The purpose of the proposed rules is to implement: (1) Section 273.02, F.S., which requires the Chief Financial Officer to adopt rules regarding the requirements for recording of state-owned tangible personal property in the state’s financial system ...  

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    DEPARTMENT OF FINANCIAL SERVICES
    Division of Accounting and Auditing

    RULE NO: RULE TITLE
    69I-72.001: Definitions
    69I-72.002: Threshold for Recording Tangible Personal Property for Inventory Purposes
    69I-72.003: Recording of Property
    69I-72.004: Marking of Property
    69I-72.005: Disposition of Property
    69I-72.006: Inventory of Property
    69I-72.007: Capitalization of Property
    PURPOSE AND EFFECT: The purpose of the proposed rules is to implement: (1) Section 273.02, F.S., which requires the Chief Financial Officer to adopt rules regarding the requirements for recording of state-owned tangible personal property in the state’s financial system and for the periodic review of such property for inventory purposes; and (2) Section 273.055, F.S., which requires custodians to maintain records to identify property items for disposition in accordance with rules issued by the Chief Financial Officer. The Auditor General's Office had been responsible for issuing such rules; however, Chapter 2006-122, Laws of Florida, transferred those responsibilities to the Chief Financial Officer. Chapter 2006-122, Laws of Florida, also created Section 273.025, F.S., which requires the Chief Financial Officer to adopt rules regarding the requirements for the capitalization of property that has been recorded in the state’s financial system.
    SUBJECT AREA TO BE ADDRESSED: Recording and inventory requirements for state-owned tangible personal property. Capitalization requirements for state-owned tangible personal property.
    SPECIFIC AUTHORITY: 273.02, 273.025, 273.055 FS.
    LAW IMPLEMENTED: 273.01, 273.02, 273.025, 273.03, 273.04, 273.05, 273.055 FS.
    IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
    TIME AND DATE: October 16, 2007, 2:00 p.m.
    PLACE: Room 430, Fletcher Building, Tallahassee, Florida
    Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Molly Merry, (850)413-3097 or molly.merry@fldfs.com If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
    THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Molly Merry, Chief, Bureau of Accounting, 200 East Gaines Street, Tallahassee, Florida 32399-0354 (850)413-3097 or molly.merry@fldfs. com.

    THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:

     

    69I-72.001 Definitions.

    (1) “Capital Asset” means real or personal property that has a cost equal to or greater than an established capitalization threshold and has a useful life extending beyond one year. Capital assets are reported in the statement of net assets in financial reporting.

    (2) “Class Code” means a classification number used to commonly identify similar items of property which is established by the State’s Chief Financial Officer in the State's financial system.

    (3) “Control Accounts” means summary accounts designed to control accountability for individual property records. Unlike individual property records which establish accountability for particular items of property, control accounts accumulate the total cost or value of the custodian’s property and through entries to the control accounts documenting acquisitions, transfers and dispositions, provide evidence of the change in that total cost or value over periods of time as well as the total cost or value at any point in time.

    (4) “Cost” means acquisition or procurement cost (i.e., invoice price plus freight and installation charges less discounts). In determining cost, the value of property exchanged by a custodian in satisfaction of a portion of the purchase price of new property shall not be deducted from the full purchase price regardless of any property “traded in” on the new property.

    (5) “Custodian” means, without limitation, any elected or appointed State officer, board, commission or authority, or any other entity or agency entitled to lawful custody of property owned by the State.

    (6) “Custodian’s Delegate” means a person acting under the supervision of the custodian to whom the custody of property has been delegated by the custodian and from whom the custodian receives custody receipts.

    (7) “Depreciated Cost” means acquisition cost less accumulated depreciation.

    (8) “Depreciation” is the systematic and rational allocation of the acquisition cost of an asset over the expected useful life of the asset.

    (9) “Financial System” means the Florida Accounting Information Resource (FLAIR) or its successor.

    (10) “Fiscal Year” means the State’s fiscal year established in Section 215.01, F.S., to begin on the first day of July and to end on the following thirtieth day of June, both dates inclusive, in each and every year; or the fiscal year established by other law applicable to a particular custodian.

    (11) “Identification Number” means a unique number assigned and affixed to each item of property to identify it as property held by the custodian and for the purpose of differentiating one item of property from another.

    (12) “Property” has the meaning set forth in Section 273.02, F.S.

    (13) “Unaccounted for Property” means property held by a custodian subject to the accountability provisions of Rule 69I-72.002, F.A.C., which cannot be physically located by the custodian or custodian’s delegate which property has not been otherwise lawfully disposed of.

    (14) “Value” means the worth or fair market value at the date of acquisition for donated property.

    Specific Authority 273.02, 273.025 FS. Law Implemented 273.01, 273.02, 273.025, 273.03, 273.04, 273.05, 273.055 FS. History– New________.

     

    69I-72.002 Threshold for Recording Tangible Personal Property for Inventory Purposes.

    All tangible personal property with a value or cost of $1,000 or more and having a projected useful life of one year or more shall be recorded in the state’s financial system as property for inventory purposes. Any hardback book with a value or cost of $25 or more and having a useful life of one year or more that is circulated to students or the general public, and any hardback book with a value or cost of $250 or more that is not circulated shall be recorded in the state's financial system as property for inventory purposes. For the purpose of this rule chapter, “cost” is used if the property is purchased and represents the purchase price of the property item; “value” is used if the property is donated and represents the fair market value of the property item at the date of donation.

    Specific Authority 273.02, 273.025 FS. Law Implemented 273.01, 273.02, 273.025 FS. History–New_________.

     

    69I-72.003 Recording of Property.

    (1) Maintenance of Property Records – Custodians shall maintain adequate records of property in their custody. The records shall contain at a minimum, the information required by these rules.

    (2) Individual Records Required for Each Property Item – Each item of property shall be accounted for in a separate property record. Related individual items which constitute a single functional system may be designated as a property group item.  A property group item may be accounted for in one record if the component items are separately identified within the record. Examples of property items subject to group accountability include, but are not limited to: modular furniture, computer components, book sets and similar associations of items. All property group items, the total value or cost which is equal to or greater than $1,000, shall be inventoried under these rules.

    (3) Content of Individual Property Records – Each property record shall include the following information:

    (a) Identification number.

    (b) Description of item or items.

    (c) Physical location (the city, county, address or building name and room number therein).

    (d) Name of custodian or custodian’s delegate with assigned responsibility for the item.

    (e) Class Code.

    (f) In the case of a property group, the number and description of the component items comprising the group.

    (g) Name, make or manufacturer, if applicable.

    (h) Year and/or model(s), if applicable.

    (i) Manufacturer’s serial number(s), if any, and if an automobile, vehicle identification number (VIN) and title certificate number, if applicable.

    (j) Date acquired.

    (k) Cost or value at the date of acquisition for the item or the identified component parts thereof. When the historical cost of the purchased property is not practicably determinable, the estimated historical cost of the item shall be determined by appropriate methods and recorded. Estimated historical costs shall be so identified in the record and the basis of determination established in the custodian’s public records. The basis of valuation for property items constructed by custodian personnel shall be the costs of material, direct labor and overhead costs identifiable to the project. Donated items, including federal surplus tangible personal property, shall be valued at fair market value at the date of acquisition. Regardless of acquisition method, the cost or value of a property item shall include ancillary charges necessary to place the asset into its intended location and condition for use. Ancillary charges include expenditures that are directly attributable to asset acquisition and placing the asset in service, such as freight and transportation charges, site preparation costs, and professional fees.

    (l) Method of acquisition and, for purchased items, the statewide document (voucher) number obtained from the State’s financial system.

    (m) Date the item was last physically inventoried and the condition of the item at that date.

    (n) If certified as surplus, the information prescribed in Section 273.05(5), F.S.

    (o) If disposed of, the information prescribed in Rule 69I-72.005, F.A.C.

    (p) Any other information on the individual property record that the custodian may care to include.

    (4) Control Accounts – A custodian-wide control account showing the total cost or value of the custodian’s property shall be maintained. A custodian may keep additional control accounts for property to the extent deemed necessary for different funds and sub-funds. Control totals may not be established by periodically summarizing the costs or values recorded on the individual property records. Rather, entries to control accounts shall be derived from documents evidencing transactions resulting from the acquisition, transfer, or disposition of property items and shall be posted contemporaneously with entries to the individual property records.

    (5) Depreciation shall be recorded to meet financial reporting requirements relating to depreciation accounting. However, depreciation shall not be recorded on the individual property records or in control accounts in such a manner as to reduce the recorded acquisition cost or value (i.e., depreciation shall be recorded as an item separate from the acquisition cost).

    Specific Authority 273.02, 273.025, 273.055 FS. Law Implemented 273.02, 273.025, 273.04, 273.055 FS. History–New_________.

     

    69I-72.004 Marking of Property.

    (1) Marking of Property – Each property item shall be permanently marked with the identification number assigned to that item to establish its identity and ownership by the custodian holding title to the item. The marking shall visually display the property identification number of the item and may include an electronic scanning code (“barcode”) to facilitate electronic inventory procedures.

    (2) Exemptions for Marking Property – Any item of property whose value or utility would be significantly impaired by the attachment or inscription of the property identification number is exempt from the requirement for physical marking. However, the custodian’s property records shall contain sufficient descriptive data to permit positive identification of such items.

    (3) Location of Marking – Items with the same class code shall be marked in a similar manner to facilitate identification. In determining a marking location, careful consideration shall be given to the intended use of the items; the probability that the marking could be obliterated by wear, vandalism or routine maintenance functions; and, the appropriateness of the marking method chosen. Additionally, the location of the marking and the marking method chosen shall not mar the appearance of the item. When utilizing an electronic scanning format system, electronic codes shall be placed on property in the same manner as other markings specified in this section.

    Specific Authority 273.02 FS. Law Implemented 273.02 FS. History– New_________.

     

    69I-72.005 Disposition of Property.

    (1) Methods of Disposition – Property within the meaning of these rules may be lawfully disposed of as provided in Sections 273.04, 273.05 and 273.055, F.S.  Property assigned to a custodian or a custodian’s delegate which is not accounted for during regular or special inventories shall be subject to the rules regarding unaccounted for property (See subsection 69I-72.006(7), F.A.C.).

    (2) Required Information – The following information shall be recorded on the individual property record for each item lawfully disposed of pursuant to Section 273.04, 273.05 or 273.055, F.S.:

    (a) Date of disposition.

    (b) Authority of disposition (custodian certification as surplus property, agency resolution, etc., as appropriate).

    (c) Manner of disposition (sold, donated, transferred, cannibalized, scrapped, destroyed, traded).

    (d) Identity of the employee(s) witnessing the disposition, if cannibalized, scrapped or destroyed.

    (e) For items disposed of, a notation identifying any related transactions (such as receipt for sale of the item, insurance recovery, trade-in).

    (f) For property certified as surplus, reference to documentation evidencing that such property was disposed of in the manner prescribed by Section 273.055(3), F.S.

    (3) Transfer of Property Records – The individual property record for each item lawfully disposed of as described in this rule shall be, upon disposition of the item, transferred to a disposed property file.  Destruction of such records shall be governed by the provisions of Chapter 119, F.S.

    (4) Control Account – The cost or value of items lawfully disposed of shall be removed from the control account at the time of disposition.

    Specific Authority 273.02, 273.025, 273.055 FS. Law Implemented 273.02, 273.025, 273.04, 273.05, 273.055 FS. History–New_______.

     

    69I-72.006 Inventory of Property.

    (1) Physical Inventory Required – Each custodian shall ensure that a complete physical inventory of all property is taken at least once each fiscal year.  Each custodian shall ensure that a complete physical inventory of all property under the control of the custodian or custodian’s delegate is taken whenever there is a change of custodian or custodian’s delegate.

    (2) Inventory Forms – The form used to record the physical inventory shall be at the discretion of the custodian.  However, the form shall display, at a minimum, for each property item the following information:

    (a) Date of the current inventory.

    (b) Name and signature of the person who conducted the current inventory.

    (c) Identification number.

    (d) Existence of item (or indication that the item was not located).

    (e) Description of the item or items.

    (f) Present condition of the item or items.

    (g) Physical location (the city, county, address or building name and room number therein).

    (h) The name of the custodian or the custodian's delegate with assigned responsibility for the item.

    (i) State standard class code.

    (j) In the case of a property group, the number and description of the component items comprising the group.

    (k) Name, make or manufacturer, if applicable.

    (l) Year and/or model(s), if applicable.

    (m) Manufacturer’s serial number(s), if any, and if an automobile, vehicle identification number (VIN) and title certificate number, if applicable.

    (n) Date acquired.

    (3) Unrecorded Property – Any property item found during the conduct of an inventory which meets the requirements for accounting and control as defined in Rule 69I-72.002, F.A.C., and which item is not included on the inventory forms described above, shall have an inventory form created for the item when located. After appropriate investigation to establish the ownership of the item, it shall be added to the custodian's property records or, if ownership cannot be reasonably established, the item may be disposed of as surplus property pursuant to Section 273.05, F.S.

    (4) Custodian’s Delegate Shall Not Inventory Certain Items – The custodian's delegate shall not personally inventory items for which they are responsible.

    (5) Property Assigned to Other Custodians – In some instances, it may not be cost effective to make a physical inventory of property that has been temporarily assigned to another custodian at an offsite location.  In such instances, the custodian’s delegate may, in lieu of a physical inventory, obtain a certified statement from the other custodian’s delegate attesting to the existence and condition of the property.

    (6) Reconciliation of Inventory to Property Records – Upon completion of a physical inventory:

    (a) The data listed on the inventory forms shall be compared with the individual property records.  Noted differences such as location, condition, and custodian's delegate shall be investigated and corrected as appropriate or, alternatively, the item shall be relocated to its assigned location and custodian or custodian’s delegate shown in the individual property record.

    (b) Items not located during the inventory process shall be promptly reported to the custodian or the custodian's designee (who shall be an individual other than the custodian's delegate responsible for the unaccounted for property) and the custodian shall cause a thorough investigation to be made. If the investigation determines that the item was stolen, the individual property record shall be so noted and a report filed with the appropriate law enforcement agency describing the missing item and the circumstances surrounding its disappearance.

    (7) Unaccounted for Property – For items identified as unaccounted for, recording the items as dispositions or otherwise removing the items from the property records shall be subject to approval of the State’s Chief Financial Officer as provided in Section 17.04, F.S., and Rule 69I-21.002, F.A.C.

    Specific Authority 273.02 FS. Law Implemented 273.02 FS. History– New_________.

     

    69I-72.007 Capitalization of Property.

    For statewide financial reporting purposes, all tangible personal property with a value or cost of $1,000 or more and having a projected useful life of one year or more must be capitalized. Any hardback book with a value or cost of $25 or more and having a useful life of one year or more that is circulated to students or the general public, and any hardback book with a value or cost of $250 or more that is not circulated must be capitalized.

    Specific Authority 273.025 FS. Law Implemented 273.025 FS. History–New_________.