UNIVERSITY OF THE VIRGIN ISLANDS

BOARD OF TRUSTEES RESOLUTION

CAPITALIZATION THRESHOLD



Purpose: The University's capitalization threshold amounts will be determined based on

capital category effective October 1, 2003, as outlined in this resolution.



WHEREAS, the University reports under the Governmental Accounting Standards Board

(GASB) Statement No. 34, Basic F inancial Statements-and Management’s Discussion

and Analysis- for State and Local Governments and GASB Statement No. 35, Basic

Financial Statements- and Management’s Discussion and Analysis- for Public Colleges

and Universities, and



WHEREAS, GASB concedes that different thresholds may be appropriate for different

types of capital assets. For example, the capitalization threshold for infrastructure assets

would probably be higher than the threshold used for vehicles or office equipment; and



WHEREAS, on July 29, 1995, the Office of Management and Budget (OMB) issued a

memorandum entitled "Equipment Capitalization Threshold Waivers under OMB Cost

Principles Circulars for Universities and Non-Profit Organizations." That memorandum

authorized Federal agencies with cost negotiation cognizance to increase the equipment

capitalization threshold from $500 to $5,000. On May 8, 1996, OMB revised OMB

Circular A-21's definition of equipment. A-21 now defines "equipment" as an article of

nonexpendable, tangible personal property having a useful life of more than one year and

an acquisition cost that equals or exceeds the lesser of the capitalization level established

by the University for financial statement purposes, or $5,000; and



WHEREAS, The University expects the higher capitalization level to produce

administrative efficiencies by reducing significantly the accounting and record keeping

requirements; and



WHEREAS, for the past several years the OMB Circular A-133 Audit Report has cited

control weaknesses in the management of the equipment inventory. The higher

capitalization threshold will reduce University exposure with the Federal government in

this area; and



WHEREAS, The University will not remove fixed assets from its accounting and

reporting system as a result of the change in the threshold. Items bought prior to October

1, 2003 with a value of $500 or more per unit, will also be considered capital assets, and



WHEREAS, changing the capitalization level will not have an adverse effect to the

indirect cost charged due to the fact the University assesses indirect cost on a Modified

Total Direct Cost base which includes salaries and benefits only; and



WHEREAS, as a public institution, the University must demonstrate prudent use of the

funds entrusted to it by its various constituencies. This policy is designed to promote


NOW THEREFORE BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE

UNIVERSITY:



Section 1.That the Board of Trustees of the University of the Virgin Islands hereby

authorizes and approves effective October 1, 2003 the following capitalization thresholds

by category as follows:



Description Capitalized Comments

Threshold



Land 0.00 | All land will be capitalized at cost or if donated at

fair market value on date of transfer.



Land Improvements 0.00} All Land Improvements will be capitalized at cost

or if donated at fair market value on date of transfer.



New Buildings 0.00 | New Construction will be capitalized at cost



Additions and Renovations of 10,000.00 | Maintenance and Repairs will not be capitalized



Buildings



Infrastructure 10,000.00 | Maintenance and Repairs will not be capitalized



Machinery & Equipment 2,500.00 | Items under this threshold may be added to

University inventory records for stewardship

purposes as deemed necessary by the Purchasing

Manager and the VP of Finance and Administration.



Collections N/A | Not capitalized



Library Collection 0.00] All Library Collections are capitalized at cost or if

donated at fair market value on date of transfer.



Computer Software 50,000.00



Section 2. That the Board of Trustees of the University of the Virgin Islands authorizes



the President and Vice-President for Administration and Finance Affairs to take the



necessary action to implement the foregoing schedule of capitalization thresholds.



Section 3. That this resolution shall be in full force and effect from and after its adoption.

CERTIFICATION



The undersigned does hereby certify that the foregoing is a true and exact copy of a



resolution of the Board of Trustees of the University of the Virgin Islands and adopted at

its meeting on Saturday, June 19, 2004 as recorded in the minutes of said meeting.



Lash new 22. 2HO4



Secte etary of the Board Date

0/22. [2.004

Chairman of the odrd Date U