Equipment Management – The Basics PRESENTED BY: KARA COLANNINO RESEARCH FINANCES AND SYSTEM SPECIALIST, FACULTY OF ARTS AND SCIENCES, RESEARCH ADMINISTRATION SERVICES AT HARVARD UNIVERSITY SARAH ELWELL ASSISTANT 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: Equipment shall vest in the recipient. Recipients shall use the equipment in the program for which it was originally required regardless of the continuation of federal funding.

OMB A-110 Sec. 34 further states: 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? It is bought or acquired with sponsored funds Has an unit acquisition cost at or above the capitalization threshold (usually $5K) Has a useful life of at least one year 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? It is a single item or system costing less than the threshold for capital equipment 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? Must be assembled over time Cannot produce useful results right away Must be “Placed in Service” as soon as they start producing useful results Are used mainly in larger science departments

Fabricated Equipment: An example

Systems What is a System? Systems components/items necessary to each other Provide useful results right away

All components are needed to acquire useful data 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: Equipment shall vest in the recipient. Recipients shall use the equipment in the program for which it was originally required regardless of the continuation of federal funding. Equipment records shall be retained Inventory of federal assets shall be taken at minimum biennially. Assets shall be safeguarded against fraud and theft. Assets shall be maintained properly to ensure assets remain in good condition

Equipment Tracking A description of the equipment. Manufacturer's serial number, model number, federal stock number, national stock number, or other identification number. Source of the equipment, including the award number. Location and condition of the equipment and the date the information was reported. Unit acquisition cost. 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. 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 Information from which the percentage of federal funding can be determined. Location of the asset. Condition. Acquisition cost. Date the Inventory was taken

Harvard Example: Physical Inventory

Equipment can be disposed of when: Disposals Equipment can be disposed of when: Equipment is "disposed of" when it is: No longer under the control and responsibility of recipient No longer an identifiable piece of equipment; or, No longer part of the inventory of active items.

Disposals Types of Disposals: Trade-ins Selling or transfers of equipment Equipment that has no value Equipment returned to sponsor Idle Equipment Equipment that is lost of stolen

Disposals Selling or donating Federally sponsored equipment Should the recipient or host institution have no need for the equipment the OMB A110 states: That the institution must notify the sponsor. 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. 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 #2 Wilberforce 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 #3 George 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 Elwell sarah_elwell@harvard.edu 617-496-5649

Questions and Comments…… Thank you – Kara and Sarah