3.7 Property and Equipment
Equipment and Nonexpendable Personal Property Acquired With Discretionary Funds
If as a recipient, you use discretionary funds to acquire equipment and nonexpendable personal property, the following standards and procedures govern ownership, use, management, and disposition of this type of equipment:
- When you use discretionary funds to acquire equipment and nonexpendable personal property, title settles on your organization, subject to the obligations and conditions set forth in Title 28 CFR Part 66 [PDF - 224 Kb] for State and local units of government, and in Title 28 CFR Part 70 [PDF - 216 Kb] for other recipients.
Financial Management Tip
Your organization should use its own capitalization policy for classification of a nonexpendable item. If your organization does not have a capitalization policy in place, you must use the Federal policy that states that a nonexpendable item with a fair market value of $5,000 or more and a useful life of more than one year is considered equipment.
- A State should use equipment acquired under an award in accordance with State laws and procedures. Local government recipients and subrecipients must ensure equipment acquired under an award is in accordance with the requirements contained in the section “Equipment Acquired with Juvenile Justice Act Formula and Victims of Crime Act Assistance (Formula) Funds.”
- Other recipients should use nonexpendable personal property in the project or program for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds.
- When nonexpendable personal property is no longer needed for the original project or program, you may use it in connection with other federally sponsored activities in the following order of priority:
- Other projects of the awarding agency needing the property
- Grants of a State needing the property
- Projects of other Federal agencies needing the property
- A State must ensure its equipment acquired under an award is managed in accordance with State laws and procedures over property.
- Other recipients’ property management standards for nonexpendable personal property must include the following requirements:
- Property records should be maintained accurately and include the following information:
- A description of the property
- Manufacturer’s serial number, model number, Federal stock number, or other identification number
- Source of the property, including the award number
- Whether title settles with the recipient or the Federal Government
- Acquisition date (or date received, if the property was furnished by the Federal Government) and cost
- Percentage (at the end of the budget year) of Federal participation in the cost of the project or program for which the property was acquired (not applicable to property furnished by the Federal Government)
- Location, use, and condition of the property at the date the information was reported
- Unit acquisition cost
- Ultimate disposition data, including date of disposal and sales price or the method used to determine current fair market value where a recipient compensates the Federal awarding agency for its share
- You must take a physical inventory of property and reconcile the results with the property records at least once every 2 years.
- Any differences between quantities determined by the physical inspection and those shown in the accounting records should be investigated to determine the causes of the difference.
- You should, in connection with the inventory, verify the existence, current utilization, and continued need for the property.
- Control systems should be in effect to ensure adequate safeguards to prevent loss, damage, or theft of the property.
- Any loss, damage, or theft of nonexpendable property should be investigated and fully documented. If the property was owned by the Federal Government, the recipient must promptly notify the Federal agency.
- You are required to implement adequate maintenance procedures to keep the property in good condition.
- Where you are authorized or required to sell the property, proper sales procedures should be established which would provide for competition to the extent practicable and result in the highest possible return.
- A State should dispose of its equipment acquired under the award by the State in accordance with State laws and procedures.
- Local recipients and subrecipients should follow the disposition requirements in the section “Equipment Acquired with Juvenile Justice Act Formula and Victims of Crime Act Assistance (Formula) Funds.”
- Other recipients should use the following disposition requirements for nonexpendable personal property:
- If the nonexpendable personal property has a fair market value of less than $5,000, you may use it for other activities without reimbursement to the Federal Government, or you may sell the property and retain the proceeds.
- If the nonexpendable personal property has a fair market value at or above $5,000, you may retain it for other uses provided that compensation is made to the awarding agency.
- Compute the amount of compensation by applying the percentage of Federal participation in the cost of the original project or program to the current fair market value of the property.
- If you have no need for the property and the property can still be used, you should request disposition instructions from the awarding agency.
- The awarding agency should determine whether the property can be used to meet the agency’s requirements.
- If no requirement exists within that agency, then the agency should report the availability of the property to the U.S. General Services Administration to determine whether a requirement for the property exists in other Federal agencies.
- The awarding agency should issue instructions to you no later than 120 days after receiving your request, and apply the following procedures: (a) If instructed, or if disposition instructions are not issued within 120 calendar days after your request, you should sell the property and reimburse the awarding agency an amount computed by applying to the sales proceeds the percentage of Federal participation in the cost of the grant; (b) however, you should be permitted to deduct and retain from the Federal share $100 or 10 percent of the proceeds, whichever is greater, for your selling and handling expenses.
- If you are instructed to ship the property to other agencies needing the property, the benefiting Federal agency should reimburse you with an amount computed by applying the percentage of your organization’s participation in the cost of the project or program to the current fair market value of the property, plus any reasonable shipping or interim storage costs incurred.
- If you are instructed to otherwise dispose of the property, you should be reimbursed by the awarding agency for costs incurred in its disposition.
- The awarding agency may reserve the right to transfer title to property with a fair market value of $5,000 or more if that property was acquired with Federal funds. The agency can transfer the title to the Federal Government or a third party named by the agency, when such a third party is otherwise eligible under existing laws.
- These transfers are subject to the following standards:
- The property must be identified in the award, or it must otherwise be made known to you as the recipient in writing.
- The awarding agency should issue disposition instructions within 120 calendar days after the end of the Federal support of the project for which it was acquired.
- If the awarding agency fails to issue disposition instructions within the 120-calendar-day period, the recipient should follow standards set in Title 28 CFR Part 66 [PDF - 224 Kb] and Title 28 CFR Part 70 [PDF - 216 Kb].
- When title to property is transferred, you should be paid an amount equal to the percentage of participation in the purchase applied to the current fair market value of the property.