REPORT:

Remove Various Fixed Assets from Inventory

SYNOPSIS:

AQMD Policy and Procedure No. 20 requires a biennial Districtwide fixed asset inventory, an annual Applied Science and Technology inventory, and the disposal of fixed assets declared surplus. In 1995 a fixed asset inventory was conducted for the whole AQMD and in 1996 for AST alone. This action is to approve the removal of unlocated fixed assets and to declare as surplus the equipment determined to be obsolete or broken and not worth repairing.

COMMITTEE:

Administrative, November 21, 1997, Recommended for Approval

RECOMMENDED ACTION:

1. Authorize the removal of the equipment identified on Attachments A and B from AQMD’s fixed asset inventory.

2. Declare the items on Attachment C as surplus and authorize their deletion from the AQMD fixed asset inventory; and authorize the Purchasing Manager to dispose of these fixed assets by direct sales, public auction, or donation.

Barry R. Wallerstein, D.Env.
Acting Executive Officer

Background

AQMD Administrative Policy and Procedure No. 20 establishes procedures for the approval, purchase, tagging, physical inventory, and disposal of fixed asset equipment. This policy requires an annual physical inventory of the Applied Science and Technology division (AST) and biennial inventories of all other divisions. In accordance with this policy, staff has previously requested the Board’s approval to remove equipment which had been retired, damaged, or reported missing from the inventory of assets. The last request to remove surplus or missing items was approved in December 1995 and represented the results of the 1993 biennial Districtwide inventory and the 1994 AST annual inventory.

During August through December 1995, each division at the AQMD conducted a biennial physical inventory of its equipment. These inventories were observed by Finance staff. Bar code scanners were used to account for the assets. Following the conclusion of this inventory, additional efforts were made to locate assets which were missing and where appropriate, controls were reviewed with the divisions in an effort to provide better safeguards for assets. The most common items reported missing were computer-related equipment and hardware. Based on a review of the missing computer items, Information Management has determined that:

1. Equipment identified as missing in previous inventories was withheld from removal pending further research.

2. Desktop hardware (CPUs and monitors for personal computers) was in some cases replaced by the manufacturer but never removed from the fixed asset inventory.

Attachment A is a list of unlocated fixed assets comprised of both missing and stolen items as determined from the August through December 1995 inventory. The attachment reflects the results of an independent appraiser’s valuation (completed in April 1997) of all unlocated and stolen items. The current market value is stated next to the recorded value (cost) of the item.

Attachment B is a list of unlocated fixed assets from the August through September 1996 annual inventory by the AST division. The attachment also reflects the results of an independent appraiser’s valuation of all unlocated items. The current market value is stated next to the recorded value (cost) of the item.

Attachment C is a list of obsolete or nonrepairable office equipment that staff has identified as obsolete or broken and not worth repairing. Independent appraisal of these assets is not practical because of the cost involved and the broken condition of the assets. The equipment on this list have already been replaced as required. AQMD Administrative Policies and Procedures No. 20 provides that surplus property is to be surrendered to the Purchasing Manager for disposal.

A summary of the information in Attachments A, B, and C appears below:

Original Cost Current Value

Attachment A - 1995 Inventory

Unlocated items $215,159.60$ 20,630.00

Stolen fixed assets31,194.682,660.00

Attachment B - 1996 AST Inventory

Unlocated items10,776.151,240.00

Attachment C - Obsolete or Nonrepairable

Equipment584,588.16 Not Applicable

Proposal

Because of the age of the assets, the current value of these missing assets is materially less than the recorded value. Staff recommends that the unlocated items on Attachments A and B be removed from the AQMD’s total fixed assets inventory of $20,429,089. Based on original cost the items for which removal is recommended represent approximately 1.3% of total equipment inventory.

The fixed assets appearing on Attachment C represent obsolete and nonrepairable equipment and furnishings which have been replaced as part of AQMD’s replenishment program and are no longer of use to the AQMD. Staff is recommending that the assets on Attachment C, as in the past, be surplused through the salvage process and disposed of through an auction process or donation to nonprofit and charitable organization.

Resource Impacts

The proposed action will have no impact on the General Fund, but the General Fixed Assets Account Group will be reduced by $841,718.59.

Attachments

A. Missing Fixed Assets from 1995 Inventory

B. Missing Fixed Assets from 1996 AST Inventory

C. Obsolete or Nonrepairable Fixed Assets

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