General Process

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Context

Banner Fixed Assets contains each institution's personal property records (e.g., equipment, vehicles, library books, etc., that meet or exceed the capitalization threshold). Banner Fixed Assets now also contains each institution's real property records, including:

• Buildings
• Improvements Other than Buildings (IOTBs)
• Infrastructure
• Land Improvements

Land records are not currently in Banner Fixed Assets; they will be converted to Banner Fixed Assets at a later date. Purchases of land and buildings with land are rare; please contact the Controller's Division before capitalizing purchases of land.

Importance

Complete and accurate real property records in Banner Fixed Assets are critical and used for many purposes, including:

• Official records of OUS Real Property
• Financial Reporting
• Facilities and Administrative Rate Proposals
• Distinguishing between State and Federally Funded Real Property
• Property Control
• Insurance Values
• Distribution of Insurance Assessments
• Depreciation Calculations
• Distribution of Depreciation Expense

The following standard procedures and general processes are to provide for the uniform accounting and maintenance of OUS real property records in Banner Fixed Assets. The policies and general processes are in addition to OUS Fixed Assets Accounting Policies and Banner User Manuals.

General Differences -- Personal Property versus Real Property

Although Banner Fixed Assets contains both personal property and real property records, the attributes of real property transactions are somewhat different and must be accommodated in the process for recording real property records in Banner Fixed Assets:

General Attributes -- Personal Property	General Attributes - Real Property
Procurement Transactions - (Proprietary funds use A8xxx accounts Codes - Non- Proprietary funds use 401xx, 402xx account codes)	Procurement Transactions - (Account Codes 403xx, 404xx, 405xx, 406xx, 407xx in unexpended plant funds)
Generally One Invoice	Multiple Invoices
One Fund	Multiple Funds
One Fiscal Year	Multiple Fiscal Years
"Construction in Progress" possible but not the norm	"Construction in Progress" expected
One Account Code	Possibility of multiple account codes for same project; e.g., land, building, land improvements, IOTBs, infrastructure.
One Asset Record in Banner Fixed Assets	Possibility of multiple asset records in Banner Fixed Assets (e.g., original cost, additions, major improvements of buildings; building component depreciation).
Once in Banner Fixed Assets, the capitalized cost is complete.	Once in Banner Fixed Assets, capitalized costs may increase due to additional capitalizable expenditures resulting from "substantially completed" buildings.
Payment source not limited to unexpended plant funds.	Payment source limited to unexpended plant funds.
Procurement documents and accounting processed primarily by Departments and Institutional Business Offices.	Procurement documents and accounting processed primarily by Facilities Business Offices.
Posting of invoice automatically results in an origination "OTAG" record in Banner Fixed Assets & corresponding capitalization entry to the General Ledger.	Posting of invoice does not automatically result in an origination "OTAG" record in Banner Fixed Assets nor a corresponding capitalization entry to the General Ledger.

Although there are differences, the following attributes of personal and real property transactions should remain the same:

• Monthly Depreciation Process
• Reconciliation of Banner Fixed Assets to Banner FIS
  • The totals in Banner Fixed Assets should agree to the control totals in the Banner FIS asset accounts.
    
    
  • For each type of real property, the annual change in Banner FIS general ledger asset balance should agree to the sum of the capitalizable expenditures in the Banner FIS operating ledger less the asset disposals for the year.
• Periodic Banner Fixed Assets Audit Reports
• Fixed Assets Closing of the Books Procedures

Objective

To ensure that all capitalizable expenditures pertaining to real property are capitalized and accurately recorded in Banner Fixed Assets.

General Process for Recording Real Property Records in Banner Fixed Assets

See flowchart in Appendix 1

Assumptions

We had the following assumptions in developing a general process for recording real property records in Banner Fixed Assets:

1. The basis for the real property records added to Banner Fixed Assets are the expenditure transactions in the institution's unexpended plant funds. The expenditure account coding is presumed accurate; any incorrect account coding must be corrected by journal voucher.
2. The source of the real property records in Banner Fixed Assets will come from forms/reports prepared by the institution's facilities business office, subject to review and approval by the institution's business office. The forms/reports will be prepared periodically, but at least annually at year-end closing. The forms/reports are the official record, must be printed, must contain authorized signatures, and must be retained and filed as the source of the real property records entered into Banner Fixed Assets.

   University Decision: Design of Real Property Forms/Reports

   University Decision: Location of filing of Real Property Forms/Reports

3. The form/report format should allow the fixed assets office to input information directly into Banner Fixed Assets. An alternative to the report would be individual update forms such as the previous CO-355 forms used in the past to update the old real property system. (See Appendix 2 for sample form/reports)
4. The University will ensure that Banner Fixed Assets agrees to the balances of the applicable asset accounts in Banner FIS through the use of the FWRNIPR report.

   University Decision: Which office/person will reconcile Banner Fixed Assets to Banner FIS?

5. The University will ensure that the annual total capitalizable expenditures of the unexpended plant funds and the real property disposals agree, by real property account code, to the annual net change of the real property asset accounts in Banner FIS.

   University Decision: Which office/person will perform this reconciliation?

Access Needs to Banner Fixed Assets

Facility business offices will need query access to the institution's Banner Fixed Assets to view fixed assets records and validation tables, and the ability to query "construction in progress" records in Banner Fixed Assets.

Capitalization Forms/Reports

Please see attached sample in Appendix 2; the form has been designed to include all information the fixed assets office will need to enter a real property record into Banner Fixed Assets.

General Processes

1. Request creation of unexpended plant fund for project Plant fund requests are to be routed to the Chancellor's Office for creation.
2. Request creation of level two location code for new real property assets Level two Location code requests are to be routed to the Chancellor's Office for creation. Every real property asset will have a single level two location code. The location code will resemble the Ptag number of the asset. Assets with multiple Ptags (such as buildings with additions, improvements or components) will only have one level two location code for the asset.
   
   Location codes must adhere to the standard numbering convention in Appendix 4: Banner Fixed Assets Standards.
   
   In order to create the location code, the institution must provide:
   
   Ptag number for the asset meeting the Ptag numbering convention
   
   
   • Title or description
   • Total square footage (for buildings only)
   • Predecessor location code (on or off campus, out of state, etc)
   • Physical location information (which could be street address, GPS coordinates, other description of physical location).
   (see Appendix 4: Banner Fixed Assets Standards for more information)
   
   For remaining processes, refer to Appendix 3: Flowchart - Lay-Out of Real Property Records in Banner Fixed Assets. This flowchart is critical because it shows how Banner Fixed Assets (designed primarily for recording personal property) can be used to accommodate all the complications of recording real property.
   
   
3. Begin construction in progress records Facilities would prepare the capitalization form/report that will include the information on Appendix 2 Banner Fixed Assets Real Property Update Form. The form/report would require the University prescribed signature authorization. On the capitalization form/report, the following items must be considered:
   • The initial CIP record would be established using the Fixed Asset Master maintenance form FFAMAST using either the `New Tag, Non-Procurement' or `Gift/Donation' action types
   • The permanent tag (ptag) number must follow the ptag numbering convention described in Appendix 4. The assignment of the ptag number is critically important because it denotes the type of real property, additions and improvements associated with existing building records, and building component depreciation; and must tie to the Banner FIS location code.
   • If a lease, the System status code must be set to `L'
   • If the new record is construction in progress, one must complete the following fields:
   • • Title To Code: SN - " OUS Owned not Insured "
     • Work in Progress Indicator: " Y "
   • For ALL asset records in Banner Fixed Assets, the sequences of the max change sequence number records of the capitalization window must correspond to the sequences of the funding source window. For example, if there are five (5) sequences in funding, there must be five (5) sequences in the capitalization data on the max change sequence number AND the sequence numbers must match. It is particularly important for Facilities and Administrative cost purposes as one must be able to associate depreciation with its corresponding funding source.
4. Increase amount of CIP record To increase the amount of an existing CIP record, the fixed assets office needs to know the periodic increase in capitalizable costs. If performed annually, this would be the Year to Date capital costs to the project. If performed more frequently, this would be the sum of the monthly or periodic capitalizable costs yet to be capitalized. The Appendix 2 capitalization form/report provides for the funding distribution and the periodic amount by which one would establish or increase the cost in Banner Fixed Assets.
   • Increase in the amount of CIP would be performed by creating a new Origination tag in the Fixed Asset Master Maintenance form FFAMAST using the `New Tag, Non-Procurement' action type. Fill in all new funding information and associated capitalization data.
   • Perform an SCAO Otag capitalization in the Fixed Asset Adjustment form FFAADJF to capitalize the otag.
   • Attach the Otag to the original CIP Ptag record using the Primary tag and subordinate type of (A)ttachment via the "Permanent Tag - Update Asset" action of the Fixed Asset Master Maintenance form FFAMAST.
5. Establish completed or "substantially completed" records
   
   
   • Converting CIP records to Complete or "substantially completed" records:
     
     
     • On at least an annual basis at year end closing, Facilities must review the CIP records and notify the fixed assets office of those CIP records that are completed or "substantially completed¹." The fixed assets office updates the real property record to "completed" and begins depreciation on the real property record.
       
       To obtain a listing of CIP records, the facilities would use the following:
       
       
       • Access the Fixed Asset List form (FFIFALV) and perform an expert query to identify all CIP records.
       • CIP records can be identified by the work in progress indicator and/or the asset account code. Enter a `:' in any field in FFIFALV and execute the query to bring up the expert query window. Then enter: FFBMAST_WORK_IN_PROG_IND = `Y' Then execute the query to get a listing of CIP records
         
         
       Facilities would forward Forms/Reports (see Appendix 2), with authorized signatures, to the fixed assets office for those CIP records that are complete or "substantially complete."
       
       
       • Use Fixed Assets Adjustment Form (FFAADJF), function code GLAS - GL Change Asset Account to change the asset account from the CIP account to the corresponding non-CIP asset account.
       • Use Fixed Assets Master Form (FFAMAST), PTAG update, to change (1) Work-in-Progress indicator, (2) TTST Code to SI - OUS owned insured (or other appropriate code), and (3) In Service Date.
       • Also complete the depreciation window in FFADEPR using the useful life consistent with the asset's Asset Type, Method = SL Straight Line, Frequency = Monthly, Salvage Value = 0 and the depreciation start date consistent with the depreciation start date policy per the OUS Fiscal Policy Manual.
         
         
   • Create Complete or "substantially completed" records for assets not previously CIP:
     • Use Fixed Assets Master Maintenance Form (FFAMAST), action type "New Tag, Non-Procurement" OR "Gift/Donations". - Note, gifts must also be recognized as revenue.
       
     • If the asset is a Gift, perform Journal Voucher debiting the asset's capitalization fund and account E1001 with the Fair Market Value (FMV) of the asset and Credit the appropriate 03xxx revenue account to the capitalization Fund's foapal where depreciation is recorded to recognize the revenue.
       
     • Use the Fixed Assets Adjustment Form (FFAADJF), function code SCAP - Ptag Capitalization to capitalize the asset to the GL.
       
     • Also complete the depreciation window in FFADEPR using the useful life consistent with the asset's Asset Type, Method = SL Straight Line, Frequency = Monthly, Salvage Value = 0 and the depreciation start date consistent with the depreciation start date policy per the OUS Fiscal Policy Manual.
6. Add amounts to "substantially completed" records
   
   Follow same process as "Increase Amount of CIP Record" above.
   
   
7. Other - disposal of real property
   
   Use Fixed Assets Adjustment Form (FFAADJF), using the function code DISP - Sale of Asset OR WOFF - Write Off. Be sure to use the DISP - Sale of Asset function if there are proceeds from a sale else use the Write Off.
   
   
8. Other adjustments to real property records [Please contact Controllers Division]

Reconciliations

1. Reconciling Banner Fixed Assets to Banner FIS
   
   Run FWRNIPR report to ensure that records in Banner Fixed Assets agree to the capital asset general ledger balances in Banner FIS.
   
   
2. Reconciling Banner Opal ledger activity in unexpended plant funds to additions in Banner Fixed Assets (See Appendix 6)
   
   Prepare the reconciliation worksheet to ensure that the net changes in the Banner FIS capital asset balances agree to the changes in the year's real property capitalizable expenditures less real property disposals.

Appendices

• Appendix 1: Flowchart -- General Process for Recording Real Property Records in Banner Fixed Assets
• Appendix 2: Banner Fixed Assets Real Property Records Update Form
• Appendix 3: Flowchart - Lay-Out of Real Property Records in Banner Fixed Assets
• Appendix 4: Policies Pertaining to Real Property Records
• Appendix 5: Validation Tables Used for Real Property Records [to be completed]
• Appendix 6: Banner Fixed Assets Real Property Reconciliation Worksheet

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¹ See OUS Fiscal Policy Manual Section 55.100.200.D for definition of "Substantially Completed."