Financial Management of Property, Plant and Equipment (Capital Assets and Equipment)

This policy establishes the proper methods to account for facilities and equipment, including capitalization, depreciation, disposals and impairments, and various funding sources. Download the full policy .

Policy Statement
The University requires that amounts expended for facilities and equipment (in excess of certain thresholds and whether purchased, constructed, or leased) be capitalized, and depreciated. Capitalized amounts should be periodically inventoried for impairment or possible write-off in accordance with Generally Accepted Accounting Principles (GAAP) and regulatory requirements.

This policy provides guidance for the management and control of capital equipment that is owned by the University, titled to the University, under the custody of the University, or for which the University is accountable to the federal government or other sponsors.

If direction differs between this policy and external regulations, sponsor or donor terms, or other internal policy or procedures, the more restrictive instruction will apply.

Reason for Policy
This policy exists to ensure adherence with Generally Accepted Accounting Principles (GAAP) and other regulatory requirements, to promote consistent accounting treatment across the University, and to ensure the operating results of University units are not misstated as a result of transactions unrecorded or recorded improperly.

Who Must Comply
All Harvard University schools, school or units, local and central units, affiliated institutions, allied institutions, and University-wide Initiatives (collectively, “schools and units”) must comply.

Summary of Procedures
1. Oracle Fixed Assets is the System of Record for Property, Plant, and Equipment.
2. Follow Harvard’s General Rules for Capitalization
3. Follow Specific Rules for Capitalizing Equipment
4. Follow Specific Rules for Capitalizing Buildings, Land and Improvements
5. Inventory and Asset Management
6. Correcting General Ledger Coding
7. Account for Disposition, Retirement, and Impairments
8. Comply with Sponsored Requirements