Acquisition of Asset Fabrication Inventory Services The University of Texas at Austin

Objectives Definition Requirements Examples Costing

Definition Handbook of Business Procedures (16.2.C) definition: Handbook of Business Procedures (16.2.C) A unique, one-of-a-kind item that is built or assembled from individual parts or materials by or under the direction of university personnel. The completed item of fabricated equipment may result as a stand-alone item. Fabrications are created by assembling a number of components (manufactured or custom made) to produce a piece of equipment that meets unique research specifications Departments usually have fabrications when they need a special piece of equipment that can be assembled from other pieces of equipment Fabrications are added to a departments inventory once the assembly is completed and the item is put into service A guide for fabrication. A guide for fabrication

Requirements Value requirement All services and items used in fabrication must become a permanent part of the end product’s value, unless they are destroyed during testing or consumed in fabrication The fabricated item must be worth more than $5,000 to be recorded as capital equipment In some unique cases, fabricated items can also be controlled items Useful life requirement The fabricated item must have a useful life greater than one year

Special Cases Sometimes it is hard to tell if an item should be classified as a fabrication or not. Inventory Services determines this based on if the parts for fabrication can: stand alone be independently identifiable move separately be repurposed If you are not sure how an item should be classified please for

Examples Typically Fabricated A device built from pieces of grinded metal Putting multiple different pieces in an enclosure to work together Two devices modified to work together in the same location, sealed from casual tampering Typically Not Fabricated A camera on a tripod Building your own computer Repairs General purpose office supplies

Subaccounts Contract and Grant Services has established subaccounts to consolidate expenditures involved in fabrication. Inventory Services uses these subaccounts, but mainly track fabrication expenses using object code 1832 Departments must advise the UT accountant of the particular contract or grant involved if an item is going to be fabricated so they can agree on the appropriate subaccount number At end of fiscal year, Inventory Services assigns a fab INV number for all expenditures in a particular subaccount with the OBJ Code 1832 Departments should maintain a record system if multiple fabricated items/projects are charged in a subaccount

Cost of Materials Cost of materials and supplies shall be assigned to the subaccount by using OBJ Code 1832, to the extent to which they can be identified by the department Cost of contract labor is also assigned UT Austin labor is allowed only if these conditions are met: Cannot be direct charged and indirect charged Service center charges are ok Direct charge on grant for fabrication work is only one charge, not double charged If allowed by grant/contract/department

Modifying Fabrications If you permanently modify a fabricated item please contact Inventory Services so the appropriate changes can be made to the item’s book value Example: A part of a fabricated item is replaced with a newer part. This will require a change in the book value of the fabricated item

Fabrication Costing AllowableNot Allowable Capital CostCannot be Charged Raw or Processed Materials X Hardware or Parts X Component Devices or Assemblies X Precious Metals X Consumable - Electricity, Fuel, Gasses, Supplies X Consumed or Expended MaterialsX "Expendable" Tools (i.e. small hand tools)X Penalties, fines, prompt payment fees X Any charges that do not contribute to/become a permanent part of the finished item X

Fabrication Costing AllowableNot Allowable Capital CostCannot be Charged Labor – Direct charges to grants via service center charges if allowed by grant/contract/department* X Labor – Direct charges to grants NOT via service center, but coordinated with Inventory Accounting and Costing & Analysis Unit if allowed by grant/contract/department* X Labor – Contract for fabrication X Labor - Machine Shop for fabrication X Maintenance X Destroyed in Testing X Destroyed due to negligence X LDDT (Loss, Damage, Destruction & Theft) Items X * Cannot direct and indirect charge the same labor expense (double charge)

Transfer of Cost Some departments keep stock of commonly used components, and these components are usually purchased in large quantity for economic reasons If these components are used for fabrication projects, the cost of the component is determined and transferred by an Interdepartmental Transfer Voucher (IDT) from a department account to a fabrication subaccount Exception: If the Department determines that a cost is insignificant or cannot be determined, the cost will not be transferred