USFR Account Changes for Equipment Thresholds

by Kara M. Curtis, CPA, Audit Manager

Posted on July 24, 2025

The Arizona Auditor General has recently updated the Chart of Accounts in the Uniform System of Financial Records for Arizona School Districts (USFR) to allow for easier federal reporting for capital purchases. This Chart of Accounts change is effective July 1, 2025.

The modification was made based on feedback from many Arizona school districts and should help districts align with the equipment threshold increases made by the Office of Management and Budget (OMB) in April 2024. In addition to other threshold increases, the OMB updated the definition of capital equipment expenditures from items with a unit cost of $5,000 or more to a unit cost of $10,000 or more (2 CFR 200.439(b)(2)). The equipment threshold increase was part of a significant revision to the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance) for new federal awards issued on or after October 1, 2024.

As a result, the new USFR Chart of Accounts now guides districts to code equipment expenditures as follows:

School districts are only required to use object codes 6740-6742 for equipment purchases from federal grants. For equipment not purchased from a federal grant with a cost over $10,000, a district could continue to use object codes 6733, 6736, and 6739, but it may be easier/more consistent to just use the new object coding structure for all equipment coding.

Because the equipment codes for federal grant reporting have been expanded, object codes 6740 and 6750 have also been re-purposed from prior years. Prior to this change, object code 6740 was used for “Depreciation/Amortization” (now object code 6750), and object code 6750 was used for “Capital Asset Impairments” (now object code 6760). Both of these codes are only applicable to proprietary funds and will need to be updated if a school district is using them.

This new coding structure should help Arizona school districts with federal grant reporting, including indirect cost reporting. However, it does not change the capitalization threshold for Arizona school districts, which remains at $5,000 (or less if your Governing Board policy is lower). There are no changes to the definition of capital items for financial reporting. As a result, it will be very important to remember to include these new codes in your parameters for your GFA module import and capital outlay reconciliation at year-end to ensure all capital assets are reported.