A very labor- and time-intensive process for many districts is keeping an up-to-date and accurate record of additions of new assets, transfers of assets between locations, and deletions of surplus assets. Before the end of the school year in late May / early June, this is an ideal time to distribute the workload by having select staff take / reconcile the inventory of controlled items located on campuses and in departments. This time of year is also ideal because you will need to ask questions about items that cannot be readily located before the majority of employees depart at the end of the school year.
Key controls include:
- Tagging fixed (capital) assets and controlled inventoried items promptly after purchase and receipt by the district
- Promptly notifying the district’s fixed asset specialist when fixed assets or inventoried items are received at locations other than central receiving
- Identification of fixed assets and inventoried items purchased with federal funds and segregating the items for purposes approved in grant applications
- Recording property transfers and movements to new locations in the district
- Recording surplus items approved for disposal that have reached “end-of-useful-life”
- Contacting the grantor agency for directions on disposal of surplus grant-funded fixed assets and inventoried items, in accordance with applicable grant application terms and federal regulations
- Keeping inventory records current for the disposal of surplus items
- Prohibiting discarding items at the campus or department level
- Conducting public auctions of surplus items
- Monitoring approved off-district or off-campus personal use of district’s fixed assets and inventoried items, in accordance with the district’s policies and procedures
- Requiring completion of custody receipts for approved off-district or off-campus use of assets and check-in when items are returned
- Maintaining a complete inventory record for each grant-funded item, in accordance with applicable federal regulations
- Recording lost, stolen or destroyed items
- Reporting stolen items promptly (before they are sold at local pawn shops)
- Conducting an inventory of items assigned to employees that terminate their employment prior to their last day of service, when practical
- Conducting annual campus and department inventories
- Testing campus and departmental inventories periodically on a year-round basis
Technology solutions for controlling capital and inventoried assets should be considered by school districts that are relying primarily on a manual inventory process. Technology solutions promote more effective monitoring, management and inventories of assets so they can be deployed or located more promptly to benefit various instructional programs. School districts need solutions that are more advanced than a manually updated spreadsheet.
It essential to stay current, because a multitude of internal control issues are certain to arise if inventory records remain incomplete for a prolonged period of time, which can span multiple fiscal years in worst-case scenarios when inventory processes fall behind. Additional reasons to stay current are to facilitate prompt detection of potentially stolen assets, in addition to monitoring allowed uses of grant-funded assets to avoid substantial financial penalties for noncompliance. If your district is having difficulty in capital asset management, it’s time to consider installing an advanced interactive software tool that can assessed by all campuses and departments, in addition to consideration of arranging for additional training and a management review to help accelerate the district’s path in updating out-of-date inventories and to accelerate the implementation of best practices.
Terminology
Most districts define a fixed or capital asset as: an asset acquired by purchase, construction, or donation that is tangible in nature; had an acquisition cost of $5,000 or more ($5,000 or more fair market value for donated items); and has a useful life in excess of one year. Inventoried items are defined as: items with a value between $1,000 and $4,999 that were acquired by purchase or donation. The cost should include ancillary charges necessary to place the asset into its intended location and condition for use. Ancillary costs include costs that are directly attributable to asset acquisition—such as freight and transportation charges, site preparation costs, and professional fees.