ADMINISTRATION AND FINANCE POLICIES AND PROCEDURES TABLE OF CONTENTS

Transcription

1 CONTROL Revisin Date: 1/21/03 TABLE OF CONTENTS OVERVIEW OF ACCOUNTING FOR INVESTMENT IN PLANT CURRENT POLICY INVENTORY MAINTENANCE AND CONTROL PROCEDURES FOR RECEIVING INVENTORY ITEMS GSC ASSETS INFORMATION SYSTEM PHYSICAL INVENTORY PROCEDURES PROCEDURES FOR MOVING/DISPOSAL OF INVENTORY ITEMS PROCESSING CAPITAL EXPENDITURES CAPITAL EXPENDITURE APPROVAL AND PROCESSING CAPITAL LEASE EXPENDITURES ACCOUNTING FOR CAPITAL EXPENDITURES PROCESSING CAPITAL DELETIONS ACCOUNTING FOR CAPITAL DELETIONS VALUATION AND ACCOUNTING FOR INVESTMENT IN PLANT VALUATION METHODS FOR ASSET TYPES ACCOUNTING FOR INVESTMENT IN PLANT FINANCIAL REPORTING AND DISCLOSURES FINANCIAL REPORTING DISCLOSURES... 9 Exhibit N: EXHIBIT 10-1 STATE OF NEW JERSEY - ASSET INPUT FORM 10-2 GSC ASSET INPUT FORM 10-3 GSC RECEIVING REPORT/PO FOR INVENTORY ITEMS 10-4 GSC ASSETS INFORMATION SYSTEM FILE LAYOUT 10-5 GSC INVENTORY RECORD FORM 10-6 GSC OBJECT CODE LISTING (IA FBM 097) 10-7 GSC PURCHASE REQUISITION LISTING (IA PBR 110) 10-8 GSC ASSETS INFORMATION SYSTEM - CATEGORY CODE LISTING 10-1

2 CONTROL Revisin Date: 1/21/ OVERVIEW OF ACCOUNTING FOR INVESTMENT IN PLANT This chapter encmpasses the plicies and prcedures fr prper accunting and effective cntrl f fixed and mvable assets acquired by the Cllege. Objectives f these plicies and prcedures include: Establishment and maintenance f necessary recrds including depreciatin and insurance data. Identificatin f assets acquired and/r utilized. Cntrls regarding asset lcatin and parties respnsible fr maintaining and safeguarding assets. Althugh IA-FRS is used t prcess and accunt fr all financial transactins f the Cllege, an additinal system is necessary t accmplish the afrementined bjectives with regard t fixed and mvable assets. This system, the GSC Assets Infrmatin System, is maintained fr financial reprting, prperty cntrl and insurance purpses. Nn-cnsumable items (furniture, fixtures, and equipment) with a per unit cst f $300 r mre are cnsidered Cllege inventry and are included in the Asset Infrmatin System. Of these, items csting $500 r mre are capitalized fr financial reprting purpses. In additin, items csting $20,000 r mre are recrded in the State f New Jersey Fixed Assets System, as are buildings, land, and capital imprvements csting $25,000 r mre CURRENT POLICY Plant funds are recrded and maintained fr the majr fund grupings cnsisting f Unexpended, Renewal and Replacement, Retirement f Indebtedness, and Investment in Plant. Plant and equipment assets csting $500 r mre per unit which have a useful life f at least tw years are cnsidered capital assets. Capital expenditures fr the year are recrded as additins t Investment in Plant. Sld r discarded plant and equipment assets are recrded as deletins frm Investment in Plant. A cmplete physical inventry f plant and equipment is taken nce every three years, and peridic spt checks are perfrmed at randm t ensure departmental cmpliance with prcedures. Detailed inventry recrds f plant, prperty, and equipment, including required data fr all knwn reprting purpses, are maintained in the GSC Assets Infrmatin System. Asset Input Frms are cmpleted and used fr entering data int the system (see Exhibit 10-2). 10-2

3 CONTROL Revisin Date: 1/21/03 Histrical cst f plant and equipment is used fr financial accunting and reprting purpses. The State f New Jersey will retain title t all buildings, land, and capital imprvements acquired prir t July 1, 1987 with acquisitin cst f $25,000 r mre and will reprt these as state-wned assets. The State f New Jersey will retain title t all equipment acquired prir t July 1,1987 with acquisitin cst f $20,000 r mre and will reprt these as state-wned assets. Asset Input Frms are cmpleted and frwarded t the State f New Jersey-OMB fr assets t which the state retains title (See Exhibit 10-1) INVENTORY MAINTENANCE AND CONTROL The prcedures regarding maintenance and cntrl f Cllege inventry are discussed PROCEDURES FOR RECEIVING INVENTORY ITEMS Ensuring that inventry items are prperly recgnized and recrded as received requires special effrts f varius departments as fllws: Purchasing - Department names d nt appear n cpies f purchase rders mailed t vendrs. This serves t frce all deliveries thrugh Central Receiving, when practicable, s that all items received may be tagged. Central Receiving - An asset number is assigned t each item received with a cst f $300 r mre and, when practical, the asset tag cntaining the number is applied t the item. The asset number fr each item received is recrded n a cpy f the purchase rder printed at Central Receiving, and these are frwarded t the Fixed Assets Accuntant n a weekly basis (See Exhibit 10-3). All infrmatin fr cding Input Frms is taken frm these receiving reprts. Requesting Departments - Departments which insist n receiving shipments directly frm vendrs, and thse requesting that equipment be delivered unpened by Central Receiving are respnsible fr making arrangements with the Fixed Assets Accuntant s these items may be tagged as set frth abve. 10-3

4 CONTROL Revisin Date: 1/21/ GSC ASSETS INFORMATION SYSTEM The Fixed Assets Accuntant maintains an updated plant and equipment inventry list based n infrmatin regarding additins and deletins frwarded by Central Receiving (See Sectin ), infrmatin frwarded by departments (Sectins and ), and physical inventry results (Sectins ). This cmputerized inventry system maintains recrds fr leased assets, dnatins f assets, and purchased assets. See Exhibit 10-4 fr a cmplete listing f fields maintained in the database. The GSC Assets Infrmatin System is capable f assisting in risk and insurance management by maintaining recrds f all insurable fixed and mvable assets in additin t capital assets. A cmplete set f manuals fr the Assets Infrmatin System is maintained in the ffice f the Fixed Assets Accuntant PHYSICAL INVENTORY PROCEDURES A physical inspectin f all recrded fixed and mvable assets is perfrmed ver a three-year perid by the Fixed Assets Accuntant with the assistance f an inventry cntrl team as fllws: All rms are cvered in each building wned and/r utilized by the Cllege. Bar cded asset tag numbers are scanned and recrded in data cllect terminals fr all items fund in each rm fr uplading t the Assets Infrmatin System. If n tag is present n an inventry item, a tag is applied and a specific descriptin is manually entered in data cllect terminals, in additin t any ther relevant infrmatin available (serial number, mdel number, manufacturer, etc.). The results f the physical inventry is cmpared t infrmatin cntained in the GSC Assets Infrmatin System t verify that all inventry items cntained in the system remain in use and are at the recrded lcatins. In cases where a tag is applied t an item by the inventry team, all recrds in the system are scanned fr a match n the asset descriptin, serial number and ther infrmatin available t ascertain that the asset is previusly unrecrded befre entering the item in the system as an additin. When necessary, estimates f acquisitin cst and acquisitin date are based n similar assets fr which recrds exist PROCEDURES FOR MOVING/DISPOSAL OF INVENTORY ITEMS User departments shuld cmplete an Inventry Recrd Frm (see Exhibit 10-5) when inventry items are t be mved frm ne lcatin t anther. This applies even if items are nly mved t a new rm within the same building. This frm shuld als be cmpleted when the inventry items are missing/stlen, returned t vendr, damaged/stred r therwise dispsed f. Upn receipt f this frm, inventry recrds are updated accrdingly. The Inventry Recrd Frm shuld be filled ut as cmpletely as pssible and prmptly 10-4

5 CONTROL Revisin Date: 1/21/03 frwarded t the Fixed Assets Accuntant. The Rwan Cllege f New Jersey Maintenance Department will mve n inventriable assets withut having received a cpy f the Inventry Recrd Frm frwarded frm the Fixed Assets Accuntant PROCESSING CAPITAL EXPENDITURES The prcedures regarding prcessing f capital expenditures are discussed CAPITAL EXPENDITURE APPROVAL AND PROCESSING Capital expenditures riginate within requesting departments by cmpletin f a purchase requisitin. Tw different categries f furniture, fixtures and equipment are distinguished as fllws: Minr Equipment - Furniture, fixtures, and equipment csting less than $500 per unit; these items are charged t bject cde 2800 (see Exhibit 10-6). Capital Equipment - Furniture, fixtures, and equipment csting $500 r mre per unit; these items are charged t the bject cdes in the 7000 series (see Exhibit 10-6). Exceptin - Items csting less than $500 per unit which must be installed and used with a larger unit which, when fully assembled, csts $500 r mre; these items are treated as Capital Equipment. A purchase rder shuld be issued t initiate all expenditures. The purchase rder is apprved and prcessed in accrdance with prcedures utlined in Chapter 13 f this manual. The Fixed Assets Accuntant reviews detailed purchase requisitins (see Exhibit 10-7) t verify that equipment purchases are prperly classified. Crrectins are made as fllws: Purchasing crrects bject cdes n purchase requisitins as related t Inventry Assets at the request f the Fixed Assets Accuntant. Accunting Office prcesses jurnal entries at the request f the Fixed Assets Accuntant t transfer expenditures frm incrrect bject cdes t prper bject cdes in thse cases where purchase rders have already been expensed. Supprting detail is prvided with each request. Object cdes n Miscellaneus Disbursements Vuchers are reviewed and crrected when necessary by Budget Office, as these are apprved in that ffice. This will serve t verify that expenditures fr equipment purchases are prperly classified in thse cases where n purchase rder is prepared. 10-5

6 CONTROL Revisin Date: 1/21/ CAPITAL LEASE EXPENDITURES When ne r mre f the fllwing fur criteria are met, inventry items financed thrugh leasing arrangements are accunted fr as purchased capital assets (per FASB #13): The lease transfers wnership f the leased asset t the Cllege by the end f the leased term. The lease cntains a bargain purchase ptin. The lease term is equal t 75 percent r mre f the ttal estimated life f the leased asset. The present value f the minimum lease payments at the inceptin f the lease is at least 90 percent f the market value f the leased asset ACCOUNTING FOR CAPITAL EXPENDITURES All capital expenditures are accunted fr at the time the gds are received and accepted by the Cllege. Fixed Assets Accuntant reviews paid purchase rders and expense vuchers fr the fllwing: Capital assets charged t Current Funds accunts, and All charges t the Unexpended Plant Funds and Funds fr Renewals and Replacements. Fixed Assets Accuntant reviews and classifies purchases accrding t the fllwing: Current Funds Expenditures - by type f asset, restricted vs. unrestricted and capital vs. expended. Unexpended Plant Funds and Funds fr Renewals and Replacements - by type f plant asset, restricted vs. unrestricted and capital vs. expended. Fixed Assets Accuntant prepares and psts jurnal vucher entries t recrd additins as fllws: Current Funds - amunt f capital expenditures by funding surce transferred t Plant Funds - Investment in Plant as "Expenditures frm Current Funds fr Investment in Plant," and Unexpended Plant Funds and Funds fr Renewals and Replacements - amunt f 10-6

7 CONTROL Revisin Date: 1/21/03 expenditures by asset accunt (land, buildings, land and ther imprvements) transferred t Plant Funds -Investment in Plant. Fixed Assets Accuntant files purchase rders numerically in Plant Fund File fr current year PROCESSING CAPITAL DELETIONS The prcedures regarding prcessing f capital deletins are discussed ACCOUNTING FOR CAPITAL DELETIONS All capital deletins riginate frm the department respnsible fr safeguarding the asset. When written ntificatin is received per prcedures utlined in Sectin 10.2 f this manual, the Fixed Assets Accuntant: Determines histrical cst (acquisitin cst r estimated histrical cst). Prepares and psts jurnal vucher entries at the end f the fiscal year t delete the value f the asset and related accumulated depreciatin frm the Plant Funds -Investment in Plant subgrup VALUATION AND ACCOUNTING FOR INVESTMENT IN PLANT The valuatin and accunting fr the varius asset types cmprising Investment in Plant are discussed VALUATION METHODS FOR ASSET TYPES Fixed and Mvable Assets purchased by the Cllege are valued at acquisitin cst. Exceptins are nted belw: Acquisitin cst f buildings, land, and capital imprvements existing at June 30, 1987 were estimated by cnsultants f the State f New Jersey (American Appraisal Cmpany and Ernst & Whinney). An appraisal f these was perfrmed t arrive at current replacement cst, and index factrs were applied t backtrend the current replacement cst t the knwn r estimated date f cnstructin r acquisitin t arrive at an estimated histrical cst. 10-7

8 CONTROL Revisin Date: 1/21/03 Capital leases are valued at the lwer f the present value f the minimum lease payments, (excluding executry csts) r the fair market value f the leased asset at the inceptin f the lease. Dnatins f Capital Assets are valued at Fair Market Value n date f gift r estimate theref. Capital equipment (furniture, fixtures, and equipment) is valued at acquisitin cst r estimate theref in the absence f prper dcumentatin ACCOUNTING FOR INVESTMENT IN PLANT The Fixed Assets Accuntant determines which accunts in the Investment in Plant Fund trial balance have had activity as f the June 30 fiscal year end. The Fixed Assets Accuntant prepares and psts a Jurnal Vucher clsing ut the additin and deletin accunts t the Investment in Plant Fund balance: Additins - debit t Transfers frm Current Fund - Equipment Purchased and Additin accunts fr ttal in the accunts (accunts are zer at end f fiscal year), and credit t Investment in Plant Fund balance fr ttal; Deletins - debit t Investment in Plant Fund balance fr ttal f deletins, and credit t Investment in Plant deductin accunt fr ttal in accunt (accunt is zer at end f fiscal year) FINANCIAL REPORTING AND DISCLOSURES Annual financial reprting fr Capital Assets and necessary disclsures are discussed FINANCIAL REPORTING The fllwing reprts are prepared at the end f each fiscal year: Detailed Listing f Assets by Building Summary f Assets by Class Cde Additins 10-8

9 CONTROL Revisin Date: 1/21/03 Deletins Transfers Adjustments Depreciatin Reprts DISCLOSURES The necessary disclsures fr financial reprting purpses are as fllws: Disclsures are made as t the valuatin f Plant Assets included n balance sheet. Disclsures are made as t the wner r title-hlder f assets included n the balance sheet. Disclsures are made as t methd(s) used fr cmputing depreciatin expense. 10-9