DEPARTMENTS & DISTRICTS AFFECTED: ALL AGENCIES, DEPARTMENTS, AND DISTRICTS GOVERNED BY THE BOARD OF SUPERVISORS
EFFECTIVE: 11/78 REVISED: 01/94, 12/99
_________________________________ David E. Sundstrom, Auditor-Controller
Each department, agency, and district shall conduct an inventory of fixed assets as of the date specified in the schedule of fixed asset inventory dates prepared by the Auditor-Controller pursuant to Title I, Division 4, Article 5 of the Codified Ordinances of Orange County. The certified fixed asset inventory listing must be filed with the Auditor-Controller no later than the last day of the month following the month in which the inventory was started.
To establish a policy and related procedures to ensure an accurate and complete count of fixed asset items.
Government Code Section 24051
Requires periodic inventory of equipment
Codified Ordinances of the County of Orange, Title I, Division 4, Article 5
County implementation of Section 24051 "Inventory of Equipment," permits staggered inventory schedule for various county departments and agencies
Accounting Standards and Procedures for Counties, State of California
Control of Fixed Assets; Accounting for Fixed Assets; Inventory of Equipment
Board of Supervisors' Resolution No. 93-1390 dated December 14, 1993
Delegation of Fixed Assets Policies and Procedures Revisions to Auditor-Controller, Including Establishment of $5,000 Minimum Capitalization Limit
Federal Office of Management and Budget Circular A-87(OMB A-87)
Requires that every County agency head file a certified inventory of fixed assets with the County Auditor-Controller not less than once every two years. On the date specified in the schedule of property inventory dates prepared by the Auditor-Controller, each agency must perform an inventory of the fixed assets under its control.
The State Controller's Manual, "Accounting Standards and Procedures for Counties," defines fixed assets as "tangible assets of significant value having a utility that extends beyond the current year." Generally, fixed assets are classified in three categories: land, buildings and improvements, and equipment. Fixed assets include equipment which costs $5,000 or more, including sales taxes, freight charges, and installation.
Equipment is defined as movable property of a relatively permanent nature with a significant value. Equipment items that cost $5,000 or more, including sales taxes, freight charges, and any other taxes, are classified as fixed assets. Equipment items are capitalized and are maintained in the County's central fixed asset accounting system.
The Property Officer is an employee within a department/agency who has been designated by the department/agency head as being accountable for the property charged to the department/agency, although the ultimate responsibility for the property remains with the department/agency head. The Property Officer must report directly to the department/agency head. The Property Officer is responsible for overall supervision of the inventory and for assembling the required documentation of the inventory.
The Coordinator is the individual responsible for the planning, coordination and control of the physical inventory. If the Coordinator is not also the Property Officer, he or she must report directly to the Property Officer during his/her tenure as coordinator.
The Count Team is comprised of the following two individuals: Locator - The individual responsible for identifying and calling out the description and identification number of the asset. Recorder - The individual responsible for recording the data called out by the locator.
Upon notification from the Auditor-Controller's Department that a fixed asset inventory is required, the Property Officer prepares written instructions for the Coordinator and Count Team incorporating the procedures listed below. The instructions are to be submitted by the Property Officer to the Auditor-Controller General Ledger Unit for review and approval. Any anticipated deviations from these standard procedures should be discussed with and authorized by the Auditor-Controller General Ledger Unit prior to conducting the inventory. To facilitate a complete and accurate count, the Auditor-Controller Department has developed the following standard procedures for the physical inventory of fixed assets. To assure a complete and accurate inventory, the instructions must be followed and the count teams must proceed in an orderly and systematic manner. The Auditor-Controller Department will provide an official fixed asset listing (computer printout) prior to the inventory date.
Assigns individuals to count teams.
Establishes times and locations for the teams.
Sends a copy of the department's/ agency's inventory procedures to the Auditor-Controller General Ledger Unit for review. Notifies the Auditor-Controller of the inventory date.
Distributes inventory procedures and instructions, makes specific assignments, and answers any questions for the count teams. It is recommended that the department/agency Property Officer schedule and conduct a pre-inventory meeting at which all participating persons are present.
Reviews the department's/agency's inventory procedures for compliance with this Procedure. Notifies the department/agency of any required additions or changes.
THE LOCATOR AND RECORDER CAN ALTERNATE DUTIES DURING THE COURSE OF THE INVENTORY
Count Team - Locator: Tagged Fixed Assets
The Locator shall progress through rooms and buildings in a systematic manner so that all assets will be inventoried.
Reads the fixed asset number from the standard County fixed asset tag together with the description and the serial number, if applicable.
Marks the fixed asset to indicate that it has been inventoried.
Count Team - Recorder: Tagged Fixed Assets
Repeats the data as read and traces each item to the fixed asset listing.
Indicates that the item has been accounted for and adds location information to the Fixed Asset Document (FAD), if desired, to update the Fixed Asset Accounting System records, or records location information for updating departmental location lists.
Records, on an exceptions listing, those tagged items that are not on the fixed asset listing.
Count Team - Locator: Untagged Fixed Assets
Calls out the description, serial number, and location of untagged fixed assets. These assets shall be marked so that they can be easily identified later.
Count Team - Recorder: Untagged Fixed Assets
Records untagged fixed assets on an exceptions listing.
Count Team - Locator: Mutilated Fixed Asset Tags
Identifies mutilated fixed asset tags and marks the assets so that they can be easily identified later.
Count Team - Recorder: Mutilated Fixed Asset Tags
Records assets with mutilated fixed asset tags on a separate listing.
Forwards any updated FADS to the Auditor-Controller General Ledger Unit to revise the master location records of fixed assets.
Replaces all mutilated fixed asset tags. (Step 11)
Consolidates the list of all tagged items not on the inventory listing (Step 7), and takes the necessary steps to have them placed on the final inventory listing.
Consolidates the list of all untagged items (Step 9) and determines the proper fixed asset numbers from the Inventory listing. Supervises the tagging of these items.
Examines the inventory listing and prepares a list of all fixed assets that have not been located and inventoried.
Prepares the Certified Inventory The Property Officer prepares a final inventory listing, certified by the department/agency head, and submits it and the list of exceptions to the Auditor-Controller General Ledger Unit no later than the last day of the month following the month in which the inventory was started. The certified inventory shall consist of the following:
Inventory of County Property Form The Inventory of County Property certification form (Form F0132-150) shall be signed by the department/ agency head. In the case of a department/agency head changeover inventory, the incoming department/ agency head signs the "Receipt of Incoming Officer" portion of the form. See Exhibit I.
Listing of Exceptions The listing of exceptions to the computer printout of the inventory includes items listed on the printout which were not found, and items found which were not listed on the printout. All exceptions must be fully explained. Any missing items which have previously been reported to the Auditor-Controller as having been stolen should be so noted. Exhibit II of this procedure displays an example of a properly completed listing of fixed asset inventory exceptions.
Computer Printout - Inventory Listing The computer printout of the fixed asset inventory supplied by the Auditor-Controller General Ledger Unit shall be submitted with the Inventory of County Property form and the exception listing. The Auditor-Controller printout must be submitted to ensure that all fixed assets are included in the inventory
Directs department/agency personnel to attempt to locate all missing items and to determine the reasons for the loss of the missing items.
Prepares the Fixed Assets Inventory Procedures Questionnaire (Exhibit III), signed by the department/agency head, and submits it to the Auditor-Controller General Ledger Unit no later than the last day of the month following the month in which the inventory was started.
Prepares the Sixty-Day Follow-Up Letter The department or agency is permitted sixty (60) calendar days from the end of the month in which the inventory was taken to locate any items reported missing on the inventory certification or, if some items still cannot be found, to determine the reasons for the shortage. On or before the end of this sixty (60) day period, the Property Officer files a letter with the Auditor-Controller. The letter shall
Report items found,
Report items still missing,
Include explanations for the items still missing,
Request deletion of the missing items from the fixed asset inventory and relief of accountability for the items, and
Report any findings and resulting recommendations to prevent a reoccurrence of missing items.
The letter must be signed by the department/agency head, or in his/her absence by the Chief Deputy or an Assistant Director. A copy of the letter shall be sent by the department/agency to the County Executive Office (CEO) Risk Management Division. Exhibit IV of this procedure displays an example of a properly prepared sixty-day follow-up letter.
Inspects documents submitted by the department or agency for deficiencies in the inventory procedure. If there are no unresolved deficiencies, the Auditor-Controller sends a letter to accept the inventory to the department or agency head. This letter is signed by the Auditor-Controller and is distributed to the CEO and the departmental/agency property officer. Any recommendations for improvements of fixed asset controls are contained in this letter.
A reporting schedule for physical inventories and missing, stolen, damaged, dismantled and destroyed fixed asset equipment items is shown in Exhibit V.
Deficiencies in Departmental or Agency Inventory Procedures
General Ledger Review/Property Officer Response
The Fixed Asset Inventory Procedures Questionnaire, written departmental inventory procedures, Inventory of County Property Form, listing of exceptions, and Sixty-Day Follow-Up Letter will be reviewed by the Auditor-Controller General Ledger Unit for compliance with this procedure. If this review reveals apparent deficiencies, the General Ledger Manager will attempt to resolve the problems with the departmental or agency Property Officer.
Referral to Auditor-Controller Cost Studies/Mandated Audits
If inventory procedure problems cannot be resolved by the Auditor-Controller General Ledger Manager and the departmental/agency Property Officer, the General Ledger Manager shall communicate his/her concerns to the Auditor-Controller Cost Studies/Mandated Audits Manager. The General Ledger Manager shall send the following:
Written descriptions of any apparent deficiencies in the inventory procedure
The Fixed Asset Inventory Procedures Questionnaire for the affected department/agency
Departmental/agency procedures for conducting the inventory
Inventory of County Property Form, listing of exceptions, and Sixty Day Follow-Up Letter
The Cost Studies/Mandated Audits Manager shall attempt to resolve the inventory problems with the affected department/agency.
Referral to Internal Audit Department
If the Auditor-Controller Cost Studies/Mandated Audits Manager cannot resolve the inventory problems with the department/agency, the Auditor-Controller will refer the inventory to the Internal Audit Department, requesting further review. The Internal Audit Department will then perform whatever procedures it deems necessary to audit the inventory. Internal Audit will provide recommendations of corrective action in a written audit report in accordance with Administrative Procedure No. 1 of the Audit Oversight Committee, which includes distribution to the Auditor-Controller, CEO, Board of Supervisors, Clerk of the Board, and situationally includes distribution to the District Attorney.
If inventory deficiencies cannot be corrected based on review by the Internal Audit Department, the issues will be presented by the Internal Audit Department to the Audit Oversight Committee for resolution in accordance with Audit Oversight Committee Administrative Procedure No. 1.
Issuance of Acceptance Letter
Once corrective action is taken as determined by the Auditor-Controller Cost Studies/Mandated Audits Manager, or by the Internal Audit Department if requested by the Auditor-Controller, the Auditor-Controller will send the letter of acceptance of the inventory to the department/agency director. See Step 21 of Section 2.3, above.