INTRODUCTION
The University of North Carolina at Pembroke (UNCP) has made a significant investment in fixed assets and these assets are used to support its mission of providing education and research. The purpose of this department is to ensure that assets are properly acquired, accounted for, maintained, and disposed. These procedures are carried out in accordance with state policies, federal regulations, audit requirements, and generally accepted accounting principles.
RESPONSIBILITY, ACCOUNTABILITY, OWNERSHIP
All fixed assets are owned by UNCP and not a specific individual. The University has sole ownership of these assets except for:
- Equipment purchased with certain federal funds for a sponsored project
- Equipment that is leased
- Equipment that is on loan from another institution or business
All university employees are responsible for protecting UNCP property. They are accountable for care, maintenance, and safe keeping. Not following correct policies and procedures can lead to audit findings for the University. Repeated audit findings can have the consequence of restrictions on how future state appropriations can be spent. All University employees and in particular: Department Heads, Unit Directors, Provosts, Vice Chancellors, Deans, Public Safety, the Controller, and Internal Audit all have specific responsibilities with regards to fixed assets.
DEFINITION: FIXED ASSET
A fixed asset is defined as property with a total cost equal to or greater than $2,500 for inventoried and a total cost equal to or greater than $5000.00 for capitalized and has a useful life of two or more years. Some examples of fixed assets are land, infrastructure, buildings, equipment, and art. Total costs are all costs necessary to place the asset in its location and its condition for use. Total costs include the purchase price plus other necessary costs like shipping charges, legal fees, installation costs, sales tax, surveying fees, demolition costs, and insurance premiums during the construction phase. All of these charges combined must be $2,500 or greater. A tangible asset can be touched or physically measured like vehicles, furniture, and buildings. Intangible assets are rights that result from ownership of assets that are owned by the University, lack physical substance, and are non-financial in nature. Intangible assets include patents, easements, trade names, and logos. Fixed assets are acquired for use in normal operations and are not allowed to be resold without written approval from the NC State Surplus Property Office.
CAPITALIZATION
An asset becomes capitalized when it is recorded as a fixed asset in that statement of net position. The fixed asset is then depreciated over its useful life. Certain fixed assets are kept at their original cost indefinitely. This is the case with land, collectibles, and other appreciable assets such as works of art. The benefits to capitalizing an asset are improved accountability and consistency. Also, it provides comparability to the private sector. The University capitalizes assets that have a value or cost of $5,000 or greater at the date of acquisition and an estimated useful life of two or more years. The only exception is intangible assets. Intangible assets with an estimated useful life of two or more years are capitalized if they meet the following thresholds: 1) Purchased or licensed software, easements, land use rights, patents, copyrights and trademarks are capitalized when the value or cost is $100,000 or greater, and 2) internally generated software is capitalized when the value or cost is $1,000,000 or greater. All other assets not meeting these thresholds are expensed in the year of acquisition including all furniture, machinery and equipment with a cost of less than $5,000 or a useful life of less than two years.