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Scope

This policy relates to the reconciliations and capitalization of federally funded assets.

Reason for Policy

To ensure compliance with federal guidelines on assets purchased with federal funds.

Policy Statement

At time of acquisition, Capital equipment funded either totally or partially from direct or federal flow-thru funds, must reflect in the AM system the full ChartField String with the detail ProjectID. This identifies the portion of federal participation in the asset purchase and the award from which it was purchased. Awards within the PeopleSoft Grants module have at least one project number attached to them.  Each award that has a Catalog of Federal Domestic Assistance (CFDA) number identifies the award as federally funded.

Reconciliations must be performed and prepared monthly for all Federally Funded Equipment comparing life-to-date balances in Asset Management (AM) to life-to-date capital expenses reflected in the General Ledger (GL).  The Project ChartField Strings for federally funded projects must match between AM and GL. It is critical to the University that the Project ChartFields accurately reflect capital purchases in both AM and GL for a federally funded grant.   Any capital equipment purchase made with federal funds must be reconciled to the ChartField level.  Any reconciling items should be cleared within 60 days. The reconciliation is documented, signed by the preparer and forwarded to the campus accounting director for review and approval. This managerial level control ensures the accuracy, completeness, and timeliness of the reconciliation.

This policy and procedure is in addition to the overall reconciliation of total assets entered into Asset Management (AM) and capital expense reflected on the General Ledger (GL) which is required on a fiscal year basis.  The annual equipment reconciliation is not performed on a detail ChartField level.  Only Federally Funded Equipment must be reconciled by the detailed ChartField string. Federal guidance requires that the University identify both Federally Funded Equipment and the specific award from which the funding derives.  The University identifies federal awards within the Grants module.

Per federal regulations, the Department or Principal Investigator (PI) shall use the equipment in the project for which it was acquired as long as needed, whether or not the project continues to be supported by Federal funds and shall not encumber the property without approval of the Federal awarding agency. When the equipment is no longer needed for the original project, the Department or PI can use the equipment in connection with other federally-sponsored activities, in the following order of priority: (1) activities sponsored by the Federal awarding agency which funded the original project, then (2) activities sponsored by other Federal awarding agencies. For equipment with a current per unit fair market value of $5,000 or more, the Department or PI may retain the equipment for other uses provided that compensation is made to the original Federal awarding agency. If the recipient has no need for the equipment, the Department or PI must request disposition instructions from the Federal awarding agency. The Federal awarding agency will then issue instructions to the Department or PI. Equipment purchased with federal funds may not be surplused by the Department unless instructed to do so by the Federal awarding agency.  The PI is responsible for notifying the SPO of any loaned or sponsored provided equipment to be tracked.

Definitions

Project ChartField String - any ChartField string that uses a specific project number (8 characters). Transactions not related to a specific project that only have the project “00” are not considered a detail Project ChartField String.

Federally Funded Equipment - any piece of equipment, meeting the University’s capitalization criteria, purchased totally or partially with funds provided to the University by the Federal government.  Federal funds include direct awards from the government and all flow-thru funds provided from any entity to the University.

Accountabilities

UM System Controller’s Office:

• Review reconciliations for appropriatefollow-up on reconciling items to ensuretimely resolution of discrepancies by the campus Accounting Office or SponsoredPrograms Office.

UM System Supply Chain:

• Investigate and resolve items that have an expense recorded in GL, but the itemisnot reflected in AM.

Campus Sponsored Programs Office:

• Resolve items related to CorrectingEntries and Journal Entries.
• At grant closeout complete the final equipment reports to the sponsor to ensurethe equipment will be handled based upon the sponsor’s guidelines in the award.
• Monthly reconcile AM reports to GL reports of Federally Funded Equipment resolving any discrepancies.
• The reconciliation is documented, signedby the preparer and forwarded to thecampus accounting director for review and approval.

Principal Investigator:

• Responsible for notifying the Sponsored Programs Office Accountants of any loaned or sponsoredprovided equipment to be tracked.

Additional Details

Forms

Related Information

History

Formerly Accounting Policy Manual 60.65 – Reconciliation and Capitalization of Federally Funded Assets (revised 10/5/2007)

Procedure