Equipment

Questions that are frequently asked by Head Start staff with regard to equipment records, capitalization threshold, equipment purchased, and donated equipment are answered. Head Start and procurement staff will benefit from reviewing these FAQs.

Q: After we dispose of equipment, for how long do we need to maintain the records for that equipment?

A: Federal regulations (45 CFR 74.53 and 45 CFR 92.42) require records to be maintained for three years beyond the date of final disposition (i.e., the date the equipment was sold or otherwise disposed).

Q: Do the regulations that apply to equipment purchased with Federal funds also apply to donated equipment?

A: Yes, if the equipment is used as a source of non-Federal share.

Q: My agency's capitalization threshold is lower than $5,000. How does this impact our administration of equipment, including prior approval for equipment purchases?

A: Approval from the ACF awarding office is necessary only for items of equipment that meet or exceed the Federal acquisition cost level of $5,000 per unit. Grantee agencies do not need prior approval to purchase items of equipment with an acquisition cost under this threshold, even in situations where grantee agencies are using a more stringent (i.e., lower) threshold.

Once equipment is acquired, however, the capitalization threshold adopted by the grantee agency must be consistently followed while the equipment is being managed and used by the grantee. For example, if a grantee agency chooses to define equipment using a lower threshold, such as $3,000, then an item purchased for $3,800 will appear as supplies for Federal purposes but as equipment in the grantee agency's records. This lower threshold should prevail when guiding the grantee agency in its administration of equipment, including internal procedures for approval, inventory and sale of equipment.

When a grantee no longer needs equipment purchased using Federal funds (as provided in 45 CFR 74.34(g) and 45 CFR 92.32(e)), it should request disposition instructions from the ACF awarding office or provide the proceeds only for those items with a current per unit fair market value of $5,000 or more.

Q: What are the characteristics of an adequate equipment management system?

A: Adequate equipment management system would include at least the following criteria:

  1. The grantee keeps records that adequately identify items of equipment owned or held by the grantee and document all the following information:
    1. A description of the equipment
    2. Identifying number, such as a serial number
    3. Source of funding, including the award number
    4. Title holder
    5. Acquisition date
    6. Percentage of Federal funds used in the purchase
    7. Location and condition of the equipment
    8. Unit acquisition cost
    9. Disposition data, including date of disposal and method used to determine the current fair market value where the grantee compensates theFederal government for its share of the disposal proceeds.
  2. At least once every two years, the grantee's equipment is physically inventoried to verify that the items covered by the records exist and are either usable and needed or listed as surplus. The grantee is expected to investigate any discrepancies between the physical inventory and its records to determine and correct the causes.

    The grantee keeps equipment in good condition and has appropriate safeguards to prevent loss, damage, or theft.

    Before buying or renting equipment, the grantee follows a procedure to assure that the acquisition is cost-beneficial and that no equipment is available for use that makes the acquisition unnecessary.

    For equipment acquired under ACF grants and subject to 45 CFR 74.14 (Special Award Conditions), the grantee complies with the additional requirements in that section.

Equipment. Fiscal Assistant. HHS/ACF/ACFY/HSB. n.d. English.

Last Reviewed: November 2008

Last Updated: August 7, 2015