University of California, San Diego


July 1, 2004


SUBJECT:    New Equipment Threshold - Guidelines for Processing Purchase Transactions

A notice from Vice Chancellors Relyea and Attiyeh informed the campus community that the threshold for inventorial and capitalized equipment would increase from $1,500 to $5,000 effective July 1, 2004, based on new UC Office of the President (UCOP) direction. This notice is intended to inform the campus community of the processing and financial implications of this change.

Inventorial and capitalized equipment includes items owned by or in the custody of UCSD that:

- Are non-expendable (cannot be used up)
- Stand alone
- Have a normal useful life of one year or more
- Qualify as tangible personal property (can be appraised for value)
   with an acquisition cost of $5,000 or more

To ease the phase in of this new threshold, we are developing new processing procedures to ensure that purchases of items funded by extramural/sponsored funds and previously defined as inventorial equipment (unit value equal to or greater than $1,500) will not be assessed overhead through June 30, 2006. Effective July 1, 2006, indirect cost will be applied to equipment items with a unit value less than $5,000.

Additionally, UCOP Financial Management now requires that we capture more detailed financial information. Therefore, purchases of equipment items with a unit value equal to or greater than $1,500, but less than $5,000, regardless of fund source, will be recorded to a new set of expenditure account codes.

To achieve these two independent objectives, UCSD will continue to require that purchases of equipment items with a unit value of $1,500 or more be processed through the High Value Purchase Order process.

Following are the highlights of how we will implement the new process:

- New commodity codes and expenditure account codes will be established for equipment items with a unit value of $1,500 to $4,999, and will associate with processing rules that waive indirect cost through June 30, 2006

- Equipment with a unit value of $1,500 to $4,999 will not be captured and reported as inventorial equipment

- Revised commodity codes will be established for inventorial equipment items with a unit value of $5,000 and above

At this time, our Low Value processes (Express Card and Department Order) are not designed to ensure the above objectives are satisfied; therefore restricting the use of these procurement tools for items with a unit value of $1500 or more is necessary. Over the course of the next few months, we will analyze the various procurement methods to determine how we can allow processing of non-inventorial equipment items greater than $1,500 via the Low Value processes.

We will also work with Storehouse, Bookstore and Administrative Computing and Telecommunications to ensure their recharge activity complies with the financial requirements of these new guidelines.

Business and Financial Services units are collaborating to design and implement processing procedures and guidance to support these new requirements. We will finalize these guidelines and publish to the Campus via Blink by July 12, 2004.

Between July 1 and July 12, if equipment purchases meeting these new definitions are required, use the current High Value Purchase Requisition process. The professional buyers will ensure that the correct equipment expenditure or inventorial account code is assigned on the High Value Purchase Order.

We appreciate your patience and understanding as we approach the numerous complex issues that arise because of this policy change, and look forward to working together with the campus community to achieve a reasonable result.

Please consult http://blink.ucsd.edu/go/equipmentchange for more information. Further detailed information regarding transaction processing and accounting requirements will be included in this Blink page prior to July 12, 2004.

If you have questions, please contact one of the following individuals:

- Purchasing: Linda Collins, lcollins@ucsd.edu, x43082
- Disbursements: Alicia Cole, acole@ucsd.edu, x40541
- General Accounting: Julie Staffiero, jstaffiero@ucsd.edu, x44368
- OPAFS: Rachel Mercado, rmercado@ucsd.edu, x40058
- Equipment Management: Robert Forsythe, rforsythe@ucsd.edu, x46286

Linda Collins
Purchasing and Equipment Management