Fabrication Accounts

1. Fabrication Accounts • Fabrication policy http://www.atc.caltech.edu/finance/ • Fabrication set up form http://www.atc.caltech.edu/finance/

2. Fabrication Accounts Definition • “An equipment fabrication is the transformation of materials, supplies, hardware costs and direct labor (including associated fringe benefits) into an item of equipment that: • Does not currently exist • Meets unique research specifications • Has a total estimated cost in excess of $5,000 • Has an estimated useful life of at least 2 years • When completed, will not be affixed permanently to a building or structure”

3. Fabrication AccountsFiscal Implications • Costs charged to a fabrication account are not burdened (i.e., overhead rate is not applied), regardless of expenditure type • Fabricated equipment that is eventually capitalized in Oracle Fixed Assets will include all costs charged to the fabrication PTA (including labor, travel, etc.)

4. Fabrication AccountsChargeable Costs • Costs charged to a fabrication PTA must be integral to the construction of that fabrication (may include labor costs) • Must be in compliance with OMB Circular A-21 • Must not be prohibited in the awarding document

5. Establishing A Fabrication PTA • Fabrication PTA’s should be established as far in advance as possible to prevent initial costs being charged to a non-fabrication account • Division representative completes an equipment fabrication request form

6. Establishing A Fabrication PTA • Information required on the fabrication set up form includes: • Description • Ownership (Caltech/Gov’t/Other)* • Ultimate destination* • Estimated placed in service date (the best judgment of the PI of the point in time at which an equipment fabrication will become operational) • Estimated cost • Must be signed by the PI or the division representative *It is extremely important that the issue of ownership and final destination be known and appropriately identified at the time of account set up as this directly impacts the type of fabrication account that will be established. If the incorrect type of account is established at set up then all costs charged to that account will ultimately have to be transferred to the corrected account type.

7. Establishing A Fabrication PTA • Completed forms should be sent to Property Services (Ernest Ngalula at M/C 116-6, ext. 4181) • Property Services reviews the form to verify that the proposed fabrication is capable of meeting Caltech’s definition of fabricated equipment then passes the form to Project Accounting

8. Establishing A Fabrication PTA • Project Accounting verifies that the fabrication is allowable under the terms of the grant, contract or co-operative agreement being charged and if prior approval is required • Who actually sets up the account? • If set up at the same time as the main award – OSR • If main award already set up – Project Accounting

9. Establishing A Fabrication PTA • If a significant budget realignment is subsequently requested (more than 20% of the original fabrication budget) PA will work with Property Services and OSR to ensure that the project continues to meet the definition of a fabrication and that it continues to be allowable under the terms of the awarding document

10. Fabrications • Equipment expenditure types should not be used on fabrication accounts • Technically, a component purchased for a fabrication is not a stand alone asset therefore it doesn’t meet the definition of equipment • In practical terms using equipment expenditure types on fabrications impacts Caltech’s reporting to agencies • Remember: Charges hitting a fabrication PTA are overhead free therefore no fiscal implications to using ‘supplies – allocable’