Internal Controls Practices

Equipment Management

Campus funding is affected by reports of expenditures for equipment that are sent to federal, state, and private funding agencies. Keep your resources safe and reports reliable by focusing on the following key internal control practices.

Definition: The University defines equipment as any stand-alone item, with a useful life of one year or more, and with an appraised value of at least $5,000.

If you buy or dispose of equipment, or manage equipment records and inventory, learn these best practices.

Separation of duties

One of the most important things you can do to protect your equipment is to separate equipment management duties so that no one person has control over the entire equipment management process.

  • Best practice is to have different people:

    • Purchase items

    • Approve invoices for payment

    • Classify equipment and record changes

    • Perform periodic/ annual physical inventory

    • Maintain custody and dispose of property

    • Reconcile equipment purchases to financial records

  • Potential consequences if duties are not separated:

    • Inaccurate equipment location recorded

    • Lost, stolen, or destroyed property

    • Misstated financial records

    • Incorrect insurance requirements and liability charges

    • Inaccurate asset values recorded

Accountability, authorization, and approval

You maintain accountability when the right person authorizes equipment purchases, classifies property based on UCD equipment classification criteria, and correctly records new purchases, disposals and changes in asset location.

  • Best practices:

    • Approve invoice based on purchase order information.

    • Inspect equipment to determine condition and valuation.

    • Adjust inventory records periodically to record changes in equipment status.

    • Equipment Management pre-approves the physical removal, sale, and transfer of inventorial assets.

    • Report equipment theft to UCD Police.

  • Potential consequences if accountability does not exist:

    • Unsuitable or unauthorized items purchased

    • Improper transfer of property to unauthorized location

    • Assets acquired for personal use

    • Incorrect valuation of equipment recorded in financial and equipment records

    • Lost or stolen property

    • Misstated financial statements and information sent to reporting agencies

Security of assets

Keep all your equipment physically protected. This also applies to off-campus use of University equipment. Establish detailed equipment records to maintain accounting control and physical accountability of assets.

  • Best practices:

    • Department head approves off-site business use of equipment.

    • Equipment Management approves all relocations of offsite equipment transfers.

    • Review and update insurance requirements periodically, or when equipment status changes.

    • Provide keys and combinations of secured locations only to authorized personnel.

    • Restrict access to equipment to those who have a business need to use property.

    • Follow recommended physical layout standards.

  • Potential consequences if security of assets does not exist:

    • Lost or stolen property

    • Inaccurate equipment records and financial statements

    • Liability for off-site accidents

Review and reconciliation

Reconciliation activities ensure the proper classification, recording, and documentation of equipment. Perform periodic reviews to ensure the accuracy of equipment records and recorded asset balances.

  • Best practices:

    • Perform periodic equipment reviews to determine value and proper usage and/ or disposal.

    • Count physical inventory at least annually.

    • Compare property records to physical inventory status.

    • Properly classify equipment as non-inventorial or inventorial.

    • Identify and account for inventorial equipment with UCD property tag.

    • Review and update insurance requirements periodically, or when equipment status changes.

    • Document and report changes to inventory records on KFS CAMS.

  • Potential consequences if review and reconciliation activities are not performed:

    • Lost, stolen, or temporarily diverted assets

    • Incorrect asset values

    • Inaccurate equipment records and financial statements

    • Inability to provide funding agencies with accurate data

Supplemental content

Controls & Accountability