SAN FRANCISCO COMMUNITY COLLEGE DISTRICT ADMINISTRATIVE PROCEDURES MANUAL

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1 1 of 6 A. Property Accounting All District Property shall be accounted for through the use of appropriate records and inventory procedures. Deeds shall be properly recorded and safeguarded. All equipment shall be assigned a property control numberupon receipt and its locations recorded. B. Marking and Identifying Capital Assets 1. Mark all inventorial capital assets upon receipt and acceptance to identify that the property belongs to the District. This identification should facilitate accounting for the asset, aid in its identification, and discourage theft.. 2. Responsibility for controlling capital asset control numbers rests with the Receiving Department Supervisor. The Supervisor is to ensure that the stickers are adequately controlled.. 3. Upon receipt of the capital asset, the Receiving Department or the appropriate designated employee shall match the asset to its Purchase Order, tag it with a bar code sticker, and note the following: a. Asset control number b. Description c. Building/Room location d. Quantity e. Original unit cost f. Manufacturer g. Model h. Serial number i. New, used, or donated j. Date placed in service k. Life span/sub program l. Classification C. Federal/State Grant Requirements Employees who purchase equipment under a federal or state grant must be aware of the federal and state inventory control requirements. Each grant should be reviewed for specific requirements on asset ownership D. Use of College Equipment 1. Authorization. District owned equipment, identified with an asset control number, shall not be removed from any district building except with written permission of the Chancellor, President, or Vice-Chancellor, or designee.

2 2 of 6 2. Responsibility and Liability Any employee who removes district owned property assumes personal liability for repair or replacement of such equipment in the event of damage or theft. 3. Resignation or Termination Upon resignation or termination from District employment, all District assets must be returned to the District, including laptops and related accessories, cameras, cell phones, and vehicles as part of the check out procedure with Human Resources. E. Capital Facilities Space Utilization A space inventory report shall be prepared each year by the Facilities Planning and Administrative Services Office and submitted to the State Chancellor s Office according to their requirements and specifications. F. Capital Asset Management 1. Purpose The purpose of a capital asset inventory system is: a. To provide control and accountability over capital asset, and b. To gather and maintain information needed for the preparation of financial statements. 2. Compliance The following procedures are the minimum capital assets requirements needed for compliance with the State Budget and Accounting Manual (BAM) and Generally Accepted Accounting Principles (GAAP): a. Capital Assets include: land, land improvements, buildings, building improvements, construction in progress, machinery and equipment, vehicles, infrastructure, easements, works of art, and historical treasures. They are to be reported, and, with certain exceptions, depreciated in the financial statements. b. When to capitalize assets: Capitalize all and all other assets when the acquisition exceeds the following dollar thresholds: Table Capitalization Dollar Thresholds Asset Classification Tracking and Inventory Capitalize and Depreciate Land $1 Capitalize Only Land Improvements $1 $25,000 Building $1 $50,000

3 3 of 6 Building Improvements $1 $50,000 Construction in Progress $1 Capitalize Only Machinery and Equipment $1000 $5,000 Vehicle $1000 $5,000 Computer $1 $5,000 A/V Equipment $1 $5, All computers and A/V equipment considered high theft items shall be treated as capital assets for tracking purposes and shall be asset tagged. Where possible, laptops may be engraved with the District s name. 4. New Acquisitions: Capitalize new assets, which meet the thresholds stated above and are not additions, improvements, repairs or replacements to existing capital assets. 5. Extraordinary repairs, betterments, or improvements: Capitalize assets that increase future benefits from an existing capital asset beyond its previously assessed standard of performance3 if they exceed the thresholds stated in Table above. Capitalizable leasehold improvements are classified within the commodity class major group Building or Land Improvements. Increased future benefits typically include an extension in the estimated useful life of the asset, an increase in the capacity of an existing capital asset or a substantial improvement in the quality of output of reduction in previously assessed operating costs. 6. Replacement: Capitalize the acquisition of a capital asset to replace a part of another asset when the cost of the replacement exceeds the thresholds stated in Table above. The following exceptions apply: a. Replacement of roof covering is capitalized unless the replacement extends the useful life of the building. b. Replacement floor coverings and window coverings are not capitalized. c. Costs to remodel a building to a different use, where the remodeling does not extend the useful life of the structure itself, are not capitalized 7. Deletion of Replaced Items: Remove the cost and accumulated depreciation of the replaced asset from the accounting records if the amounts are determinable and the replacement is capitalized. 8. Additions: Capitalize expansions of or extensions to an existing building capitalized capital asset that cost more than the thresholds stated in table G. Capital Asset Value Determination 1. Purchased Assets: Use the historical costs including all applicable taxes and all appropriate ancillary costs less any trade discounts or rebates. If such information is not available, use the estimated costs.

4 4 of 6 2. Land Assets: The capitalized value is to include the purchase price plus costs such as legal fees, filing fees, excavation cost incurred, and any other additional costs incurred to put the land in conditions for its intended use. 3. Building Costs: Include both acquisition and capital improvement costs. Capital improvements include structures and all other property permanently attached to, or an integral part of the structure. 4. Equipment, Furniture, or Fixtures: Include those assets that are not considered to be capital improvements and should be valued at the actual or reasonably estimated cost. Include the cost of extended maintenance/warranty contracts in the asset valuation in the contract is purchased at the same time as the capital asset. Depreciate these contracts over the useful life of the asset. Do not capitalize the payments for contracts purchased at the same time as the capital asset. 5. Self-Constructed Assets: Include all direct costs associated with the construction. H. Capital Leases A capital lease is a lease that transfers substantially all the benefits and risks of ownership to SFCCD. A lease must meet one or more of the following four criteria to qualify as a capital lease: 1. Ownership of the leased property is transferred to the District at the end of the lease term; 2. The lease contains a bargain purchase option; 3. The lease term is equal or greater than 75% of the estimated useful life of the property: 4. The present value of the future minimum lease payments is 90% or more of the fair market value of the leased property. Account for capital leases with a net present value of the future minimum lease payments or fair value, whichever is less, but exceeding thresholds stated in Table 1 as an acquisition of a capitalized asset and the incurrence of a liability.

5 5 of 6 I. Depreciation Procedure Depreciation begins when an asset is placed in service. Depreciation is to be calculated using the straight-line method. To calculate depreciation using this method. Annual Depreciation = Cost Salvage Value Table Useful Life for Capital Assets Asset Class Useful Life (years) Furniture & Equipment 8 Computer and Technology 3 Equipment Buildings and Building 50 Improvements Landscaping 10 Musical Instruments 10 Outdoor Equipment 20 Portable Classroom 15 Software 8 Vehicles 8 J. Transferring Capital Assets Between Departments and Retiring Capital Assets from the Inventory. 1. When custody of an asset is transferred between departments it is the transferring department s responsibility to notify the Receiving Department Supervisor so that the capital asset listing may be updated. 2. It is the Receiving Department Supervisor s responsibility to record all retirements on the appropriate schedule and for the department retiring the item to submit a Recommendation to Dispose of District Property form to the Purchasing Department. This list is then forwarded to the Board of Trustees for approval.

6 6 of 6 K. Lost or Stolen Property When suspected of known losses of capital assets occur, departments should conduct a search for the missing property. The search should include transfers to other departments and possible declaration of surplus. If the missing property is not found: 1. Notify the Business Manager and file a Police Report 2. Have the individual deemed to be primarily responsible for the asset, as well as that individual s supervisor, complete and sign a statement detailing the events surrounding the disappearance of the asset 3. Remove the missing asset from the District s Capital Asset Listing 4. Maintain records of the missing capital asset. Recommended by Vice-Chancellor Finance and Administration: Approved by Chancellor: Date: New Administrative Procedure Draft Version C: Date 5/16/15