1. 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

2. Equipment Management – The Basics
Overview Equipment Management
Fabrications
Types of Equipment
Equipment Tracking
Inventory
Disposals
Audit Findings Exercise

3. 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.

4. 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.

5. 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.

6. 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

7. 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

8. 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

9. 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.

10. 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

11. Fabricated Equipment: An example

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

13. 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

14. 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.

15. 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

16. 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

17. Harvard Example: Equipster

18. Equipment Inventory
OMB Circular A-110 section 34 states that schools must maintain records of federally-funded or owned equipment.

19. Inventory I have this inventory record list in front of me
– what do I need to do now?

20. 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

23. Harvard Example: Physical Inventory

24. 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.

25. 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

26. 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 §

27. 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

28. 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.

29. Exercise: Audit Findings
Let’s review some recent equipment audit findings
What was the problem?
What could have been done to avoid the finding?

30. 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?

31. 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?

32. 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?

33. Contact Information
Kara Colannino
Sarah Elwell

34. Questions and Comments……
Thank you –
Kara and Sarah