E-3-3 Fabricated Equipment Policy

I. Purpose

To provide guidelines for capturing costs of capitalizable equipment fabricated by departments. Occasionally, it is necessary to fabricate specialized equipment within the university due to lack of availability on the market.  All purchases, whether or not they are above the capitalization threshold, incurred for the fabricated specialized equipment are to be charged to the fabricated equipment WBS element ensuring  the valuable piece of equipment is included in capital equipment inventory and is insured.

II. Responsibilities

1. Department
   1. Submit necessary documents to Capital Assets Accounting in Accounting and Financial Reporting Services (AFRS) in order to initiate the creation of the fabricated equipment WBS element.
   2. Create a journal voucher to fund the project. If funded by a sponsored project, work with Research Financial Services, the Office of Sponsored Projects Administration and Collaborative Grant Services.
   3. Clear any overdrafts immediately and provide additional documentation and funding necessary to complete a project.
   4. Notify Capital Assets Accounting when the project is complete.
2. Capital Assets Accounting
   1. Create fabricated equipment WBS Element.
   2. Complete and post journal voucher funding the project. If funded by a sponsored project, reimburse the fabricated equipment WBS element from the sponsored project monthly as expenditures are incurred.
   3. Monitor and manage the accounting for the fabricated equipment WBS element.
   4. Capitalize the project and record to equipment inventory.  
   5. Close the project and return any excess funds to original funding source.

III. Policy

When a department determines the need to fabricate an equipment item with an expected total cost of $5,000 or greater, a fabricated equipment WBS element must be established to track the expenses associated with the fabrication of the equipment. Charges included in the capitalization of this equipment must be charged to GL account 550090, Fabricated Equipment. 

Note: Equipment having a total cost of $200,000 or greater requires legislative approval.

IV. Procedures

1. To establish a fabricated equipment WBS element, the department will submit the following to Capital Assets Accounting:
   1. A completed Project Establishment Form.
   2. An estimate of the total cost of the project
   3. Journal Voucher to fund fabricated equipment WBS element:
      1. Cost center instructions:
         1. For existing WBS elements - A journal voucher debiting GL account 755030, Transfer to Unexpended Plant Funds, using SAP transaction FV50 to transfer necessary funds to the WBS element. Journal vouchers funding existing fabricated equipment WBS elements should be saved and parked by the department for posting by AFRS. 
         2. For new WBS elements - When journal vouchers for new WBS elements are created, the department will not know the WBS element number; therefore, these journal vouchers should be parked only. AFRS will complete and post the journal voucher after the WBS element has been created.
      2. Sponsored project instructions:
         1. If the fabricated equipment will be funded in part or in whole by a sponsored project, then procedures will be implemented on a case-by-case basis based on the requirements of the sponsor(s). Research Financial Services, the Office of Sponsored Projects Administration and Collaborative Grant Services must be notified by the department before the project is requested. 
         2. When a fabricated equipment WBS element funded by a sponsored project is established, a journal voucher funding the project will not be required. Rather, reimbursement from the sponsored project will be made by Capital Assets Accounting monthly as expenses are incurred.
2. Fabricated equipment will be capitalized and begin depreciating when the equipment is completed and placed into service.
3. Prior to the fiscal year-end process, Capital Assets Accounting will request an update of the status of all fabricated equipment projects.
   1. The department should notify Capital Assets Accounting  when a project is complete. Then, Capital Assets Accounting will close the project WBS element. 
   2. Balances remaining in the project WBS element will be returned to the original funding source.