Follow the Money

1. Follow the Money Gary Quinn, CPPM Mike Smart, CPPS University of Texas Southwestern Medical Center Dallas, Texas

2. Follow the Money

3. Why Follow the Money? • Compliance with regulations/policies • Financial reporting of property • Ensuring property that should be on inventory is • Ensuring that you can identify the value of any asset (historical and net book) • Determining if remuneration is received when an asset is lost, damaged, destroyed or transferred from the organization

4. Regulations? What Regulations? • Circular A-21 • Circular A-133 • Circular A-110

5. Tracking Financial ValueWhy? • Financial Reporting • Organizational financial report • Report to Grantor • Report to regulating agencies • Knowing Net Book Value

6. What is Included on Inventory? • Capitalization Threshold? • Sensitive Control Threshold?

7. What if an asset is Lost, Damaged or Destroyed • Knowing Original Purchase Value • Knowing Current Net Book Value • Current Market Value? • Replacement Cost?

8. Disposal • Calculation of Gain or Loss for financial reporting • Determining appropriate Disposal Method may rely on Net Book Value • Determining appropriate Disposal Method may rely on expected resale value • Sale vs. Salvage decision • Retain Record IAW regulation/policy

9. What data must be included in the record? • Identification of the asset • Identification of funding source • Cost • Depreciation schedule • Dates of all transactions • Custodian

10. What data must be included in the record? • Location • Owning department • Title restrictions • Disposal restrictions • Other Institution Required Information

11. What must the property record chart fields reveal? • Funding source • Sub ledger or account • Financial object (capital or non-capital money) • Fund Type (restricted, unrestricted, etc.) • Expenditure (Dollar cost) • Purchase Order

12. What must the property record chart fields reveal? • Payment Voucher • Receipt of Property • Custodian • Location

13. Funding Source • Fund Code • University money or grant/contract money? • Federal or private grant? • Multiple funded?

14. Who has Title? • Title with grantor or university? • How and when is title conveyed? • Disposal permissions required? • Title stays with grant, university or PI?

15. Tracking Current Value • Is it depreciable? • Depreciation Start Date? (receipt date, final payment date, placed in service date) • Residual Value? • Who is dictating the depreciation schedule (organization, state or federal regulation, or grantor)

16. Tracking Current Value • Which Useful Life convention are you to use? • If there are dual requirements do you maintain two sets of books or adjust financials for one of the financial reports at year end?

17. Value Option Example X-Ray Equipment • Original value: $7,795,000 • Useful life = 84 months • Age = 60 months • Residual value = $0

18. Value Option Example Calculations: Accumulated Depreciation = ((Original value – Residual Value) / useful life) x age Net Book Value = Original Value – Accumulated Depreciation

19. Value Option Example • Accumulated Depreciation = (($7,795,000 - $0)/84) x 60 = $5,567,857 • Net Book Value = $7,795,000 - $5,567,857 = $2,227,143 Purchase Value is: $7,795,000 Net Book Value is: $2,227,143 Current Market Value is: ?

20. What is included on your Financial Report? • Organizationally funded capital assets • Grant funded capital assets (with conveyed title) • Grant funded capital assets (w/o conveyed title)? • On Loan Capital assets? • Capital assets held in trust? • Leased Capital assets?

21. Consequences for not following the money • Loss of grant authority • Loss of funding • Financial penalties • Audit findings • Loss of credibility (confidence in the organization)

22. Follow the Money