SUBSECTION 2.2.3.1
ENCUMBRANCES

2.2.3.1.1

Encumbrances

Effective Date:

Sept. 1, 1998

2.2.3.1.1.a

Encumbrances are obligations for goods, materials, and services which have been ordered but not received by the end of the accounting period. Encumbrance accounting assures that appropriation authority will be available for a subsequent expenditure. This is accomplished by recording as an encumbrance the estimated amount of an order when it is placed, thereby restricting that portion of the appropriation.

2.2.3.1.1.b

Encumbrance accounting is employed when the accounts involved are subject to budgetary control. Formal encumbering of all items of expenditure is not required. Utilities, rent, travel, salaries and wages, and employee benefits and taxes are not to be encumbered.

2.2.3.1.1.c

Agencies are to encumber all documents with a material impact on their budgets that specifically restrict available appropriations for future use such as: Purchase Requisitions (A15-A); Purchase Orders (A16-A); Field Orders (A17-A); Printing Requisitions (A21-A); personal services contracts and other contracts placed by the Division of Purchasing or the agency's contracts section. Each encumbrance transaction is to be supported by complete documentation. The use of "dummy" or projected encumbrances as a method to avoid transfers to reserve or circumvent the allotment process is an improper application of encumbrance accounting and is not to be practiced.

2.2.3.1.1.d

Section 2.2.3.8.2 shows illustrative entries to establish and liquidate encumbrances.