Capital Assets, Leases, and Subscription‑Based Information Technology Arrangements (SBITAs) - Financial Management Policy - 30940

The purpose of this policy is to establish uniform requirements for the acquisition, capitalization, recording, safeguarding, inventory, reporting, and disposal of capital assets, leases, and subscription‑based information technology arrangements (SBITAs) at Germanna Community College (Germanna). This policy is intended to strengthen internal controls, ensure accurate financial reporting, and ensure compliance with applicable Commonwealth and Virginia Community College System requirements.

All Germanna departments acquiring, using, or disposing of capital assets must comply with this policy regardless of funding source. Capital assets must be properly identified, safeguarded, and recorded to ensure accountability, accurate financial reporting, and compliance with Virginia Community College System (VCCS) and Commonwealth requirements.

Capital assets, leases, and subscription-based information technology arrangements (SBITAs) must be evaluated and recorded in accordance with applicable accounting standards and Commonwealth guidance.

When conflicts exist between this policy and VCCS or Commonwealth policy, VCCS and Commonwealth policy shall prevail.

3.1 Capitalization and Thresholds

Capital assets include tangible or intangible property that has a useful life greater than one year and meets applicable capitalization thresholds. Germanna follows the Commonwealth capitalization threshold of $5,000 unless otherwise required by funding source or VCCS policy. Equipment purchased through Equipment Trust Funds (ETF) with a value of $500 or greater must be capitalized in accordance with VCCS requirements.

Assets must be evaluated as complete functional units when determining capitalization. Items that individually fall below the capitalization threshold must be capitalized when they function together as a single unit, are physically connected, or are necessary for the asset to operate as intended. This includes systems such as audio-visual equipment, network infrastructure, laboratory systems, security systems, or other integrated equipment installations. When components function as a single unit, the combined cost of all components must be evaluated against the capitalization threshold.

Renovations, improvements, and repairs to capital assets must be evaluated to determine whether the expenditure should be capitalized or expensed. Expenditures that materially extend the useful life of an asset, increase its capacity, or improve its efficiency or functionality shall be capitalized. Routine maintenance and repairs that do not extend the useful life or enhance the asset’s performance shall be expensed and not recorded as capital assets, regardless of cost.

3.2 Acquisition and Recording

Capital assets must be identified upon receipt and recorded in the Administrative Information System Asset Management module (AIS‑AM) in a timely manner. Assets should be tagged and recorded within 30 days of receipt and must be recorded within the fiscal year acquired. The Business Office is responsible for recording capital assets after receiving appropriate documentation from the receiving department.

Acquisition cost includes all expenditures necessary to place an asset into service. This includes purchase price, freight, installation, site preparation, professional fees, and any other costs required to place the asset into its intended use. Supporting documentation must be maintained to support the recorded value of each capital asset.

Donated assets must be recorded at fair market value at the date of acquisition. Assets transferred from other state agencies must be recorded at the original historical cost and acquisition date when available. 

3.3 Movement and Relocation of Assets

Equipment relocations must be documented and communicated to ensure asset records remain accurate.  

For information technology (IT) assets, location changes must be recorded in the appropriate system to ensure synchronization with the official asset management records. For non-IT assets, appropriate documentation must be completed and submitted to the Business Office for update in the asset management system.  

Equipment may be removed from College premises only for approved purposes such as remote computing, mobile learning, or offsite instruction or demonstration, must be authorized and controlled by the appropriate department (including Technical Services for IT-related equipment), and must be documented and available for review to support asset tracking and physical inventory.

3.4 Intangible Assets

Intangible assets include software, licensing agreements, subscription‑based technology arrangements, and other non‑physical assets. These assets must be evaluated to determine whether capitalization is required. Intangible assets that meet capitalization requirements must be recorded in accordance with Commonwealth and VCCS guidance.

3.5 Leases and Subscription‑Based Information Technology Arrangements (SBITAs)

All contracts must be reviewed to determine whether they contain lease or subscription‑based information technology components. This includes agreements for software, hosted solutions, cloud‑based systems, and other subscription arrangements. Contracts that include multiple components must be evaluated to identify subscription and non‑subscription components.

Subscription‑based information technology arrangements must be evaluated in accordance with GASB Statement No. 96. This evaluation includes reviewing the contract term, payment structure, implementation costs, renewal options, and control of the underlying technology. Components of a contract must be evaluated separately when necessary to ensure proper accounting treatment.

Long‑term leases and SBITAs must be recorded in the appropriate system within 30 days of commencement of the agreement. Payment schedules, discount rates, and other required information must be documented to support financial reporting. Short‑term leases and subscription agreements must be tracked for reporting purposes even if capitalization is not required.

3.6 Review and Documentation Requirements

Purchases that may qualify as capital assets, leases, or subscription-based information technology arrangements (SBITAs) must be reviewed prior to execution when possible, to ensure proper classification and accounting treatment. Departments must provide contracts and supporting documentation to the Business Office for review. Technology-related purchases must also be reviewed by Technical Services to assist in identifying potential SBITA arrangements.

Documentation supporting asset classification, valuation, and useful life must be retained in accordance with Commonwealth records retention requirements.

3.7 Physical Inventory and Asset Management

A physical inventory of capital assets must be conducted at least once every two years. Inventory results must be reconciled with AIS‑AM and any discrepancies must be investigated and resolved in a timely manner. Departments are responsible for assisting with physical inventory and maintaining accurate asset locations.

3.8 Disposal and Surplus

Assets that are no longer needed must be processed in accordance with Department of General Services surplus property requirements and VCCS procedures. Disposals must be recorded in AIS‑AM within 60 days or by fiscal year end, whichever occurs first. Supporting documentation must be maintained for all disposals. 

If assets are suspected to be lost or stolen, the incident must be reported promptly to Campus Police, other appropriate authorities as applicable, and the Business Office, and supporting documentation, including any required incident or police reports, must be retained to support asset disposition and audit requirements.

3.9 Roles and Responsibilities

The Business Office is responsible for maintaining capital asset records, ensuring compliance with capitalization requirements, evaluating leases and subscription-based information technology arrangements (SBITAs), performing reconciliations, supporting financial reporting and audit requirements, and ensuring that a physical inventory of capital assets is conducted at least once every two years.

Departments are responsible for promptly checking received goods to ensure the correct items were delivered in the agreed-upon quantity and are not damaged or defective, entering receipt information in eVA, safeguarding assets, notifying the Business Office of purchases, transfers, and changes in location or condition, providing timely documentation to support asset classification and recording, and assisting with physical inventory.

Technical Services is responsible for assisting in the identification and evaluation of technology-related capital assets and SBITAs.

Capital Asset: Tangible or intangible property with a useful life greater than one year that meets capitalization thresholds.

Component Asset: Multiple items that function together as a single unit and must be capitalized as one asset.

Intangible Asset: Non‑physical asset including software, licenses, and subscription arrangements.

Lease: Contract that conveys control of the right to use an asset.

SBITA: Subscription‑Based Information Technology Arrangement governed by GASB Statement No. 96. 

Virginia Community College System Capital Assets Policy and Procedures Manual

Commonwealth of Virginia CAPP Manual Topic 30000 Series

GASB Statement No. 87 – Leases

GASB Statement No. 96 – Subscription‑Based Information Technology Arrangements

Department of General Services Surplus Property Manual

Vice President of Finance and Operations

Cabinet:

Leadership Council:

First Reading – Date: 07/23/20 Approval – Date: 08/27/20

Revised – Date: 06/25/26