If you are unable to post to this site yourself, please email Procurement Services who can post the items for you.
When assets are transferred departmental users can update the Assignments screen with the employee name and new location, but you will need to let the helpdesk know so that they can update the asset key to reflect the correct department.
Sales
When selling the asset externally you should look to maximise any income and therefore the following areas could be considered.
- Auction
- Advertise nationally on the Procureweb Surplus Equipment link on the JPPSG web site. This is particularly useful if the item is a piece of technical research equipment.
- Private companies
- Employee offers (but safety issues must be considered).
Accounting in UFS
An invoice must be created in the Accounts Receivable module using the transaction code LZGA (Fixed Asset Disposals) and the following potential accounting requirements should be considered.
- All sales of fixed assets are liable to VAT and the standard rate of VAT should be applied unless the sale meets the criteria for zero-rating e.g. the item is exported. See chapter 9 of the FPM - VAT & Other Taxes and speak to the Tax Section for further advice.
- Assets transferred to employees should normally be charged for at the market value. Transfers below market value must be reported as a taxable benefit on the P11d return at the end of the tax year. It is not permissible to give assets away to employees without charge.
Notify the fixed asset helpdesk of:
- the asset number
- sales invoice number
- agreed price
- any disposal costs
The helpdesk will remove the asset from the fixed asset register and process all the appropriate journals i.e. to transfer the cost, sale proceeds and accumulated depreciation to the disposal account. Any profit from the disposal would usually stay within the department.
Part-exchanges
Where an offer for a part-exchange is received from a supplier of replacement equipment compare the value with offers from other groups interested in purchasing the items.
From an accounting perspective we need to process the transaction carefully to ensure that the register, sales and purchases are all dealt with correctly.
| Issue | Procedure |
|
The full value of the new asset is reflected in the FA module
That the old asset disposal value is recorded in the FA module |
The invoice is entered in the AP module with the distributions for the full value (pre-trade in) having the Track as Asset box ticked if the value of the equipment is greater than £5,000. Email the FA Helpdesk with full details of both the new and old asset and the trade in value given. |
| The value of the old asset is declared in our Financial records and VAT accounted for as appropriate | The trade in value is entered in the AP module, either as a Credit Note or as a negative distribution line in the invoice. This is coded to the Trade In Control Account with no VAT. |
| That the supplier only receives the net payment via the AP module |
An invoice is raised in the AR module for the trade in value of the old asset being sold. This is coded as normal and VAT is applied. A credit note is raised in the AR module for the full trade in value. This is coded to the Trade in Control Account with outside scope VAT. The AR invoice and credit note are matched. If required, the AP invoice and credit note are matched. |
Gifts
If gifting an item to a charity, ensure that they collect the item to minimise any additional costs. Inform the Fixed Asset Helpdesk of the disposal and consider the following potential accounting requirements.
- VAT at the standard rate is normally due on all gifts.
- However, in certain circumstances we may be able to zero-rate the supply - you must contact the Tax section for advice in these circumstances.
Taken by researchers/academics
The Financial Regulations specify that assets bought by the University, irrespective of funding source remain the property the University until sold or destroyed, unless contracts with external sponsors specify otherwise.
If you are unsure of the contract terms then contact Research Operations Office (ROO) for clarification. ROO notify the FA helpdesk of grants transferring to other organisations so that relevant assets can be identified and contract terms verified.
- Notify the Fixed Asset Helpdesk of any assets that it is proposed to transfer to another institution when transferring a research grant.
- If research is completed and the academic leaves but wishes to take equipment with them and it is not specified within the contract with the sponsor any subsequent removal must be treated by the Head of Department as either a 'transfer' (see Sales) or 'theft' and appropriate procedures should be followed. Such equipment may, however, be sold to the institution to which the academic is moving to - normal disposal procedures should then be followed.
Scrapped, obsolete and damaged items
In these instances the Fixed Asset Helpdesk should be notified. They will remove the asset from the fixed asset register and process all the appropriate journals i.e. to transfer the cost and accumulated depreciation to the disposal account.
Damaged, destroyed or stolen items
Please refer to the FPM chapter 18: Insurance, on how to progress any claims. Notify the Fixed Asset Helpdesk of any lost assets.