Many of our PIs design and build models or stand-alone equipment as a part of a sponsored research project. When the end-product of this work has an estimated value of $5,000 or more, the completed item is assigned a property tag by CSU Property Management, and will ultimately be capitalized as an asset as long as it exceeds the $5,000 threshold for equipment. These items are known as fabricated equipment. At CSU, Work in Process accounts (or 88-funds) are designed to funnel all expenses related to the equipment fabrication, including personnel, materials, supplies and services. WIP accounts do not have indirect costs charged on accumulated expenses because the final product will be categorized as equipment, and is thus exempt from indirect costs.

At Proposal Stage – Kuali Research (KR)

To ensure that all of the pieces required to create the final product are accounted for in the budget, any line item related to the fabrication process will need to be assigned to the Object Code Name of “Equipment Fabrication – MTDC Exempt” in the KR budget module. Within the budget justification you will create a laundry list of non-academic personnel effort, associated fringe benefits, materials and supplies (literally nuts and bolts), activities and other services and their related costs, that feed into the fabrication process and will eventually become a single piece of equipment.

Note: Only the actual fabrication of equipment is free from indirect cost assessment. Design and development tasks are considered research and therefore not exempt from idc calculations. Allowable costs may include materials and supplies and shop or non-academic personnel labor (e.g., technicians). Software costs may only be included if the software is necessary for the equipment to function.

At Award Stage – Kuali Financial System (KFS)

Upon award, OSP will create an 88-fund that is attached to the original 53-fund created for the research project. Once work begins on the project, any expenditure coded as “Equipment Fabrication” will be tracked and the tally all of the labor, materials and other expenses directly related to the fabrication will post to the related 53-fund each month-end. No indirect costs will be assigned to these transactions because the final product will be considered “Equipment.”  The 88- fund will continue track these costs over the life of the project and the final total will reflect the full cost of the fabricated equipment that needs to be capitalized.

Note: An 88-fund is for fabricated equipment under a sponsored project whereas an 89-fund is for work in process not related to a sponsored activity.

Communication with Property Management

It is critical that Property Management be kept in the loop on the fabrication progress, and notified of any changes to the anticipated completion date or timeline. Property Management will need to inspect the final product and determine the appropriate property sticker that will be created and affixed to it. There have been issues in the past due to fabricated pieces “disappearing” (i.e., being incorporated into other models and/or equipment, moved to another location, or being destroyed or disassembled for other purposes before classified as an asset). These situations cause extensive accounting issues that must be avoided. Therefore, open and frequent communication with Property Management is the best way to ensure the proper financial outcome.

References and Contacts

The CSU Financial Procedure Instructions (FPI) 4-7 detail exactly what type of equipment constitutes “fabrication” and the steps needed to create a WIP account. It also contains a list of offices that may need to be involved.