Controller's Unit Policy Program

* This information replaces FIS 603-01 When is Capitalization Required & 603-02 What Special Accounting is Required & 603-03 How are Plant Funds Established & 603-04 Use of Correct Account Code & 603-05 Completing a Plant Fund Request Form & 606 Year End Processes for Capitalization

Required Capitalization

Land/Easements & Right of Ways are capitalized regardless of amount.

LIBRARY SPECIAL COLLECTIONS

Library special collections are library holdings normally considered inexhaustible and accounted for like works of art or historical treasures.  They are held for public exhibition, education.  They are protected, cared for, and preserved.  They must be capitalized when the total cost of the collection is equal or greater than $5,000. However, they do not depreciate.

BUILDINGS

$100,000 or more are capitalized.

BUILDING IMPROVEMENTS

$100,000 or more are capitalized.

IMPROVEMENTS OTHER THAN BUILDINGS (IOTB’S)

$50,000 or more are capitalized.
If this real property is included as part of new building construction, then a separate plant fund is not needed.  However, use of the 40401 account code is required.

LAND IMPROVEMENTS

Must have a value of $100,000 or more to be capitalized.

INFRASTRUCTURE

Infrastructure assets are long-lived capital assets that are part of a network of assets that can have service potential for an extended period, and that are normally stationary.  In order to be capitalized they must have a value of $50,000 or more.

Required Accounting

Effective: 01/01/2003
Revised: 01/14/2010

A “plant fund” or funds (8XXXXX) must be established to track capitalization amounts.  The OUS Controller’s Division establishes plant funds in response to a request from the OSU Facilities Services Controller, after approval by the OUS Facilities Division.

Establishing Plant Funds

• Request that a plant fund be established.  This request must identify ALL the funding sources and the amount from each so that the correct type of plant fund(s) can be established.  Each funding source must be set up separately (bond funds, budgeted/general funds, auxiliary funds, gift funds).  Send the request to the Facilities Services Controller who will complete the necessary paperwork.  If the project has been approved by the legislature as part of the capital construction program, use the same name as submitted and approved by the legislature.  The names should not exceed 35 characters in length.  Each individual project financed by a particular source of revenue will require a separate FUND with a Fund Code that rolls up to the OUS level Fund Code for that revenue source.  The FUND title will be assigned by the institution.  It is a descriptive title that may be the same as the project name, or a more descriptive name.
• The FS Controller will forward the request to the OUS Facilities Division.  A copy will be sent to the OUS Controller’s office with a notation that the original was sent to the OUS Facilities Division.  Staff in the OUS Facilities Division will review and approve the request.  The approved forms are sent to the OUS Controllers Office for Index/Fund (FOAPAL) setup in Banner.  The project number (in the grant code field) will begin with 9xxxx.  The Fund will begin with 8xxxxx. 
• The FS Controller will provide the project number, fund number and new index number for the plant fund to the FS project manager, and requesting parties. 
• The FS Controller will transfer monies as required by the plant fund (8xxxxx) process, unless they are gift funds.  Gift fund transfers are the responsibility of the funding department/unit.  This includes funds from the OSU Foundation.

Account Code

Effective: 01/01/2003
Revised: 01/14/2010

• Account codes 403xx – 407xx CANNOT be used on general funds.  They MUST be used on Plant Funds beginning with 8xxxxx.
• Funds with Program Code 90001-90005 are to be used for expenses that are for a new facility (also includes acquisition of facilities), and must be capitalized.
• Program Code 93000 is used for Plant improvement, remodeling or similar improvements to existing facilities that extends the life of the facility.  These expenses are capitalized.
• Program Code 97000 includes repair and deferred maintenance projects that do not extend the life of the facility, but rather are required to keep it functional.  These projects are not normally capitalized.
• The 4xxxx account codes are for capitalized expenses.
• The 23xxx account codes are non-capitalized repair and maintenance expenses.

•  

Plant Fund Requests

• Revised: 01/14/2010

  A FUND within the Unexpended Plant Funds represents a specific source of revenue used to finance all or a portion of a capital construction, improvement or repair project.  The Fund Code is a 6-digit number that uniquely identifies a particular FUND.  The Fund Codes for plant accounting are as follows:

• 800000 - 804999 Unexpended Plant Funds
  • includes Auxiliary Funds and Building Use Credits
• 805000     Special Unexpended Plant Projects
  • rarely used
• 807000 - 809999 Gift/Grant/Contract Plant Projects
  • includes SELP loans
• 810000     State General Fund Appropriations Projects
• 815000     Article XI-F(1) Bond Plant Funds
• 820000     Article XI-G Bond Plant Funds
• 822700     XI-G Bond Interest
• 823000     COP Plant Funds
• 825000     Restoration and Insurance Plant Funds
• 830000     Renewal and Replacement Reserves
• 840000     Renewal and Replacement – Auxiliary Enterprises

• The Revenue Source is required information and must indicate the source of the revenue for the project, and in the case of Article XI-F(1) bonds, the source that will repay the debt service.  The Revenue Source should coincide with the Fund Code.  The more common revenue sources used for OUS projects are as follows:

• General Fund Appropriation
• Article XI-G Bonds
• Article XI-F(1) Bonds
• Auxiliary Enterprise Balances
• Gifts and Grants
• Building Use Credits
• Commingled Student Building Fees
• State Restoration Funds
• Certificates of Participation (COP)
• Special Funds (i.e. lottery funds, Board’s reserve for Architectural and Engineering Planning)

• Other required information includes:

• Organization Code – the code that represents the function or department responsible for the FUND.
• Program Code – the code that describes the plant construction or improvement activity.
  • 90000     Plant Construction and Improvement
  • 90001     Plant Construction
  • 93000     Plant Improvement
  • 97000     Renewal and Replacement
• Fund Manager – name of the person in charge of or having control over the FUND.
• Budget – a required entry and should give the total budget for the FUND.  In the case of a legislatively approved project, this would be the same as the Expenditure Limitation, unless there will be more than one FUND for the project.  In that case, the amount would be a specific FUND’s share of the expenditure limitation.
• Requested By – is a required field and must show who is requesting the FUND to be established (OSU Facilities Services Controller).
• Comments – is a required field and it must give a brief explanation of the project and its relationship (if any) to other established FUNDS.
• Finally, the document must be signed and dated by the OSU Facilities Services Controller.

• Plant Fund Request Forms may be obtained from Facilities Services at 7-4921.

Year End Processes for Capitalization

Effective: 01/01/2003
Revised: 12/27/2012

Buildings & Grounds - Improvements and Adjustments in Excess of $5,000

The annual capitalization report must be completed and submitted.  The report must include all Plant Construction and Improvement Funds that had expenditures during the current fiscal year (see FWRFAAC) plus any other expenditures for buildings, improvements other than buildings, infrastructure, land or land improvements activity that qualify for capitalization.  Transactions through period 14 must be included.  Prior year adjustments must be clearly identified.  Funds with zero or negative balances must be reported if they had capitalized account codes (4XXXX) transactions during the year.  Include an explanation for these transactions.

The contents of year-end reports will be used to classify year-to-date (YTD) expenditures through Period 14 and post them to the appropriate subsidiary file for financial statement purposes.  Amounts reported for unfinished (not completed/not accepted) projects at June 30 must be identified as construction in progress (CIP).  These amounts will need to be identified for posting to the appropriate asset in a future year.  Amounts reported as non-capital maintenance and repairs will be utilized in the indirect cost computations.  Data must be reported as whole dollar amounts for each category of expenditure.  OSU Office of Business Affairs prepares the journal vouchers to adjust the appropriate Net Investment in Plant Fund (890000) and Asset Accounts.

• OSU may report current year Period 14 transactions in the next fiscal year as a prior year adjustment.

• OUS 05.780 Accounting for Capital Projects is a helpful reference.

• In addition, year-end reports are prepared for any changes in:

• • Square feet of existing buildings whether by additions, demolitions, or removals.

  • The functional use of buildings so that usage categories maintained in the building master record may be revised.  With regard to the use of buildings, give particular attention to miscellaneous housing properties acquired that may have been converted to offices or similar institutional facilities.

  • Changes in ownership/rededication.