12.1.3 Equipment Trade-ins and Limitations

Policy Statement

Units may trade in unneeded University of Illinois System equipment when purchasing new “like-kind” equipment. All equipment being traded must be reviewed and approved prior to any trade-in activity by the relevant university contract processing office and the University Property Accounting and Reporting Office (UPAR).

Reason for the Policy

All trade-ins of equipment must be handled in compliance with State of Illinois statutes, rules, and system policy. Traded-in equipment no longer in the possession of the system must be removed from inventory by submitting a disposal request in FABweb. Doing this helps to prevent inaccurate reporting of the biennial inventory resulting in auditing discrepancies.

Employees who misuse or fraudulently engage in equipment trade-ins are subject to repercussions including, but not limited to, investigation, disciplinary action, termination of employment, and may also be subject to criminal prosecution.

Applicability of the Policy

This policy applies to all equipment owned by the system, regardless of value or presence of a PTag for inventory. Equipment titled to the federal government, or other institution, that is not owned by the system cannot be traded.

Procedure

Purchases with a trade-in must comply with the Illinois Procurement Code (30 ILCS 500/) and applicable purchasing policies and procedures.

The trade-in allowance must be used to reduce the purchase price of the new “like-kind” equipment. The trade-in allowance must be documented by the vendor on the purchase documentation such as purchase request, purchase quote, or vendor invoice.

Sponsored Program Funds

System equipment purchased on sponsored program funds requires approval from the applicable university sponsored program office. Contact the applicable university’s sponsored program office and obtain approval prior to trading in any system equipment purchased using grant funds. A unit may not proceed with a trade-in of equipment until it receives confirmation from UPAR and the university contract processing office for that campus.

Chicago: Sponsored Programs

Springfield: Sponsored Programs

Urbana-Champaign: Sponsored Programs Administration

Information needed to request approval for a trade-in:

• Unit Head approval of the trade.
• Non-Inventoried equipment: Serial Number (if available) for each piece of equipment to be traded in.
• Inventoried equipment: Property control (PTag) number and Serial Number (if available) for each piece of equipment to be traded in.
• Item description with estimated value of each item.
• Amount of vendor trade-in allowance for each item or a total for all traded equipment.
• Requisition number (if known).

State Funds

Proposed trade-ins of system equipment purchased on state funds, starting with a “1” (direct budget appropriations to the system from the State of Illinois) must be approved by University Property Accounting and Reporting (UPAR). After being notified of an approval request from a unit, UPAR will seek approval from Illinois Central Management Services (CMS) for the outbound transfer of equipment. A unit may not proceed with a trade-in of equipment until it receives confirmation from UPAR that CMS has approved the trade-in. (Admin Code 5010.690)

Information needed to request approval for a trade-in:

• Unit Head approval of the trade.
• Non-Inventoried equipment: Serial Number (if available) for each piece of equipment to be traded in.
• Inventoried equipment: Property control (PTag) number and Serial Number (if available) for each piece of equipment to be traded in.
• Item description with estimated value of each item.
• Amount of vendor trade-in allowance for each item or a total for all traded equipment.
• Requisition number (if known).

All Other Funds

Proposed trade-ins of system equipment purchased on all other funds (funds starting with a 2, 3, 6, 7) must be approved by University Property Accounting and Reporting (UPAR). A unit may not proceed with a trade-in of equipment until it receives confirmation from UPAR. (Admin Code 5010.700)

Information needed to request approval for a trade-in:

• Unit Head approval of the trade.
• Non-Inventoried equipment: Serial Number (if available) for each piece of equipment to be traded in.
• Inventoried equipment: Property control (PTag) number and Serial Number (if available) for each piece of equipment to be traded in.
• Item description with estimated value of each item.
• Amount of vendor trade-in allowance for each item or a total for all traded equipment.
• Requisition number (if known).

Prohibited Acts

• Trade-ins of equipment for an unknown product or service to be acquired in the future or store credit.
• Trade-ins of equipment for an item that will be titled to another institution.
• Trade-ins that result in the unit receiving funds or store credit in addition to a new “like-kind” item, is considered a sale, and is not allowable by State of Illinois regulations or system policy.

Pre-purchase

Equipment can be traded in if the unit is purchasing new, "like-kind" equipment as defined by 44 Illinois Adm. Code 5010.680. Units must work with the applicable system or university purchasing office to document the trade-in on all purchasing documents. This must include a listing of the equipment item(s) traded in, including item description(s), estimated item value and serial number(s) and/or PTag number(s) of any inventoried equipment. The value of the vendor’s trade-in allowance must be stated in the purchasing documents. This documentation can be completed through request of a vendor quote including all the elements noted above.

When creating a requisition for purchase, the original cost of the equipment (without the trade-in allowance) must be considered when selecting the appropriate account code for purchase. When the new acquisition is submitted in FABweb, the trade-in allowance is manually added back to the new purchase by Property Accounting and the account code used must reflect that final cost.

Equipment cannot be traded in for store credit to be used later, or for items that are "unlike" (e.g., equipment for supplies, equipment for reduced rental rates, equipment for inventory for resale, etc.). Equipment cannot be traded in for equipment that is titled to another institution, such as leased items not owned by the State of Illinois or the system.

Traded Banner Inventoried Equipment with a PTag:

1. The following information about the trade-in equipment should be listed on the purchase documents (requisition, invoice voucher):
   • Property control (PTag) number
   • Description
   • Serial number of the equipment to be traded (if available)
   • Estimated value of traded items
   • Amount of the vendor trade-in allowance being given for the trade-in
2. When submitting the newly purchased equipment OTAG to inventory in FABweb, use the "External Cross Reference" field to enter the PTag of the traded equipment and trade-in amount.
3. FABweb Unit Rep should submit a disposal in FABweb to dispose of the traded equipment and choose category "Other > Trade-In," listing in the comments the new PTag number and trade-in allowance.

Traded Non-Inventoried Equipment without a PTAG:

1. The following information about the trade-in equipment should be listed on the purchase documents (requisition, invoice voucher):
• Description
• Serial number of the equipment to be traded (if available)
• Estimated value of traded items
• Amount of the vendor trade-in allowance being given for the trade-in
2. If the new equipment is at or above the minimum inventory threshold, when submitting the newly purchased equipment OTAG to inventory in FABweb, use the "External Cross Reference" field to enter "No PTag" for the non-inventoried traded equipment and trade-in amount.
3. Non-inventoried equipment must be submitted on a disposal request in FABweb using the serial number and description of the equipment.

Post-purchase

When completing the new acquisition record in FABweb, the unit rep must reference the traded equipment PTag or description for non-inventory items in the “External Cross Ref” blank under the Item Info tab in FABweb. Asset values will be understated if the trade-in allowance(s) are not identified as part of the new acquisition of equipment. UPAR will add-back the value of the trade-in allowance to the newly purchased equipment so that the actual value of the equipment is shown in Banner as required by the Governmental Accounting Standards Board (GASB).

For any items traded-in, but with no disposal request submitted in FABweb at the time of the original trade-in, the FABweb Unit Rep must complete a disposal request in FABweb to remove the traded-in equipment from the unit’s inventory in accordance with 12.4.3 Dispose of Unneeded Equipment.