This issue of the Financial Management Office Newsletter includes information about the following:
- Review for Impairment of Capital Assets
- Enhancements to Labor Ledger Inquiries
- Tax Rules on Payments of Royalties and Prizes & Awards
- Resources
The FMO Newsletter is distributed monthly. Should you have any questions about this newsletter, contact Amy Kunz via email at amykunz@hawaii.edu.
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Review for Impairment of Capital Assets
Target Audience: Fiscal Administrators
The 2021 fiscal year end is approaching and it is important that we record all impairments of capital assets for audited financial statement purposes. Capital assets include equipment, buildings, facilities, infrastructure assets and construction projects.
In order to comply with Governmental Accounting Standards Board (GASB) Statement No. 42, “Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries”, Fiscal Administrators are reminded of the need to report events of impairment of capital assets to the Capital Asset Accounting Office so that appropriate accounting recognition can be determined for the current fiscal year.
For accounting purposes, capital asset impairment is a significant, unexpected decline in service utility (expected usable capacity at time of acquisition) of a capital asset. The events or changes in circumstances that lead to the impairment are not considered normal or ordinary.
Common indicators of impairment are as follows:
- Evidence of physical damage (e.g., fire, flood, wind, etc.)
- Enactment or approval of laws or regulations or other environmental factors (e.g., new water quality standards that cannot be met at a water treatment plant).
- Technological development or evidence of obsolescence (e.g., a magnetic resonance imaging machine that is rarely used because a newer one provides better service).
- Change in manner or expected duration of use of a capital asset (e.g., closing of a school prior to the end of its useful life).
- Construction stoppage (e.g., stoppage due to lack of funding).
Please contact Kelcie Watai at (808) 956-3103 or by email at kelciew@hawaii.edu if you have questions about impairment or believe your campus or department has experienced any kind of capital asset impairment in the current fiscal year by June 18, 2021. Thank you for your cooperation in this matter.
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Enhancements to Labor Ledger Inquiries
Target Audience: KFS Users with Labor Access
Labor Ledger Posted Entry
Several enhancements are now incorporated into the KFS Labor Ledger Posted Entry screen to provide improved query versatility as well as offer returned results that departments can better customize to their needs. Highlights of those enhancements and the screen view are as follows:
- Organization Code is now included as a search filter and displayed in the returned results.
- A Debit/Credit View option has been added. The ‘Include’ option allows the user to have amounts displayed with a debit (D) or credit (C) Debit Credit Code designation. Alternatively, the ‘Exclude’ option displays amounts as positive (debit) or negative (credit) values.
- Transaction Date has been modified to allow filtering with From and To date ranges.
- Employee Name field is now added on search results after the Employee ID field.
Labor Ledger/HR View-Effort Reporting
A new query screen was created to replace the “CBMR289 – To Assist with Effort Reporting” global databook that was in eThority. Prior to this, the HR and Labor Ledger information returned was limited to 3 sub fund groups (FSPON1, FVOCED, FUSDA). However, based on user requests, this screen will allow all sub fund groups (e.g. Federal, General, Special, Revolving, and Trust funds) to be viewed. For more information and background regarding this screen, refer to this January 2021 FMO Newsletter article that announced the Effort Reporting query.
If you have any questions about these enhancements, please contact the Fiscal Services Office at fissrv@hawaii.edu.
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Tax Rules on Payments of Royalties and Prizes & Awards
Target Audience: Fiscal Administrators and Staff
As Fiscal Administrators, please take the time to know the taxation rules when the following types of payment are made to individuals:
- Royalties
- Prizes/Awards
Royalties:
Definition: To qualify as a royalty, a payment must relate to the use of a valuable right. Examples of royalties may include payments for the use of trademarks, trade names, service marks or copyrights.
Tax rules: All royalties paid by UH should be reported on Form 1099-Misc, regardless of payees’ location even if payees are living outside of United States. All such royalty payments are U.S. income to be reported by UH on payees respectively.
Prizes/Awards:
Definition: Prizes or awards can either be cash, cash equivalent (i.e. gift cards) or value of items which UH gives to recipients in competitions, recognition of achievements, or promotional events.
Tax rules: Recipients of prizes or awards totaling $600 or more will be reported by UH to the Internal Revenue Service based on the following scenarios.
- Form 1099-Misc shall be issued for recipients who are U.S. citizens or resident aliens and not employees.
- Form 1042-S shall be issued and 30% federal tax withholding will be imposed for recipients who are not U.S. citizens or resident aliens
- For employees, the value of prize or awards will be reported on Form 1099-Misc if prizes or awards are won for reasons other than related to employment and such events were opened to general public.
- Prizes or awards for work related achievement shall be reported on the employees’ Form W-2.
Should you have any questions, please call or email Ken Lum at kenlum@hawaii.edu.