Controller's Unit Policy Program

* This information replaces FIS 702 Administration of Service Center Reserve Funds

INDEX

• .100 POLICY STATEMENT
• .110 POLICY RATIONALE
• .130 ENTITIES AFFECTED BY THIS POLICY
• .140 APPROVAL AND EFFECTIVE DATE OF POLICY
• .150 KNOWLEDGE OF THIS POLICY
• .160 DEFINITIONS
• .170 RESPONSIBILITIES
• .210 CAPITAL PLAN DEVELOPMENT
• .220 EQUIPMENT RESERVES
• .230 PURPOSES OTHER THAN EQUIPMENT
• .300 ACCOUNTING ENTRIES
• .301 RESERVE FUNDING
• .302 EQUIPMENT – CAPITAL EXPENDITURES
• .303 EQUIPMENT – NONCAPITAL EXPENDITURES
• .910 CONTACT INFORMATION

.100  POLICY STATEMENT: 

Each service center enterprise unit should maintain a long-term equipment Reserve Funding Plan for acquiring, replacing and maintaining its depreciable equipment.  This policy sets forth basic requirements for administering and accounting for the funds set aside by service center enterprises for the purpose of acquiring, replacing, and maintaining depreciable equipment.

.110  POLICY RATIONALE

OSU seeks to ensure that service center enterprises appropriately plan for the acquisition, replacement, and maintenance of depreciable equipment and to ensure the appropriate and consistent accounting of the funds set aside for this purpose.  

.130  ENTITIES AFFECTED BY THIS POLICY

Compliance with this policy is applicable to all service center enterprises that own equipment having an aggregate historical capital asset cost equal to or exceeding $150,000. Service Center enterprises that do not meet this threshold and voluntarily establish an asset reserve must also comply with these policy requirements.

.140  APPROVAL AND EFFECTIVE DATE OF POLICY

This policy was approved by the OSU Vice-President for Finance and Administration on May 26, 2017.

.150 KNOWLEDGE OF THIS POLICY

All OSU Service Center, Business Affairs, Capital Planning & Development, and Business Center support personnel with financial management responsibilities must be knowledgeable of this policy.

.160 DEFINITIONS

Equipment Reserve Funding Plan (Reserve Funding Plan) – A long-term funding plan that documents service center enterprise management’s intent and expectations for the amount that will be expended on acquiring and maintaining capital equipment over a specified future period.

Equipment Reserve Fund – Monies set aside by service center enterprises pursuant to an Equipment Reserve Funding Plan to acquire, construct, and/or make repairs to capital equipment used in the operation of the related service center enterprise.

Bulk Purchases – An expenditure to simultaneously purchase multiple assets that individually cost less than $5,000, but in aggregate cost $5,000 or more.

.170 RESPONSIBILITIES

A. Service Center Management

• Submit Reserve Funding Plans to Business Affairs each fiscal year and to Capital Planning & Development if the Reserve Funding Plan contemplates the fabrication of equipment.
• Ensure that asset reserves are adequate and appropriate for each service center enterprise.
• Develop the Reserve Funding Plan in conjunction with the unit budgeting process. 
• Submit revised Reserve Funding Plans to Business Affairs within 30 days of service center management approval.

B. Capital Planning & Development:

• Review and provide comment on Reserve Funding Plans that include fabricated equipment to ensure they are included in the university’s 5 year capital plan approved by the board.
• Advise Business Affairs of issues related to fabricated equipment and plans as needed.

C. Business Centers:

• Consult and advise Service Center management on the development of their Reserve Funding Plans.
• Coordinate with Service Center management to ensure Reserve Funding Plan budgets and transactions are appropriately documented, maintained and updated.

D. Business Affairs:

• Review annual and revised service center Reserve Funding Plans for clarity and policy compliance.
• Forward Reserve Funding Plans to the VP for Finance and Administration for approval.
• Work with units on Reserve Funding Plans that are deemed insufficient by Business Affairs or the Vice-President for Finance and Administration.

E. Vice-President for Finance and Administration:

• Approve service center Reserve Funding Plans.

.210 – CAPITAL PLAN DEVELOPMENT

In order to be effective, Reserve Funding Plans must take a long-term view and anticipate equipment expenditures over the following 5-year period.

Reserve Funding Plans should be developed in conjunction with the development of the service center’s operating budget.  Reserve Funding Plans must include anticipated inflows and outflows of monies in each reserve fund, including the contributions to the reserves as well as the expenditures for capital equipment, repairs and maintenance, and bulk purchases of non-capital equipment and their impacts on the reserve balance over the required timeframe. 

Some factors to consider in setting an appropriate annual funding level include the age, condition, and functional performance of existing equipment, technological trends, current and prospective operating budgets, and anticipated changes in operational needs and capacity.

Reserve Funding Plans must be submitted to the Assistant Director of Financial Accounting and Analysis in Business Affairs by April 30th of each fiscal year after completion of the unit budgeting process.  Reserve Funding Plans are reviewed by Business Affairs and are then forwarded to the Vice President for Finance and Administration for approval.  Modifications to Reserve Funding Plans equal to or greater than 10% or $10,000 per fiscal year, whichever is larger, require the submission of a revised plan within 30 days of service center management approval. 

.220 – EQUIPMENT RESERVES

Equipment reserves are intended to be used for the acquisition or construction of new capital equipment, repairs and maintenance, and/or replacement of existing non-serviceable or fully-depreciated capital equipment.  To qualify for capitalization, expenditures for equipment must equal or exceed $5,000 per individual asset.

Expenditures for minor equipment are normally purchased from the associated service center operating fund.  However, reserve funds can be used for bulk purchases of items that individually cost less than $5,000 if when aggregated the total cost is $5,000 or more and the expenditure is included in the service center’s annual Reserve Funding Plan. 

.230 – PURPOSES OTHER THAN EQUIPMENT

Reserve fund balances represent a commitment to fund future purchases or repairs of equipment in accordance with the provisions of this policy, and cannot be used for regular service center operating expenses.  Any use or purpose that is not explicitly permitted within this policy must be approved by the VP for Finance and Administration.  Requests of this nature should be forwarded to the Director of Financial Accounting and Analysis in Business Affairs for processing.

PROCEDURES

.300 – ACCOUNTING ENTRIES

.301 – RESERVE FUNDING

Equipment reserves are established in the 0905xx fund series in Banner and are funded by the following journal entry:

.302 – EQUIPMENT-CAPITAL EXPENDITURES

Capital equipment purchases must be made from the service center operating fund where the assets will be capitalized and depreciated.  Capital equipment expenditures require processing the following JV transaction to transfer funding into the associated service center operating fund before funds can be expended. 

.303 – EQUIPMENT-NONCAPITAL EXPENDITURES

When reserve funding will be used to fund bulk purchases of non-capital equipment, the related disbursements must be made directly from the 0905xx reserve fund. 

.910 – CONTACT INFORMATION

Direct questions about this policy to the following offices as indicated: