Purchasing equipment: Ensuring you select the correct purchasing category
When purchasing an equipment item, you will select one of the Equipment purchasing categories, which will assure the appropriate coding is put in. The natural account coding will be for one of the equipment-clearing codes, starting 10xxx depending on the item and purchasing category chosen this code should NEVER be amended. The idea behind ALL equipment, software, and vehicle purchases having a default coding to an Asset clearing account is so any potential assets can be tracked centrally. This includes Fixed Assets over £50k (University's Capitalisation Level) and Expense Assets over £25k (prior to the 1st April 2023 expense assets were recognised when they exceeded a cost of £10,000).
In order for us to pick up these potential assets, the PO has to be coded to an asset clearing account. When a PO is raised it creates no general ledger accounting, nothing is posted to your departmental accounts. When the PO is receipted it creates no general ledger accounting, nothing is posted to your departmental accounts. It is only when the invoice is processed and matched to the PO that the invoice has its accounting created and at this point entries are made to the General Ledger.
This then alerts the Fixed Asset team (Finance Division) to consider whether the item needs to be included in the Departmental Equipment Listing Process (DEL) as an expense asset or added as a fixed asset, or whether it fits neither criteria. The Fixed Asset team will treat it accordingly. If the item is under £50k there is a mapping within the interface between Accounts Payable and the General Ledger that will remap the expense from the asset clearing code to the correct expense code i.e. equipment will map from the PO natural account of 10107 to the general ledger expense code of 76110. This is all done automatically as and when the invoice gets accounted on the system. At no time does a posting occur in the General Ledger for entries under £50k that goes on the balance sheet to 10107. Coding is direct to 76110.
There isn’t a system control in place to stop the changing of the coding on the requisition from 10107 but if you do the invoice and its associated expense will not be picked up centrally as a possible asset addition so anything over £50k will not be capitalised and departmental equipment listings will not be up-to-date, which means insurance returns will be less informed and harder to compile and departments will not be compliant in asset stewardship to the required level.