Section 114-60.2 -- Accountability

1. All system-controlled property must be controlled in a property accountability system which has been approved by the Director, Office of Acquisition and Property Management (PAM). The acquisition cost of system-controlled property (including any installation, shipping, and set-up charges) will be recorded in a property accountability system. For items transferred, donated, found during inventory, etc., the fair market value at the time of receipt will be used to determine the acquisition cost. All system-controlled property must be assigned to an Accountable Officer immediately upon receipt regardless of the source of the property.
2. Museum property is personal property and must be controlled through accessioning and cataloging procedures found in 411 DM. Museum collections are generally not subject to depreciation and they are not recorded in a general ledger account.
3. All bureau-managed property must be managed in accordance with bureau/office established procedures.
4. Single pieces of furniture with an original acquisition cost less than the capitalization threshold shall be considered non-capitalized and non-expendable property.
5. All expendable property meeting the criteria listed below, with the exception of day to day administrative operating supplies (e.g., printer cartridges and copy paper) must be controlled:
6. 1. acquired in bulk quantity for future issue with an aggregate acquisition cost of $1500 or more per line item;
   2. having a total issued value per line item for three months of $3000 or more;
   3. Quantitative records must be maintained that record unit and total line item cost. Running balances for each line item must be computed and recorded each time a receipt, issue, or disposal occurs. Bureau/office systems to maintain these controls must be approved by the head of the bureau/office, or his/her designee;
   4. Exemptions to the dollar limitations may be granted by the head of the bureau/office, or his/her designee. Exemptions may only be made for offices having a very limited number of items meeting the controlled expendable property requirements, provided such items are not of a desirable nature for theft or personal conversion. A justification and approval must be prepared which documents the rationale for not formally controlling the items; or
   5. Expendable property not meeting the dollar limitation criteria listed above may be considered shelf stock, and need not be formally controlled.

114-60.201 -- Capitalization and Accountability Records

114-60.201-1 -- Accounting for Capitalized Property

Each bureau/office property accountability system must comply with the system requirements of the Joint Financial Management Improvement Program (JFMIP-SR-00-4) including the recording of financial accounting data relative to the item's acquisition, physical quantities of property on-hand, and property location. The records must also enable periodic independent verifications of accuracy of the accounting records through reviews, such as GAO and OIG audits, property management reviews and physical inventories.

Each bureau/office must establish and maintain a system of accounting for capitalized property in accordance with the requirements of this directive. All non-expendable property items acquired and held by a bureau /office with an acquisition cost at or above the approved bureau/office capitalization threshold will be considered capitalized property.

All capitalized personal property shall be depreciated based on the useful life of the item and salvage value, and begins upon receipt of the item. Transfers within Interior will maintain the same depreciation rate and useful life. Transfers from outside Interior and donations will be depreciated at the fair market value and the estimated remaining useful life at the time of receipt. Straight-line depreciation is the Departmental standard for depreciation.

114-60.201-2 -- Capitalization Threshold

All personal property with an original acquisition cost of $15,000 or more must be capitalized in the bureau/office finance system unless (a) the item has a useful life of less than two years, or (b) the item is intended for sale by the bureau/office. Betterments meeting, or exceeding, the capitalization threshold for personal property must be recorded as a separate item in the bureau/office property and financial records.

The capitalization threshold for internal use software is $100,000 per license. Internal use software, meeting the capitalization threshold, shall be recorded and tracked in the bureau/office property management system (See Financial Statement Guidance Memo No. 2001-001).

Specific exceptions for capitalization thresholds above $15,000 may be granted by the Office of Financial Management through the Office of Acquisition and Property Management with appropriate justification. Requests should be addressed to the Director, PAM, and shall include any information or supporting evidence which verifies that acceptable accountability records are being, and will be, maintained for all accountable property at, or below the proposed capitalization threshold. PAM will conduct a review of the bureau/office accountability system and record keeping to ensure that no compromise of accountability will occur if the request is granted; that detailed property item accountability and control will continue to exist; and that such a system will be in place prior to the raising of any capitalization threshold. Requests will be considered only for a bureau/office in its entirety, and will not be considered for a portion thereof.

114-60.201-3 -- General Ledger Account

Each bureau/office shall establish and maintain a system of general ledger accounts to properly account for all Government-owned, capitalized, personal property (including inventories of Government property held by non-Government entities). Property acquired through loan shall not be entered into the general ledger account. Property converted to ownership at the end of a lease period may be capitalized. (See Exhibit I)

The original acquisition cost of capitalized property acquired and disposed of shall be reflected in the general ledger account. Such adjustments to the general ledger account are to be made in the month the item is received or disposed. The cost of capitalized equipment must be charged to the appropriate equipment account from the receiving report document. If the assigned object class, or type of funds cited on the purchase order/receiving report is incorrect because of the determination of capitalization, the Property Administrator or designee must notify the appropriate finance office of the required change.

The general ledger account, together with the property accountability records, must provide a record of the acquisition and disposition of all capitalized property, as well as provide information needed for inventory control and management purposes. Summary totals in the general ledger accounts must be supported by detailed entries in the property accountability records.

The Subsidiary General Ledger Accounts for personal property are:

1750 Equipment
1759 Accumulated Depreciation on Equipment
1810 Assets Under Capital Lease
1819 Accumulated Depreciation on Assets Under Capital Lease
1820 Leasehold Improvements
1829 Accumulated Amortization on Leasehold Improvements
1830 Internal-Use Software
1832 Internal-Use Software in Development
1839 Accumulated Amortization on Internal-Use Software

114-60.201-4 -- Property Accountability Records

Each bureau/office must establish and maintain a system of detailed item accountability records that reflect its investment in system-controlled property. The records must contain all items of system-controlled property acquired by purchase, transfer, lease, loan of 6 months or more, authorized donation, or other means.

1. System-controlled property in the custody of the Government.

   Property accountability records must be established and maintained for all system-controlled property (see IPMD 114-60.500, Receipt of Property and Services). These records shall be subject to audit and all entries must be supported by valid acquisition and disposal documents. Records disposal is governed by established records retention requirements.

2. Capital leases.

   Capital leases are leases that transfer substantially all the benefits and risks of ownership to the lessee. If, at its inception, a lease meets one or more of the following four criteria, the lease should be classified as a capital lease by the lessee. Otherwise, it should be classified as an operating lease.

3. 1. The lease transfers ownership of the property to the lessee by the end of the lease term.
   2. The lease contains an option to purchase the leased property at a bargain price.
   3. The lease term is equal to or greater than 75 percent of the estimated economic life of the leased property.
   4. The present value of rental and other minimum lease payments, excluding that portion of the payments representing executory cost, equals or exceeds 90 percent of the fair value of the leased property.

The last two criteria are not applicable when the beginning of the lease term falls within the last 25 percent of the total estimated economic life of the leased property.

3. Accountable property in the custody of contractors, grantees, cooperators, concessionaires, or other non-Federal recipients.

   Accountability records must be established and maintained for all Government-owned property in the custody of a contractor, grantee, or other non-Federal recipient in accordance with the terms of any legal instrument. This property shall be subject to the same inventory, reconciliation and management controls as any other accountable property held by the bureau /office. The Government employee who is responsible for authorizing non-Federal use of Government property is responsible for transmitting information regarding such Government furnished property to the PMO.

   The Contracting/Grants Officers, or other authorizing official, will be responsible for the accomplishment of the physical inventories, and the reconciliation of any discrepancies revealed by such inventory, or for ensuring such inventories are accomplished in accordance with contractor/grantee's approved property system. Completed and certified inventories will be provided to the PMO by the Contracting/Grants Officer, or official who authorized such use. (See Federal Acquisition Regulation Part 45)

4. Transfers.
5. 1. Transfers without Reimbursement between Interior Entities. Personal property transferred without reimbursement to another Interior bureau/office will be recorded as a decrease to the asset and accumulated depreciation accounts of the transferring bureau/office and as an increase to the asset and accumulated depreciation accounts of the receiving bureau/office at the same amount.
   2. Transfers with Reimbursement between Interior Entities. Personal property transferred with reimbursement to another Interior bureau/office would generally be recorded on the receiving bureau/office's books at the amount of reimbursement to the transferor plus all associated incidental costs. However, such transfers must be reviewed with the Office of Financial Management and the auditors to ensure that the financial records of Interior as a whole are not affected.
   3. Transfers without Reimbursement between Interior and Another Federal Entity: In most cases, transfers of personal property between Federal entities occur without reimbursement to the transferor for the value of the asset. Incidental payments or costs associated with the transfer, including documentation, etc., are not considered reimbursement for the value of the asset. Transfers without reimbursement are recorded in Interior's accounts at the net book value of the transferor plus all associated incidental costs. If the transferor's net book value is not determinable, the estimated fair market value of the property plus all associated incidental costs should be recognized.

      The date the transferor originally acquired the personal property should be obtained for calculation of depreciation. If the original date of acquisition cannot be obtained, it shall be estimated in coordination with appropriate technical and property officials.

   4. Transfers with Reimbursement between Interior and Another Federal Entity: Personal property transferred to or from another Federal entity with reimbursement to that entity for the value of the property is recorded at the amount of reimbursement to the transferor plus all associated incidental costs. Incidental payments and costs associated with the transfer, including documentation, etc., are not considered reimbursement for the value of the asset, but are treated as a component of the costs.
6. Monthly reconciliation of accounts.

   The total value of capitalized property recorded in the property accountability records shall be compared with the related balances shown in the general ledger control account at least monthly. Property records must be integrated with or reconciled with the related general ledger account. Any differences disclosed as a result of this comparison shall be investigated to determine the cause of the differences and to identify necessary improvements in the process to prevent errors, losses or irregularities. All differences must also be adequately documented, reconciled and adjusted in accordance with sound accounting practices to bring the property accountability records and the general ledger account into complete agreement.

114-60.201-5 -- Property Records Retention and Disposal

The following General Records Schedules pertain to the retention or disposal of personal property records: General Records Schedule 3, Procurement, Supply, and Grant Records; General Records Schedule 4, Property Disposal Records; General Records Schedule 8, Stores, Plant, and Cost Accounting Records; and, General Records Schedule 10, Motor Vehicle Maintenance and Operation Records. Personal property records are to be retained, or disposed of, in accordance with these General Records Schedules. Bureaus/offices may retain records beyond the General Records Schedule requirements at their discretion.

114-60.202 -- Accountable Officers

1. Generally, the head of an organizational unit having jurisdiction over property should be designated as the Accountable Officer for such property, but more than one Accountable Officer may be appointed. For example, it may be appropriate for an organizational unit to have more than one Accountable Officer if the geographic jurisdiction is of such size as to preclude regular review and inspection of the property by one Accountable Officer. Multiple Accountable Officers should not be appointed solely to spread liability.
2. The Accountable Officer for Government property in the custody of contractors, grantees, concessionaires, cooperators,or other authorized non-Government entities, shall be the Contracting Officer, or other management official administering the contract, grant, or legal instrument which authorizes the custody of the Government Property.
3. Property accountability remains fixed until an Accountable Officer is relieved by one of the following:
4. 1. Transfer of accountability to another Accountable Officer within the bureau/office or Department;
   2. Transfer of excess property to another Government agency, eligible Indian Tribe, or other eligible recipient;
   3. Sale of property;
   4. Authorized condemnation, destruction, abandonment or donation;
   5. Board of Survey determination;
   6. Termination of lease or loan agreement.

114-60.203 -- Transfer of Accountability

When an Accountable Officer is to be relieved of accountability, the outgoing Accountable Officer is responsible for conducting a physical inventory of the property for which he/she is responsible and accountable. Any shortages or overages must be reconciled prior to departure. The incoming Accountable Officer shall be required to formally accept full accountability and responsibility for all Government-owned, and leased or loaned property involved in the transfer of accountability.

In the event that the incoming Accountable Officer is not available at the time of the outgoing Accountable Officer's departure, accountability for the property will be transferred to an interim, acting, or other Accountable Officer. The designations of Custodial Officers, Receiving Officers, etc. made by the outgoing Accountable Officer may remain in effect until the new permanent Accountable Officer is designated.

114-60.204 -- Relief of Custody

When a Custodial Officer is relieved of responsibility for personal property, it is the responsibility of the Accountable Officer to ensure that property entrusted to that individual is accounted for. This may be done by either requiring a physical inventory for the Custodial Officer's property, or the Accountable Officer may require a written statement that all property entrusted to that person is accounted for. The latter method shifts responsibility for any shortages to the Accountable Officer.

114-60.205 -- Responsibility Records

1. System-controlled property. To assign the responsibility for system-controlled property, a receipt must be obtained when such property is issued to individuals or transferred from the custody of one individual to another. System-controlled property in the possession of each employee shall be recorded and tracked on a Receipt for Property, Form DI-105, or other approved form.
2. Common use items. Items in common use but not in the custody of any one cognizant employee should be assigned to a Custodial Officer, and the responsibility records may be annotated with the location. However, any employee having custody or use of Government-owned property, may be adjudged financially liable by a Survey Authority for its loss or damage whether or not the employee has signed a receipt for the property.
3. Expendable property. Responsibility records of the type prescribed in paragraph (a) of this section for system-controlled property are not required to be maintained for expendable property. Bureaus/offices must however, insure that appropriate safeguards and controls are established at the operating office level to guard against:
4. 1. Excessive losses,
   2. Excessive purchases or withdrawals when compared to program requirements, or
   3. Use of property for other than official purposes.

114-60.206 -- Property Clearance

Prior to separation, transfer, or reassignment an employeemust obtain a signed property clearance from Property Management and a physical inventory must be taken of all property in the employee's custody. When all property is satisfactorily accounted for, a property clearance shall be given. When an employee is separated or transferred out of the bureau/office, certification for final salary payment must be withheld until clearance is obtained.

114-60.207 -- Use of Government-owned Property Restricted to Official Purposes and the Use of Non-Government-owned Property

1. No officer or employee of the Department shall use or authorize the use of Government property for other than official purposes (see 18 U.S.C. 641).
2. Government-owned personal property may be furnished for use only when specific authority exists to do so, and then only within the scope, purpose, and limitations of the authority. Such authority may exist when the use of Government-owned property has been authorized within the written terms and conditions of a legally executed contract, grant, cooperative agreement, purchase order, or memorandum of understanding. The contracting/grants officer, or other authorized official for that legal instrument is the only official who can authorize the provision, acquisition, reimbursement, utilization or disposal of any Government property so involved.
3. Unauthorized use of Government property is prohibited. Property may not be used in or moved to an employee's residence or other property not leased or rented by the Government unless specific written authority is granted by the head of the bureau or office, or his/her designee. The written authority will indicate the period of time the employee is authorized such use, and specify the termination date of the authorization. Such authorization will be granted only in instances when the employee is required to use property for official uses in the performance of assigned duties. The provisions of this paragraph do not apply to field equipment used in the performance of authorized work.
4. Limited personal use of Government office equipment is allowable as long as the use occurs on non-duty time, does not interfere with official business, is not a commercial gain activity or is otherwise prohibited, and the expense to the Government is negligible. (See 410 DM 2, Limited Personal Use of Government Office Equipment and Library Collections)
5. The following provisions do not apply to property leased or rented by the Government:
6. 1. Non-Government-owned personal property shall not be installed in, affixed to, or otherwise made a part of any Government-owned personal or real property in a manner that makes the Government responsible for any loss or damage; or that has the potential to damage the Government-owned property involved; or subjects the Government to any copyright or license agreement violations. Specifically, no one may install software on Government-owned ADPE or use software for Government work inviolation of a license agreement or copyright.
   2. Employee-owned property may not be used in the performance of official duties, unless specific authority is granted by the head of the employing bureau/office, or designee. This policy is established to limit the possibility of tort claims against the Government in the case of accident or injury caused by or related to the use of non-Government-owned property.
6. Exceptions. The approval of the employee's supervisor is required before any non-Government-owned property can be installed in, affixed to, or otherwise made a part of any Government-owned property. The employee must be informed that the Government cannot be held liable for loss or damage to such property before granting approval, unless such liability is defined by and assumed by the bureau /office in a written agreement which is signed by the head of the bureau /office or their authorized representative to whom such authority has been delegated in writing.
7. 1. Use as described in (e)2. is authorized when specifically required by a labor union collective bargaining agreement.
   2. The supervisor's approvals is not required for the use or installation of privately-owned decorative items or memorabilia in the work place, provided that the structure or the safety of the facility is not thereby compromised.
   3. The policy set forth in 41 CFR 101-25.100, which permits the use of Government-owned personal property in emergency conditions which threaten loss of life or property, shall be followed in making determinations as to what constitutes official use under exceptional circumstances.

Exhibit I -- Formula for the Determination of Lease Capitalization