Revision/Update Information: September, 2009
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This document is a user's guide for the Equipment Inventory System (EIS). This manual is only intended for the explanation an use of the EIS software as produced by the Ohio Department of Education. It is not intended to give any financial or legal information. Please refer to your CPA, attorney, or other qualified professional for financial and legal advice.
The User's Guide is intended for those who are unfamiliar with the system and need a place to start. In general this guide presents an overview and the theory of the EIS fixed asset management system rather than specific details and sample runs of programs. It also contains some of the more advanced subjects which are more topically oriented.
This manual is intended for both beginning and experienced users of the Equipment Inventory System (EIS) and for those who are responsible for financial reporting under GAAP.
EIS Reference Manual
Fixed Asset Manual for Ohio Local Governments
Office of the Auditor of State
Available from Ohio Department of Education, State Software Dev. Team.
EIS Tutorial, SSDT
Available from Ohio Department of Education, State Software Dev. Team.
The equipment inventory subsystem (EIS) is one part of the school asset accounting system which is used for maintaining an inventory of fixed assets and producing reports.
The State of Ohio Auditor's Office defines a fixed asset management system "as a system of methods, policies and procedures which address the acquisition, use, control, protection, maintenance and disposal of assets."
A fixed asset is defined as a financial resource meeting all of the following criteria:
Many Ohio school districts are now in the process of implementing a fixed asset management system because of the State mandate to begin using generally accepted accounting principles (GAAP) for annual financial reporting. The reporting of fixed assets is one facet of the financial report. Implementing a fixed asset management system 12 - 18 months in advance of GAAP reporting is essential in order to provide the needed financial data.
The schedule for school districts to convert their financial statements to conform with generally accepted accounting principles follows. Once a district has been required to prepare a report in accordance with GAAP, it must continue to prepare GAAP financial statements for all future years regardless of its budgeted revenues.
Each school district which has budgeted revenues exceeding the amounts listed below, as established by administrative rule 117-2-01 of the Ohio Administrative Code, will prepare its first set of GAAP financial statements for the year indicated.
$100 million for any fiscal year ending on or after June 30, 1988;
$20 million . . . June 30, 1991;
$10 million . . . June 30, 1992;
$7 million . . . June 30, 1993;
$5 million . . . June 30, 1994;
$3 million . . . June 30, 1995;
All school districts . . . June 30, 1996.
There are other good reasons why a district would want to implement a fixed asset management system even if GAAP reporting was not required.
Insurable Values - complete fixed asset identification and evaluation may prevent the local district from being over or under insured.
Control and Accountability - the fixed asset system can be used to maintain information regarding the location, responsible party and condition of public property. The system permits loss, theft, or damage to property to be more easily identified.
Accounting for Depreciation - depreciation of fixed assets is necessary to determine total expenses, net income, and changes in fund equity of income producing enterprises (such as cafeterias).
Maintenance Scheduling and Cost Analysis - by maintaining records of maintenance costs and frequency of necessary repairs, decisions relating to major overhauls or replacement can be made. The district may move from emergency maintenance to preventive maintenance.
Preparation of Capital and Operating Budgets - fixed asset information regarding asset condition, scheduled maintenance, useful life and repair costs permits the local district to better prepare long-term capital budgets, make informed repair or replacement decisions, and generate reasonable estimates of maintenance and repair costs for the current operating budget.
1.2 The Planning Stage
Good planning is critical to reaching the goals of implementing a fixed
asset accounting system and being prepared for GAAP reporting. It is
the responsibility of the entire school administration, not just the
treasurer.
1.2.1 Establishing Board Policies and Procedures
In order to begin the planning process the District Board needs to establish policies and procedures and distribute the responsibilities.
A good reference is the following excerpted version of the manual
prepared by the Office of Thomas E. Ferguson, Auditor of State.
FIXED ASSET MANUAL FOR OHIO LOCAL GOVERNMENTS, obtainable from
the Office of the Auditor of the State of Ohio.
The District Board needs to address each of the following issues. They may get assistance from the district treasurer, a representative from an appraisal company, and/or a C.P.A.
CAPITALIZATION LIMITS
Capitalization limits determine what items will appear on the GAAP schedules. Both dollar and useful life thresholds can be set. The Board needs to decide values for these. Any item with a dollar cost or useful life less than the threshold will not be capitalized. With a higher dollar, fewer items will be capitalized. With a lower dollar value, more items will be capitalized. Districts generally find a middle ground.
CONTROLLED ITEMS
These are items which are inventoried and reported on the system as fixed assets but which do not meet the capitalization criteria. However, the district may want to maintain information for insurance purposes and/or to help prevent loss or theft of such items. The Board needs to determine what types of items to include.
PERCENT FOR FOUNDATIONS
A certain percent of the original cost of buildings can be assigned to the foundation in order to exclude building foundations on the Insurable Values Reports. The district's insurance company needs to be contacted to obtain this percent.
TRANSFER AND DISPOSITION OF ASSETS
The Board needs to decide if the transfer of assets from one location to another is permitted, and if so, under what conditions, with whose approval, and what report forms to use. Similar decisions should be made for the disposing of a fixed asset; who is responsible, under what conditions, who must provide prior approval, and what forms are required.
CAPITAL LEASES
The Board should set policy to determine whether or not operating leases should be maintained on the system. Capital leases are maintained on the system if they meet the capitalization limits.
TAKING AN INVENTORY
The Board must decide whether or not to hire an appraisal company to do an initial inventory and what specific information it wants to gather and in what form. Careful planning at this point is critical in order to get maximum benefit. See Section 1.2.2, Working with an Appraisal Company for more details.
TAGGING ITEMS
The Board should decide whether or not to tag items, and if so, whether or not to have an appraisal company do it as they inventory. See Section 1.2.3, Tagging for more details.
ORGANIZATIONAL UNIT IN CHARGE
At some point the Board must decide which organizational unit will be responsible for which items. This could be classroom teachers and/or various staff persons.
LOCALLY DEFINED CODES
The EIS software requires the use of a number of codes. Some of these are set by the Ohio Department of Education. However, others are to be defined locally by the school district. These include the following:
Item Categories.
Asset Classes.
Item Condition Codes.
Disposition Codes.
Function/Activity Codes.
Fund Codes.
Location Codes.
Organizational/Department Unit Codes.
Please see Chapter 3, Maintaining Item Information for more details on establishing the locally defined codes. The programs used for entering these codes are discussed in detail in the EIS Reference Manual.
PROCEDURES
Once policies have been established, procedures must be defined in order to insure that each policy is implemented. For example, if policies regarding the transfer of assets from one location to another state that the approval of the area supervisor must be obtained and that the treasurer's office must be notified, then a form should be designed and circulated to record the approval and the notification.
TIME LINE FOR STARTUP
The following diagram gives the time outline in order for a district to be prepared for GAAP reporting with a minimum of discomfort.
| Pre-GAAP Period |
+_______+_______+______+____+___________+_________+______+_____________+
18 | | | 12 | 6 | July 1
mos. | | | mos. | mos. | Begin GAAP
prior | | | prior | prior | Reporting
| | | | | Fiscal Yr.
| Establish | Receive and Update EIS
| Coding | Load Inventory Information
| Structures | Tape from on Files
| | Appraisal Co.
Establish On-Site
Board Inventory by
Policies Appraisal Co.
|
Many districts choose to hire an appraisal company to do the initial inventory and generate a tape which can be loaded into the EIS system. An appraisal company can do a variety of things for a district depending on their needs, and how much they wish to spend. The options are: doing an inventory, an appraisal, tagging, or a mixture of these. An inventory/appraisal should be taken 12-18 months before starting the first GAAP fiscal year since it will take 6 - 8 months to get the tape.
It is CRITICAL that the district have their local codes in place so that the appraisal company will provide the data in a format that can easily be entered on the system. It is recommended that representatives of the district and the appraisal company meet before the inventory is taken to agree on coding schemes. A program called EISIX will automatically enter data from an appraisal tape into many of the fields on an item record on the system or will create new item records. The appraisal company needs to be provided with file specifications in order for EISIX to work properly. New districts need to work closely with an appraisal company in setting up the locally defined codes. Failure to do so will only result in frustration and additional work for the district.
There is still considerable work the district must do to start up on EIS even with the use of an appraisal company. Some of the codes, such as asset class, fund, and function/activity may have to be entered manually for each item on the system.
Some districts will want to continue a relationship with an appraisal company where every year or so they send a tape to the company. The company will make updates on such fields as life expectancy, salvage value, replacement cost, insurable value, and send the tape back. The data from this tape can automatically be entered into the desired fields of current records on the system and/or new records will be added. Other districts prefer to make all the updates themselves and if necessary consult with an insurance company to obtain new insurable values and replacement costs for categories of items.
The following is a summary of the steps to be followed in using an appraisal company:
If a district already has inventory on file, it is critical that an appraisal company use any tag numbers that already exist for these items. |
Location Worksheets
In order to facilitate the work of an appraisal company if items are already on the system, or to assist in verification of items at a given location, you may want to use location worksheets. These are generated as a report listing all items at each location.
To obtain these worksheets either type:
$ RUN OECN$EIS:EISRPT |
at the $ prompt and select option EIS302 or from the menu system type:
Menu>EIS Menu>EISRPT |
and select option EIS302.
1.2.3 Tagging
In most cases districts will choose to use some kind of physical tag for fixed assets maintained on the EIS system. This is very useful for locating items for inventory purposes as well as for maintaining control of smaller items which are more susceptible to loss or theft. It is critical that the tags are sturdy and not easily removed. Insurance companies are very receptive to the idea of tagging and maintaining inventory lists. So much so that this practice should lower the district's insurance costs.
One of the Board policies should address the issue of who should do the tagging and when. Should the district start tagging before an inventory is taken, have the appraisal company do it as they take the inventory, or wait until after the inventory? Policies should be established to determine where the tags should be placed. Failure to do this can cause multiple tags to be placed on a single item. It will also reduce the amount of time required for physical inventories. Having the appraisal company do the physical tagging is very convenient, but will add to the cost. Also, the policy needs to state who will issue the tag numbers and who will do the physical tagging as new items are entered on the system.
For some items you will need to use fictitious tags. Examples are: buildings, certain types of construction, possibly textbooks and library materials if the district wishes to track them. This permits the items to be maintained on the system even though a physical tag makes no sense.
In some cases it makes sense to consider a group of similar items as a unit or "lot" and to use one tag for the entire lot. This should be addressed ahead of time, possibly in Board policies. An example might be all of the student desks or chairs in a given classroom. The EIS software allows you to keep lots by simply using one tag number and entering the actual number of items in the lot. The software also allows you to split a lot into two or more sub-lots in order to move some of the items to a different location or to dispose of part of a lot. The individual items in the lot generally do not have physical tags attached. If they did, they would all have the same tag number.
Generally you would maintain a set of items as a lot if the items:
Generally you would maintain a set of items as individually tagged items if the items:
1.3 Overview of the EIS System
For those just beginning with the EIS software it is helpful to have a
view of the entire system. You need to be aware of the function of each
of the following parts:
EIS/USAS interface
Creating locally defined codes
Using the item screen functions
Producing EIS reports.
See the EIS Reference manual for more detail on using the programs to perform the following functions and procedures.
EIS/USAS INTERFACE
By setting a flag in the USAS program USASDAT, purchase order information for fixed assets can automatically be transferred from the USAS invoice file to an EIS pending file. This file will continue to grow as purchase orders are processed using either of the USAS programs INPROC or APE. Then it is easy to add new fixed assets to the EIS files by using EIS programs which go directly to the pending file and bring over needed purchase order information. See Section 2.3, Interfacing with the Uniform School Accounting System (USAS), for more detail.
LOCALLY DEFINED CODES
Before any assets can be added to the item file it is necessary to have a set of locally defined codes in place. These are normally set up once by using the programs contained in EISMNT. These programs must be used to define the local codes and to modify them as required.
ITEM SCREEN FUNCTIONS
The programs contained in the collection EISSCN are the main working programs. These programs enable you to add items to the inventory file, to update information on these records, and to add and maintain transaction records which track when acquisitions are made, when items are disposed of, and when items are transferred from one class to another. These programs also allow you to browse the pending file or to split a collection (lot) of items with one tag number into subcollections.
EIS REPORTS
The EIS software can produce a wide variety of reports by using the programs continued in EISRPT. These will produce the schedules needed for the GAAP reporting, location worksheets, brief or full asset listings, pending file listing, insurance values report, lease asset listing, maintenance listing, book value report, etc.
The User's Guide will frequently refer to "GAAP reporting", a district being on "GAAP", or the "Pre-GAAP" period. The definitions of these terms follows:
| Term | Meaning |
|---|---|
| GAAP | Generally Accepted Accounting Principles |
| GAAP Reporting | Producing an annual general purpose financial statement which contains a balance sheet or producing a Comprehensive Annual Financial Report (CAFR) |
| Being on GAAP | This means that the district has started the period of GAAP reporting and the GAAP flag on the EISMNT/DATSCN record has been set to "Yes". Please see Section 2.1, Configuration Information, for more details. |
| Pre-GAAP Period | The period of time when the GAAP flag on the EISMNT/DATSCN record is set to "No" |
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