Equipment Management –

The BasicsPRESENTED BY:

KARA COLANNINORESEARCH FINANCES AND SYSTEM SPECIALIST, FACULTY OF ARTS AND SCIENCES, RESEARCH ADMINISTRATION SERVICES AT HARVARD UNIVERSITY

SARAH ELWELLASSISTANT DIRECTOR OF OPERATIONS, FAS DIVISION OF SCIENCE AT HARVARD UNIVERSITY

Equipment Management –

The Basics• Overview Equipment Management• Fabrications• Types of Equipment• Equipment Tracking• Inventory• Disposals• Audit Findings Exercise

Equipment Policy

What is the purpose of an Equipment Policy?

To ensure equipment used for sponsored programs is managed in accordance with sponsor or donor requirements and in a

manner that maximizes its benefit.

Equipment Policy

OMB A-110 Sec. 34 states:

a) Equipment shall vest in the recipient.b) Recipients shall use the equipment in

the program for which it was originally required regardless of the continuation of federal funding.

Equipment Policy

OMB A-110 Sec. 34 further states:

d) Assets shall be safeguarded against fraud and theft.

e) Assets shall be maintained properly to ensure assets remain in good condition.

What is Capital Equipment?

a) It is bought or acquired with sponsored funds

b) Has an unit acquisition cost at or above the capitalization threshold (usually $5K)

c) Has a useful life of at least one yeard) Is moveable – not permanently affixed

to a building

Useful Lives of Capital Equipment

Harvard Calculates useful lives of capital equipment, for depreciation calculation purposes, are as follows:

• Computer hardware/software - 4 years• Scientific equipment (medical, diagnostic, etc.) - 8 years• Furniture, residential - 3 years• Furniture, office - 7 years• Vehicles - 4 years• Other equipment, including for administrative & support - 7

years

• Non-Capital Equipment

What is Non-Capital Equipment?

a) It is a single item or system costing less than the threshold for capital equipment

b) Has a useful life less than one year

Other Types of Equipment

• Government Furnished Property- Agencies of the federal government will on

occasion furnish equipment or other property under a grant or contract for use in sponsored activities. GFP remains owned by and titled to the federal government while in ones possession and until it is properly disposed of.

• Fabricated Equipment

What is Fabricated Equipment?

a) Must be assembled over timeb) Cannot produce useful results right awayc) Must be “Placed in Service” as soon as they

start producing useful resultsd) Are used mainly in larger science

departments

Fabricated Equipment: An example

• Systems

What is a System?

a) Systems components/items necessary to each other

b) Provide useful results right away

Systems: An example

Microscopy System:Air table ($3K)

Microscope ($4.5K)Camera ($2K)

Computer ($1K)System Total: $10.5K

All components are needed to acquire useful data

Equipment Tracking

In addition to acquiring, using, maintaining and protecting capital equipment, the general

responsibilities include keeping records of capital equipment they have acquired with federal funds or

that are federally-owned and are in their possession.

Institutions must also properly dispose of federally-funded or owned equipment according to the terms and conditions of the grants or contracts through

which the equipment had been acquired.

OMB A-110 §.34 (Equipment) states:

a.Equipment shall vest in the recipient.b.Recipients shall use the equipment in the program for which it was originally required regardless of the continuation of federal funding.c.Equipment records shall be retainedd.Inventory of federal assets shall be taken at minimum biennially. e.Assets shall be safeguarded against fraud and theft.f.Assets shall be maintained properly to ensure assets remain in good condition

Equipment Trackinga) A description of the equipment.b) Manufacturer's serial number, model number, federal stock

number, national stock number, or other identification number.c) Source of the equipment, including the award

number. d) Location and condition of the equipment and the date the

information was reported.e) Unit acquisition cost.f) Ultimate disposition data, including date of disposal and sales

price or the method used to determine current fair market value where a recipient compensates the federal awarding agency for its share.

g) Equipment owned by the federal government shall be identified to indicate federal ownership

Harvard Example: Equipster

Equipment Inventory

OMB Circular A-110 section 34 states that schools must maintain

records of federally-funded or owned equipment.

Inventory

• I have this inventory record list in front of me

– what do I need to do now?

Inventory Continued……

• Location of asset• Condition• Date the Inventory was taken and by

whom• Prime user• Conduct your inventory Biennially

Harvard Example: Physical Inventory

Disposals

• Equipment can be disposed of when:

a) Equipment is "disposed of" when it is: No longer under the control and responsibility of recipient

b) No longer an identifiable piece of equipment; or,

c) No longer part of the inventory of active items.

Disposals

• Types of Disposals:

a) Trade-insb) Selling or transfers of equipmentc) Equipment that has no valued) Equipment returned to sponsore) Idle Equipmentf) Equipment that is lost of stolen

Disposals

•Selling or donating Federally sponsored equipment

a) Should the recipient or host institution have no need for the equipment the OMB A110 states: That the institution must notify the sponsor.

b) The federal award agency then has 120 days to transfer title to the Federal Government or to a third party if they so chose. After 120 days the institution can dispose of it.

a) Please refer to OMB Circular A110 – Section § 215.34

Audits• A-133 calls for an audit of Equipment Compliance

Testing every two years

• The A-133 Compliance Supplement includes a specific compliance points related to equipment and real property management

• Auditors observe the equipment to verify existence, including whether the equipment is appropriately safeguarded and maintained.

• Floor to Sheet and Sheet to Floor

In closing…• All equipment should be used in the program for

which it was acquired or, when appropriate, other federal programs

• Physical inventory of equipment shall be taken at least once every two years and reconciled to the equipment records

• An appropriate control system shall be used to safeguard equipment

• Equipment shall be adequately maintained.

Exercise: Audit Findings

Let’s review some recent equipment audit findings

• What was the problem?

• What could have been done to avoid the finding?

Exercise: Audit Finding #1

State University of New York Research Foundation, 10/13/11, audited by HHS OIG.

A laptop was purchased to operate a piece of equipment, but was instead being used by a

graduate student in the lab.

Why is this a finding?

How could this have been avoided?

Exercise: Audit Finding #2Wilberforce University, 07/29/10, Department

of Energy

University Official sold $10,000 worth of computer equipment purchased with a federal

grant.

Why was this a finding?

How could this have been avoided?

Exercise: Audit Finding #3George Washington University, 04/13/05,

Department of Transportation

PI submitted invoice that contained fictitious labor and equipment charges.

Why was this a finding?

How could this have been avoided?

Contact Information

»Kara Colannino kcolann@fas.harvard.edu

http://www.fas.harvard.edu/~research/

617-495-1488

» Sarah Elwellsarah_elwell@harvard.edu 617-496-5649

Questions and Comments……

Thank you –

Kara and Sarah