Role of the Fixed Asset Custodian

The fixed asset custodian plays an important role in maintaining the accuracy of the data contained within the University's fixed asset system. The Office of the Comptroller relies on the custodians of the University's assets for critical pieces of information that impact our financial statements. Here we will define the role of the custodian through the life cycle of an asset so that a full understanding of this role can be gained by those taking on this responsibility in their department.

There are three stages of a fixed asset's life cycle: 1) acquisition, 2) maintenance, and 3) sale or disposal.

Acquisition

Use of Proper Capital Expense Account Codes

When a department is acquiring an asset that has a fixed asset they should charge the expenditure to the appropriate FOAPAL, but pay particular attention to the account code being selected. Fixed assets are defined at the University as assets that have a per unit cost of $5,000 and a useful of more than 1 year. The account codes for capital expenditures are as follows and should be utilized when submitting the requisition to purchase the asset:

Account Code	Account Description
6305	Office Furniture and Equipment > $5,000
6310	Software/Computer Equip Exp > $5,000
6315	Maintenance Equipment Exp > $5,000
6320	Transportation Equipment Exp > $5,000
6325	Building Equipment Exp > $5,000
6330	Other Equipment Exp > $5,000
6380	Land Purchases and Improvements
6381	Land Improvement Purchases
6385	Building Purchases
6386	Artwork Purchases
6388	Leasehold Improvement Purchases
6399	Expended for Plant (Capitalized)

There are situations were bulk purchases are considered capital such as large furniture purchases for classrooms and labs. In those cases, if the purchase is in excess of $5,000 in total, it is permissible to capitalize. However, General Accounting will make the final determination as to whether something meets the capitalization policy regardless of the actual account code utilized.

Using the capital account codes listed above, enables General Accounting to better screen for fixed assets and capitalize them in a timely fashion. Using other account codes when purchasing capital require the General Accounting staff to have to hunt for items that are purchased in these accounts and spend time looking up any invoices that are for an amount of $5,000 or more. If a capital asset is then identified in one of those accounts, the expenditure must then be reclassified by the General Accounting team to the correct capital account listed above. In a perfect world, all capital expenditures made in a period would be solely recorded in the accounts designated for capital.

Now that you know the important consideration of account code selection at the time of purchase, let's discuss other considerations for the custodian during the acquisition phase.

Receipt and Invoicing of Fixed Asset

Once an asset is received, it is important to ensure that the invoice is submitted timely for payment by submitting to the digital mailroom used by our Smart Source purchasing system at Drexel_university@edmamericas.com. A fixed asset can't be capitalized until it is both invoiced and received. Sometimes the invoice precedes the asset's receipt or the vendor could require a deposit on the purchase prior to delivery and the remainder upon receipt. It is important for custodian's to understand the importance of following our purchasing policies and purchasing fixed assets using the requisition process. This ensures that all invoices are tied to that invoice and it allows the General Accounting team to know if an asset has been fully invoiced and whether it can be capitalized and begin depreciation in the current fiscal year or if it has to be placed in construction in process until all the invoices and the actual asset is received. If confirming orders are used for each invoice, it becomes difficult to understand that the various invoices are for one asset and it may result in General Accounting thinking the asset was received and depreciating it prematurely.

On occasions, individuals purchase fixed assets using a P-Card. This is not the recommended University procedure, but situations arise when it is a necessity. On a monthly basis, the General Accounting team reviews all P-Card purchases for expenditures exceeding $5,000 to determine if any fixed assets were purchased through that mechanism. If an asset is thought to be a fixed asset, the staff member will reach out to the individual who made the purchase and require them to submit a copy of the invoice, receipt, or other supporting documentation related to the asset so that I final determination as to whether the purchase is for a fixed asset can be made.

Once a payment is made on an invoice it is considered expense. General Accounting runs monthly queries of all expenses greater than $5,000 and screens the transactions for items that are capital by looking up the invoice in our Smart Source system. They document when purchases are not capital and the reasoning in a master file. However, when an item is identified as meeting the capitalization policy, they begin the fixed asset capitalization process.

Capitalization Process for a Fixed Asset

When an asset is deemed to be capital by the General Accounting team, a Fixed Asset Addition Form is completed. This form contains key pieces of information about the asset that can be garnered from the data in Smart Source. The General Accounting team pulls down an image of the purchase order's supporting documentation and the copies of the invoices for our permanent records. The details that are usually gathered at this stage are the purchase order number, invoice numbers and amounts, FOAPALs used to purchase the equipment, description of the asset, manufacturer, amount of the purchase. The part that becomes difficult is determining the asset's proper custodian and its current location. As such, in FY 2020, General Accounting has introduced a new process in which they will send a Pre-Confirmation email to the individual that they believe is the custodian based on their initial review. The email will instruct the individual receiving the Pre-Confirmation email to reply immediately to the sender if they are not the appropriate custodian and optimally identify the correct custodian. Otherwise, the individual receiving the Pre-Confirmation email should act as the custodian and review the form and update to the best of their ability any of the fields and data with the correct information. General Accounting is especially interested in serial numbers, model numbers, building and room locations so that they can have the most accurate data to enter into the University's fixed asset system. If General Accounting does not receive a response to the Pre-confirmation email in 5 business days, they will assume that the information provided is accurate and move to capitalize the asset in the fixed asset system. If they do receive a response, they will incorporate that information into the data entered into the Banner fixed asset system when capitalizing the asset.

The above process is one of the most critical points in the life of an asset and helps in all future actions related to the asset. Custodians should take the Pre-Confirmation emails seriously and respond timely so that the annual confirmation process is made simpler in the long run.

Tagging of a Fixed Asset

Once a fixed asset is capitalized in Banner, a tag needs to be placed on the asset to document its asset id number and allow the department to confirm it easily during the annual confirmation process and report its disposal. A member of the General Accounting staff will reach out to the custodian to schedule a convenient time to either tag the asset or to drop tags off to the custodian or the custodian's designee, if the custodian prefers and is able to tag the asset his or herself. The permanent tag of the asset in the fixed asset system is pre-assigned when the asset is determined to be capital. The tag number becomes the last six digits of the permanent tag number in Banner fixed assets.

Some assets can not be tagged because it is physically impossible or impractical due to size (a building, a small but expensive piece of research equipment, software). If that is the case, General Accounting will not reach out to tag the asset.

The current asset tags being used by both Drexel University and the Academy of Natural Sciences is a small tag that has black lettering, a grey background, and a six digit barcode. The Drexel tag's say Drexel University and the Academy's tag's say Academy of Natural Sciences at the top of the tag. Note: There was a erroneous retagging of assets at the Academy by an external firm in which they retagged many of the assets during an inventory with Drexel tags. Therefore, an asset at the Academy may have a University and Academy tag.

In the past, Drexel used a tag with a blue and white background in which the asset number was five digits in length. Some assets at the University may have been retagged with the new grey barcode tags during the last physical inventory process. Not to worry, the old tag data is preserved in the fixed asset system, and the permanent tag information was replaced with the new six digit bar code tag number.

Permanent Tag Code Prefix Meaning

Custodians will notice that permanent tag prefixes vary. The following is a handy reference guide to the meanings of these prefixes:

Prefix	Prefix Description
F	Denotes assets that were purchased out of unrestricted, designated or restricted funds at Drexel. Typically the F is followed by two or three zeroes depending on the tag used at the time the asset was purchased.
FA	These denote assets that were purchased out of unrestricted, designated or restricted funds at the Academy. Typically the FA is followed by one or two zeroes depending on the tag used at the time the asset was purchased.
FM	These denote assets that were purchased out of unrestricted, designated or restricted funds when PHEC (aka DUCOM or Chart M) was a separate entity. Typically the FM is followed by one or two zeroes depending on the tag used at the time the asset was purchased.
R	Denotes that the asset was funded by a plant fund project at Drexel. Equipment, furnishings, software that are purchased out of capital projects will have a R prefix and end with the physical tag number assigned to the asset (5 or 6 digits depending on tag used). The capital project itself uses a prefix of R but its last six digits are that of the project fund number. Its second and third digits may be two zeroes or the last two digits of a calendar year, if the project had expenses over multiple years.
RA	Denotes that the asset was funded by a plant fund project at the Academy. Equipment, furnishings, software that are purchased out of capital projects will have a R prefix and end with the physical tag number assigned to the asset (5 or 6 digits depending on tag used). The capital project itself uses a prefix of R but its last six digits are that of the project fund number. Its second and third digits may be two zeroes or the last two digits of a calendar year, if the project had expenses over multiple years.
RM	Denotes that the asset was funded by a plant fund project when PHEC (aka DUCOM or Chart M) was a separate entity. Equipment, furnishings, software that are purchased out of capital projects will have a R prefix and end with the physical tag number assigned to the asset (5 or 6 digits depending on tag used). The capital project itself uses a prefix of R but its last six digits are that of the project fund number. Its second and third digits may be two zeroes or the last two digits of a calendar year, if the project had expenses over multiple years.
ANS	Denotes a tag related to the Academy that was purchased pre-acquisition. Many of these tags have been converted to a F tag number and few remain.
No Prefix	These are assets that were purchased prior to the use of Banner Fixed assets and it represents the asset id from the legacy general ledger known as Drexel University Information Management System (DUIMS).

Maintenance

The custodian is responsible for confirming their fixed assets on an annual basis. In early July of each fiscal year, the Office of the Comptroller sends out a notification that the annual process has begun and that all assets should be confirmed in the Fixed Asset Confirmation Tool. The confirmation process runs until early August. The custodian is required to make updates to any editable fields in the Fixed Asset Confirmation Tool that is incorrect or needs updating. Custodians should pay particular attention to validating the location and condition of the asset. If an asset has been disposed and is appearing on the confirmation list, the custodian is required to mark that asset with a condition of "DS - Disposed/Junked". Any asset condition other than "DS-Disposed/Junked" is considered an active asset. Only assets marked as "DS-Disposed/Junked" will be written-off as part of the annual confirmation process.

Custodians are able to assign one proxy to help assist them with the asset confirmations.

It is important to understand that custodians should not wait until the annual confirmation process to report an asset as disposed, although that is the common practice. We recommend emailing the General Accounting Department at acct11@drexel.edu and attaching the Capital Asset Disposition/Transfer Form [PDF] to the email. This will ensure action is taken immediately pertaining to the disposal of the asset and is a best practice. This procedure will also ensure that the asset does not appear on your annual confirmation list.

The custodian should also report transfers of assets to different departments using the Capital Asset Disposition/Transfer Form [PDF] and sending the form to the General Accounting Department at acct11@drexel.edu. This will alleviate the need to change the custodian during the confirmation process each year.

The custodian should also utilize the Capital Asset Disposition/Transfer Form [PDF] to report location changes, but absolutely during the year-end confirmation process.

Disposal

Assets need to be reported to General Accounting when they are disposed, stolen, or sold. Disposals of fixed assets should be reported throughout the year using the Capital Asset Disposition/Transfer Form [PDF]. General Accounting will then write-off the asset from our fixed asset database which will automatically update our general ledger asset balances for these adjustments.

An asset that is fully depreciated should never be marked as disposed during the confirmation process unless it cannot be found. If the asset is still physically present on the campus it must be part of our asset and corresponding accumulated deprecation balances. If you have questions about when an asset should be considered disposed please contact General Accounting at acct11@drexel.edu.

Funds related to the sale of an asset can be recorded as other income in the departments account. Since the amounts are typically, immaterial, the university does not offset these amounts against any losses on disposal.

When you disposing of an asset and are unsure if it is our fixed assets system, please reach out to General Accounting at acct11@drexel.edu and provide as much detail about the asset and the team will research if it is in our database.

Disposals handled through our Surplus Property program headed by Bo Solomon will be reported to General Accounting automatically, but when in doubt, send in the Capital Asset Disposition/Transfer Form [PDF].