701 - Encumbrances Policy

Title

The University of North Carolina at Chapel Hill Finance Policy 701- Policy on Encumbrances

Introduction

Purpose

Encumbrances provide an effective method of tracking commitments across a wide range of departmental end-users - an important control feature given that some procurements require a long lead time for the vendor to supply the merchandise or perform the service.

Policy

Policy Statement

To maintain accurate accounting for all budgets, the University utilizes encumbrances. Encumbrances are Commitment Control entries that record a commitment of funds by removing them from the budget balance available (BBA). Purchase requisitions and purchase orders encumber funds.

Exceptions

None.

Special Situations

None.

Additional Information

Frequently Asked Questions

Q: Why doesn't my purchase order show up as encumbered for the same amount as the requisition?
A: The requisition amount is generally an estimate of the cost for the merchandise. The purchase order will state the actual cost based on contract prices, discounts, etc.

Q: How do I liquidate outstanding encumbrances on a PO after invoicing is complete.
A: Request for liquidations may be submitted on a $0 requisition to Purchasing Services indicating the lines you wish to have liquidated on the PO, or entire PO if you would like to clear all encumbrances. For projects having a budget end date: if the budget end date has passed and the project has been closed, then you must first contact the budget holder to reopen the chartfield prior to submitting your request to liquidate.

Related Requirements

None.

Contacts

Policy Contact
Subject Contact E-Mail
Purchase order liquidation Accounts Payable and Vendor Services accountspayable@unc.edu

History

Revised:

  • February 2, 2015: Updated references to campus vouchers and chartfield strings; removed Q&A and procedure.
  • May 20, 2010
  • July 27, 2007
  • October 14, 2003