Budgetary Accounts - Section AM-004
Effective Date 2/16/04
Budgetary accounting is a management tool to assist in controlling expenditures. Budgetary accounting is an important control tool for General Funds, Cash Funds, Construction Funds, Federal Funds and Revolving Funds (budgeted fund types) since the annual budget is a legal compliance standard against which the operations of such funds are evaluated.
In EnterpriseOne (E1), budgetary accounts include appropriation, allotment and encumbrances. Appropriations are the authorizations granted by the Legislature to make expenditures or incur obligations for specific programs. Appropriations are made by specific program and fund type. Allotments are a portion of the appropriation currently available for expenditures or to incur obligations. Encumbrances reserve a portion of an appropriation representing a current fiscal year obligation that has not been paid, or commitments related to unperformed contracts for goods and services.
In EnterpriseOne, appropriation and allotment are "control" accounts. Before posting expenditures the system checks to ensure sufficient appropriation is available. Available appropriation for each program and fund type is computed by subtracting fiscal year-to-date expenditures and encumbrances from the total appropriation. A check for sufficient allotment is made prior to posting expenditures in E1. If there is not enough allotment to post a transaction, the batch fails the general ledger post in E1. This is to ensure that expenditures do not exceed the Legislature's authority for that program and fund type. A request must be made to DAS Budget to increase a program's allotment.
Encumbrances are created during the fiscal year through the purchasing module of EnterpriseOne or manually at management's discretion, to reserve appropriation for specific expenditures. Manual encumbrances are created using a journal entry. Purchase orders are encumbered automatically through the use of the purchase order system. For more information, review specific encumbrance procedures in the E1 manual.