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Scope

This policy relates to the reconciliations and capitalization of federally funded assets.

Reason for Policy

To ensure compliance with federal guidelines on assets purchased with federal funds.

Policy Statement

At time of acquisition, capital equipment funded either totally or partially from direct or federal flow-thru funds, must be reflected in the Asset Management (AM) system with the full ChartField String with the detail ProjectID. This identifies the portion of federal participation in the asset purchase and the award from which it was purchased. Awards within the PeopleSoft Grants module must have at least one project number attached to them.  Each award that has a Catalog of Federal Domestic Assistance (CFDA) number identifies the award as federally funded.

Reconciliations must be completed for all Federally Funded Equipment no less frequently than quarterly. However, monthly reconciliations are recommended.  The reconciliation must be reviewed and have approval documented for all Federally Funded Equipment on a quarterly basis.  The reconciliation should be comparing life-to-date balances in AM to life-to-date capital expenses reflected in the General Ledger (GL).  Any reconciling items should be cleared within a reasonable timeframe not to exceed the grant closure or fiscal year end, whichever comes first. Items that are unable to be resolved at fiscal year end need to be identified, actively investigated and resolved by grant closure.

This policy is in addition to the overall reconciliation of total assets entered into AM and capital expense reflected on the General Ledger (GL) which is required on a fiscal year basis.  Federal guidance requires that the ŷ���ڱ���Ƶ identify both Federally Funded Equipment and the specific award from which the funding derives.  The ŷ���ڱ���Ƶ identifies federal awards within the Grants module.

Per federal regulations, the Department or Principal Investigator (PI) shall use the equipment in the project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award, and the non-Federal entity must not encumber the property without prior approval of the Federal awarding agency.  Refer to the policy ownership section of the Capital Asset Policy regarding equipment management and disposition. 

Definitions

Project ChartField String - any ChartField string that uses a specific project number (8 characters). Transactions not related to a specific project that only have the project “00” are not considered a detail Project ChartField String.

Federally Funded Equipment - any piece of equipment meeting the ŷ���ڱ���Ƶ’s capitalization criteria that was purchased totally or partially with funds provided to the ŷ���ڱ���Ƶ by the Federal government.  Federal funds include direct awards from the government and all flow-thru funds provided from any entity to the ŷ���ڱ���Ƶ.  Federally Funded equipment could be titled to the ŷ���ڱ���Ƶ or retained by the Federal Government.

Accountabilities

UM ŷ���ڱ���Ƶ Controller’s Office:

• Establish and maintain policy for the capitalization of assets.
• Oversee the financial impacts of recording capital vs non-capital assets and expenses in the general ledger.
• Review reconciliations for completeness and timely resolution of reconciling items and document approval of the reconciliation.

UM ŷ���ڱ���Ƶ Supply Chain/Asset Management:

• Investigate and resolve items that have an expense recorded in GL, but the item is not reflected in AM either from procurement reports or notification from Campus Accounting Office.
• Record federally funded assets in AM with proper classification of ownership.

Campus Accounting Office:

• Perform Asset Management reconciliations to the general ledger for Federally Funded Equipment and follow-up on reconciling items to ensure timely resolution of discrepancies.
• Provide reconciling items to UM ŷ���ڱ���Ƶ Procurement/Asset Management for further investigation and resolution.
• Reconciliations are to be submitted to the UM ŷ���ڱ���Ƶ Controller's Office at least quarterly.

Campus Sponsored Programs Office:

• At grant closeout complete the final equipment reports to the sponsor to ensure the equipment will be handled based upon the sponsor’s guidelines in the award.
• Assist campus accounting office and UM ŷ���ڱ���Ƶ Procurement/Asset Management with resolving reconciling items.
• Notify Asset Management team of equipment additions and disposals for appropriate classification of ownership.

Principal Investigator:

• Responsible for notifying the Sponsored Programs Office of any equipment provided by or purchased by an external sponsor, regardless of whether the title is retained by the sponsor or the ŷ���ڱ���Ƶ.

Additional Details

Forms

Related Information

22401 Capital Asset Policy

History

Revised December 11, 2024 for timing of reconciliations and document review and approvals.

Formerly Accounting Policy Manual 60.65 – Reconciliation and Capitalization of Federally Funded Assets (revised 10/5/2007)

Procedure