K.1.10 Capital Equipment Management Policy | Marine Biological Laboratory

The Marine Biological Laboratory
Policy No. K.1.10
Division of Research

Initiated by: Interim Director of Research Administration
Approved by: Director of Division of Research
Date: January 9, 2024
Distribution: MBL Staff and Scientific Community

1.0 Policy Statement

All capital equipment owned by The Marine Biological Laboratory (“MBL”) is subject to this policy.
The safeguarding and use of movable capital equipment is the responsibility of the purchaser, Principal Investigator, or other assigned party (“Custodian”).
The purchase of equipment with MBL funds for personal or private use is prohibited.
Financial Services is responsible for maintaining a “fixed asset ledger” of all capital assets owned by MBL, which is separate from the Capital Equipment Inventory database.
The Division of Research is responsible for tagging capital equipment and maintaining a Capital Equipment Inventory database in accordance with this policy.
The Development Office and Financial Services must be notified of all gifts of capital equipment that have been received by any MBL employee or office.
The Division of Research must be notified of any changes in status of equipment such as relocation or disposal.

2.0 Definition of Capital Equipment

MBL defines capital equipment as an item of nonexpendable, tangible personal property having a useful life of more than one year, and an acquisition cost that is $5,000 or more per unit.

Examples of capital equipment:

Scientific equipment
Office equipment
Vehicles
Fabricated (constructed) equipment.

The total cost of the capital equipment includes the costs of:

Freight
In-transit insurance
Multiple items purchased on one Purchase Order (“PO”) that work together as a unit with a combined cost of $5,000 or more.
Any modification or accessories necessary to make the equipment usable.
Operating software purchased with hardware with a combined cost of $5,000 or more.

Note: It is against MBL policy to separate POs to circumvent the $5,000 limit.

Examples of items/services that are NOT capital equipment:

Extended warranty
Maintenance agreement
Software licenses
Accessories less than $5,000 purchased separately from the original PO (and doesn’t fall under fabricated equipment).
Replacement parts
Professional Services
Repairs
Training/Familiarization
Tools with a cost less than $5,000 for building constructed equipment.
Labor expense (salary expense)
PCs, Laptop computers, or tablets with an original cost of less than $5,000 per unit.
Furniture and Fixtures with an original cost of less than $5,000 per unit.

Capital equipment can be purchased with:

Sponsored-program funds (e.g. grants, contracts)
MBL endowment funds
MBL gift funds
MBL unrestricted operating funds

Capital equipment can be received as a:

Gift/donation
Transfer from another institution

3.0 Constructed/Fabricated Equipment

Fabricated equipment is constructed to be a unique, identifiable, and discrete item that has a useful life of more than one year and is made of material and components which cumulatively cost $5,000 or more. Given that some of the items purchased to construct an item may be under $5,000 and may come from multiple vendors, fabricated equipment is posted to equipment natural account 5370. Supporting documentation, such as PO’s and invoices will be used to track smaller purchases related to the fabricated item.

Fabricated equipment exists for various reasons including the following:

The equipment with desired function is not available in the market.
It is cost saving to build equipment.
A research project is focused on creating a new piece of equipment.

Before placing the first PO for a new piece of fabricated equipment, a Fabricated Equipment Form is required to be completed and sent to the Procurement Manager with the PO so that all expenses related to the same piece of equipment are capitalized properly. A copy of the Fabricated Equipment form should be submitted to the Research Administrator in your area.

4.0 Capital Equipment Management

Capital equipment management will be done by the Division of Research at MBL. The Division of Research will work closely with Financial Services to ensure that all assets are reported and managed per federal guidelines. There are six main equipment management topics:

4.1 Purchasing Equipment
4.2 Tagging New Equipment
4.3 Transfer of Equipment
4.4 Disposal of MBL or Federal Equipment
4.5 Annual Physical Inventory
4.6 Responsibility and ownership

4.1 Purchasing Equipment

The Procurement Manager in Financial Services reviews and approves all requisitions for capital equipment. After purchase, Financial Services staff determines whether the equipment is considered capital or minor equipment, a permanent upgrade to existing equipment, equipment components purchased as part of a fabrication project, or repair or replacement components or parts. Final invoices for capital equipment are provided by Financial Services to the Division of Research for equipment tracking purposes.

Equipment meeting the threshold for capital equipment property control are assigned property control tag numbers and entered into the Capital Equipment Inventory database.

Drop shipments of purchased equipment off campus are to be coordinated and approved in advance by the Procurement Manager with the Division of Research approval. To initiate this process, the purchaser should contact the Procurement Manager prior to purchase to coordinate the logistics of the shipment.

Equipment that is considered part of the Physical Plant is provided via the Facility Services Department, reconciled at fiscal yearend, and added to a Capital Equipment Inventory database by the Division of Research.

4.2 Tagging New Equipment

All capital equipment owned and maintained by MBL must be assigned a property tag number to comply with MBL policy and federal regulations. The Division of Research will assign a property tag number and enter all available information into the Capital Equipment Inventory database. Upon notification from Financial Services that an equipment item has been received, the Division of Research will affix a decal indicating the assigned property tag number to the item in a visible location. When the size or nature of the item makes tagging impractical, a property tag number will be assigned for record purposes, and “non-taggable” will be entered into the comments field in the Capital Equipment Inventory database along with a brief description of why the item can’t be tagged. The Division of Research will record the following information in the equipment inventory database:

Tag number
Tagged date
Name of Custodian
Location (building, room no.)
Acquisition Date
PO number
PO date
Vendor name
Description of equipment
Make/serial no. of equipment
Cost center
Total value

Additional information pertaining to the equipment can be entered as necessary into the comments section of the Capital Equipment Inventory database. Organizational control objectives are met by recording individual and center/department custodial information on the property record.

4.3 Transfer of Equipment

4.3.1 Transfer of Equipment to MBL (Ownership Change):

There may be instances where a researcher/ principal investigator (PI) is accepting a position at MBL and is bringing equipment with them to the MBL or an agency or individual wishes to donate equipment to MBL. In this case, to ensure the department, Division of Research, Office of Sponsored Programs and Financial Services are aware of the incoming equipment, the Incoming Equipment Declaration Form should be completed and returned to the Division of Research to ensure all equipment is accurately tracked and tagged. A copy of the completed Incoming Equipment Declaration Form is forwarded to Financial Services once complete, so that the equipment can be properly recorded in MBL’s financial system.

4.3.2 External Transfer of Equipment (Ownership Change):

When a PI leaves the MBL, they may request to take some or all their associated equipment. In these instances, the PI must work with the department and division to identify all pieces of equipment they would like to transfer. As these transfers result in the equipment leaving the MBL, these should follow the equipment disposal process. For additional information, please reference section 4.4 Disposal of MBL or Federal Equipment.

4.3.3 Internal Transfer of Equipment (No Ownership Change):

There may be instances where one department transfers equipment to another department. In these instances, the custodian from the department that is transferring the equipment should email the Division of Research, capitalequipment@mbl.edu the following information:

Equipment tag number and description
New custodian’s name and department
New location of the equipment

The Division of Research will use the information supplied by the transferring department to confirm the existing asset information in the Capital Equipment Inventory database. Financial Services will be made aware of any transfers once all information is confirmed.

4.4 Disposal of MBL or Federal Equipment

MBL Centers and Offices must notify and gain the approval of the Division of Research prior to the disposal of any capital equipment.

The Equipment Disposal Form is initiated by the Custodian and represents departmental approval of the disposal. Once the form is completed and signed by both the Custodian and the Department/Center Director, it should then be submitted to the Division of Research.

The Division of Research will process the disposal in the Capital Equipment Inventory database and notify the Custodian that the item can be disposed of.

Once the approval process is complete, a final copy of the disposition form is to be sent to Financial Services so that the asset can be removed from the financial records.

There are a few options for the disposal of capital equipment:

Junk/Discard/use for parts.
Trade-In: If existing equipment will be traded-in as value toward the purchase of new equipment, the PO for the new equipment must state this so that the Procurement Manager can facilitate the trade-in.
Sale/Transfer: Any sale or transfer of MBL equipment to third parties outside the MBL, including MBL employees, requires the prior of the Division Director and the Director of Sponsored Programs if the equipment was purchased with federal funds. The sale must be coordinated with Financial Services to manage receipt of funds and execution of a bill of sale. Vehicle sales require additional steps to cancel insurance and registration.

The property tag should be removed from the equipment prior to any type of disposal or transfer unless it is being transferred to another MBL laboratory/department or loaned to another institution.

5.0 Missing/Stolen Equipment

If equipment is missing or stolen, the custodian will be required to fill out the Capital Equipment Loss Report form and submit it to the Division of Research. Security must be notified when equipment is stolen and will make the determination of whether the local police should be notified. A final copy of the loss form is to be sent to Financial Services so that the asset can be removed from the financial records.

6.0 Annual Physical Inventory

MBL utilizes both physical and periodic inventory methods. A physical inventory is performed every year to verify the existence, condition, and location of MBL capital equipment. Inventories will be planned and scheduled by the Division of Research for all capital equipment. Each Department/Center Director is responsible for determining who will conduct the physical inventory for their group to assure that accountability and control are being properly maintained. Physical inventories assure accurate financial reporting of MBL assets and adequate management controls. The physical inventory verifies the following:

Does the equipment still exist?
Is the correct tag affixed to the equipment?
Is the location the same?
Is the equipment still being used?
If not in current use, is the equipment still operational?

If the tag is damaged or missing, a replacement tag will be issued by the Division of Research. The equipment inventory database will be updated as necessary, and the inventory date will be noted.

Items not located during the annual inventory will require the Custodian to complete the Capital Equipment Loss form and submit it to the Division of Research, who will consult with Financial Services on further action. In addition, the Director of Sponsored Programs must be notified in case there are reporting requirements. The Capital Equipment Inventory database will reflect information reported by the Custodian.

Requirements for physical inventory of accountable property include all MBL locations (field sites, annexes, leased sites, etc.) for which property is in their possession. For capital equipment offsite, it is required that the person responsible at the location of the capital equipment provides photographic evidence when able to do so. For items that have tracking devices, tracking information should also be included. In cases where a piece of capital equipment can’t be photographed nor tracked via GPS, an email from the responsible personnel with an explanation of why photographic evidence and tracking information is not feasible will suffice as adequate equipment verification. All offsite verifications should be emailed to the Division of Research.

7.0 Responsibility and Ownership

The Division of Research has the responsibility to identify and control equipment and direct the necessary actions for purchased, transferred, or fabricated equipment to ensure that all Capital Equipment is listed inventoried and tracked appropriately.

On the last business day of each month Financial Services will forward documentation for all capital purchases to the Division of Research. This will include copies of POs, invoices, packing slips, and any other relevant documents.

The Division of Research will tag all newly acquired capital equipment and record the required information in the Capital Equipment Inventory database.
The Division of Research will undertake an inventory of all MBL capital equipment every year. Financial Services may access the Capital Equipment Inventory database at any time for review.
Notification of items that are disposed of or not located will be forwarded to Financial Services by the Division of Research quarterly to enable the requisite adjustments in the Financial Service’s fixed asset ledger.
If an MBL employee who is a capital equipment Custodian transfers positions or terminates, the employee must send a complete list of their equipment to the Division of Research prior to transfer/termination if possible. The list must indicate which items are to be retained by MBL, disposed of, or transferred to another institution. Items to be retained by MBL must be assigned to another Custodian. Items to be disposed of are subject to the Disposal of Equipment terms in this policy. Items to be transferred to another institution are subject to the MBL Equipment Loan/Transfer terms found in this policy.
Disposal of capital equipment purchased with federal funds may have special requirements that vary by awarding agency. Please refer to grant and contract agreements for any additional requirements. Approval of the Office of Sponsored Programs is required for all disposal of assets purchased with federal funds.
Capital equipment that is determined to be broken and not to be repaired, disposed of, sold, donated, or transferred to another institution will be retired from active service. Reasons for retirement will be entered into the equipment inventory database and Financial Services will be notified.

Appendix 1

DEFINITIONS

Capital Equipment

The Marine Biological Laboratory defines capital equipment as an item of nonexpendable, tangible personal property having a useful life of more than one year, and an acquisition cost that is $5,000 or more per unit.

Fabricated Equipment

A unique, identifiable, and discrete item that has a useful life of more than one year and is made of material and components which cumulatively cost $5,000 or more.

Asset Custodian/Contact (“Custodian”)

The individual, designated by the department head or chair, whose responsibilities include securing capital equipment, maintaining capital equipment records in a timely manner, and participating as needed in equipment inventories or capital equipment verifications.

Physical Inventory

The annual process of physical verification of all government property acquired, furnished or fabricated, and accountable under the MBL contract, including that property in possession or control of subcontractors. Physical inventories include sighting, tagging, marking, recording, reconciling, and reporting of Government property, including overages, shortages, requests for approved inventory adjustments, and, when necessary, requests for relief of responsibility. If equipment is purchased with Federal funding, physical inventories require the scheduling, performing, and subsequent reporting of information to the Government Property Administrator as specified in the contract/grant as required by the terms and conditions of the sponsor agreement.

Periodic Inventory

An inventory conducted at predetermined intervals and usually accomplished in a short period of time on a wall-to-wall basis. Inventories are scheduled after considering types of property, quantities, total dollar value, usage and established control methods, locations, and security provided.

Recording

The actual physical verification of capital equipment inventory, including sighting, counting, tagging, marking, and annotating information in the MBL database, including an item’s present location.

Reconciliation

The comparison of physical inventory data, internal documentation, government regulations, and official contract records to sustain and support performance and agreement, or approval adjustment, or relief of responsibility.

Appendix 2

FORMS

Appendix 3

CODE OF FEDERAL REGULATION