Transcript No Slide Title

Knowledge Building
for
Property Management
December 2005
Department of Financial Training
Property Management
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
Department of Financial Training
Policy 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
Department of Financial Training
What is a Capital or Property 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
Department of Financial Training
Importance of Property Management
 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 Administrative proposal, which is a key component in the
Indirect Cost recovery negotiations with the Federal
Government
 Outside audits
– PWC & A-133
 University Financial Statements
Department of Financial Training
Property Management System (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:
 Item description
 Manufacturer
 Acquisition date
 Model
 Tag number
 Serial number
 Status
 Acquisition cost
 Tagging contact
 Accumulated
 Custodian
 Location
depreciation
 Cost History
Department of Financial Training
Roles in Managing Property Assets
 There are five main roles in managing
property:
 Buyer
 Property Management Group
 Property Administrator
 Custodian
 Tagging Contact
Department of Financial Training
Role: 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?
Department of Financial Training
Role: Property Management Group
 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
Department of Financial Training
Role: Property Management Group (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.
Department of Financial Training
Role: 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
Department of Financial Training
Role: 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
Department of Financial Training
Role: 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
Department of Financial Training
Lifecycle 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
Department of Financial Training
Flowchart for Recording Assets in
Property Management System (PMS)
Asset
Purchased
by Buyer
Asset
Invoiced
Asset
Received
Asset
Paid
Asset Object Codes
PMG Adds Asset
to PMS*
& Sends Tags to
Tagging Contact
Tagging Contact
Tags Asset
& Sends Info to
PMG & Prop Admin
PMG Updates
PMS 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.
Department of Financial Training
Recording of Assets:
Acquisition 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
Department of Financial Training
Recording of Assets:
Government Ownership of Equipment
 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.
Department of Financial Training
Recording of Assets:
Transfers-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
Department of Financial Training
Maintenance of Asset Data:
Property Administrators Update PMS
 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
Department of Financial Training
Maintenance of Asset Data:
Movement 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
Department of Financial Training
Disposal of Assets:
‘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
Department of Financial Training
Disposal of Assets:
Sale 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
Department of Financial Training
Disposal of Assets:
Lost, 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
Department of Financial Training
Depreciation: What is 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
Department of Financial Training
Depreciation: What is 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
Department of Financial Training
Depreciation:
Example of Depreciation Schedule
 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
Department of Financial Training
Depreciation:
Use of in Calculation of Book Value
Book 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
Department of Financial Training
Property 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
Department of Financial Training
Inventory 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
Department of Financial Training
Access Request Forms/System
Availability
 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.
Department of Financial Training
Best 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
Department of Financial Training
End-User Support Model
PMG
property@pobox
Property
Administrator
Tagging
Contact
Custodian
Department of Financial Training
Reminder: Events that Trigger Need to
Review/Manage Equipment 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
Department of Financial Training
Your 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