Equipment Workshop Seyed Mohammadi, Director, Federal Cost Accounting, University Finance Trudy Riley, Assistant Vice Provost, Research Administration George Walueff, Associate Director, Procurement
What is Equipment? Personal property Tangible Movable Acquisition cost of $5k or more Functional for its intended use in & of itself Useful life of 2 or more years
Accessory/Peripheral An item intended to be used with an equipment Increases/enhances the productivity/utility of the equipment When purchased with the equipment, the combined system with be considered one equipment If purchased at a later date and attached to the equipment, the cost is added to the cost of equipment only if the cost exceeds $2,000
Fabricated Equipment Material purchased for the purpose of building, constructing or assembling of equipment that will be so identified upon completion. Capitalization of equipment • Proposal preparation • Administration of award • Closeout actions
Repair/Replacement Parts Items that are necessary to restore an item of equipment to a fully functional status Not considered equipment in and of themselves Cost of the part may be added to the equipment's adjusted cost if: • the cost of the repair or replacement part is 50% or more of the base equipment, OR • the item significantly enhances the functional capacity of the base equipment
Capitalized Cost of Equipment The equipment cost include all the following where such costs can be identified: • Net invoice price of the equipment • Cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it useful for the purpose for which it was acquired • Protective and transit insurance • Freight • Installation
Proposal Preparation Budgeting • Why is it important to know at this stage equipment Budget • What to include/not to include justification • Does solicitation require a quote When to purchase equipment
F&A and Equipment Equipment defined as items with cost of $5,000 or more and useful life of one year or more Per OMB Circular A21, depreciation is the methodology to compensate institutions for use of their equipment Equipment purchased with federal funds or donated by the federal government is excluded for F&A calculation and no recovery is allowed No recovery is allowed for equipment used as cost share
F&A and Equipment – Cont’d Auditors will use a sample of equipment to be verified on site visit Auditors will verify the location of equipment indicated on the survey If significant discrepancies are identified, the depreciation will be allocated on a building-by-building or department-by-department basis
Equipment Determination & Procurement Budget may Include the Funding Source(s) Following (as defined in To be Considered • University CFR) at time of Grant • State • Equipment Proposal • Federal • Services • Combination • Subrecipients • Combination
Non-Compliance Compliance with Federal Promotes: and Institutional Policies & Procedures Promotes: Audit Findings Cost Efficiency Disallowance Accountability Special Conditions Integrity Jeopardize Future Funding Tarnished Reputation
Sound Procurement Practices for Equipment Purchases Eliminate Bias and Eliminate Inappropriate Influences Quality Actual or • Vendor Communications Product at a Eliminate • Solicitation of Quotes, Bids Apparent or Proposals Competitive Waste • Evaluation of Responses Conflict of • Award of Contract Price = Value • Specification Development Interest • Performance Based • Avoid Brand Names
Equipment Solicitation Process by Procurement Services Complete, Unbiased Specifications Competitive Environment Include Disadvantaged Businesses Response Evaluation (in consultation with PI) • Adherence to Specifications • Price/Cost Analysis • Extended Warranty and Training Priced Separately • Delivery Terms • Payment and Freight Terms Verify if Vendor is Disbarred, Suspended or Excluded
Purchasing Equipment Replacement or Upgrade of Existing Equipment Requisition/Vendor Payment Request • Role of Contract & Grant Specialist Include Tag Number on Requisition • Include Cost Components in Price on Equipment Line • Include non-Cost Components on Separate Line(s) • Training • Extended Warranty
Ownership/Property Who owns the equipment/property? Why is this important? How do you know who owns it? Reporting requirements Tracking equipment location Equipment disposition • Equipment Activity - found at www.udel.edu/webforms (Blank form: Equipment Activity)
Closeout and Equipment What has been purchased? Have you capitalized? Reporting requirements of sponsor Terms/conditions of award and ownership
Resources Procurement Policies • Class I Movable Equipment: Policy Number: 5-10 (http://www.udel.edu/ExecVP/policies/procurement_and_auxiliary_services/5- 10.html) • Equipment Screening : Policy Number: 5-21 (http://www.udel.edu/ExecVP/policies/procurement_and_auxiliary_services/5- 21.html) Research Office Policies & Information • Equipment Cost Share Policy (http://www.udel.edu/research/preparing/equipcostshare.html) • Transfer of Equipment Purchased on Research and Training Contracts and Grants: Policy Number 6-8 (http://www.udel.edu/ExecVP/policies/research/6-08.html) • More RO policies and forms • http://www.udel.edu/research/researchers/policies-forms.html • Grants Management Guide for Fabrications Information • http://www.udel.edu/research/preparing/grantsmanual.html?panel=0 http://www.udel.edu/research 16
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