Grant, Contract & Gift Accounting Manual
Section 207: Equipment
Property acquired from a research sponsor or purchased with sponsored research funds is accountable to the grant or contract for which it was obtained. Contract authority must exist for the acquisition of facilities, special test equipment and other equipment on sponsored research funds. Equipment budgeted in the grant or contract award is assumed to be approved by the award sponsor. Additional acquisitions of capital equipment on award funds must be pre-approved in writing by the sponsor when required by the regulations of that sponsor.
There may be additional management procedures and restrictions required by an award sponsor. In the case of federally sponsored research, procedures and restrictions are specified in OMB Circular A-110 (Property Standards section), OMB Circular A-21, the Federal Acquisition Regulations (FAR), and the NASA Grant Handbook, as well as terms of the individual contract or grant. (Note: The NASA Grant Handbook has been updated as of October 19, 2000. The revised rules are not retroactive, but affect awards begun after that date.)
Active information circulars are located in the NASA Grant & Cooperative Agreement Handbook. Select circular number GIC 01-01, dated: March 29, 2001 Guidance on Property Administration Requirement for Special Purpose and General Purpose Equipment.)
Principal Investigators acquiring equipment for sponsored research are held accountable for following the sponsor’s requirements, as well, as OSU’s policies, regarding screening, acquisition, maintenance, physical inventories, reporting and disposition of property.
207-01: Purchasing Equipment from OSU Surplus Property
Surplus property normally cannot be purchased on grants and contracts. The reason is that Property Administration is unable to verify what funding source originally purchased the property. OMB Circular A-110 and FAR state that property that was originally purchased with federal funds cannot be re-purchased with federal funds. Because of the CAS principal of consistency, this policy is applied to all sponsored projects.
The exception is when the surplus property did not come from OSU. Occasionally, OSU sells surplus property for other entities, like Benton County.
Note: only scientific equipment can be purchased, not general-purpose desks and other items.
207-02: Trade-in of Capital Equipment
- Property Management should clear all assets prior to offering as a trade-in. Verbal approval will be given on the telephone.
- After approval, prepare a Property Disposition Request (PDR) to remove the traded asset from inventory. Be sure to note the amount of credit that is to be received from the vendor for the traded asset. If multiple assets are being traded there must be a specific amount for each asset – not a lump sum for all.
- The PDR should be attached to the Department Requisition that is sent to Purchasing.
- Purchasing will set up the Purchase Order in Banner to reflect the full value of the new asset (including the value of the trade-in credit, rather than less the value of the trade-in credit). There should be a text notation on the Purchase Order regarding the amount of credit to be received from the vendor.
- Purchasing will provide a copy of the PO as well as the original PDR to Inventory Control to keep on file until the asset is received and paid for.
- The invoice for the new asset must be processed for the full amount of the asset (including trade-in credit) even though the invoice from the vendor will probably be reduced by the value of the trade-in allowance. In order to pay the correct amount, a credit memo will be created in Banner for the amount of the trade-in allowance. Be sure to process the invoice and credit memo simultaneously (cross-referencing the document numbers in the text field of both). This allows the proper payment to the vendor.
- The credit memo will be set up for the amount of the trade-in, and posted to fund 095880 (Asset-Undistributed Income Clearing) and account code B5801 (Undistributed Income).
- Inventory Control will create the new asset record from the origination tag created by the invoice. Then the disposition of the traded asset will be processed in the Fixed Asset module under the ‘sale of asset’ function. This function will take the ‘proceeds’ of the sale (the credit amount in the undistributed clearing account from the credit memo) and return it to the appropriate departmental fund. This process allows the proper recording of the gain or loss on the disposal of the traded-in asset. Gain or loss will only be posted to 09XXXX Service Center and 1XXXXX Auxiliary funds.
207-03: Guidelines for Ownership Coding of Sponsor Funded Equipment
- In determining ownership codes, the award or contract, subsequent official modifications and contract specific correspondence from the agency supersedes agency regulations.
- Agency regulations are the specific guide to that agency’s implementation of OMB Circular A-110 (grants & cooperative agreements), and thus are the guidelines for equipment ownership coding in all areas not covered by the award document. Appropriate FAR clauses are used for contracts in conjunction with the award document.
- Unless otherwise specified in the agency regulations or the agreement itself, contractor-acquired equipment valued at $5000 or more, purchased under agreements with agencies that require final equipment reports and provide disposition instructions, will be source coded “CI” (Conditionally Owned, Insured) or “FN” (Federally-owned, Not Insured) as appropriate.
- Unless otherwise specified in the agency regulations or the agreement itself, all equipment purchased with grant funds from agencies that do not require final equipment reports or issue disposition instructions will be source coded “SI” (State-Owned, Insured).
- Caution should be taken to avoid split purchase of a piece of equipment between agency funds which have “CI” or “FN” ownership codes unless it is the same agency, e.g., NASA.
Any equipment being purchased on split funding that has state and restricted funds must have a title-to code of “SI” to be allowable.
- “OI” Equipment does not belong to OSU and must be dispositioned at the end of the award. This equipment is usually left in a foreign country. The department is required to fill out a PDR form that will remove it from inventory. That form is to be approved by the Office of Post Award Administration. Also, the award must state that the piece of equipment is to be left with another party. All “OI” equipment must be ‘signed off’ by the receiving entity at the conclusion of the project.
For additional information or clarification on equipment policies please refer to: