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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 5FUNDS MANAGEMENT (FISCAL AFFAIRS)
SUBCHAPTER OUNIFORM STATEWIDE ACCOUNTING SYSTEM
RULE §5.200State Property Accounting System

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

  (1) Annual physical inventory--The annual capitalized and controlled personal property physical inventory that a state agency must conduct once each year in accordance with this section.

  (2) Betterment of personal property--An improvement of personal property that materially increases its serviceability or useful life, or both.

  (3) Capital asset--A possession of the state that has an estimated useful life of more than one year.

  (4) Capital lease--A lease of personal property under which the lessee substantially assumes the risks and benefits of ownership as specified under generally accepted accounting principles.

  (5) Capitalized asset--A capital asset that has a value equal to or greater than the capitalization threshold established for that asset type.

  (6) Charitable organization--The term has the meaning assigned by Civil Practice and Remedies Code, §84.003.

  (7) Comptroller--The comptroller of public accounts for the State of Texas.

  (8) Computer equipment--The equipment includes computer, telecommunications devices and systems, automated information systems, and peripheral devices and hardware that are necessary to the efficient installation and operation of that equipment, but does not include computer software.

  (9) Controlled asset--An agency asset the state has determined as high loss risk to be secured and tracked because of the nature of the possession. The term does not include a capitalized asset, real property, an improvement to real property, or infrastructure.

  (10) Fiduciary fund--A fund held by a state agency as trustee of the fund. The term includes pension funds and non-expendable trust funds.

  (11) Fiscal year--The accounting period for the state government which begins on September 1 and ends on August 31.

  (12) Include--A term of enlargement and not of limitation or exclusive enumeration. The use of the term does not create a presumption that components not expressed are excluded.

  (13) May not--A prohibition. The term does not mean "might not" or its equivalents.

  (14) Personal property--A capitalized or controlled asset not classified as real property.

  (15) Proprietary fund--A self-supporting fund whose resources are generated through user charges. The term includes enterprise and internal service funds.

  (16) Replacement of personal property--A replacement of an internal or external part of personal property that allows it to complete its normal useful life.

  (17) Salvage personal property--Personal property that no longer serves its original purpose because it is depleted, worn out, damaged, consumed, outdated, or obsolete. The term does not include personal property that has a remaining useful life.

  (18) State agency--A state governmental entity that manages, administers, or controls personal property.

  (19) State employee--An officer or employee of a state agency.

  (20) State property accounting system--The fixed asset component of the uniform statewide accounting system.

  (21) Supplemental physical inventories--The optional physical inventories that a state agency conducts in addition to the required annual physical inventory.

  (22) Surplus personal property--Personal property in the possession of a state agency that is not currently needed by the agency and is not required for the agency's foreseeable needs. The term does not include salvage personal property.

  (23) Trust property--Property not owned by the state that a state agency temporarily holds on behalf of the owner and is not used in agency operations.

(b) Exemptions.

  (1) Equipment and supplies purchased through programs, contracts, or grants with the Department of State Health Services.

    (A) An item of equipment or a supply is exempt from the requirements of subsections (c) - (q) of this section if it is:

      (i) used to promote and maintain public health;

      (ii) is purchased by or for a qualified entity; and

      (iii) is purchased through a program, contract, or grant with the Department of State Health Services.

    (B) The exemption ends if the item or supply is returned to the Department of State Health Services upon the termination of the applicable program, contract, or grant. When the exemption ends, the formerly exempt equipment or supply must be reported to the state property accounting system in accordance with the comptroller's requirements.

    (C) A state agency that purchases an exempt item of equipment or a supply shall develop and maintain internal control procedures for keeping a complete and accurate inventory of the items exempt under subparagraph (A) of this paragraph.

    (D) In this paragraph, "qualified entity" includes an individual, a corporation, a local unit of government, and a state agency.

  (2) The Department of Assistive and Rehabilitative Services.

    (A) A material, tool, book, or other necessary apparatus provided to a client by the Department of Assistive and Rehabilitative Services is exempt from subsections (c) - (q) of this section.

    (B) The Department of Assistive and Rehabilitative Services shall develop and maintain internal control procedures for keeping a complete and accurate inventory of the items that are exempt under subparagraph (A) of this paragraph.

    (C) The state auditor may request to review an inventory required by subparagraph (B) of this paragraph at any time.

    (D) An item that no longer qualifies for an exemption under subparagraph (A) of this paragraph must be added to the state property accounting system.

  (3) Items provided to clients of state agencies.

    (A) The comptroller may exempt from the reporting requirements of this section a material, tool, book, or other necessary apparatus if the item is provided to a client by a qualifying state agency.

    (B) The appropriate state agency shall develop and maintain internal control procedures for keeping a complete and accurate inventory of the items that are exempt under subparagraph (A) of this paragraph.

    (C) The state auditor may request to review an inventory required by subparagraph (B) of this paragraph at any time.

    (D) An item that no longer qualifies for an exemption under subparagraph (A) of this paragraph must be added to the state property accounting system.

  (4) Government Code, Chapter 403, Subchapter L, as added by Senate Bill 5, 82nd Legislature, 2011, Chapter 1049, §6.07, does not apply to a university system or institution of higher education except that Government Code, §§403.273(h), 403.275, and 403.278, do apply to a university system or institution of higher education.

    (A) A university system or institution of higher education shall account for all personal property as defined by the comptroller under Government Code, §403.272. At all times, the property records of a university system or institution of higher education must accurately reflect the personal property possessed by the system or institution.

    (B) The state auditor, based on a risk assessment and subject to the legislative audit committee's approval of including the examination in the audit plan under Government Code, §321.013, may periodically examine property records or inventory as necessary to determine if controls are adequate to safeguard state property.

(c) Certification of internal state agencies and reporting state agencies.

  (1) General requirement. A state agency must be certified as an internal state agency or a reporting state agency.

  (2) Initial certification. A state agency that has not been certified before the effective date of this section must properly complete and submit to the comptroller the form required by the comptroller. The agency must specify on the form whether the agency wants certification as an internal state agency or a reporting state agency. The comptroller shall review the form and consider the agency's ability to comply with this section before certifying the agency.

  (3) State agency requests for changes in certification.

    (A) A reporting state agency may change its certification to an internal state agency by:

      (i) properly completing the form required by the comptroller; and

      (ii) obtaining the comptroller's approval of the change.

    (B) An internal state agency may change its certification to a reporting state agency by:

      (i) properly completing the form required by the comptroller; and

      (ii) obtaining the comptroller's approval of the change.

    (C) When considering whether to approve or disapprove a state agency's request for a certification change, the comptroller shall:

      (i) consider the agency's history of complying or not complying with this section's requirements for the agency's current certification; and

      (ii) determine the agency's capability to comply with this section's requirements for the agency's requested certification.

    (D) This subparagraph applies if the comptroller receives a state agency's request for a certification change not later than the 30th day before the start of the next fiscal year. If the comptroller approves the change, then the change is effective on the later of:

      (i) the first day of the fiscal year following the fiscal year during which the comptroller approves the change; or

      (ii) the date the state property accounting system receives a full and accurate reporting from the agency of its property balances as of the end of the fiscal year during which the comptroller approves the change.

    (E) This subparagraph applies if the comptroller receives a state agency's request for a certification change during the last 29 days of a fiscal year. If the comptroller approves the change, then the change is effective on the later of:

      (i) the first day of the second fiscal year following the fiscal year during which the comptroller receives the request; or

      (ii) the date the state property accounting system receives a full and accurate reporting from the agency of its property balances as of the end of the fiscal year following the fiscal year in which the comptroller receives the request.

  (4) Certification changes initiated by the comptroller.

    (A) The comptroller may change a state agency's certification from a reporting state agency to an internal state agency or vice versa anytime the comptroller determines the change is needed.

    (B) If the comptroller changes a state agency's certification under subparagraph (A) of this paragraph, then the change is effective on the date specified by the comptroller.

  (5) Criteria for certification as an internal state agency. A state agency may be an internal state agency only if:

    (A) the agency determines that it will use the state property accounting system as its own property accounting system; and

    (B) the agency agrees to maintain a perpetual inventory.

  (6) Criteria for certification as a reporting state agency.

    (A) A state agency is a reporting state agency if it:

      (i) is not exempt from this section; and

      (ii) is not an internal state agency.

    (B) A reporting state agency shall modify its property accounting system to comply with the comptroller's reporting requirements, as periodically amended.

    (C) A reporting state agency shall demonstrate to the comptroller's satisfaction that the agency has disaster recovery capability.

  (7) Senate Bill 5, 82nd Legislature, 2011, §6.07 provides exemptions for universities and institutions of higher education.

(d) Personal property physical inventories.

  (1) Frequency and timing of physical inventories.

    (A) Except as provided by subsection (m) of this section, a state agency shall conduct an annual physical inventory of the personal property and trust property in the agency's possession. The agency may choose the date of the inventory.

    (B) The comptroller encourages a state agency to conduct each year one or more supplemental physical inventories of the personal property and trust property in the agency's possession.

  (2) Requirements for annual personal property physical inventories.

    (A) When a state agency conducts an annual physical inventory of the personal property and trust property in the agency's possession, the agency shall:

      (i) ensure that each property item is still within the agency's possession;

      (ii) determine whether the person who has custody of each property item as indicated on the agency's records still has custody of the item; and

Cont'd...

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