ALL AGENCIES, DEPARTMENTS, AND DISTRICTS GOVERNED
BY THE BOARD OF SUPERVISORS
EFFECTIVE: 11/78
REVISED: 01/94, 12/99
_________________________________
David E. Sundstrom, Auditor-Controller
1.
POLICY
Each department, agency, and district shall conduct
an inventory of fixed assets 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 Orange
County. The certified fixed asset inventory listing
must be filed with the Auditor-Controller no later
than the last day of the month following the month
in which the inventory was started.
1.1
Purpose
To establish a policy and related procedures
to ensure an accurate and complete count of
fixed asset items.
1.2
Authority
Authority
Subject
Government
Code Section 24051
Requires periodic inventory
of equipment
Codified
Ordinances of the County of Orange,
Title I, Division 4, Article 5
County implementation
of Section 24051 "Inventory of
Equipment," permits staggered inventory
schedule for various county departments
and agencies
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,
Including Establishment of $5,000 Minimum
Capitalization Limit
Federal Office of Management
and Budget Circular A-87(OMB A-87)
Requires that every County agency
head file a certified inventory of fixed
assets with the County Auditor-Controller
not less than once every two years.
On the date specified in the schedule
of property inventory dates prepared
by the Auditor-Controller, each agency
must perform an inventory of the fixed
assets under its control.
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 that extends
beyond the current year." Generally,
fixed assets are classified in three
categories: land, buildings and improvements,
and equipment. Fixed assets include
equipment which costs $5,000 or more,
including sales taxes, freight charges,
and installation.
1.3.2
Equipment
Equipment is defined as movable property
of a relatively permanent nature with
a significant value. Equipment items
that 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
Property Officer
The Property Officer is an employee
within a department/agency who has been
designated by the department/agency
head as being accountable for the property
charged to the department/agency, although
the ultimate responsibility for the
property remains with the department/agency
head. The Property Officer must report
directly to the department/agency head.
The Property Officer is responsible
for overall supervision of the inventory
and for assembling the required documentation
of the inventory.
1.3.4
Coordinator
The Coordinator is the individual
responsible for the planning, coordination
and control of the physical inventory.
If the Coordinator is not also the Property
Officer, he or she must report directly
to the Property Officer during his/her
tenure as coordinator.
1.3.5
Count Team
The Count Team is comprised of the
following two individuals:
Locator - The individual responsible
for identifying and calling out the
description and identification number
of the asset.
Recorder - The individual responsible
for recording the data called out by
the locator.
2.
PROCEDURES
Upon notification from the Auditor-Controller's
Department that a fixed asset inventory is required,
the Property Officer prepares written instructions
for the Coordinator and Count Team incorporating
the procedures listed below. The instructions are
to be submitted by the Property Officer to the Auditor-Controller
General Ledger Unit for review and approval. Any
anticipated deviations from these standard procedures
should be discussed with and authorized by the Auditor-Controller
General Ledger Unit prior to conducting the inventory.
To facilitate a complete and accurate count, the
Auditor-Controller Department has developed the
following standard procedures for the physical inventory
of fixed assets. To assure a complete and accurate
inventory, the instructions must be followed and
the count teams must proceed in an orderly and systematic
manner. The Auditor-Controller Department will provide
an official fixed asset listing (computer printout)
prior to the inventory date.
RESPONSIBILITY
STEP
ACTION
2.1
Before Inventory
Coordinator
1.
Assigns individuals
to count teams.
2.
Establishes times
and locations for the teams.
3.
Sends a copy of
the department’s/ agency’s inventory
procedures to the Auditor-Controller General
Ledger Unit for review. Notifies the Auditor-Controller
of the inventory date.
4.
Distributes inventory
procedures and instructions, makes specific
assignments, and answers any questions for
the count teams. It is recommended that the
department/agency Property Officer schedule
and conduct a pre-inventory meeting at which
all participating persons are present.
Auditor-Controller
5.
Reviews the department’s/agency’s
inventory procedures for compliance with this
Procedure. Notifies the department/agency
of any required additions or changes.
2.2
During Inventory
THE LOCATOR AND
RECORDER CAN ALTERNATE DUTIES DURING THE COURSE
OF THE INVENTORY
Count Team –
Locator:
Tagged Fixed Assets
6.
The Locator shall
progress through rooms and buildings in a
systematic manner so that all assets will
be inventoried.
Reads the fixed asset number from the
standard County fixed asset tag together
with the description and the serial number,
if applicable.
Marks the fixed asset to indicate that
it has been inventoried.
Count Team – Recorder:
Tagged Fixed Assets
7.
Repeats the data as read and traces
each item to the fixed asset listing.
Indicates that the item has been accounted
for and adds location information to the
Fixed Asset Document (FAD), if desired,
to update the Fixed Asset Accounting System
records, or records location information
for updating departmental location lists.
Records, on an exceptions listing, those
tagged items that are not on the fixed
asset listing.
Count Team – Locator:
Untagged Fixed Assets
8.
Calls out the description,
serial number, and location of untagged fixed
assets. These assets shall be marked so that
they can be easily identified later.
Count Team – Recorder:
Untagged Fixed Assets
9.
Records untagged fixed assets
on an exceptions listing.
Count Team – Locator:
Mutilated Fixed Asset Tags
10.
Identifies mutilated fixed
asset tags and marks the assets so that they
can be easily identified later.
Count Team – Recorder:
Mutilated Fixed Asset Tags
11.
Records assets with mutilated
fixed asset tags on a separate listing.
2.3
After Inventory
Coordinator
12.
Forwards any updated FADS to
the Auditor-Controller General Ledger Unit
to revise the master location records of fixed
assets.
13.
Replaces all mutilated fixed
asset tags. (Step 11)
14.
Consolidates the list of all
tagged items not on the inventory listing
(Step 7), and takes the necessary steps to
have them placed on the final inventory listing.
15.
Consolidates the list of all
untagged items (Step 9) and determines the
proper fixed asset numbers from the Inventory
listing. Supervises the tagging of these items.
16.
Examines the inventory listing
and prepares a list of all fixed assets that
have not been located and inventoried.
Property Officer
17.
Prepares the Certified Inventory
The Property Officer prepares a final inventory
listing, certified by the department/agency
head, and submits it and the list of exceptions
to the Auditor-Controller General Ledger Unit
no later than the last day of the month following
the month in which the inventory was started.
The certified inventory shall consist of the
following:
Inventory
of County Property Form
The Inventory of County
Property certification form (Form F0132-150)
shall be signed by the department/ agency
head. In the case of a department/agency
head changeover inventory, the incoming
department/ agency head signs the "Receipt
of Incoming Officer" portion of the
form. See Exhibit
I.
Listing of
Exceptions
The listing of exceptions to the computer
printout of the inventory includes items
listed on the printout which were not
found, and items found which were not
listed on the printout. All exceptions
must be fully explained. Any missing items
which have previously been reported to
the Auditor-Controller as having been
stolen should be so noted. Exhibit II
of this procedure displays an example
of a properly completed listing of fixed
asset inventory exceptions.
Computer
Printout – Inventory Listing
The computer printout of the fixed asset
inventory supplied by the Auditor-Controller
General Ledger Unit shall be submitted
with the Inventory of County Property
form and the exception listing. The Auditor-Controller
printout must be submitted to ensure that
all fixed assets are included in the inventory
18.
Directs department/agency personnel
to attempt to locate all missing items and
to determine the reasons for the loss of the
missing items.
19.
Prepares the Fixed Assets Inventory
Procedures Questionnaire (Exhibit
III), signed by the department/agency
head, and submits it to the Auditor-Controller
General Ledger Unit no later than the last
day of the month following the month in which
the inventory was started.
Property Officer
20.
Prepares the Sixty-Day Follow-Up
Letter
The department or agency is permitted sixty
(60) calendar days from the end of the month
in which the inventory was taken to locate
any items reported missing on the inventory
certification or, if some items still cannot
be found, to determine the reasons for the
shortage.
On or before the end of this sixty (60) day
period, the Property Officer files a letter
with the Auditor-Controller. The letter shall
Report items found,
Report items still missing,
Include explanations for the items still
missing,
Request deletion of the missing items
from the fixed asset inventory and relief
of accountability for the items, and
Report any findings and resulting recommendations
to prevent a reoccurrence of missing items.
The letter must be signed by the department/agency
head, or in his/her absence by the Chief
Deputy or an Assistant Director. A copy
of the letter shall be sent by the department/agency
to the County Executive Office (CEO) Risk
Management Division. Exhibit
IV of this procedure displays an example
of a properly prepared sixty-day follow-up
letter.
Auditor-Controller
21.
Inspects documents submitted
by the department or agency for deficiencies
in the inventory procedure. If there are no
unresolved deficiencies, the Auditor-Controller
sends a letter to accept the inventory to
the department or agency head. This letter
is signed by the Auditor-Controller and is
distributed to the CEO and the departmental/agency
property officer. Any recommendations for
improvements of fixed asset controls are contained
in this letter.
2.4
Reporting Schedule
A reporting schedule for physical inventories
and missing, stolen, damaged, dismantled and
destroyed fixed asset equipment items is shown
in Exhibit
V.
3.
Deficiencies in Departmental or Agency Inventory
Procedures
3.1
General Ledger Review/Property Officer Response
The Fixed Asset Inventory Procedures Questionnaire,
written departmental inventory procedures,
Inventory of County Property Form, listing
of exceptions, and Sixty-Day Follow-Up Letter
will be reviewed by the Auditor-Controller
General Ledger Unit for compliance with this
procedure. If this review reveals apparent
deficiencies, the General Ledger Manager will
attempt to resolve the problems with the departmental
or agency Property Officer.
3.2
Referral to Auditor-Controller Cost Studies/Mandated
Audits
If inventory procedure problems cannot be
resolved by the Auditor-Controller General
Ledger Manager and the departmental/agency
Property Officer, the General Ledger Manager
shall communicate his/her concerns to the
Auditor-Controller Cost Studies/Mandated Audits
Manager. The General Ledger Manager shall
send the following:
Written descriptions of any apparent
deficiencies in the inventory procedure
The Fixed Asset Inventory Procedures
Questionnaire for the affected department/agency
Departmental/agency procedures for conducting
the inventory
Inventory of County Property Form, listing
of exceptions, and Sixty Day Follow-Up
Letter
The Cost Studies/Mandated Audits Manager
shall attempt to resolve the inventory problems
with the affected department/agency.
3.3
Referral to Internal Audit Department
If the Auditor-Controller Cost Studies/Mandated
Audits Manager cannot resolve the inventory
problems with the department/agency, the Auditor-Controller
will refer the inventory to the Internal Audit
Department, requesting further review. The
Internal Audit Department will then perform
whatever procedures it deems necessary to
audit the inventory. Internal Audit will provide
recommendations of corrective action in a
written audit report in accordance with Administrative
Procedure No. 1 of the Audit Oversight Committee,
which includes distribution to the Auditor-Controller,
CEO, Board of Supervisors, Clerk of the Board,
and situationally includes distribution to
the District Attorney.
3.4
Unresolved Deficiencies
If inventory deficiencies cannot be corrected
based on review by the Internal Audit Department,
the issues will be presented by the Internal
Audit Department to the Audit Oversight Committee
for resolution in accordance with Audit Oversight
Committee Administrative Procedure No. 1.
3.5
Issuance of Acceptance Letter
Once corrective action is taken as determined
by the Auditor-Controller Cost Studies/Mandated
Audits Manager, or by the Internal Audit Department
if requested by the Auditor-Controller, the
Auditor-Controller will send the letter of
acceptance of the inventory to the department/agency
director. See Step 21 of Section 2.3, above.
Legal