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Business and Financial Policies and Procedures

Reconcile Encumbrance Balances

Before You Begin

Encumbrances provide estimates of projected expenses not yet incurred. They may pertain to a year's activity or to a specific transaction, and they are classified in Banner as reservations of budgeted funds.

The University requires units with self-supporting activities to reconcile encumbrance balances to ensure the accuracy of the unit's estimates of available funds. Therefore, units must regularly liquidate, close, or adjust unneeded or inaccurate open encumbrances throughout the year, and at fiscal year-end. Encumbrances remaining open at the end of the fiscal year will always be rolled into the new fiscal year.

This procedure is not for payroll and indirect cost encumbrances.

Begin

To reconcile encumbrance balances:

  1. Review the Encumbrance Balances Report in View Direct. This report is organized by Chart and 6-digit Organization codes. It provides data to compare each open encumbrance, requisition, and purchase order to related source documents (requisitions, work orders, service contracts, etc.).
  2. Reconcile by verifying that the purchase for which the encumbrance was established has not been cancelled or paid (liquidated). 
  3. Correct any discrepancies by removing or modifying remaining encumbrance balances associated with completed or cancelled purchase orders.
  • Contact your campus Purchasing Division to modify or liquidate requisitions and purchase orders.
  • Modify or liquidate general encumbrances through a journal voucher

Related Policies and Procedures

Monitor a Self-Supporting Fund

Additional Resources

Job Aids for Journal Voucher Processing (GL 101)
Job Aids for General Encumbrances (GL 103)

Last Updated: March 1, 2016 | Approved: Senior Associate Vice President for Business and Finance | Effective: January 2013

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