FACILITIES PROJECT FUNDING AND CAPITALIZATION POLICY

Transcription

1 FACILITIES PROJECT FUNDING AND CAPITALIZATION POLICY PURPOSE The purpose of this policy is to provide guidance and standardization in the funding of Facilities Projects and for proper accounting of capital expenditures incurred during the course of a Facilities Project. POLICY STATEMENT The University of Texas MD Anderson Cancer Center (MD Anderson) will maintain materially correct accounting records for all Facilities Projects in accordance with the regulations prescribed by the Texas Comptroller of Public Accounts and State Property Accounting (SPA), and Board of Regents of The University of Texas System. SCOPE This policy applies to all faculty, trainees/students, and other members of MD Anderson s workforce and all projects managed by The University of Texas System Office of Facilities, Planning, and Construction (OFPC) or locally managed by the MD Anderson offices of Facilities Management Division regardless of total cost and job duration. TARGET AUDIENCE The target audience for this policy includes, but is not limited to, faculty, trainees/students, and other members of MD Anderson s workforce involved in Facilities Projects. DEFINITIONS Facilities Project: The construction of or improvement to a capital (financial) asset, generally a building, or repair and maintenance to a capital asset. Infrastructure: A long-lived capital asset that is stationary in nature and typically preserved longer than most capital assets. It is generally linear and continuous, and provides an underlying foundation or framework for the physical operation of the institution and its buildings and facilities. The capitalization Threshold for Infrastructure is $500,000. (See the Asset Management Capital Asset Manual.) Major Project (Board of Regents): Any project that meets one or more of the following criteria: New construction with a value of at least $4 million; Repair and rehabilitation projects with a value of at least $4 million; Any project determined by the Board to be architecturally or historically significant; Any project that is debt financed regardless of dollar value except those projects appropriated through the LERR budget; and Page 1 of 5

2 Any campus planning efforts that are intended to result in a capital project meeting one or more of these criteria. Threshold: The minimum dollar value of a project that establishes the requirement to make a capital or non-capital decision. PROCEDURE 1.0 Threshold The institutional Threshold for capital project review and decision requirements is $100, Project Cost The total project cost should include all expenditures associated with the construction, build out, and functional requirements to bring the project into service including, but not limited to, capital equipment, minor equipment, furniture, telecommunications, and computing hardware. 3.0 Repair and Maintenance Projects and Projects Less Than $20, Repair and Maintenance Projects are operating costs and expensed as incurred. 3.2 A Facilities Project with a total project cost less than $20,000 is considered an operating project and will be expensed as incurred. 3.3 Project work will be funded and completed within the Facilities operating expense budget. 4.0 Projects Between $20,000 and $100, A Facilities Project with a total project cost between $20,000 and $100,000 is considered an operating project and will be expensed as incurred. 4.2 Project work related to a clinical or research area will be funded and completed within the appropriate Operating Project Budget of the Executive Vice President, the Provost and Executive Vice President, or the Executive Vice President & Physician-in-Chief. 4.3 Project work related to repair and maintenance would be funded and completed within the Facilities Repair and Maintenance Operating Budget. 4.4 The scope and nature of the work will determine if the project is a capital or non-capital project. General Accounting is responsible for reviewing the project and making this determination. 5.0 Projects Between $100,000 and $4,000,000 Not New Construction 5.1 A project will be capital if one or both of the following conditions are met: A. The project changes the primary function of the area or improves its safety. B. The project materially extends the useful life of the building or improves the efficiency of the building system or equipment being replaced. 5.2 When a project meets the capital criteria, the Long Term Capital Plan (LTCP) will fund the project. A funding source (Fund Group 20 Chartfield) will be established to account for all project-related expenditures. Page 2 of 5

3 5.3 A non-capital project will be considered an operating expense. Therefore, funding and completion of a clinical or research project will be within the appropriate Operating Project Budget of the Executive Vice President, the Provost and Executive Vice President, or the Executive Vice President & Physician-in-Chief. 5.4 Project work related to repair and maintenance would be funded and completed within the Facilities Repair and Maintenance Operating Budget. 6.0 Major Projects 6.1 The funding for Major Projects is completed through a Capital Planning & Management process and in accordance with the rules established by the Board of Regents of The University of Texas System and the Texas Higher Education Coordinating Board. 6.2 A funding source or multiple sources will be established to account for all Major Project expenditures. Major Projects will be capitalized. 7.0 Notification for Asset Capitalization from a Project 7.1 The asset from a project will be capitalized at the time of the first move-in by the intended occupants as defined by Step 6b of the Facilities Project Management Delivery process. Or, if the project does not include a move, capitalization occurs when General Accounting receives the project close out. 7.2 It is the responsibility of Facilities to provide the notification of capitalization to General Accounting. 8.0 Project Closure 8.1 The funding source for a capital project will be closed upon project closeout notification when Step 7 of the Facilities Project Management Delivery process is completed. 8.2 It is the responsibility of Facilities to provide the closure notification to General Accounting. 9.0 Project Monitoring And Reporting 9.1 Quarterly reports for all Fund Group 20 projects with no Accounts Payable activity for the past 90 days is prepared by General Accounting and reviewed by Facilities for building and renovation projects. 9.2 These quarterly reports will serve as a monitoring function to ensure that all Fund Group 20 projects remain current, and that capitalization and project closures stay current and are administered in a timely fashion according to the policy. 9.3 Projects that have had no activity for three months will be considered for capitalization and closure, and exceptions will be noted via to General Accounting Page 3 of 5

4 ATTACHMENTS / LINKS Asset Management Capital Asset Manual (Attachment # ATT0260). RELATED POLICIES Asset Management Capital Asset Policy (UTMDACC Institutional Policy # ADM0110). Construction and Remodeling Policy (UTMDACC Institutional Policy # ADM0236). JOINT COMMISSION STANDARDS / NATIONAL PATIENT SAFETY GOALS None. OTHER RELATED ACCREDITATION / REGULATORY STANDARDS None. REFERENCES State Property Accounting (SPA) Process Users Guide. Texas Government Code Chapter Page 4 of 5

5 POLICY APPROVAL Approved With Revisions Date: 12/31/2013 Approved Without Revisions Date: Implementation Date: 12/31/2013 Version: 22.0 RESPONSIBLE DEPARTMENT(S) Office of the CFO, Facilities Management Page 5 of 5