ASSET MANAGEMENT

PROCEDURE

THE MICO UNIVERSITY COLLEGE

1A Marescaux Road, Kingston 5

Office of Accountability: Office of the VP Administration

Office of Administrative Responsibility: ~ Accounts Department
~ Each and Every Department
Date Procedure Created: November, 2011
Date Procedure Approved by the Board:
Date of any Procedure Revision:

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 Table of Contents
A. Introduction .......................................................................................................................................................... 3
1. Purpose ............................................................................................................................................................. 3
2. Organisational Scope ........................................................................................................................................ 3
3. Definitions ......................................................................................................................................................... 3
4. Procedure Content............................................................................................................................................ 5
4.1 Budgeting for Capital Expenditure ............................................................................................................ 5
4.2 Recognition ............................................................................................................................................... 5
4.3 Measurement after recognition ................................................................................................................ 6
4.4 Depreciation.............................................................................................................................................. 8
4.5 Impairment of Assets ................................................................................................................................ 9
4.6 Physical Verification of Assets................................................................................................................... 9
4.7 Disposal of Assets.................................................................................................................................... 10
5. Legislative Compliance.................................................................................................................................... 11
6. References ...................................................................................................................................................... 11
B. Appendices ......................................................................................................................................................... 12
Appendix I – Asset Register Form ........................................................................................................................... 13
Appendix II – Asset Disposal Form .......................................................................................................................... 14

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 A. Introduction
Assets Management is a system of maintaining, upgrading and operating physical assets. It is also
part of Generally Accepted Accounting Principles. The University College therefore shall implement
procedures to ensure that it has a fair knowledge of its property and property locations and employ
accepted accounting principles to capitalize and depreciate its investment as necessary especially for
tax and insurance purposes.

1. Purpose
The purpose of this procedure is to ensure that the University College monitors, manages and
maintains its assets to provide the best possible service to its users.

2. Organisational Scope
These procedures are relevant to all of the University College’s property or assets and are applicable
to all staff members.

3. Definitions
For purposes of this procedure, unless otherwise stated, the following definitions shall apply:

Book Value: Is the cost of a plant asset minus the accumulated depreciation since the asset was
acquired. This net amount is not an indication of the asset's fair market value.

Capitalization Threshold: The value set for capital items that are to be depreciated.

Cost Model: Initial cost less accumulated depreciation and any accumulated impairment losses.

Computing Equipment: Include servers, printers, scanners, and plotters. (Note purchasing of small
non-networked printers for individual machines is discouraged. Where such
printers are required, the IT Department will assess the need in the area, and
attempt to install a networked printer which will service the area and which
IT Department can support centrally).

Desktop Equipment: Includes all components of a personal computer unit and laptops i.e. the
monitor, base unit, mouse, mouse pad, keyboard, speakers, and the
standard application/operating software, cables and freight.

Specified Item: Is an asset that doesn’t meet the capitalisation criteria but is recorded as a
fixed asset through the asset register because it is prone to accidental or
deliberate loss due to its portability and attractiveness e.g. palm pilots,
videos, cameras, televisions and audio equipment.

Depreciation: Is a charge on a fixed asset to allocate the cost of the asset over the
estimated useful life of the asset. The depreciation charge for each period is
recognised as an operating expense and shall be charged to the budget
centre that holds the asset.
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 Fair Value: Is the amount for which an asset could be exchanged between
knowledgeable, willing parties in an arm’s length transaction. Where there
is no market based evidence of fair value (because of the specialised nature
of the asset) depreciated replacement cost may be used.

Repairs and Include costs incurred in the day-to-day servicing of an asset, including
Maintenance: labour, consumables, and the cost of small parts.

Recoverable Amount: Is the higher of an asset’s fair value less costs to sell and its value in use.
Value in use would usually be determined as the present value of future cash
flow projections.

Residual Value: Is the remaining value of an asset after it has been fully depreciated (the
(Salvage value) value at the end of the useful life of an asset).

Impairment of When the book value of an asset falls below its recoverable amount, the
an asset: asset is considered impaired.

Initial Cost: Includes the asset’s purchase price plus any costs directly attributable to
brining the asset to the location and condition necessary for it to be capable
of operating in the manner intended.

Useful Life: Is defined as the period over which an asset is expected to be available for
use by the University College. It is determined in relation to an entire asset
category, as opposed to an individual asset and after considering the
following factors; expected usage, physical wear and tear, technical or
commercial obsolescence, legal or other limits.

Disposal of Asset: Is the removal of an asset no longer needed by means of sale, write-off,
trade-in, transfer or donation.

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 4. Procedure Content
4.1 Budgeting for Capital Expenditure
a) All capital expenditure purchases must have an approved budget allocation before purchase can
take place (except for emergency purchases and externally funded assets).
b) The procurement guidelines as outlined in the GoJ’s Handbook Public sector Procurement
Procedures and The Mico University College Procurement Procedures shall be followed.
c) For Emergency procurement of Urgent Non-budgeted purchases:
- Approval shall be sought from the President or VP Administration or their Nominee
- Procedures as outlined in the GoJ’s Handbook Public Sector Procurement Procedures shall
be followed.

4.2 Recognition
4.2.1 Capitalisation Criteria

Action Responsible Officer

4.3.1.1. Classify all assets. VP Administration /
Any asset classed as a fixed asset and shall be recorded Bursar
on the University College’s Fixed Asset Register when it
meets all of the following criteria (Capitalization
Threshold):
The item -
i) Has an initial cost price greater than J$10,000.00
ii) Is Computing equipment
iii) Is Desktop equipment
iv) Is an Individual work of art
v) Is a piece of furniture and in particular antique
furniture
vi) Is equipment e.g. Air conditioners
vii) Is a “specified” items
viii) Has an estimated useful life greater than 1 year
ix) Has not been purchased with the intention of
resale.
4.3.1.2. For existing asset Bursar
Expenditure shall be capitalised if the expenditure was
incurred to improve the asset’s functionality e.g. repairs and
maintenance.
4.3.1.3. Spare parts may be capitalised where they meet the Bursar
capitalisation threshold and they are expected to be
used over more than one year.

Note: Expenditure splitting in order to get below the capitalisation threshold (J$10,000) is not
permitted.

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 4.3 Measurement after recognition
4.3.1 Details for the Asset Register
Each item on the Asset Register shall be assigned a Number, which shall be alpha-numeric, to
incorporate the location of the asset, the type of asset and an assigned numeral.

Action Responsible Officer

4.3.1.1. Establish an Asset Register : VP Administration
i) Record al assets (once it has been established that the
asset meets the criteria for recognition) on the
University’s Fixed Asset Register, using the form at
Appendix I
ii) Provide the Accounts Department with the list of items
identified on the Register, their description, Serial No.
Manufacturer, Location, Custodian and Asset Register
No.
iii) Identify whether or not the item is moveable e.g.
classroom chairs.
iv) Keep the Asset Register current, by periodic reviews.
v) Account for disposal of an asset as is necessary.
4.3.1.2. Complete the Asset Register by providing information on Bursar
purchase of the asset, the value, and depreciation.
4.3.1.3. Assign an Asset Register Custodian at each location that shall Head of Faculty /
have the responsibility of Department / or
i) Assisting with the formulation of the Asset Register for Appointee
that location
ii) Ensuring the maintenance of the Asset Register at that
location
4.3.1.4. Post at each location the Assets Register for that location. VP Administration
4.3.1.5. Ensure that the Assets Register has the requisite details of VP Administration /
each item which shall include but not limited to Asset Custodian for
i) Location details and identification number Location /
ii) Asset description with serial number, supplier and Bursar
manufacturer and asset identification number
iii) Purchasing details or details of value
iv) Cost of asset
v) Disposal information where necessary
4.3.1.6. For Accounting Purposes VP Administration /
Asset Custodian for
Measure items as:
Location /
i) Individual assets; or Bursar
ii) A collection of related items or components that
cannot operate in isolation, whose combined
original cost exceeds the threshold (refer
capitalisation threshold defined in section 4.2.1; or

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 iii) An accessory which is required for permanent
attachment to an existing capitalised asset. The cost
of the accessory is to be added to the existing asset
if it meets any of the capitalisation threshold; or
iv) Pooled assets of a similar type, whose combined
cost exceeds the capitalisation threshold. Items
whose individual value exceeds the threshold must
be separately detailed in the Fixed Asset Register
and cannot form part of a pool of assets.

4.3.2 Method of measurement

Action Responsible Officer

4.5.1 After initial recognition the University College shall: Bursar
- Choose the cost model of measurement or revaluation.
(The model shall be applied across the entire class of
asset and shall not differ among individual assets in a
class).
4.5.2 Conduct revaluation of classes of assets frequently to Bursar
determine if at balance date, the fair value of the asset
differs materially from the carrying amount.
4.5.3 The approved methods of measurement by class of asset
are:

Asset Class Model of Cycle

Measurement
Infrastructure Assets Revaluation Every 4 years
Computing Equipment
IT Software Cost
Furniture & Equipment
Library Collections
Musical equipment
Vehicles Cost
Works of art, classical antiquities, Revaluation Every 10 years
heritage collection, museum artefacts

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 4.4 Depreciation
Action Responsible Officer
4.4.1 Charge depreciation on an item in each period to the budget Bursar
centre that holds the asset. (The depreciation amount of an
asset is the initial cost or revalued cost less the residual
value).
4.4.2 Review this estimate at the end of each financial year and Bursar
note change in the accounts
4.4.3 Review the depreciation method and rates annually to Bursar
ensure they remain appropriate.
(The depreciation method used reflects the pattern in
which the assets future economic benefits are expected
to be consumed by the University College).
4.4.4 Depreciate assets purchased solely for specific projects over Bursar
the life of the project. Where the asset is not depreciated of
the life of the project the budget centre owning the project
shall bear the residual depreciation).
4.4.5 Leasehold improvements are depreciated over the Bursar
shorter of the unexpired period of the lease and the
estimated useful life of the assets.
4.4.6 Depreciation methods and rates used by the University
College are:

Asset Class Cycle

Infrastructure Assets 5 – 40 years (under advice
from independent valuer)

Computing Equipment 3 – 5 years

IT Software Cost 3 – 5 years

Furniture &Equipment Cost 3 – 15 years

Library Collections Costs 3 – 10 years

Musical equipment Cost 5 - 13 years

Vehicles Cost 5 years

Works of art, classical antiquities, heritage Not depreciated due to the

heritage nature of the asset.
collection, museum artefacts Cost

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 4.5 Impairment of Assets
Action Responsible Officer
4.6.1 Non-revalued Assets Bursar
Recognise any impairment loss immediately in the Financial
Statement.
4.6.2 Revalued Assets Bursar
Recognise any impairment loss directly against any
revaluation reserve to the extent that the impairment loss
does not exceed the amount in the revaluation of that asset.
4.6.3 Review the book values of all property, plant and equipment Bursar.
on an annual basis.

4.6 Physical Verification of Assets

The objective of physical verification is to maintain the integrity of the University’s Asset Register
by:
i) Ensuring that all the assets held are recorded in the register;
ii) Verifying that all assets in the register have been physically located and are still functional
and in use; and
iii) Updating the register for unrecorded changes in asset ownership, responsibility or
location.
Action Responsible Officer
4.7.1 Ensure that all items, inclusive of assets and specified items, All Staff
the property of the Mico University College and especially
those itemized on the Asset List remain the property of the
University College in the location identified.
4.7.2 Undertake verification of all the assets and specified items, VP Administration /
before the budget period, to include: Asset Custodian for
i) Annual physical verification of assets with net book Location /
value/cost overJ$275,000.00; Bursar
ii) Biannual physical verification of assets with net
book value/cost between J$50,000 and
J$274,999.99;
iii) Tri-annual verification of assets with net book
value/cost between J$10,000 and J$49,999.99;
iv) Immaterial asset below J$10,000 will not be
subject to asset verification.

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 4.7 Disposal of Assets
The University College shall be required to obtain the consent of the Ministry of Education to dispose
of, or sell assets where the value of those assets exceeds an amount determined by the Ministry of
Education.
However, below this threshold items shall be disposed of in the following manner:
Action Responsible Officer
4.7.1 a) Determine the method of Disposal of the Asset i.e. Asset Custodian at
i) Sale Location
ii) Trade-in
iii) Write-off
iv) Internal Transfer
v) Donation
vi) Any other disposal method
b) Make recommendation to the Dean of the Faculty
or the Head of Department.
4.7.2 a) Determine the reason for the write-off, therefore Asset Custodian at
whether an asset is: : Location
i) Stolen; or
ii) Lost; or
iii) Obsolete; or
iv) Converted to components; or
v) Un-repairable; or
vi) Uneconomical to repair; or
vii) Any other reason
b) Make recommendation to the Dean of the Faculty or
the Head of Department
4.7.3 Seek approval from the VP Administration to dispose of an Dean of Faculties / Heads
asset by completing the Asset Disposal Form supplying the of Department
necessary support documents. Asset Disposal Form
(Appendix II)
4.7.4 i) Grant approval as is necessary VP Administration
ii) Advise the Bursar that the asset should be removed
from the Fixed Asset Register, by submitted the
requisite approval.
4.7.5 Ensure that the Office of the VP Administration received the Dean of Faculties / Heads
asset to be disposed of. of Department
4.7.6 Undertake and make arrangements for the physical disposal VP Administration
of all assets except computing assets.
Where the asset is specialised or unique in some way ensure
that specialist advisers determine the best method of
disposal.

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 4.7.7 Dispose of all computing equipment that is to be disposed Head of the IT
of. All software and data stored on computers and servers Department
shall be fully deleted and cleaned before the asset is
disposed of.

5. Legislative Compliance
The University College shall comply with all the relevant laws, guidelines, rules, regulations and
procedures within a legislative framework, of the Laws of Jamaica.

6. References
a) Financial Administration and Audit Act
b) GoJ’s Handbook of Public Sector Procurement Procedures
c) The Mico’s Procurement Policy
d) The Mico’s Procurement Procedures
e) The Mico’s Investment Policy

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 B. Appendices

Appendix I – Asset Register Form

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Appendix II – Asset Disposal Form

The Mico University College

ASSET DISPOSAL FORM
Please read instructions overleaf to complete form
CONTACT DETAILS

NAME CONTACT PERSON

DEPARTMENT LOCATION ID
Telephone No. Email Address
DESCRIPTION OF ITEM
DESCRIPTION and/or
TYPE OF ITEM
Asset Register No.
Manufacturer: Serial No.
Year of Purchase Original Cost
DISPOSAL OF ITEM
TYPE OF DISPOSAL:
1. 2. 3. 4. 5.
 Sale  Trade-in  Wright-off  Donation  Internal Transfer
Date of Disposal
1. For Sale: Buyer’s Detail – Name:
Buyer’s Detail - Address:
Sale Value
2. For Trade-in: Entity’s Detail – Name:
Entity’s Detail - Address:
Appraised Value
Details of New Asset
3. For Write-offs - Reasons
 Stolen  Lost  Obsolete  Converted to components  Un-salvageable  Uneconomic to salvage
4. For Donations: Name of Entity
Rationale
5. For Internal Transfer: Details
(Location etc.)
For Assets Sold or Traded In – Details of Disposal Process (Advertising, Public auction, Tender etc.)

For Assets Not Sold (Write-offs) – Details of Disposal Method (Destroyed etc.)

Proposed By Signature: Date

Dean / HOD

Authorised By Signature: Date

President / VP Administration
Asset Register updated
in Accounts by Signature: Date
Bursar
Insurance Register updated
in Accounts by Signature: Date
Bursar

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 NOTES ON COMPLETION

The purpose of this Form is to provide as much information as possible regarding the asset to be disposed of, for updating the
University College’s Asset Register and Insurance Records.

Please read the following in its entirety before completing this Form.

1. APPROVALS - This Form must be signed by The President of the University

College or the VP Administration or their Nominee.

2. YOUR DETAILS - All fields must be completed.

3. DESCRIPTION OF ITEM - The Asset Register Number and full details of the item, as best
known, must be given.

4. DISPOSAL DETAILS - A description of the type of disposal proposed.

If “written-off”, under what circumstances

If sold or traded-in,
- details of the entity
- the value at which it was sold or traded-in
- details of the new asset
- details of the proceeds of sale and payment processing
If obsolete, manufacturers recommendation.
If donated details of the entity to receive the asset and a rationale as to
why that entity was chosen for the donation.

OTHER INFORMATION

To comply with the requirement for proper disposal, please ensure that all relevant waste electrical and electronic
equipment is separated from other wastes and is disposed of following all Health and Safety recommendations.

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