Background: Campus funding is affected by reports of expenditures for equipment that are sent to federal, state, and private funding agencies. Keep your resources safe and reports reliable by focusing on the following key internal control practices.

Definition: The University defines equipment as any stand-alone item, with a useful life of one year or more, and with an appraised value of at least $1,500. Equipment is also classified as inventorial or non-inventorial, based on its value.

To learn more about internal control practices for managing equipment explained on this page, click the links below:

• Separation of duties
• Accountability, authorization, and approval
• Security of assets
• Review and reconciliation

Separation of duties
One of the most important things you can do to protect your equipment is to separate equipment management duties so that no one person has control over the entire equipment management process.

• Best practice is to have different people:
  • Purchase items
  • Approve invoices for payment
  • Classify equipment and record changes
  • Perform periodic/ annual physical inventory
  • Maintain custody and dispose of property
  • Reconcile equipment purchases to financial records

• Potential consequences if duties are not separated:
  • Inaccurate equipment location recorded
  • Lost, stolen, or destroyed property
  • Misstated financial records
  • Incorrect insurance requirements and liability charges
  • Inaccurate asset values recorded

Accountability, authorization, and approval
You maintain accountability when the right person authorizes equipment purchases, classifies property based on UCSD equipment classification criteria, and correctly records new purchases and changes of asset location.

• Best practices:
  • Approve invoice based on purchase order information.
  • Inspect equipment to determine condition and valuation.
  • Adjust inventory records periodically to record changes in equipment status.
  • Equipment Management pre-approves the physical removal, sale, and transfer of assets.
  • Report equipment theft to UCSD Police.

• Potential consequences if accountability does not exist:
  • Unsuitable or unauthorized items purchased
  • Improper transfer of property to unauthorized location
  • Assets acquired for personal use
  • Incorrect valuation of equipment recorded in financial and equipment records
  • Lost or stolen property
  • Misstated financial statements and information sent to reporting agencies

Security of assets
Keep all your equipment physically protected. This also applies to off-campus use of University equipment. Establish detailed equipment records to maintain accounting control and physical accountability of assets.

• Best practices:
  • Department head approves off-site business use of equipment.
  • Equipment Management approves all relocations of offsite equipment transfers.
  • Review and update insurance requirements periodically, or when changes in equipment status change.
  • Provide keys and combinations of secured locations only to authorized personnel.
  • Restrict access to equipment to those who have a business need to use property.
  • Follow recommended physical layout standards.

• Potential consequences if security of assets does not exist:
  • Lost or stolen property
  • Inaccurate equipment records and financial statements
  • Liability for off-site accidents

Review and reconciliation
Reconciliation activities ensure the proper classification, recording, and documentation of equipment. Perform periodic reviews to ensure the accuracy of equipment records and recorded asset balances.

• Best practices:
  • Perform periodic equipment reviews to determine value and proper usage and/ or disposal.
  • Count physical inventory at least annually.
  • Compare property records to physical inventory status.
  • Properly classify equipment as non-inventorial or inventorial.
  • Identify and account for inventorial equipment with UCSD property tag.
  • Review and update insurance requirements periodically, or when equipment status changes.
  • Document and report changes to inventory records on central campus database.

• Potential consequences if review and reconciliation activities are not performed:
  • Lost, stolen, or temporarily diverted assets
  • Incorrect asset values
  • Inaccurate equipment records and financial statements
  • Inability to provide funding agencies with accurate data

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Questions? For information about managing equipment, contact Equipment Management, (858) 534-2847. For information on internal control practices, contact Debbie Rico, (858) 822-2797.