Proposed Process Improvements for Fixed Assets Management
Implementing Oracle Fixed Assets for managing fixed assets and capital projects, the proposed process aims to streamline capitalization, improve financial reporting controls, and enhance operational efficiencies. By organizing accounts based on asset categories, tracking ownership, and providing detailed financial data, the new process ensures accurate reporting and better decision-making for tracking and managing assets effectively.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
E N D
Presentation Transcript
Fixed Assets Implementation Movable Equipment New Natural Accounts Capitalization/Financial Reporting : Current vs. Proposed Process 1
The Purpose Implementing Oracle Fixed Assets to manage fixed assets and capitalization of capital projects We have analyzed the current process and are planning to implement improvements to the process for financial reporting and operation controls Currently the Plant Funds team must look at every purchase to every account to determine whether to account for it as an asset or not The new process will improve reporting controls between both general ledger and sub-ledger activities, support the units by providing more detailed financial data, improve the reporting on equipment for F&A where it is critical to know what costs are capitalized vs expensed. Accounts will be organized better for capitalized ME (over $5,000) and for capital budgeting, know what costs are being capitalized (i.e. for F&A reasons), and will help PF team reconcile Capital purchase definition = $5,000 or more, Rutgers owned, and has a future benefit of over 12 months We have organized the accounts based on the capital asset categories which are sometimes required by external and internal reporting (Lab equipment vs. farm equipment), (IT equipment vs. medical equipment) PF team will record which UDO owns each asset and reports will be available to units so that you can report on your assets The new process will be implemented for FY2021 budget
Current Process The current process for ME Capitalization: Users in the field purchase items capitalized of nature to expense natural accounts 5/6XXXX. Plant Funds then capitalizes ME by debiting the asset cost to Central s balance sheet and by crediting natural account 67040 on a Central Finance UDO, with FT 900. This eliminates the expense at the university consolidated level Initial natural account charged by department is not reduced - today it is too hard to eliminate by account, this is what we want to do going forward we want to ensure the charge to the unit is the same account as the credit to Central Currently true expenses are comingled with the capital costs and it is difficult to separate them We will able to know what costs are expenses vs. what costs are capitalized
Current Process - General Ledger Example : Units purchasing ME thru RU Marketplace NJMS PO for Capitalized ME Server 840.6295.8759.3300.100.5056.58010 $11,499.96 Capitalizing NJMS PO# 1154581 ME Server Dr. 900.1510.9999.0001.180.9999.18180 $11,499.96 Cr. 900.1510.9999.0001.900.7150.67040 ($11,499.96) Depreciating NJ]MS PO# 1154581 ME Server Computers/Servers are depreciated over 5 years. Annual Depreciation: Dr. 900.1510.9999.0001.900.7150.88530 $2,299.99 Cr. 900.1510.9999.0001.180.9999.18560 ($2,299.99)
Proposed Process Impact The proposed process for ME Capitalization: Users in the field purchase items charging one of the nine new expense natural accounts 67XXX. Plant Funds, upon review, will capitalize against the same new expense natural account. If not capitalizable, Plant Funds will ask the Units to move the expense to a true expense natural account. Also, if a capital purchase that was not charged to the appropriate capital purchase account, Plant Funds will ask the unit to reclass it to the correct capital purchase account Throughout year, the respective new ME capitalized natural accounts will be cleared. The true expenses will not be comingled with the capitalized ones. Budgeting for the new accounts will be active for Fiscal Year 2021.
Proposed Accounts ACCOUN T TYPE PARENT VALUE DESCRIPTION COMMENT/DEFINITION RU Owner Equipment (including capitalizable equipment and software) of more than $ 4,999.99 per unit and with a useful life of at least one year. This can include the initial purchase of a computer system. For example: components of a computer system separately may cost less than a $ 5,000 each, but if the components are necessary for the system to function and the total purchase price of all components is more than $5,000, all components should be charged here. Please note this information on the purchase order(s) involved. Also installation expenses for capitalized permanent equipment should be charged here. Capital Purchases Equipment -- Current 67040 Capital Purchase Equipment Expense Facilities Capital Purchase Equipment Athletics / Recreation Capital Purchase Equipment - Capital Purchase Equipment - Audio/Tel Comm/Pstage/Machinary/Tools/Dining/Custodial /Construction Capital Purchase Equipment - All IT Related/Copier/Comm. Equip Capital Purchase Equipment - Music Capital Purchases Equipment 67041 Expense 10 Years Treadmill, Eliptical,Pitching Machine,Weight Training system 10 Years SmartBoard, Touch Display, ,Postage Mailing Machine,Welding Machine, Auto Diagnostic Tool,Broiler,Oven,Floor Scrubber, Washing Machine, Backhoe, Skid Steer loader Capital Purchases Equipment 67042 Expense 5 Years Server, Printer, Storage Array, Computer, Computer Cluster, Copier, Switches, Router Expense 15 Years Piano, Organ 10 Years Microscope, Freezer, Centrifuge, Incubator, Glovebox, Fabrication PCR System Capital Purchases Equipment 67043 Expense Capital Purchases Equipment 67044 Capital Purchases Equipment 67045 Capital Purchase Equipment - Laboratory Expense Capital Purchase Equipment - Furniture&Fixtures/Stage Auditorium Capital Purchases Equipment 67046 Expense 15 Years Desk, Modular Station, Conference Table, Portable Stage 5 Years State Gov Plated/Registered Vehicle such as Cars,SUV,Van,Truck, Etc. Non Plated vehicles such as ATV,Club Car, Segway, Boats, Outboard Boat Motors, Racing Shell Capital Purchase Equipment - NJDMV Plated,Non-Plated/Boats Capital Purchases Equipment 67047 Expense Capital Purchase Equipment - Trailers/Farm Equipment Capital Purchase Equipment - Medical Capital Purchases Equipment 67048 Expense 10 Years Utility Trailer, Boat Trailer, Livestock Trailer, Tractor, Mower Capital Purchases Equipment 67049 Expense 10 Years Dental Chair, X-Ray system, Manniquin, Imaging system 5 Years Purchase of software that can be capitalized. Software Purchased outright that is owned with no start and end date of use. Could be for Science, Security, Tracking, Space Scheduling, Capital Purchases 67050 Capital Purchase Software Expense
Proposed Process - General Ledger Changes to the process: Example : Units purchasing ME thru SciQuest The charge account the unit uses will be an account set up for the specific type of equipment NJMS PO# 1154581 for Capitalized ME Server 840.6295.8759.3300.100.5056.67043 $11,499.96 The account used to credit the Central P& will be the same account, so that the elimination and consolidation is cleaner and can be controlled at the account level Capitalizing NJMS PO# 1154581 ME Server Dr. 900.1510.9999.0001.180.9999.18180 $11,499.96 Cr. 900.1510.9999.0001.900.7150.67043 ($11,499.96) Depreciating NJMS PO# 1154581 ME Server (No Changes) Computers/Servers are depreciated over 5 years. Annual Depreciation: Dr. 900.1510.9999.0001.900.7150.88530 $2,299.99 Cr. 900.1510.9999.0001.180.9999.18560 ($2,299.99)
New Process Benefits Operation Controls, SL to GL Reconciliation, Financial Reporting: Consistent approach as reporting on Capital Projects CIP natural accounts. GL reporting is much cleaner not comingling true expense with the capitalized ones. Units are able to immediately identify their capital expenditures without running other shadow systems for analysis. Now they can benchmark better budget versus actual monthly based on GL activities. Units still being charged upfront for their ME capital expenditures under Operating Expenses . New Fixed Assets module will be synchronized and reconciled with general ledger. Categories are mirrored between sub- ledger and general ledger enabling for better controls and efficiencies. Year end accruals will be charged to a separate account, keeping FA Sub-Ledger matching to GL at all times. Property Management efficiently reducing time spent searching for equipment to be capitalized. Facilities &Administration (F&A) rate calculation will be more efficient for the equipment part now that we separated true expense from the capitalized ones. The monthly additions can also be tracked to the asset cost account on Central linked to the corresponding P&L account Units can also know their real capital purchases vs. their expense by running reports / queries by accounts, and will also be able to see their actual assets going forward
Next Steps New accounts will be in production on or about January 1st, at which point can be used for actuals but not required Spread 2021 budget to the new accounts according to the budget dates from the budget office Start using new accounts for actuals starting on July 1, at which point all capital purchases must go to the new accounts and you will need to reclass if coded incorrectly Look for communications coming out between now and July 1 to keep everyone informed Training and/or instructional events are also being planned to be discussed
