UTHSC-H Finance - Capital Assets Management

Table of Contents

Section	Title
	Introduction/Overview
A.	Accountability & Responsibility for State Property
B.	Liability for Property Loss
C.	Purchasing / Tagging Equipment
D.	Annual Physical Inventory Process
E.	Transfer of Capital and Controlled Equipment-Internal
F.	Transfer of Capital and Controlled Equipment-External
G.	Transfer of Non-capital, Non-controlled Equipment
H.	Temporary Removal of State Property from UTHSC-H Premises
I.	Discarding Obsolete Equipment
J.	Lost or Stolen Equipment
K.	Purchases of Equipment by UTHSC-H Employees
L.	Equipment Loans
M.	Surplus Computers
N.	Software Capitalization
O.	Adjustments to Departments Records
P.	Trade-in of Equipment
Q.	Returned Merchandise to Vendor
R.	Gifts of Equipment
S.	Equipment Guidelines for Separating Employees
T.	Calculating Depreciation
U.	Criteria and Procedures for Classifying Leases
V.	Performing Year-end Closing and Reporting

Introduction/Overview

See HOOP 16.01

As a direct result of the increasing need for accountability, Texas State Government is responding by taking positive measures to trim its day-to-day expenses. Many state agencies and institutions are depending upon technology to assist them by providing expanded and more immediate information. Because of the response of the State Government to these changes, the Texas Comptroller of Public Accounts was chosen to develop and update statewide property accounting. The goal of these changes is to provide government with more information in order to produce better and more timely decisions. These changes are also intended to serve as a governmental tool to assure the public that the assets that all state agencies are entrusted with are being taken care of and used well.

The purpose of this handbook is to inform you, the user and/or custodian of state property within The University of Texas Health Science Center at Houston (UTHSC-H), of current State laws, rules, regulations, and procedures which must be followed in using and disposing of state property. These policies and procedures apply to all state property, regardless of cost.

The Information Handbook for State Property Accounting Responsibility, published by Capital Assets Management (CAM), contains the policies and procedures of the UTHSC-H mandated for the fulfillment of state property accounting responsibilities. The policies and procedures described in the Information Handbook apply to all state property, regardless of cost or fund source.

Table of contents

Section A

Accountability & Responsibility for State Property

All state agencies are responsible for the accurate and timely reporting of all personal property in their possession. Agencies are also responsible for assuring the accuracy of all statements of financial condition relating to personal property.

The authority of the delegation of responsibility as it pertains to state property is contained in Tex. Gov't. Code Ann. sec. 403.273 (Vernon Supp. 1993) and reads, in part:

The head of each state agency is responsible for the custody and care of state property in the agency's possession.
The head of each state agency shall designate a property manager and inform the comptroller of the designation. Subject to comptroller approval, more than one property manager may be appointed by the agency head.
The property manager shall maintain the records required and be the custodian of all property possessed by the agency.
When an agency's property is entrusted to a person other than the property manager, the property manager shall require a written receipt from the person receiving custody of the property...

The President of The University of Texas Health Science Center at Houston has selected the Assistant Director of Accounting as the designated Property Manager. The Assistant Director of Accounting has designated Capital Assets Management (CAM) to assume the day-to-day responsibility for the institution's property and equipment compliance.

Chairs, administrative heads of departments (in the absence of chairs) and administrative heads of operating units (collectively known as chairs and administrative heads) within UTHSC-H are designated property officers, and as such, are responsible for all university property in their care and in performing the annual physical inventory at the time scheduled and in the manner prescribed by the Property Manager. Although this responsibility may not be delegated, one or more persons should be selected by the chair or administrative head to assist in carrying out the daily functions required to properly account for assigned property. This person will be referred to as the designated administrative official throughout this document. Chairs and administrative heads have responsibility for three types of property:

Institutionally owned property that costs $5,000 or more. This equipment must be tagged and entered into the inventory records of the UTHSC-H, which are used to report UTHSC-H inventory to the Comptroller's Office of Public Accounts.
Institutionally owned non-consumable property that costs less than $5,000 per unit. Even though this property is not tagged or entered into the inventory records, the chair or administrative head is responsible for ensuring the retention of the property in the department's custody and ensuring that such property is used for the proper purposes.
Institutionally owned property that meets the comptroller's definition of "controlled." Controlled assets are tagged and recorded in the inventory records. The comptroller has defined "controlled" assets as the items listed below, most of which cost between $500 and $5,000. Handguns and rifles/shotguns must be reported regardless of cost.

Title	Minimum	Account
Hand Guns	$0	67374
Rifles	$0	67374
Data Projectors	$500 - $4,999.99	67374
Stereo Systems	$500 - $4,999.99	67374
Cameras	$500 - $4,999.99	67374
Video Recorder/Laserdisc Player (TV, VCR, Camcorder)	$500 - $4,999.99	67374
Desktop CPU (*not* Apple)	$500 - $4,999.99	67378
Printer (not portable)	$500 - $4,999.99	67378
CPU Desktop--Apple	$500 - $4,999.99	67378
Portable CPU (*not* Apple)	$500 - $4,999.99	67378
Portable Apple CPU	$500 - $4,999.99	67378

The CAM Department is responsible for establishing and maintaining the required property records. Inventory Crystal Reports and Unlocated Inventory Crystal Reports are requestable and should be generated by the departments in the asset management module. Any reports needed beyond those previously mentioned should be obtained through CAM.

When there is a change of the chair or administrative head, the outgoing chair or administrative head will request that Capital Assets Management prepare a "Property Transfer Receipt" form (contact CAM) and a report of the inventory items for which he or she is accountable. It is the sole responsibility of the incoming chair or administrative head to satisfy himself or herself that all property items listed on the report are present and in good condition before signing the Property Transfer Receipt form. Signing the Property Transfer Receipt form means the incoming chair or administrative head accepts responsibility for the property.

Table of contents

Section B

Liability for Property Loss

Each chair or administrative head should ensure that an employee entrusted with property exercises, at a minimum, reasonable care for its safekeeping. The term "reasonable care" means that steps have been taken to maintain the upkeep of any asset in an acceptable manner, to ensure the security of the asset, to ensure that any asset can be located at any time requested, and to ensure that the person responsible for the asset is known.

If the President has reasonable cause to believe that an agency's personal property is missing, destroyed, or damaged through the negligence or fault of an official or employee of the State, the President must report the occurrence to the State Auditor's Office and the Office of the Attorney General. The Attorney General will investigate and, where appropriate, take legal action to recover the value of the State's property. The Attorney General shall determine the value to be recovered based on the value of the asset and the degree of responsibility. The authority under which liability for property loss is outlined is found in Tex. Gov't. Code Ann. sec. 403.275 (Vernon Supp. 1993) and reads:

"The liability prescribed by this section may attach on a joint and several basis to more than one person in a particular instance. A person is pecuniarily liable for the loss sustained by the State if:

agency property disappears, as a result of the failure of the head of an agency, property manager, or agency employee entrusted with the property to exercise reasonable care for its safekeeping;
agency property deteriorates as a result of the failure of the head of an agency, property manager, or agency employee entrusted with the property to exercise reasonable care to maintain and service the property; or
agency property is damaged or destroyed as a result of an intentional wrongful act or of a negligent act of any state official or employee."

Tex. Gov't. Code Ann. sec. 403.276 (Vernon Supp. 1993) reads, in part:

“If the President has reasonable cause to believe that any state property in the agency's possession has been lost, destroyed, or damaged through the negligence or fault of any state official or employee, the agency head responsible shall immediately report the loss, destruction, or damage to the state auditor and to the attorney general.
The attorney general shall investigate a report of loss, destruction, or damage to state property."...
"If the investigation discloses that a property loss has been sustained by the state through the fault of a state official or employee, the attorney general shall make written demand on the state official or employee for reimbursement to the state for the loss sustained."

When a departmental chair realizes that an item of equipment is not in its proper location, he or she shall conduct a diligent search until the item is either found or it is deemed lost or stolen.

When the chair determines that an item of equipment is stolen from the premises of any unit of the Health Science Center, he/she or a designated administrative official is responsible for immediately reporting the theft by telephone to the University of Texas Police Department (UTPD). UTPD will conduct an examination of the incident and instruct the reporting department to execute a Missing, Damaged or Stolen Property Report form found on the CAM web site.

The department must send a copy of the completed form to Capital Assets Management, retain a copy for the departmental records, and forward the original form to the chief of UTPD. UTPD shall then complete an Offense/Incident Report and forward a copy to the Capital Assets Management Department.

In the case of lost or missing equipment, the chairperson or designated administrative official shall complete and forward a Missing, Damaged or Stolen Property Report form (see CAM web site) to Capital Assets Management. The department must keep a copy for the departmental records. UTPD is not to be contacted when equipment is lost or missing.

In both instances, the chair or administrative head must forward a memo to the Property Manager documenting the circumstances surrounding each loss or theft and describing the controls that were in place to safeguard the equipment at the time of the loss or theft. The Property Manager will determine if reasonable care was exercised to prevent the loss or theft. If it is determined that negligence existed, the party entrusted with safeguarding the property may be held personally liable for the loss.

On receipt of the Missing, Damaged or Stolen Property Report form and the memo from the chair or administrative head, Capital Assets Management (CAM) will notify both the Comptroller and the State Auditor's Office (SAO) via the Statewide Property Accounting system. For stolen assets, CAM will fax the Missing, Damaged or Stolen Property Report form and other documents to the SAO.

If the State Auditor's Office determines that a violation has occurred by a State official or employee, it will forward the report to the Office of the Attorney General (AGO) for investigation. If the AGO declares negligence, it will make a written demand upon such State official or employee for reimbursement to the State for the loss sustained as determined by the SAO.

Assets that are reported missing will remain on that department's inventory for a two-year period. If the asset is still missing after two years, it can be deleted from the inventory records.

Table of contents

Section C

Purchasing / Tagging Equipment

The Capital Assets Management (CAM) Department audits Purchase Orders (PO's), Requisitions (RQ’s) and Procurement Card purchases with a total order cost of $500 or greater for proper coding of the account and classification of the expenditures. If the expenditure is for the purchase of capital or controlled equipment, CAM will assure that a bar code identification plate is affixed to the property and the inventory records are updated in the Assets Management System accordingly. The Capital Assets Management Department also is responsible for the control of inventory tags and numbers and will make certain a number is assigned to each item of equipment that meets the criteria for capitalization or controlled as it is received.

All items, to include Capital and Controlled equipment, purchased with the Procurement Card are required to be entered into PeopleSoft as a POS requisition. The entire purchase must be entered in the requisition, with a cost breakdown for each item. Capital Assets Management (CAM) must be notified of all capital and controlled asset purchases within 48 hours of the purchase to insure proper coding, tagging and reporting. A detailed price breakdown such as sales receipt, invoice, quote or packing slip with price listing (only one) from the vendor is required on all capital and controlled purchases and must be forwarded to CAM fax #713-500-4703. It will be imaged and retained for the life of the asset. The original receipts are to be kept in the department file as support documentation to prevent discrepancies during an Audit. Reminder: When using the Procurement Card, the department must reconcile the bank statement with the purchase order for the PO encumbrance to be released. See Procurement Card Procedures on the CAM website for the Asset Information form and more detailed instructions.

Sensitivity Tags: Occasionally a department of the University of Texas Health Science Center at Houston (UTHSC-H) may wish to tag an asset that does not meet the capital threshold and controlled criteria. Capital Assets Management will supply a sensitive tag to affix to the asset for departmental tracking only. During the annual physical inventory process, these assets are not required for reporting. This is an internal procedure only.

PROCEDURE

Departments who wish to track assets that do not meet the capital and controlled criteria should contact the Capital Assets Management Department for the sensitive tag via email or phone. It is the responsibility of the department to affix the sensitive tag to the asset and keep documentation in the files for internal tracking.

Table of Contents

Section D

Annual Physical Inventory Process

State regulations mandate that each agency shall make a complete physical inventory of all capital and controlled assets in its possession each fiscal year. The Capital Assets Management Department will conduct the annual physical inventory, the objectives of which are to physically verify existence of all capital assets and controlled equipment and to update the property system with information obtained in the inventory process to ensure the accuracy of the system database.

The process is initiated by CAM who will schedule a date for the inventory process with the department chair, administrative head or designated administrative official. This contact will address the responsibilities and expectations of Capital Assets Management and the department being inventoried. All in the department involved in the inventory process must take the On-Line Inventory Awareness Course on the CAM web site before starting the inventory process. This must be done annually.

Chairs and administrative heads must make arrangements for CAM personnel to have access to every room and area that is under the chair or administrative head's control. To ensure that all areas will be available for access by CAM's personnel, the chair, administrative head or designated administrative official will notify all personnel within his or her area that a physical inventory is going to be conducted. Departments will assign a representative to accompany CAM personnel as the inventory is performed so that questions, access issues, faculty/staff concerns, etc. can be resolved as they arise. Capital Assets Management has use of a grand master key that may be used as necessary to gain entry into locked areas. Departments must make arrangements for inventorying sensitive areas such as locked cabinets or drawers, locked closets containing capital equipment, labs containing radioactive chemicals, labs conducting experiments that cannot be disrupted, etc.

Capital Assets Management will conduct a room to room verification of each piece of capital equipment. The department should have all assets out and ready for the scanning process. CAM will scan all departmental assets into the barcode readers. After completing the first inventory, upon department request, a second inventory of remaining unlocated assets will be conducted. Once it is completed an unlocated report is provided to the department so that they can perform a room by room search to locate the unlocated assets. If the department locates the unlocated assets they are authorized to fill out an Equipment Verification Form and submit it to CAM for processing. Please note that assets must be scanned at least every other year. In rare exceptions, when scanning is not possible, departments will have to verify these assets each year for physical inventory purposes and include an explanation for verification by form on the verification of physical inventory form. Departments may be subject to an audit of items submitted on verification forms if those verifications exceed 3% of the asset count or inventory cost on the departmental inventory report. CAM personnel will use a judgmental sample which will be based on, but not limited to, historical cost, depreciated cost, last scan date, etc.

If, in the judgment of Capital Assets Management, a remote location’s inventory becomes material, the department will be notified and an on-site inventory will be scheduled. On the prescribed date, a CAM representative will travel to the location and scan the assets. Every effort should be made to have all assets available on that date as this will be a one time scan. If at all possible, this should include items out on removal. We will make every effort to conduct these inventories bi-annually. In the off year the inventory should be verified by the designated responsible party.

Inventory at remote locations not considered to be material is to be verified and signed for by a designated responsible party at the remote location. This inventory is only to be verified by an individual who is assigned to the remote location.

Upon receipt of the final unlocated report, missing assets still not found should be reported to CAM. Stolen assets should be reported to CAM and the UT police within two weeks of receipt of the unlocated report. If an asset is missing, the department will submit a Missing, Damaged or Stolen Property Report form to CAM for processing. CAM will log the asset as missing in the Assets Management System and change the status code to "M" and the disposal code to "19". The date the asset was reported missing and the name of the individual reporting the asset missing should be placed in the comment section. If the asset is not located at the end of 2 years, the disposal code should be changed to "18". This code reflects that the asset was deleted from the department's inventory. See Section J for lost or stolen equipment.

At the completion of the inventory, a departmental report and Inventory Sign-Off form will be provided to the chair or administrative head for his/her signature. An exit conference with the chair or administrative head and designated administrative official will be scheduled. The chair or administrative head must sign and date the Inventory Sign-Off form acknowledging his/her responsibility for the equipment listed on the report. The statement also certifies that no unnecessary equipment has been purchased using Federal funds. Each chair or administrative head must dedicate the resources to expeditiously complete the annual inventory. The department will complete the inventory process in less than one month.

Table of contents

Section E

Transfer of Capital and Controlled Equipment-Internal

The University of Texas Health Science Center at Houston (UTHSC-H) is committed to the responsible use of capital or controlled equipment and the orderly transfer of capital or controlled equipment within its departments. Transfers of capital or controlled equipment within the UTHSC-H must be made in a manner that clearly maintains the designation of responsibility for the property. For the purposes of this policy, “equipment" refers to capital and controlled equipment.

Any lab or clinic equipment with posted hazard warning sign(s) (e.g., biological, chemical, radiological, ultraviolet [UV]), must have its safety status verified prior to relocation.

PROCEDURE

I. Transfer of Equipment to Other Departments -- without Charge

The department that possesses the equipment completes a Report of Interdepartmental Transfer of Equipment form listing each item. Both a representative of the department that possesses the equipment and a representative of the department receiving the equipment must sign the form. Copies of the form must be distributed by the department receiving the equipment to Capital Assets Management (CAM), which modifies the departmental inventory records on receipt of the signed forms. If the movement of equipment requires the services of an outside moving company, the receiving department is responsible for the cost.

II. Transfer of Equipment to Other Departments -- with Charge

Any chair or administrative head may transfer equipment (that is surplus to his or her department) to another Health Science Center department with charge. The department offering the goods for sale should prepare and send an institutional-wide announcement (E-MAIL) that lists the items available for transfer. The list must provide the following information for each item:

Inventory tag number
Description of item
Condition (good, fair, poor)
Acquisition date
Acquisition cost
Price expected

If a department (offeree) extends an offer to purchase an available item, the department possessing the equipment (offeror) must prepare a Report of Interdepartmental Transfer of Equipment form and forward it to the offeree for their signature. The offeree must prepare a memorandum of the sale including the price agreed upon with the offeror and the chartfield from which the item(s) will be purchased. The offeree should forward the completed Report of Interdepartmental Transfer of Equipment form to Capital Assets Management and send the memorandum of sale to the General Accounting Office for appropriate fund transfers. Capital Assets Management will update the proper inventory records according to the information on the transfer form. All such expenditures of funds for equipment transferred with charge shall affect an account other than capital accounts.

III. Transfer of Equipment to Surplus Property

Property no longer having useful value to a department that is not transferred to another department or traded-in, shall be transferred to the Surplus Property Warehouse. The cost of transferring surplus property to the surplus warehouse will be assumed by the Capital Assets Management Department.

Departments wishing to transfer equipment to the Surplus Warehouse must follow the procedures and guidelines implemented by Environmental Health & Safety (EH&S) and Capital Assets Management (CAM). In an effort to protect employees, the environment, and public buyers of university surplus equipment, the Environmental Protection Program has developed a Comprehensive Asset Tracking and Environmental Release (CATER) program to inspect certain pieces of equipment before transfer to the Surplus Warehouse. This equipment includes items from research laboratories and clinics that contain a hazardous material or may have come into contact with hazardous materials.

Surplus transfer requests for all equipment can be made electronically by accessing the CAM website. Complete all sections of the Surplus Transfer of Equipment form and click on Send Request at the bottom of the form. An e-mail will be sent to the e-mail address entered on the form to indicate that the form has been sent. Save this e-mail! It is for your reference and proof that the form was submitted and when.

Prior to relocation, the department transferring laboratory equipment must ensure that the equipment has been properly decontaminated, cleaned, or drained of fluid. After electronically receiving the Surplus Transfer of Equipment form, EH&S will determine if a safety inspection is required and, if so, travel to the location within three business days to inspect potentially hazardous items that are to be relocated to the Surplus Warehouse. The inspections are confirmatory surveys to ensure the equipment has been sufficiently decontaminated. Upon completion, EH&S will remove any warning labels and affix a green CATER tag with the date inspected and his/her initials to the piece of equipment near the UT Tag or serial number or on front of the equipment. In addition, equipment such as centrifuges and refrigerators will be sealed with an appropriate label to prevent reuse before transfer to surplus. The person listed as the departmental contact will be notified by phone or in person of the inspection results.

Once EH&S personnel have inspected the equipment, the Surplus Transfer of Equipment form will be electronically forwarded to CAM. If no inspection is required, EH&S will directly forward the Surplus Transfer of Equipment form to CAM. CAM will then be responsible for scheduling and moving the equipment from the laboratory or office location to the Surplus Warehouse. See Scheduling Surplus Pickups Guidelines on the CAM website for more detailed information.

IV. Transfer of Equipment from Surplus Property

Equipment held in the "Surplus Property Area" located at the OCB warehouse is available without cost for transfer to those departments in need of such equipment. The warehouse hours are Tuesday 9:00 a.m. to noon and 1:00 p.m. to 4:00 p.m. for viewing and picking up surplus. In the event surplus property is transferred from the surplus area to another department, the department making the request shall initiate a Report of Interdepartmental Transfer of Equipment form. The cost of transporting equipment from the Surplus Property Area is funded by the department requesting the transfer.

Table of contents

Section F

Transfer of Capital and Controlled Equipment--External

The University of Texas Health Science Center at Houston (UTHSC-H) is committed to the responsible use of and the orderly transfer of equipment to the UTHSC-H and from the UTHSC-H to external entities. The UTHSC-H adheres to University of Texas System guidelines and state and federal regulations regarding the transfer of supplies and equipment. For the purposes of this policy, "equipment" refers only to capital and controlled equipment. For information on transferring non-capital and non-controlled assets, refer to Section G of this document.

The UTHSC-H considers transfers of equipment only to other universities and institutions.

Title to equipment purchased with state funds, designated funds, or gift and endowment funds vests with UTHSC-H.

Title to equipment purchased with sponsored project funds may be determined as follows:

Title to equipment purchased with federal grant funds generally vests with the UTHSC-H on date of purchase.
Title to equipment purchased with federal contract funds is determined by the terms of the contract on the date of purchase.
Title to equipment purchased with private grant or contract funds generally vests with the UTHSC-H, unless specifically stated otherwise in the grant guidelines or contract terms.
Title to equipment purchased with sponsored project funds that expired prior to the equipment's transfer to the UTHSC-H generally vests with the UTHSC-H.

The eligibility for transfer of equipment may be determined as follows:

Equipment purchased using state funds, designated funds, or gift and endowment funds is ineligible for transfer except to another State of Texas institution, and then only if it is considered surplus to the UTHSC-H.
Equipment transferred to the UTHSC-H with a faculty member may be transferred with the same faculty member to another university; in such cases, there will be no charge to the receiving university for the equipment.
Equipment purchased with active sponsored project funds is eligible for transfer only if the project is being transferred with the PI to another institution. In such cases, there will be no charge to the receiving institution for the equipment.
Equipment purchased with sponsored project funds that originated at the UTHSC-H and have since expired is eligible for transfer with the PI to another university. This transfer may be effected only if the department chair and the dean approve the transfer and the receiving institution agrees to purchase the equipment from the UTHSC-H at a depreciated cost to be determined by Capital Assets Management (CAM).

Any lab or clinic equipment with posted hazard warning sign(s) (e.g., biological, chemical, radiological, UV) must have its safety status verified prior to relocation. The PI must call the Environmental Health & Safety (713-500-5832) prior to moving such equipment.

PROCEDURE

I. Transfer of Equipment to and from another State of Texas Institution

When UTHSC-H departmental personnel become aware of the need for and the willingness to transfer equipment to another State of Texas-supported agency or institution, the head of the UTHSC-H department possessing the equipment must submit a written request that has been signed by the chair or administrative head and dean to the Property Manager requesting approval to transfer the equipment. The written request should list the UTHSC-H tag number, property description, original funding source and reason for transfer.

If the Property Manager approves the transfer, CAM must remove the property identification tags before the equipment is removed from UTHSC-H premises and will prepare the necessary forms and documents to effect the transfer in the State Property Accounting System. The entire process must be completed before removal of the equipment.

When a UTHSC-H department receives equipment from another State Institution, the department receiving the equipment must notify the Capital Assets Management Department to ensure that the transfer documents were processed by the transferring State agency and received in the Capital Assets Management office. Once the information is received, Capital Assets Management will tag those assets meeting the capitalization criteria and enter the assets into the Assets Management System.

II. Transfer of Equipment Purchased with Active Sponsored Project Funds to Another Institution

Procedures for transferring equipment purchased with active sponsored project funds differ depending on the type of contract or grant. The PI must contact the Contracts and Grants Management department to determine the appropriate procedure and obtain an External Equipment Transfer form found on the CAM website.

Before completing the External Equipment Transfer form, the PI should contact CAM to obtain a list of equipment that is eligible for transfer. The PI must submit the completed External Equipment Transfer form to the CAM department for verification. The form should be completed with the exception of approvals and should list the equipment to be transferred. The list should include the following:

inventory tag number
description
acquisition cost
account number

CAM will forward the request to the chair or administrative head, who will indicate his or her approval and secure the approval of the dean, Contracts and Grants Management, and the Property Manager. Final approval rests with the Property Manager. The Property Manager will forward the original External Equipment Transfer form to CAM for distribution of copies to the department, the PI, and Contracts and Grants Management.

The equipment shall not be removed from the UTHSC-H until all approvals have been obtained and the inventory tags have been removed by CAM.

III. Transfer of Equipment Purchased with Expired Sponsored Project Funds to Another Institution

The requesting PI must submit a letter to the Property Manager requesting transfer of equipment purchased with expired sponsored project funds. The letter must bear the signatures of the faculty member's department chair or administrative head and dean, indicating their approval. The PI must include with the letter the receiving institution's agreement to purchase the equipment at a depreciated cost, as determined by CAM. Depreciated costs will be determined using industry standards or by obtaining an independent appraisal at the expense of the requesting department. The receiving institution is required to provide UTHSC-H a Purchase Order or Check to purchase the equipment.

The equipment shall not be removed from the UTHSC-H until all approvals have been obtained and the inventory tags have been removed by CAM. It is the PI's responsibility to arrange for transport of the equipment with the receiving institution.

IV. Transfer of Equipment Purchased with Gift and Endowment Funds.

Title to equipment purchased with gift and endowment funds vests with UTHSC-H. Equipment purchased using gift and endowment funds are ineligible for transfer except to another State of Texas institution, and then only if it is considered surplus to the UTHSC-H.

V. Transfer of Equipment Transferred to the UTHSC-H from another Institution

The requesting PI must submit a letter to the Property Manager requesting transfer of equipment that he or she transferred to the UTHSC-H. The letter must bear the signatures of the faculty member's department chair or administrative head and dean indicating their approval. In such cases, there will be no charge to the receiving institution for the equipment.

The equipment shall not be removed from the UTHSC-H until all approvals have been obtained and the inventory tags have been removed by CAM.

It is the PI's responsibility to arrange for transport of the equipment with the receiving institution.

VI. Transfer of Equipment from a Non-State of Texas Institution

When a UTHSC-H department receives equipment from a non-State of Texas Institution, the department receiving the equipment must immediately notify the Property Manager and CAM. Documentation supporting transfers of equipment from non-State of Texas institutions shall be forwarded to CAM and will include the item description, serial number (if available), and the book value of the item. After obtaining this information, CAM is responsible for tagging equipment considered a capital asset and recording it in the Assets Management System.

Table of contents

Section G

Transfer of Non-capital, Non-controlled Equipment

In addition to its commitment to accurately maintain its capital or controlled equipment inventory, The University of Texas Health Science Center at Houston (UTHSC-H) is committed to the responsible use and transfer of non-capital and non-controlled assets. In this policy, all references to equipment indicate non-capital and non-controlled equipment.

The eligibility for transfer of non-capital and non-controlled equipment may be determined as follows:

Equipment purchased with state funds, designated funds, or gift and endowment funds is ineligible for transfer except to another State of Texas institution, and then only if it is considered surplus to the UTHSC-H. Exceptions to this will be considered if an item is of such a technical or specialized nature that it cannot be used elsewhere within the department. Exceptions are handled on a case-by-case basis and must be approved by the department chair and the head of the operating unit.
Non-capital and non-controlled assets purchased with sponsored project funds (active and inactive) are eligible for transfer with the principal investigator of the sponsored project if approved by the department chair and the head of the operating unit.

PROCEDURE

I. Transfer of Assets of a Technical/Specialized Nature Purchased with Non-sponsored Project Funds

The departing faculty member must submit a written request to the department chair asking that an exception to institutional policy be made. The request must identify the specific items proposed for transfer and explain why an exception should be made.

II. Transfer of Assets Purchased with Sponsored Project Funds

The departing faculty member must prepare a written request and summary list of the non-capital/non-controlled assets proposed for transfer that were purchased from active or inactive sponsored projects on which he or she was the principal investigator, and submit it to the department chair. The request must include a statement that the items were purchased with the principal investigator’s sponsored project funds.

In both instances described above, the request must be approved by the department chair and the head of the operating unit, and must be maintained as part of the permanent departmental records for audit purposes. The faculty member will be notified of approval/non-approval by the chair. After the transfer is approved, the faculty member may remove the items from the UTHSC-H.

Table of contents

Section H

Temporary Removal of State Property from UTHSC-H Premises

State property in the possession of the UTHSC-H may be removed from the premises only for official business of the University. When it is so removed, the individual removing said equipment assumes pecuniary responsibility.

If such state property is to be removed, the department requesting removal must prepare a Temporary Removal of Equipment from UTHSC-H Premises Permit form found on the CAM web site.

On this form, the person requesting the removal of equipment must do the following:

Certify that the property being removed will be used for the purpose of conducting official University business.
Provide the address where the equipment will be taken.
Provide the name and title of the person responsible for the equipment while it is removed from the premises.
Provide the date upon which the equipment will be removed from the Health Science Center premises.
Provide the date by which the removed equipment will be returned to the premises.
Date and sign the request.
List the following information for each article:
a. Inventory tag number
b. Description w/serial and model numbers
c. Manufacturer
If property is to be removed from the State of Texas, approval must be obtained from both the Dean and the Property Manager.

The form must be signed by the chair, administrative head or designated administrative official and a copy forwarded to Capital Assets Management. The individual removing the equipment must have a copy of the form with him/her at the time the equipment is removed.

At the time of the return of property, the chair, administrative head or designated administrative official must sign the form certifying that the state property was returned and that it was undamaged. The signed form must be forwarded to Capital Assets Management.

If UTHSC-H property must be taken off the premises frequently, the department should submit a blanket request with a return date within the current fiscal year. However, an extended request that goes beyond the end of any fiscal year must be renewed on an annual basis.

Table of contents

Section I

Discarding Obsolete Equipment

The Departmental Administrative Official and the person conducting the annual inventory from CAM will review all of the property assigned to the department to determine if an asset is unused, broken, or obsolete. Property that no longer has a useful value to a department, which is not transferred to another department or traded in, shall be transferred to the Surplus Property Warehouse. Such items will not be sold, discarded or placed in indefinite storage.

To transfer equipment to the Surplus Property Warehouse, departments must follow the procedures for transferring surplus property described in Section E of this document.

Before removing parts from broken or useless equipment prior to its transfer to Surplus Property, the chair or administrative head must request permission from the Property Manager. The chair or administrative head must provide a statement to the Property Manager that explains why the equipment is to be dismantled and how the parts will be used to construct or repair other existing equipment. DO NOT cannibalize equipment unless prior approval is obtained by the Property Manager through CAM.

Equipment that is obsolete, unserviceable, and useless shall be transferred in the best condition possible to the Surplus Property Warehouse. Equipment stored for a reasonable period of time in the Surplus Property Warehouse that is no longer useful to any UTHSC-H department may be sold in a public surplus auction in accordance with the applicable provisions of the Regents' Rules and Regulations. Proceeds from such public auctions fund the surplus operation including the cost of transporting surplus property from UTHSC-H departments to the Surplus Property Warehouse. Excess funds are credited to General Funds Miscellaneous Revenue (Sales and Services). Exceptions to this are rare, and are granted only by the Property Manager.

Sale of equipment considered being hazardous or a potential liability to the UTHSC-H cannot be sold in a surplus property auction until it has been inspected by the Environmental Health and Safety Department. This includes equipment that is hazardous characteristic added (chemically or biologically contaminated equipment, refrigerators included) or inherently hazardous equipment (equipment that contains a hazardous material such as a radioactive sealed source of asbestos). Sale of equipment will be conducted with either full disclosure or remediation of any hazardous characteristics.

Sale of equipment to an employee of the UTHSC-H is prohibited except where the sale of such equipment is governed by Part II of the Regents' Rules and Regulations. Refer to Section K of this document.

Regents' Rules, Part II, Chapter VII, Section 8.6.

Table of contents

Section J

Lost or Stolen Equipment

When a departmental chair realizes that an item of equipment is not in its proper location, he or she shall conduct a diligent search until the item is either found or it is deemed lost or stolen.

When the chair determines that an item of equipment is stolen from the premises of any unit of the Health Science Center, he/she or a designated administrative official is responsible for immediately reporting the theft by telephone to the University of Texas Police Department (UTPD). UTPD will conduct an examination of the incident and instruct the reporting department to execute Missing, Damaged or Stolen Property Report form found on the CAM web site.

Table of contents

Section K

Purchases of Equipment by UTHSC-H Employees

Employees who wish to purchase UTHSC-H surplus equipment may do so by accessing the on line auction website (link on main CAM web site). Employees will receive notification of upcoming auctions announcements in the “News On The Go” publication. Employees may purchase surplus property directly ONLY after receiving authorization from the Executive Vice President, Chief Operating and Financial Officer (EVPCOOCFO). Prior approval and reporting are not required for purchases made at public auctions*. Contact Capital Assets Management for further information.

*(Regents' Rules, Part II, Chapter VII, Section 8)

Table of contents

Section L

Equipment Loans

In some circumstances, departments may wish to lend The University of Texas Health Science Center at Houston (UTHSC-H) equipment to another UTHSC-H department or to an external entity. In such circumstances and under the conditions listed below, the UTHSC-H will consider allowing loans of equipment. For the purposes of this policy, "equipment" includes any item regardless of value that is titled to, purchased by, or given to the UTHSC-H. The following conditions govern equipment loans:

A department may lend equipment to another UTHSC-H department.
A department may lend equipment to another State of Texas agency, if the property is to be used for state purposes and the loan is approved by the chair or administrative head and the Property Manager.
As a general rule, departments may not lend equipment to non-UTHSC-H employees or non-State of Texas institutions. However, under extraordinary circumstances, if the loan can be documented to be in the best interest and benefit of the university, exceptions to the policy will be considered.

PROCEDURE

I. Interdepartmental Loans of Equipment

When a department lends equipment to another department, the lending department prepares, signs, and distributes an Interdepartmental Transfer of Equipment form temporarily transferring the equipment to the borrowing department. When the equipment is returned, the borrowing department processes an Interdepartmental Transfer of Equipment form in order for the property records to be updated.

II. Equipment Loans to Other State of Texas Agencies

If a department wishes to lend property to another State of Texas agency, the chair or administrative head must submit a written request to the Property Manager requesting approval for the loan. The request must explain the reasons for the loan, be signed by chair or administrative head, and be accompanied by a description of the equipment and the UTHSC-H tag number (if it is a capital asset). If approved, the Property Manager will notify the chair or administrative head and the Capital Assets Management office. On written approval from the Property Manager, CAM prepares and forwards a loan agreement form to the department making the loan for appropriate signatures. The equipment may then be removed from the UTHSC-H premises. Loans are granted for up to one year from the date the loan is effected. Loan renewals must be requested annually and approved by the Property Manager. It is the chair or administrative head’s responsibility to ensure the equipment is returned by the due date. The equipment on loan must be removed from and returned to the UTHSC-H at the expense of the state institution borrowing the equipment. The loan of equipment to other state agencies does not relieve the chair or administrative head of responsibility for the property.

III. Equipment Loans to Non-UTHSC-H Employees and Non-State of Texas Institutions

The chair or administrative head must submit a written request to the Property Manager documenting why the loan is in the best interest and benefit of the UTHSC-H. The request must be signed by the chair or administrative head. If approved, the Property Manager will notify the chair or administrative head and the Capital Assets Management office. On written approval from the Property Manager, CAM prepares and forwards a loan agreement form to the department making the loan for appropriate signatures. The equipment can then be removed from the UTHSC-H premises. Loans are granted for up to one year from the date the loan is effected. Loan renewals must be requested annually and approved by the Property Manager. It is the chair or administrative head's responsibility to ensure that the equipment is returned by the due date. The equipment on loan must be removed from and returned to the UTHSC-H at the expense of the individual/institution borrowing the equipment. The loan of equipment to another individual/institution does not relieve the chair or administrative head of responsibility for the property.

Table of contents

Section M

Surplus Computers

All hard drives will be removed by department IT personnel from university purchased computers before being sent to the Surplus Warehouse. The CPU’s will be marked to indicate that the hard drive has been removed. The hard drives will be collected by those removing them and stored in a secure location until they are destroyed to DOD standards by the departments or their IT staff. Departments should put their own procedures in place to safeguard the information on the hard drives until they are properly disposed of.

Hard drives transferred from one UTHSC-H department or area to another must be cleaned to DOD standards prior to transfer. Hard drives do not need to be cleaned to DOD standards prior to shredding as long as the drives are maintained in a secure location and under the control of UTHSC-H personnel until shredded. Any drive leaving the physical possession of UTHSC-H personnel, even temporarily, must be cleaned to DOD standards before leaving UTHSC-H’s possession. Reasonable exceptions can be made where physically or technologically necessary. Exceptions should include alternative controls to protect the confidentiality of data stored on hard drives.

Table of contents

Section N

Software Capitalization

The University of Texas Health Science Center at Houston (UTHSC-H) capitalizes computer software, whether purchased or developed internally, in accordance with guidelines provided by the State Comptroller and FASB 86 accounting principles, to which the State of Texas requires its agencies adhere. In general, the following categories of software must be capitalized:

Purchased software with a cost of $5,000 or more.

Internally developed software that is to be marketed, in accordance with the Financial Accounting Standards Board (FASB) Statement No. 86.

Chairs or administrative heads who have been designated as property officers are responsible for accurately documenting accumulated costs of procuring or developing any software that meet the afore-mentioned criteria.

I. Determining Costs

A. Purchased software: If the total cost of acquiring the software is $5,000 or more, it is capitalized. Total procurement cost includes actual cost of software, installation charges, shipping and handling charges.

Software purchased in bulk is not capitalized unless each individual license costs $5,000 minimum per unit. DOS is capitalized only when purchased with a computer system. DOS upgrades are never capitalized. Maintenance agreements are capitalized only when purchased with a capital asset.

B. Internally developed software: When a department plans to internally develop software for the market, the departmental property officer must contact Capital Assets Management for instructions on adherence to FASB No. 86 guidelines.

The departmental property officer must also determine the dollar amount to be capitalized. This amount is the cost of development after establishing technological feasibility and up to the general release of the software for customer use.

Note: In software development, “technological feasibility” is generally established when the software's detailed system design or a prototype is completed and accepted. “General release” of the software usually means that the software is being produced for consumers.

The department should track relevant costs during the development of a software project; not re-create costs after the project is finished.

Costs incurred before establishing technological feasibility and after general release of the software are expensed.

Development costs to be used to determine if capitalization is required and the amount to be capitalized include:

Salaries and benefits of all personnel assigned specifically to the software development project.

Cost of contract services associated with the project.

Cost of materials and supplies used in the project.

Cost of capital items purchased solely for the project.

Appropriate portion of capital items purchased partially for use on the project.

Indirect costs, including overhead, as appropriate.

It is acceptable to apply an indirect cost rate to some of the direct costs—if the costs of development may be reasonably estimated.

Internally developed software to be marketed is normally capitalized upon completion of the project. However, if the amount invested in an incomplete software development project is substantial, the asset may be capitalized in a manner similar to “construction in progress” at fiscal year end.

C. Enhancements to capitalized software: If capitalized software is replaced by an upgrade (e.g., upgrading Dbase III to Dbase IV), the department must notify Capital Assets Management (CAM) via interoffice memo so that the departmental inventory records can be updated. The department must notify CAM that they will destroy the original version’s disks.

II. Disposal/Sale of Software

Software that becomes surplus to a department may be transferred with or without charge to another UTHSC-H department or transferred to the Surplus Warehouse. The original disks AND manuals or other documents must be transferred together as a single package. The department transferring the software must properly execute a Surplus Transfer of Equipment form to initiate the transfer. The receiving department must indicate, on the transfer form, the UTHSC-H bar code identification number (tag) of the computer that will house the software.

Personal computer (PC) software defaults to a useful life of three years unless there are reasons for a different life cycle which must be substantiated by proper documentation. When the departmental property officer determines that capitalized software has exceeded its useful life, he or she should contact the director of CAM to arrange to remove the software from the property system.

Table of contents

Section O

Adjustments to Departments Records

Occasionally, the need will arise to alter the description, responsible person, or provide model, manufacturer, or serial number to an item on the inventory records. To accomplish this, the department must correct the items(s) on the departmental inventory report or excel file and submit the changes to the Capital Assets Management Department. An Excel file can be requested from Capital Assets Management in order to accomplish this efficiently. The Excel file can be requested at any time during the fiscal year. Such changes may also take place during the annual departmental physical inventory process.

Table of contents

Section P

Trade-in of Equipment

When a department trades in used equipment in the acquisition of new equipment, it must provide a description of the item to be traded in, including the inventory number and the trade-in allowance received from the vendor, in the comment field of the Purchase Requisition (RQ) for each purchase of new equipment. The same information shall appear in the comment field of the Purchase Order (PO). Before a department removes a traded in item of equipment from the UTHSC-H premises, they must promptly send the inventory tag and a copy of the RQ and/or PO document to the Capital Assets Management Department. The procedure for shipping traded in equipment to the vendor is discussed below.

Table of contents

Section Q

Returned Merchandise to Vendor

In instances where departments desire to return merchandise to a vendor, the department is responsible for making the proper shipping and handling arrangements with the vendor. After the arrangements have been made, the department shall generate a Return to Vendor (RTV) document in PeopleSoft and place the appropriate approval levels on the transaction. If the merchandise being returned is capital equipment, the bar code identification plate shall be removed by the department returning the goods, attached to a screen print of the RTV transaction, and sent to Capital Assets Management for removal from the departmental inventory records.

The vendor will pick up the merchandise from the department or if arrangements are made with Shipping and Receiving then they will be responsible for picking up the merchandise from the department.

Upon receipt of the RTV transaction screen print (including the attached bar code tag), Capital Assets Management will determine the action required for adjusting the department's inventory records. For returns of merchandise that do not involve refunds or credits from the vendor (i.e., they are for even exchange of equipment), Capital Assets Management will place a new barcode tag on the replacement item, enter the new number in the Assets Management System, and correct all information necessary on the new inventory record that is unique for the replacement asset (i.e., serial number, model number, etc.). Adjustments to the inventory records for returns awaiting vendor credits or refunds will be made once the credit or refund is processed by Accounts Receivable/Payable.

Table of contents

Section R

Gifts of Equipment

The Donor should deliver the item with a letter stating that it is a donation to UTHSC-H. The donor should state the value of the gift in the letter or through accompanying documentation (e.g. and independent qualified appraisal, a sales receipt, a UTHSC-H gift-in-kind donation form, IRS form 8283, or a catalog sales list for the same model instrument). The value should not reflect the donor's personal estimation of the gift's value. Capital Assets Management will determine if the documentation supporting the value of the gift is sufficient or if an appraisal needs to be done by the receiving UTHSC-H department.

If a UTHSC-H representative receives a gift from a donor without accompanying documentation, he or she should both notify the Development Office and initiate correspondence to the donor, outlining the assumed intent and restrictions of the gift. In cases where no documentation or response is received from the donor, the letter of assumed intent will be used to define restrictions.

Any UTHSC-H employee in receipt of a gift of capital equipment shall forward copies of the original documentation within 24 hours of receipt to the Development Office and to the Capital Assets Management Department. Upon receipt of the supporting documentation, Capital Assets Management will tag gifts of equipment meeting the capitalization policy and record the information on the Assets Management System.

Please refer to HOOP 10.10 for detailed policy overviews and procedures regarding the receipt and recording of gifts.

Table of contents

Section S

Equipment Guidelines for Separating Employees

Upon notification that an employee is terminating his/her employment with UTHSC-H, the chair, administrative head or designated administrative official should review the property for which the employee is responsible and take steps to ensure the property is accounted for. If appropriate, the chair, administrative head or designated administrative official should request that Capital Assets Management conduct a physical inventory of specific areas under the control of the separating employee and generate updated inventory reports for the department to use in its review. The chair, administrative head or designated administrative official should schedule a meeting with the employee to discuss the status of property the terminating employee is responsible for and to review disposition options, if applicable. In separations which involve the possible removal/transfer of University property, the chair, administrative head or designated administrative official should review Sections F and H of this document to ensure compliance with UTHSC-H policy, and:

Contact Post Award Finance to obtain information on sponsored project activities of the employee. Contact Capital Assets Management to review property transfer policies and to request inventory reports (i.e., listing of property located in a particular room or lab, listing of property purchased with particular account numbers, etc.) to be used for internal planning and control. Obtain appropriate approvals/sign-offs before property is removed from the University.

Table of contents

Section T

Depreciation of Equipment

In the Asset Manag