ALL AGENCIES, DEPARTMENTS, AND DISTRICTS GOVERNED
BY THE BOARD OF SUPERVISORS
EFFECTIVE: 01/01/85
REVISED: 01/88, 01/94, 06/99
_________________________________
David E. Sundstrom, Auditor-Controller
1.
POLICY
Each department/agency head is accountable for
all fixed asset equipment items assigned to him/her
and shall file with the Auditor-Controller a certified
inventory of all County fixed asset equipment items
in his/her charge as of the date specified in the
schedule of fixed asset inventory dates prepared
by the Auditor-Controller pursuant to Title I, Division
4, Article 5 of the Codified Ordinances of the County
of Orange.
The Auditor-Controller shall maintain a central
inventory record of fixed asset equipment items
acquired by, or under the responsibility of, each
department/agency head.
1.1
Purpose
To establish procedures to properly account
for and control equipment.
1.2
Authority
Authority
Subject
Government Code Section
24051
Inventory of Equipment
Codified Ordinances of the County
of Orange, Title I, Division 4, Article
5
Inventory of Equipment
Accounting Standards and
Procedures for Counties, State of California
Control of Fixed Assets;
Accounting for Fixed Assets; Inventory
of Equipment
Board of Supervisors' Resolution No.
93-1390 dated December 14, 1993
Delegation of Fixed Assets Policies
and Procedures Revisions to Auditor-Controller
1.3
Definitions
1.3.1
Fixed Assets
The State Controller’s Manual,
Accounting Standards and Procedures
for Counties, defines fixed assets as:
"tangible assets of significant
value having a utility which extends
beyond the current year." Generally,
fixed assets are classified in three
categories: land, buildings and improvements,
and equipment.
1.3.2
Equipment
Equipment is defined as movable property
of a relatively permanent nature with
a significant value. Equipment items
which cost $5,000 or more, including
sales taxes, freight charges, and any
other taxes, are classified as fixed
assets.
Equipment items are capitalized and
are maintained in the County’s
central Fixed Asset Accounting System.
1.3.3
Installed Equipment or Fixtures
Items of equipment which are permanently
installed in a building or structure
and are not intended to be removed,
such as plumbing fixtures, are considered
part of the building, and the cost of
these items is added to the overall
cost of the building or structure.
1.3.4
Field Equipment
Field equipment is checked out from
a pool of such items from a central
location for use away from that location.
Examples of field equipment are County
cars in the PFRD/Transportation pool,
and maintenance and repair equipment
kept at PFRD/Facilities Operations.
1.3.5
Property Officer
The property officer is a department
or agency employee who has been designated
by the department or agency head as
being accountable for equipment for
which the department or agency is responsible,
although the ultimate responsibility
for the equipment remains with the department
or agency head.
1.3.6
Property Officer’s Designee
The property officer’s designee
is an employee in the department or
agency designated by the property officer
to perform any of the functions described
in this procedure for the property officer.
Any duties in this procedure to be performed
by the property officer can be performed
by the property officer’s designee.
1.3.7
Fixed Asset Document (FAD)
A Fixed Asset Document (FAD) is a
card prepared for each equipment item.
The FAD displays the fixed asset number,
location information, description, serial
number, and other identifying information.
See Exhibit
I.
1.3.8
Disposition Order Card (DOC)
A Disposition Order Card (DOC) is
a document prepared when an agency is
disposing of an equipment item. The
DOC displays the fixed asset number,
disposition date, and other information
about the disposed equipment. See Exhibit
I.
2.
ACCOUNTING PROCEDURES
2.1
Budget Classification and Account Coding
All equipment items which cost $5,000 or
more, including sales tax, installation, freight
charges, and any other taxes, are classified
as fixed assets.
Equipment items are budgeted in and charged
to the "Equipment" account, Object
Code 4000, or, in the case of lease-purchased
equipment, to the "Lease Purchase Principal
Payment" account, Object Code 3251, and
the "Lease Purchase Interest Payment"
account, Object Code 3351.
Refer to County Accounting
Procedure (CAP) No. FA.2., "Fixed
Asset Expenditure Coding," for details
on specific items that are included in or
excluded from the equipment classification.
2.2
Receipt of Equipment
When a department or agency receives an
equipment item, the receiver copy of the purchase
order or the partial receiving report is completed
and signed. The receiver or partial receiving
report is then signed by the department or
agency property officer, to acknowledge acceptance
of accountability for the fixed asset. If
the property officer is also authorized to
sign receiving reports for payment, the signature
of the property officer on the "AUTHORIZED
SIGNATURE" line of the receiver or partial
receiving report can signify both approval
for payment and acceptance by the property
officer. After all required signatures are
affixed, the receiver or partial receiving
report is forwarded to the Claims and Disbursing
Section of the Auditor-Controller. If the
receiver contains location information, the
Auditor-Controller General Ledger Unit can
input this location information into the Fixed
Asset Accounting System.
2.3
Issuance of Fixed Asset Number by Auditor-Controller
After receipt of the receiver or partial
receiving report and payment for the item
by the Auditor-Controller, a fixed asset number
is assigned to the equipment item by the General
Ledger Unit.
Refer to Section 2.6 of this procedure for
procedures for fixed asset numbers preassigned
to certain departments or agencies.
2.4
Fixed Asset Document (FAD)
A FAD showing the assigned fixed asset number
and location information is sent by the Auditor-Controller
to the department or agency responsible for
the equipment item.
2.5
Fixed Asset Identification Tag
The Auditor-Controller sends the responsible
department or agency a fixed asset identification
tag to be affixed to the equipment item. The
fixed asset identification tag displays the
fixed asset number as shown on the FAD furnished
by the Auditor-Controller.
All equipment items are identified for inventory
and control purposes by the fixed asset tag,
except for:
Items of installed equipment which are
considered as part of the structure or
other system to which they are attached.
Items to which the fixed asset identification
tags cannot be affixed because of the
odd sizes or shapes of the items, or because
of the manner in which the items are used.
If the County property tag will not adhere
to an item because of size, shape or use
of the item, the department or agency
should affix the assigned number in some
other manner, i.e., engraving, inscribing,
stenciling, etching, or painting the number
on the item itself, or labeling the box
in which it is kept. The number must be
affixed in some way that will ensure identification
for accountability.
It is the responsibility of each department
or agency head to ensure each fixed asset
item is identified by the assigned tag number
immediately upon receipt of the tag.
Refer to Exhibit
II of this procedure for suggestions
on where to affix the fixed asset tag to
various types of equipment items.
Refer to Section 2.6 of this procedure for
procedures for fixed asset numbers preassigned
to departments or agencies.
2.6
Preassigned Fixed Asset Numbers
The Auditor-Controller issues preassigned
sets of fixed asset tags/numbers to departments
or agencies for use in tagging fixed assets
when received. In order to set up fixed assets
in the fixed asset system timely and avoid
errors, department or agency staff involved
in assigning fixed asset numbers must observe
the following procedures:
2.6.1
Fixed Asset Number on Receiver
The fixed asset number(s) must be
noted on the receiver copy of the purchase
order. Fixed asset items cannot be included
in the fixed asset system until a number
has been assigned. The total price of
the item must be $5,000 or more with
discounts included.
2.6.2
Lease Purchases
Send to the Auditor-Controller a list
of equipment obtained by lease purchase
and the fixed asset numbers assigned
to the equipment purchased.
2.6.3
Partial Payments
A fixed asset number must be assigned
when a partial payment is made even
though the equipment item has not been
received. The Auditor-Controller must
set up the item in the fixed asset system
when the first payment is made. The
department or agency must keep track
of the number assigned until the equipment
item is actually received and tagged.
2.6.4
Department or Agency Responsibility
Department or agency staff must keep
track of all fixed asset numbers assigned
to them. Auditor-Controller staff cannot
research the history of fixed asset
numbers assigned by department or agency
staff.
2.7
Equipment Listings
Each year after the June 30 records are
complete, the Auditor-Controller provides
a listing of fixed asset equipment items for
which each department or agency is accountable.
This list is provided so each department or
agency can ensure that their fixed asset records
are in agreement with the official fixed asset
records maintained by the Auditor-Controller.
The annual fixed asset listing should also
be used to conduct interim inventories as
discussed in Section 3.4.4.
2.8
Equipment Purchased for Transfer to Another
Agency or Fund
2.8.1
Background and Description
This procedure is used for fixed assets
purchased by one agency or fund for
transfer to another agency or fund.
This procedure should not be used for
older assets which are being surplussed
for eventual transfer to another agency.
Section 2.10 applies in those instances.
Examples of the types of transfers covered
by this procedure are shown below:
2.8.1.1
CEO/Information & Technology
Equipment
Section 2.8 applies when equipment
is purchased by Agency Nos. 037
(Data Systems) and 038 (Data Systems
Development Projects) on behalf
of other agencies and is transferred
to their ownership without an
accompanying transfer of appropriations.
See Sections 2.8.2, 2.8.3, and
2.8.4.
Normally, for CEO/Information
& Technology equipment purchases,
appropriations will be transferred
from 037 Data Systems or 038 Data
Systems Development Projects to
the owner agency and the equipment
will be purchased directly from
the owner agency, in which case
this procedure would not apply.
2.8.1.2
Bond-Financed Equipmen
Section 2.8 applies when equipment
is purchased by a bond-financed
fund, but ownership is transferred
to the user agencies, such as
Probation or PFRD.
2.8.1.3
Equipment Purchased By a Fund
for Transfer to Another Fund:
No Reimbursement Required
Section 2.8 applies when equipment
is purchased by one fund on behalf
of another fund, where no reimbursement
to the purchasing fund is required
from the receiving fund. This
situation normally occurs where
a fund which receives revenue
for a specific program purchases
equipment for another fund which
operates that program. For example,
equipment purchased by the Sheriff’s
Narcotics Program Fund No. 132,
which will be transferred to the
Sheriff-Coroner Agency No. 060,
would be covered by this procedure.
See Section 2.8.5.
2.8.1.4
Restriction
This procedure is solely intended
to apply to newly purchased assets
which are purchased by one fund
or agency, but where ownership
is intended to be transferred
to a different fund or agency,
with no requirement for reimbursement
by the receiving fund/agency to
the transferor fund/agency. The
surplus procedure in Section 2.10
should be used for older assets
which one agency wishes to surplus
and another agency wishes to receive.
2.8.2
Fixed Asset Numbers Assigned to CEO/Information
& Technology
The Auditor-Controller assigns CEO/Information
& Technology a block of fixed asset
numbers to be used for CEO/Information
& Technology equipment and software
purchased by CEO/Information & Technology
in Agencies 037 or 038.
2.8.3
CEO/Information & Technology Fixed
Asset Number Assignment
Upon receipt of equipment, CEO/Information
& Technology assigns a fixed asset
number, tags the equipment, and prepares
a "dummy" FAD, which is completed
and forwarded to the Auditor-Controller
after payment for the equipment is made
and the cost data is obtained from the
Expense Budget to Actual report. The
Auditor-Controller processes the "dummy"
FAD, and forwards the permanent FAD
to CEO/Information & Technology.
2.8.4
Transfer List
CEO/Information & Technology prepares
a listing of assets, including fixed
asset numbers, to be transferred from
the purchasing fund/agency which purchased
the assets to the receiving fund/agency,
attaches the FADs for those assets,
and obtains the signatures of both the
purchasing (the CEO or his/her designee)
and receiving agency head or their designees
on the listing. No DOCs are required.
CEO/Information & Technology sends
the listing with attached FADs to the
Auditor-Controller.
2.8.5
Transfers Not Involving CEO/Information
& Technology
For transfers of equipment between
funds/agencies not involving CEO/Information
& Technology, where one fund/agency
has purchased equipment on behalf of
another fund/agency, the purchasing
fund/agency prepares a listing of assets,
including fixed asset numbers, to be
transferred from the purchasing fund/agency
which purchased the assets to the receiving
fund/agency, attaches the FADs for those
assets, and obtains the signatures of
both the purchasing and receiving agency
heads or their designees on the listing.
No DOCs are required. The listing with
attached FADs is sent to the Auditor-Controller.
If the purchasing and receiving agency
head is one and the same, only one signature
is required on the listing of assets.
2.8.6
Auditor-Controller Preparation of
DOCs
The Auditor-Controller fills out DOCs
based on the transfer list and attached
FADs, and makes the changes to the fixed
asset system to transfer responsibility
for the assets from the fund/agency
which purchased the assets to the receiving
fund/agency which will be responsible
for the assets. The Auditor-Controller
sends the new FADs to the receiving
agency.
2.8.7
Fixed Asset Inventory
The transferred assets will appear
on the fixed asset inventory of the
receiving agency, but will continue
to reflect the fund/agency which originally
purchased the assets as the source of
financing of the assets.
2.8.8
Accounting Entries for Internal Service
Funds (ISFs)
Fixed assets transferred to ISFs require
special accounting entries to ensure
that depreciation expense is offset
against a revenue account if revenue
is not recovered elsewhere (i.e., through
the billing rates). Following are the
entries required to accomplish this:
Debit
Credit
A.
Equipment
xxx.xx
Deferred Revenue
xxx.xx
B.
Depreciation Expense
xxx.xx
Accumulated Depreciation
xxx.xx
Deferred Revenue
xxx.xx
Revenue
xxx.xx
To record the depreciation and the offsetting
revenue.
2.9
Sales of Fixed Assets between Funds
When a fixed asset owned by one fund is
sold to another County fund, requiring reimbursement
from the receiving fund to the selling fund,
the responsible property officers send a memo
to the General Ledger Unit detailing the fixed
asset description, fixed asset number, and
sales price. A FAD must also be submitted
with the memo. General Ledger prepares the
accounting entries necessary to record the
sale and transfers the item from the selling
fund to the buying fund in the fixed asset
records.
2.10
Surplus, Transfer, Loan, Donation, Trade-In
of Equipment
2.10.1
Disposals and Transfers
Disposals and transfers of surplus
equipment shall be performed in accordance
with Exhibit III, "Procedures for
the Disposal of Surplus Equipment."
Exhibit III is not included as it is
dependent on the County's surplus procedure
which has not yet been finalized.
2.10.2
Loans to Another Agency
When a fixed asset item is loaned
to another agency, documentation of
the loan must be prepared and retained
by the property officer. The record
of the loan must be signed by the property
officers of both agencies in order to
document the transfer of accountability.
2.10.3
Equipment Traded In
If old equipment is traded in for
new equipment, the agency must show
the full description of the equipment
being traded in, including the fixed
asset number, on the requisition for
the new equipment. A DOC for the equipment
being traded in must be completed and
sent with a FAD to the Auditor-Controller.
The purchase order must be cross-referenced
on the DOC, and the "Traded-In"
box must be checked. The purchase order
for the new equipment should list the
traded-in equipment, fixed asset number
and trade-in amount.
2.10.4
Vehicle Disposals
Surplus vehicles remain in the fixed
asset records of the owning agency until
the vehicle is auctioned or scrapped.
Following are the steps to be taken
when a vehicle is declared surplus and
ultimately removed from the fixed asset
records:
2.10.4.1
Auctioned Vehicles
When vehicles are auctioned
by the Transportation ISF, FADs
and DOCs are retained by the owner
department or agency until after
the vehicles are sold. After the
auction, PFRD/Transportation sends
a list of auctioned vehicles to
the Auditor-Controller General
Ledger Unit. The list of auctioned
vehicles shows the net proceeds
received for each one.
The owner department or agency
prepares a DOC for each disposed
vehicle, and sends the FADs, DOCs,
and a list of auctioned vehicles
to the Auditor-Controller General
Ledger Unit. Upon receipt of the
FADs, DOCs and lists of auctioned
vehicles, the General Ledger Unit
removes the assets from the fixed
asset records.
2.10.4.2
Scrapped or Junked Vehicles
The owner department or agency
must send a written declaration
that the vehicle will be junked
to PFRD/Transportation. PFRD obtains
a "junked slip" (customer
receipt indicating that the vehicle
has been junked) from the Department
of Motor Vehicles for scrapped
or junked vehicles. A copy of
the "junked slip" is
sent to the requesting department
or agency.
The owner department or agency
prepares a DOC for each disposed
vehicle. The FADs, DOCs, and junked
slips are sent to the Auditor-Controller
General Ledger Unit. Upon receipt
of the FADs, DOCs and junked slips,
the General Ledger Unit removes
the assets from the fixed asset
records.
2.10.5
Donations of Equipment to Other Organizations
or Governmental Agencies
Donations of County-owned equipment
to other organizations or governmental
agencies must be approved by the Board
of Supervisors (Board). After Board
approval, the property officer of the
agency donating the asset should prepare
a DOC for the donated equipment. The
DOC, the FAD for the donated equipment,
and a copy of the Minute Order or Resolution
approving the donation should be sent
to the Auditor-Controller. The asset
will be removed from the records upon
receipt of the completed documents.
2.10.6
Equipment Exchanges with Other Governmental
Agencies
Any swaps of County-owned equipment
to other governmental agencies in exchange
for other equipment must be approved
by the Board. The Board action shall
contain a description and cost or estimated
cost of the equipment being acquired.
After Board approval, the property officer
of the agency donating the asset should
prepare a DOC for the equipment being
given to the other governmental agency.
The DOC, the FAD for the exchanged equipment,
and a copy of the Minute Order or Resolution
approving the exchange should be sent
to the Auditor-Controller. Upon receipt
of the completed documents, the equipment
being given to the other governmental
agency will be removed from the records.
Any equipment acquired in the trade
will be added to the records.
2.10.7
Retirement of Dogs or Other Animals
When a dog or other animal is to be
retired and removed from the fixed asset
records, the property officer of the
owner agency should prepare a DOC. The
DOC, a FAD, and a memo explaining the
circumstances of the retirement, signed
by the property officer, should be sent
to the Auditor-Controller. The records
for the animal will be removed upon
receipt of the completed documents.
2.11
Stolen Equipment
2.11.1
Procedure
When fixed assets are discovered to
be missing and are believed to have
been stolen, the agency must immediately
contact the law enforcement agency having
jurisdiction (either the County Sheriff-Coroner
or a local city police department).
Immediately after the Sheriff/police
report is completed, the agency must
investigate the loss and advise the
Auditor-Controller and CEO/Risk Management
in writing of the items stolen and the
related fixed asset numbers, stating
the probability of recovery of the fixed
assets, and requesting deletion of the
items from the fixed asset inventory
and relief of accountability for the
items. The letter must also describe
the circumstances of the loss and the
specific steps which have been taken
to modify procedures and increase controls
to preclude similar incidents from occurring
in the future. A copy of the letter
must be sent to CEO/Risk Management
by the agency. The letter must be signed
by the agency head, or, in his/her absence,
by the chief deputy or an assistant
director. A copy of the report of the
law enforcement agency making the investigation
of the suspected theft must be attached
to the letter.
The Sheriff/police, Auditor-Controller
and CEO/Risk Management must be notified
immediately upon discovery of the loss.
Late notification may interfere with
filing an insurance claim for recovery
of the cost of the stolen asset.
2.11.2
Security Analysis
If the agency believes that security
procedures may be inadequate, it may
request a special security analysis
be conducted by the Sheriff-Coroner.
2.11.3
Agency Head Appearance at Board Hearing
The agency head is required to appear
at the Board meeting at which the request
for deletion of fixed assets is heard,
to respond to any possible inquiries
regarding agency security procedures.
See Section 2.17.
2.12
Damage to or Destruction of Equipment
When a fixed asset equipment item is either
irreparably damaged or totally destroyed by
fire, collision, vandalism, or any other accidental
or natural cause, the incident must be investigated
and a letter must be submitted immediately
by the department or agency to the Auditor-Controller,
giving the fixed asset description and number,
a description of the circumstances of the
damage or destruction, and a report of any
findings and recommendations to prevent a
reoccurrence. The letter must request removal
of the item from the fixed asset inventory
and relief of accountability for the item.
The letter must be signed by the department
or agency head or, in his/her absence, by
the chief deputy or an assistant director,
and a copy of the letter must be sent to CEO/Risk
Management.
2.13
Missing Equipment
When a department or agency determines that
a fixed asset equipment item is irretrievably
lost, not stolen or destroyed, a letter must
be submitted to the Auditor-Controller stating
the fixed asset description and number, and
an explanation for the missing item. The letter
should request deletion of the missing item
from the fixed asset inventory and relief
of accountability for the item. The letter
must be signed by the department or agency
head or, in his/her absence, by the chief
deputy or an assistant director, and must
include a report of any changes to policies
and procedures to prevent a reoccurrence.
A copy of the letter should be sent to CEO/Risk
Management by the agency. The Auditor-Controller
includes the fixed asset item in the next
fixed asset write-off package submitted to
the Board.
2.14
Assets Dismantled for Parts
If an agency needs to dismantle equipment
for spare parts and as a result, the original
equipment item will no longer be operational
or identifiable, the property officer prepares
a DOC, attaching a copy of the FAD, and a
letter justifying the need for dismantling
the asset. These documents must be prepared
at the time that the asset is dismantled.
The letter must be signed by the agency head
or, in his/her absence, by the chief deputy
or an assistant director, and forwarded to
the Auditor-Controller. The Auditor-Controller
includes the equipment in the next fixed asset
write-off package submitted to the Board.
