Department of Financial Training Knowledge Building

Department of Financial Training

Knowledge BuildingKnowledge Buildingforfor

Property Property ManagementManagement

December 2005December 2005


Property Management Property Management Learning Objectives Learning Objectives

Policy Overview Definition of Property Asset Property Management System Roles in Managing Property Assets Lifecycle of a Property Asset Depreciation Inventory Process Access to Property System Next Steps


Policy OverviewPolicy Overview

The University must maintain accurate records of tangible property whose value and useful life meet the criteria of a capital or property asset

Property assets are required to be tagged, monitored, and periodically inventoried

Schools & Centers have the responsibility for managing their property within all applicable regulations and policies


What is a Capital or Property What is a Capital or Property Asset?Asset?

A property asset is any item for which all 3 criteria apply:

Item valued at $5,000 or more

Has a useful life of more than one year

The University retains title


Importance of Property Importance of Property ManagementManagement

Proper stewardship of our assets will facilitate the accuracy of information which ultimately effects Indirect cost proposal to Department of

Health Human Services (DHHS) – The Office of Research Services uses asset data,

i.e. depreciation expense, in the Facilities and Admin-istrative proposal, which is a key component in the Indirect Cost recovery negotiations with the Federal Government

Outside audits– PWC & A-133

University Financial Statements


Property Management System Property Management System (PMS)(PMS)

The Property Management System is used to track and maintain information about the University's depreciable assets from acquisition to disposal Data maintained includes:

Manufacturer Model Serial number Acquisition cost Accumulated

depreciation Cost History

Item description Acquisition date Tag number Status Tagging contact Custodian Location


Roles in Managing Property Roles in Managing Property AssetsAssets

There are five main roles in managing property: Buyer Property Management Group Property Administrator Custodian Tagging Contact


Role: BuyerRole: Buyer The Buyer is the PO Manager who creates

and/or approves the PO which acquires the property item Though Buyers don’t have a role in the PMS, key

information from the PO is used when creating a property item in the PMS

The Buyer must ensure property management information on the PO is complete and accurate. This information includes:

Description Installation Location

(Bldg, Floor, Room) Category Code Responsible ORG

Model # Custodian Tagging Contact Govt. Retain Title?


Role: Property Management Role: Property Management GroupGroup

The Property Management Group (PMG), within the Comptroller’s Office, oversees all University property

The PMG is responsible for Ensuring compliance with all University &

regulatory agency policies & procedures Reviewing and adding financial assets greater

than $5,000 to the asset management system


Role: Property Management Group Role: Property Management Group (cont.)(cont.)

Recording all financial transactions to the General Ledger involving the assets, i.e. dispositions, transfer of assets to other ORGs, cost adjustments, and depreciation

Sending tags to Tagging Contacts Recording certain changes/edits in the

Property Management system– Movement of item(s) from one building to

another – Movement of item(s) from one CNAC or ORG to

another– Changes in disposition, i.e. disposal, sale, etc.


Role: Property AdministratorRole: Property Administrator

A person designated by their School/Center as the liaison between their organization and the PMG on all property issues Coordinates the property management

activities of their assigned area(s) Records certain changes/edits in the

Property Management system Maintains complete and accurate inventory

of their areas equipment– Manages the disposal process, including disposal

forms


Role: CustodianRole: Custodian

Responsible for the physical custody of the property item This is generally, but not necessarily, the

person that is using the item Name of person as specified on the

Purchase Order by the Buyer– Must be a Penn employee


Role: Tagging ContactRole: Tagging Contact

Responsible for tagging the property item Responsible for placing inventory tags

supplied by the Property Management Group (PMG)

Sends notification to PMG and Property Administrator of item(s) tagged (item and tag #) when tagging completed

Name of person as specified on the Purchase Order by the Buyer– Must be a Penn employee


Lifecycle of Property Asset in PMSLifecycle of Property Asset in PMS

Recording of Asset Maintenance of Asset Data

Location Custodian & Tagging Contact Description, Serial Number Condition Depreciation

Disposal of Asset Retirement Sale Lost, Missing, or Stolen Items


Flowchart for Recording Assets Flowchart for Recording Assets inin

Property Management System Property Management System (PMS)(PMS)

Asset

Purchasedby Buyer

Asset Object Codes

Asset

InvoicedAsset

Paid

PMG Adds Assetto PMS*

& Sends Tags toTagging Contact

Tagging ContactTags Asset

& Sends Info toPMG & Prop Admin

PMG UpdatesPMS with

Tagging Info

*Acquisition date is generally last day of the month the item was paid and not the date it was delivered or placed in

service.

Asset

Received


Recording of Assets:Recording of Assets:Acquisition CostAcquisition Cost

The acquisition cost or property value of assets acquired via Purchase Orders or C-forms is the purchase price Charges for transportation and/or labor for

equipment installation and checkout shall be added to the value of equipment, when they can be determined


Recording of Assets:Recording of Assets:Government Ownership of Government Ownership of

EquipmentEquipment When completing a requisition, if the

answer to the question ‘Govt. Retain Title?’ is Yes

– PMG will not add this item to the PM System*– Property Administrator must maintain records at

the department for this property separately No

– PMG will add the item to the PM System– Only University owned assets are added to PM

system

* Refer to specific terms and conditions of grant/contract as property may convert to University ownership after completion of grant/contract.


Recording of Assets:Recording of Assets:Transfers-in of EquipmentTransfers-in of Equipment

The Property Administrator should notify the Property Management Group (PMG) With the Department’s assistance, PMG will

determine if the property was purchased by Penn AND whether the– Cost is over $5,000– Item has a useful life of more than one year– University has title to the property

If yes to all, PMG will add item to PMS If the University doesn’t retain title, the

Property Administrator must maintain records at the department for this property separately


Property Administrators are responsible for maintaining/updating the following in the Property Management System:• Location

• Building/Floor/Room • Custodian Name• Tagging Contact• Tagging Contact Phone

Number• Description

• Manufacturer• Model #• Serial #• Condition• In Use• Surplus• Mark for Retirement• Retirement Reason

Maintenance of Asset Data:Maintenance of Asset Data:Property Administrators Update Property Administrators Update

PMSPMS


Maintenance of Asset Data:Maintenance of Asset Data:Movement of EquipmentMovement of Equipment

Change in location within the same building and ORG code Property Administrator can update in

system Change in location to different building

or change in ORG or CNAC codes Complete Equipment Change Form and

send to PMG Home use

Complete a Home Use Statement Form– Send to PMG with appropriate signatures


Disposal of Assets:Disposal of Assets:‘Retirement’ of Equipment‘Retirement’ of Equipment

Departments may ‘retire’ or discard obsolete or unusable equipment by completing the Notification of Disposition of Equipment Form which includes: Reason for Disposal ID # or Tag # Description, Manufacturer, Model, Serial Acquisition Date and Cost, Accumulated

Depreciation and Sale Price (if applicable) Obtain appropriate approval signatures prior to

disposal Remove and discard University ‘tag’ at time of

disposal


Disposal of Assets:Disposal of Assets:Sale of EquipmentSale of Equipment

Departments may sell surplus equipment by completing the Notification of Disposition of Equipment Form Obtain appropriate approval signatures prior to

disposal Remove and discard University ‘tag’ at time of

disposal Include all information previously noted and a

copy of BEN Deposit slip must be attached to form Deposit of sale proceeds should be recorded as

follows:xx0-xxxx-x-xxxxxx-5602-xxxx-xxxx (Sale amount)xx0-xxxx-x-xxxxxx-2111-xxxx-xxxx (Sales Tax 7%)– Sales to tax-exempt entities require a copy of that

entity’s tax-exempt certificate


Disposal of Assets:Disposal of Assets:Lost, Missing, or Stolen PropertyLost, Missing, or Stolen Property

Property Administrators should notify the PMG immediately if property is lost, missing, or stolen Notify University Police first of stolen property

Statements required Lost or Missing: The custodian must write

and sign a statement of how the loss occurred Stolen: Obtain a copy of the police report Attach the statement/police report to the

Notification of Disposition of Equipment Form


Depreciation: What is Depreciation: What is Depreciation?Depreciation?

Depreciation is a non-cash expense that reduces the value of an asset because of wear, age or obsolescence Most assets lose their value over time, i.e.

they depreciate

Depreciation expense information is necessary for University financial statements Indirect cost proposal


Depreciation: What is Depreciation: What is Depreciation?Depreciation?

From University Financial Policy 1106.02 All plant assets will be depreciated using the

straight line method One-half of one year’s depreciation will be recorded

in both the year of acquisition and the last year of useful life or the year of disposition whichever comes first

The Category Code, entered when creating a Purchase Order, determines the number of years the item will be depreciated, i.e. the useful life of the asset


Depreciation:Depreciation:Example of Depreciation Example of Depreciation

ScheduleSchedule Equipment purchased for $10,000 with

a five(5) year of useful life. 1st year depreciation = $1,000 2nd year depreciation = $2,000 3rd year depreciation = $2,000 4th year depreciation = $2,000 5th year depreciation = $2,000 6th year depreciation = $1,000


Depreciation:Depreciation:Use of in Calculation of Book Use of in Calculation of Book

ValueValueBook Value = Acquisition Cost – Accumulated

Depreciation Using the prior example, what is the Book Value of

the asset in year five (5)? 1st year depreciation = $1,000 2nd year depreciation = $2,000 3rd year depreciation = $2,000 4th year depreciation = $2,000 5th year depreciation = $1,000

– The last year of depreciation is 50% of one year straight line value (i.e. 50% of 2,000) regardless if disposition is June 30 or July 1

Accumulated Depreciation is $8,000 Book Value is $2,000


Property Inventory VerificationProperty Inventory Verification

Quarterly review of asset additions, transfers, & disposals by Hirons & Associates, Inc.

Hirons quarterly review site visits started in October 2005 Verify asset additions

– category code, location, description, custodian, tagging contact

Tagging of untagged assets Inquiry on asset transfers and asset

disposals


Inventory of AssetsInventory of Assets

Federal regulations require bi-annual inventory of all University owned assets

Inventory by Hirons & Associates For FY06, the bi-annual inventory will begin

in April 2006 Beginning in FY07, quarterly cycle counts

will replace the biannual inventory– One-eighth (1/8) of Penn’s property will be

counted each quarter– All assets counted over a two year period


Access Request Forms/System Access Request Forms/System AvailabilityAvailability

In order to obtain access, users must Attend training Complete ‘Request for Administrative

Mainframe Logon ID…’ Form– Need to identify ORG(s) OR CNAC – Need Access Administrators Signature

System available from 8:00 a.m. – 6:00 p.m.


Best PracticesBest Practices Periodic ‘self’ inventory to ensure data is

properly reflected in PMS Manage proactively as events happen – ask…

Where the equipment is located (Bldg/Floor/Room)? Who is the tagging contact? Who is the custodian? What equipment is used for research?

Establish operating procedures for your area for maintaining property effectively May require coordination with the following

– Building/Business Administrator– Grants Manager/Administrator– Principle Investigator (PI)– Custodian/Tagging Contact


End-User Support ModelEnd-User Support Model

Property Administrator

PMGproperty@pobox

CustodianTagging Contact


Reminder: Events that Trigger Reminder: Events that Trigger Need to Review/Manage Need to Review/Manage

Equipment UpdateEquipment Update Initial Recording of Property Add Serial or Manufacturer Numbers Confirm Category Code, Location, Custodian, and

Tagging Contact, Tag Number, etc. On-going Maintenance

Movement of Property (Building/Floor/Room) Change of Custodian or Tagging Contact Change of Status (Condition, Surplus, In Use) Change in Government Ownership of Equipment Transfer of Property from one ORG to another ORG

Disposal of Property Transfer Property to another Organization Retirement or Sale of Property Missing, Loss or Stolen Property

Transfer In of Property


Your Next StepsYour Next Steps

Complete ‘Quiz’ at end of this presentation Register for Property Management Hands-on

Training (http://knowledgelink.upenn.edu/)

Print, complete, obtain authorizing signatures, and bring to hands-on training class the Request for Administrative Mainframe LOGON ID form. http://www.finance.upenn.edu/comptroller/forms/

Meet with your School/Center Senior BA to review your role

Department of Financial Training Knowledge Building

Documents

property asset property

property system

university property

property administratorrole

property issues

property management

property management

property item responsible