Acquisition of Property

Purpose

This document describes sources of funds for property acquisition and ways by which property can be acquired for use at Research Foundation (RF) operating locations.

Sources of Funds

Substantially all funds accounted for and managed by the Research Foundation consist of direct cost and indirect cost money. Additionally, some funds may come from monetary donations. It is from these funds that all purchased RF property is acquired.

Direct cost moneys are budgeted expenses designated in each grant application for a particular item that enables specific project goals to be achieved. Accounting for direct cost funds and managing property acquired through direct cost expenditures are responsibilities of the Research Foundation.

Indirect cost recoveries are funds obtained from sponsors in support of the University's global facilities that allow research and instructional programs to be performed within the University. Valid indirect cost expenditure pools include operation and maintenance costs of the University physical plant, costs for depreciation that allow for replacement of the physical plant and equipment in it, library costs, and other administrative costs. Indirect cost recoveries are managed by Research Foundation guidelines.

Kinds Of Acquisition

When property is acquired for the support of sponsored research projects and sponsored instructional programs, the money for the acquisition and the property purchased with it must be accounted for and managed by Research Foundation policies and procedures. The accounting and management may also have to comply with sponsor policies and procedures.

The ways Research Foundation managed property can be acquired include

Purchase


Regulatory Compliance

The project director appraises property available from vendors and makes purchases conforming with Research Foundation procurement guidelines. Property acquired with direct cost sponsored funds and with title remaining vested with the sponsor is called contractor acquired equipment (CAE). Purchase of this property may require additional conformity with sponsor guidelines. They may also require submitting requisitions for competitive bidding by potential vendors. Sometimes purchases require prior approval of the purchase from the sponsor. There may be many other regulatory compliance requirements that need to be met before purchase is possible. Refer to the documents in EPSS under Purchasing, Procedures and Guidance.


Procurement

Generally, once a vendor is chosen, a purchase requisition is sent to the RF office responsible for purchasing, which encumbers the award in the RF Oracle business system for the amount of the purchase. A purchase order or contract agreement is issued to the selected vendor. When the property arrives at the location, it is checked by the project director and the invoice is reviewed by the operations manager or delegate. If the proper item has been delivered and found to be in acceptable condition, then the operations manager or delegate and project director certify acceptance. Payment is then initiated.

Purchases can also be made that bypass the encumbrance process, such as through direct payment invoices. These purchases must also be approved and communicated to the property control office.

Each location needs to develop its own process for forwarding purchasing and receiving information to the property control office so that the property can be recorded on the PCS.

Multiple Funding Purchase

Multiple funding of property involves purchase using more than one funding source. Joint funding of purchases must be approved by sponsors. New York state policy dictates that any percent of contribution by the state must result in complete title vesting with the state; joint title is not permitted between the Research Foundation and the state. Other sponsors may not allow movement of property to which they have contributed. Since problems can arise if participants in a multiple funded acquisition transfer locations, the consequences of entering into this sort of agreement need full consideration at a preliminary stage. The important issue is determining who ultimately retains title to the property.

Loan

If property is loaned to a project director for the pursuit of sponsored project goals and with the sponsor retaining title, that property must be reported to the office in charge of property control so that it can be tagged and recorded on the PCS. Property furnished by a sponsor is called "sponsor furnished property" and property furnished directly from the government is called "government furnished equipment" (GFE).

Lease

Leasing agreements for property provide use for a specified period of time in exchange for compensation. At the termination of the leasing period, the property may be returned to the leasing agency. Terms of the lease may allow purchase during or at the termination of the leasing period. Property that is leased without purchase does not have to be tagged or recorded on the PCS. Property that is purchased from a leasing agreement does require tagging and must be recorded on the PCS.

If an operating location has a lease on property (whether or not the lease has a purchase clause), the Office of General Counsel and Secretary must be notified with lease information as this information is used for financial statement audit purposes. The operations manager is responsible for making this office aware of all leased property.

Donation

Property can be donated to SUNY, to the Research Foundation, or to a project director. Donated property may qualify the donor for a tax credit if donated to SUNY or to the Research Foundation but not to a project director. All property donated for support of sponsored projects should go through the Research Foundation. This property must be donated unconditionally with title vesting with the Research Foundation.


Recording Donated Property

For recording donations of property, the property management system is dependent upon project director communication. The operations manager or delegate in charge of the property control function should be informed of donations so that appropriate procedures for inventory can be made. Benefits of proper reporting are the ability to insure the property and the ability to take property depreciation and maintenance as indirect costs. Section J13 of OMB Circular A-21 lists donations as a valid category of property for which indirect costs can be recovered.


Approval of Donations

For all donations to the Research Foundation, an approval process ensures compliance with IRS regulations, assists donors in receiving a tax credit, and provides oversight of conditions that may be attached to donations. The RF approval process is set forth in the Gifts, Contributions, and Fund-Raising Policy.


IRS Regulations

If a donation is offered and a tax credit is requested by the donor, then IRS Form 8283, Noncash Charitable Contributions, is completed to certify the donation. This form and IRS instructions for its use are available in EPSS under Property Management, Forms, Internal Revenue Service (IRS) Forms Related to Property Management. The form must be forwarded to the Finance Office and is signed by an officer of the Research Foundation. The form is given to the donor to document receipt and enable a tax credit. Copies of the certificate are maintained in the Finance Office. Notification is passed on to the operations manager or office to which they have delegated the property control function to ensure PCS entry. This is an internal control ensuring that all property donations for which a tax credit is given are recorded on the PCS. For further IRS regulations related to donated property, refer to the document "Donated Property Disposition Procedure."

Fabrication

Fabricated property is assembled and constructed rather than purchased. Costs involved in fabrication include materials and labor. Purchase of components, shipping charges, and other costs may be involved. When feasible, all of these costs should be summed to arrive at a total value for the fabricated piece of property. The value should be entered into the Cost of Reproduction field of the PCS record for a single asset with a single asset number. All costs need to be documented to support the value determined.

Fabrications of property should be reported by project directors to the operations manager or the property control delegate. This enables the property to be physically identified with decals and tracked through database recording and physical inventory. Project directors must understand their role in this process and must comply if property management is to operate efficiently. Compliance with proper property reporting leads to insurability and indirect cost advantages for the project directors and their campuses.

Capital improvements (improvements to nonmovable items such as fume hoods or the construction of a field station) should also be reported to the Controller at the SUCF for recording on the State Fixed Asset Accounting System (SFAAS). For equipment, assets costing over $15,000 must be reported.

Surplus

Surplus property consists of property that is obtained through University, state, and federal surplus repositories. Surplus property is subject to tagging and inventory requirements. Some of this property is in excellent condition and can be very valuable. Project directors are encouraged to seek their needed property here before purchasing from vendors.

Acquisition from federal surplus is controlled by the Office of Naval Research. Acquisition from state surplus is possible through the Office of General Services and University surplus is managed by the policies of the individual operating locations.

Change History

 

 

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