Encumbrance Accounting

Oracle E-Business Suite R12 Handbook
Encumbrance Accounting
Eng. Baker Tbaishi
2017

This document discusses setup steps and provides usage guidelines for encumbrance. The
document would take the users through a complete cycle of encumbrance covering all relevant
aspects.
Anyone using this document is expected to have the basic knowledge of Oracle Application setup
steps and firm understanding of Accounting Principles.

Table of Contents
1. Introduction................................................................................... 4
2. Top Level view of Encumbrance Flow........................................... 6
3. Encumbrance Setup....................................................................... 7
4. USAGE ....................................................................................... 14
5. Important Terms Used in Encumbrance Accounting................... 30
6. Important Tables Used for Encumbrance.................................... 34

1. Introduction
This section is basically to gives a broad idea about Encumbrance and Encumbrance Accounting.
It also provides explanations to the word encumbrance, encumbrance accounting and how they
are used in Oracle Applications and the modules involved.
Encumbrance
Reservation of funds is known as encumbrance. The purposes of tracking encumbrances are as
follows:
 Avoid overspending a budget
 To facilitate effective control and consumption of budget by pre-allocating budget amount
 To Predict cash outflow and as a general planning tool.
Encumbrance is a commitment to pay in the future for goods or services ordered by not yet
received. The terms encumbrance and commitment are used interchangeably. The budget
amount can be reduced by the amount of encumbrance as listed below.
 On creation where approval is not required.
 On Approval where the approval is required.
When the goods are received or services are obtained and the invoice is created and matched,
then the encumbrance is released and the current year expenditure is accounted.
Encumbrance Accounting
Encumbrance accounting is a form of budgetary control within Oracle Applications that enables a
company to allocate funding for specific accounts. The funds checking feature which is an
integral part of encumbrance accounting, checks for availability of funds on a particular
accounting combination.
The funds checking feature can be performed either at the entry level itself before committing
the transaction or when the approval is made for the transaction. The approval process checks
for the funds check level and the approval is made only when the transaction is passed with the
funds check process.

Usage
The complete use of capabilities of encumbrance accounting, users must enable the budgetary
control flag for a set of books. When users enable the budgetary control flag, the system
automatically creates encumbrances from requisitions, purchase orders and other transactions
originating in feeder systems such as Purchasing and Payables. When users do not enable the
budgetary control flag, they can still enter manual encumbrances via journal entry, but Users
cannot generate encumbrances from requisitions and purchase orders. Users have two options
for using encumbrance data to monitor over–expenditure of a budget. After actual and
encumbrances have been posted, users can generate reports to show over–expenditures. Users
can also use funds checking to prevent over–expenditures before they occur.
Modules Involved in Oracle Application
The encumbrance accounting is involved dealt in the following modules.
 Oracle Purchasing
 Oracle Payables and finally
 Oracle General Ledger.
Hence we need to know the basic setup required in each modules.
Prerequisites
The pre-requisites to enable encumbrance are as follows:
 Installation of required modules
 Creation of set of books in General Ledger
 Create a Encumbrance Calendar
 Assign the ledger in the other modules (Purchasing and Payables)
 Enable Budgetary Control in SOB.

2. Top Level view of Encumbrance Flow
The encumbrance accounting can be achieved in the following order:
Accounting Entries such as Reserving / Relieving encumbrances are listed below:
 When performing reserve on documents in Purchasing such as requisition, PO,
Agreements and so on.
 When Approving an Invoice in AP
 When Creating the Journal Entries in GL.
The table GL_BC_PACKETS is used to store the encumbrance transactions. Each row is created
with a packet_id that stores values such as balance_type, encumbrance_type and so on. The
values in these columns can be used to identify the nature of the encumbrance (Requisition /
purchase order).

3. Encumbrance Setup
The setups for encumbrance are done in the following modules as described below
Oracle General Ledger
Enable Budgetary Control for the SOB
 Navigation: Setup  Financials  Accounting Setup Manager  Accounting
 Select the Ledger
 Click on Update Accounting Options
 Click on Update Journal Processing Options
 Under Advanced Options, Flag the Enable Budgetary Control Check Box
 Select the check box Requires Budget Journals if you want to make it mandatory to enter
budget by budget journals.
 Assign the Code Combination for the Reserve for Encumbrance Account
Open Encumbrance Year
Navigation: Setup  Open/Close

Opening the encumbrance year is done to enable the encumbrance entries. When users open
the first period ever for Users set of books, General Ledger automatically opens the first
encumbrance year as well. When Users open additional encumbrance years, General Ledger
automatically rolls Users project-to-date encumbrance balances forward through the last period
of the latest open encumbrance year.
Define Budget
Navigation: Budgets -> Define -> Budget
The encumbrance is basically for the budgets defined for an organization. Budget is the collection
of the estimated amounts defined for an organization. Choose appropriate status for the budget
in the Define Budget Organization Form.
Open: The budget is available for update and budget entry.

Current: The budget is open, and it is the default budget when users use most budgeting and
inquiry window. Users can have only one Current budget at a time for each set of books.
Frozen: The budget is unavailable for update or budget entry. General Ledger displays the
Created Date and Frozen Date, if applicable, for the budget.
Users must select the appropriate period to enter the budget. Users can have the budget opened
for a maximum of 60 periods and there is no such restriction available for number of years.
Define Budget Organization
Navigation: Budget -> Define -> Organization
Budget Organization is the budget entity, to which the budgets are estimated. Budget
Organization can be created at various hierarchies. When separate budgets needs to be
prepared for sales department, purchase department and so on. Each one of them has to be
defined as the budget organization. Again each budget organization can be created only for
specific flexfield combinations. For each combination chosen, we can define budget amount and
the budgetary control can be enforced separately for each combination.
Choose the accounts for which the budgetary control is required and link it to the budget defined
as above. Users need to complete the header level information and then navigate to the ranges
and define the ranges for the budget organization. For further information, refer Oracle General
User Guide. While defining the Account Ranges, set the appropriate Funds Check level for each
Account Range Users choose.

Define Encumbrance Types
Navigation: Setup -> Journals –> Encumbrances
Encumbrance types let you classify and track expenditures according to the purchasing approval
process. You can define encumbrance types in addition to the General Ledger standard
encumbrance types or disable existing encumbrance types.
General Ledger has the following predefined encumbrance types:
Commitment: An encumbrance you record when you complete a purchase requisition.
Obligation: An encumbrance you record when you turn a requisition into a purchase order.
You can define as many additional encumbrance types as you want or change the names of the
standard encumbrance types to reflect the terminology you use within your organization. You
specify an encumbrance type when you enter an encumbrance and when you perform inquiries.
Define Budgetary Control Groups
Navigation: Budgets -> Define -> Controls
Users can use the pre-defined Budgetary Control Group – Standard, otherwise, create a new
Budgetary Control Group. Users must enter the values for the Source, Category, Funds Check
Level, Tolerance %, Amount, Override Amount and so on.
The funds checking feature allow / reject the transaction based on the availability of funds based
on the setup as listed below:

o Absolute: Allows only when the funds are available
o Advisory: Allows the transaction with a warning when the funds are not available
o None: No funds’ checking is performed and thereby allows the transaction to commit
whether or not the funds are available.
Assign Budgetary Control Groups
Responsibility: System Administrator
Navigation: Profile -> System
Query the Profile Option Budgetary Control Groups and set the values at required levels. The
Budgetary Control Group value can determine the funds check level operations to be performed
when creating the encumbrance at each level (Requisition, PO, and so on.)

Oracle Purchasing and Payables
Ensure that the sub ledgers point towards the same ledger that you have defined in General
Ledger and attached to the GL Responsibility.
Enable Encumbrance
Encumbrance has to be enabled in Financial Options form either in Payables or Purchasing
module.
Navigation Purchasing: Setup -> Organization -> Financial Options
Navigation Payables: Setup -> Options ->Financial
Go to Encumbrance Region, Enable encumbrance types

4. USAGE
This section gives an idea to the users on how the encumbrance entries have to be created and
the flow of encumbrances from other modules. This section deals with the following.
 Entering Budget
 Encumbrance Accounting Flow from Purchasing and Payables
 Reviewing Encumbrances in GL
 Encumbrances Accounting and Relief in Various Scenarios
 Viewing Funds Available
 Year–End Encumbrance Processing
Entering Budget
Budget entries can be entered either through the Enter Budget Amounts form or through the
Enter Budget Journals form.
Navigations: BudgetsEnterJournals

The above figure shows the budget journals form with an amount of 500,000 entered against
account 01-000-1100-0000-000 for the month of Jan-01. Below figure shows the available funds
for the account in a given period.

Encumbrance Accounting Flow from Purchasing and Payables
Encumbrance can start from Purchasing. To have the full cycle of encumbrance, we need to
create the following
Requisition
Users can enter, approve and reserve Funds for Requisition.
Navigation: Requisitions -> Requisitions.
Create a requisition, reserve and approve the requisition. When approved users can do a funds
check in GL and this should be in requisition phase, provided requisition is the type of
encumbrance Users have attached at requisition level in financial options. Reserving the
requisition kicks of the funds checker program and encumbrance line gets created in the table
GL_BC_PACKETS. The encumbrance journal entries get created when the program – Create
Journal Entries is run from GL.
The data in GL_BC_PACKETS table would get deleted, only when the Create Journal Program in
GL is run and the journal gets posted.
The Transaction Created can have the following feature
Balance Type = E (Encumbrance)
Encumbrance Type = REQ (Requisition)
CCID = CCID given in Requisition Distribution
Accounting when the journal gets posted in General Leger
Document Expense DR Expense CR RFE DR RFE CR
Req Reserve 1000 1000
Navigation: Requisitions Requisitions

Purchase Order
Users can create, approve and reserve Funds for Purchase Order from requisition
Navigation: Auto Create
Find your requisition, Select the requisition and go to automatic. Make sure that the supplier
information is entered and select create. This creates the PO. Complete, reserve and approve
the PO. When approved users can do a funds check and this should be in PO phase, assuming
PO encumbrance is the type attached at PO level.
No journal entries are created at this stage but similar to the previous step Users can create
encumbrance entries by Create Journal Entry program. While using PO Encumbrance, users
cannot change price, quantity, shipment or currency once a PO has been reserved and approved,
the only way to deal with such a situation is to cancel the existing PO and create a new one when
a PO is cancelled system takes care of adjusting encumbrance.
The encumbrance created on Requisition is relived when the PO encumbrance is created and
Funds are reserved for the PO.

NOTE: The important point over here is that if a user creates the PO manually, it can lead to the
duplication of reservation of funds for the same transaction. This is because system treats PO as
a separate transaction and the user can end up having double reservation for the same
transaction one at requisition level and other at PO level. Hence it is suggested to use only Auto
Create mode to create a PO, while using Encumbrance Accounting.
The Transaction Created can have the following feature:
Encumbrance Type = PO (Purchase Order)
CCID = CCID given in PO Distribution
Accounting when the journal gets posted in General Ledger
Document Expense DR Expense CR RFE DR RFE CR
Req Reserve 1000 1000
PO Reserve 1000 1000
Req Unreserve 1000 1000

Receiving Receipts
Navigation: Receiving  Receipts
Depending on the routing users may have to deliver it. Once the goods are received system
creates Journal entries for the Receiving transaction. At this point PO encumbrance is relieved.
Otherwise, it gets relieved when Users post the invoice from payables to GL in Accrual basis of
Accounting. In case of Cash basis of accounting PO encumbrance gets relieved when Users post
payment information from Payables.
The PO encumbrance is getting relieved based on the setup the user has made, depending on
whether the period-end or on-line accrual is selected. If on-line accrual method is selected, the
PO encumbrance can be relieved when the goods are received. In case of period-end accrual, we
need run the period-end accrual process.
NOTE: Important reports that can be used to track the encumbrance entries are:
1. Requisition Distribution Detail Report.
2. Purchase Order Distribution Detail Report.
3. Encumbrance Detail Report.
The Transaction created can have the following feature:
Document Exp Dr Exp CR RFE DR RFE CR REC DR REC ACC DR REC ACC CR
PO Reserve 1000 1000
PO Enc Relief 1000 1000
Charge Accnt 1000 1000
Note: RFE - Reserve For Encumbrance, Dr - debit, Cr – credit
Rec - Receipt,

Payables
Once the Goods are received and matched against the Purchase Order, the next step is to create
an invoice for the Goods received. Invoice can be created at the following scenarios.
Enter Unmatched Invoices
Navigation: Invoices -> Entry -> Invoices
 This is applicable where no purchase order is created. For example, where the invoice has
to be created for the services rendered (Audit Fees).
 There is no separate step to reserve funds in AP unlike in PO. In AP, Validation process
takes care of the funds reservation.
 If the invoice is created and matched with PO and the amount matched is equals to PO,
then the encumbrance type can be reclassified from PO to INV and no additional entries are
generated.
 Payable also creates encumbrance when users successfully approve an invoice having a
quantity or price variance with the matched PO.
 If Users match an invoice to a PO, Payable automatically creates an entry in GL to reverse
the PO encumbrance and the Invoice Encumbrance comes into picture
 Encumbrance Entries are created when an invoice is validated and approved. The actual
entries are created when we transfer to GL through Payables Transfer to GL program and
imports the journals into GL. This will bring two entries, the Actual and the Invoice
encumbrance relief
 You need to run the Create Journal Entry program to bring in the PO Encumbrance relief
and the Invoice encumbrance lines into GL
Select the Account Combination at the header level, as in the Assignments window in the Budget
Organization. If budgetary control group is used, create a budgetary control group with the
source Payables and Category as Manual.
Entering Invoices and Match with Purchase Order
Navigation: Invoices -> Entry -> Invoices
Complete by entering invoice number, date and amount. Navigate to match and in the Find
Window the PO number is displayed. Flag the lines and select Match. You can flag multiple PO
lines to match with the Invoice.
The PO distributions lines can be copied to the Invoice distributions. Users can approve the
invoice. When approved the funds is checked automatically by the system.

The Transaction Created can have the following features:
Encumbrance Type = INV (Invoice)
Document Exp Dr Exp CR RFE DR RFE CR AP Accrual DR AP Accrual CR
PO Enc Relief 1000 1000
Invoice Enc create 1000 1000
Inv Enc Relief 1000 1000
Charge Accnt 1000 1000

Transfer the data to General Ledger
Navigation: Other -> Request -> Run
Select the Payables Transfer to General Ledger. Complete parameters and submit request.
General Ledger
Encumbrance entries can be accounted either directly in the General Ledger or they can be
imported from Payables or Purchasing. Certain types of expenditures like adjustment entries
that are created to adjust the abnormal transaction that have taken place, can be entered
directly as a journal. The transactions like the Purchase Invoices that have already been
entered into Payables, can be imported into GL, through the GL transfer program (refer 5.1.1.3
Transfer the data to General Ledger). The journal entries are then created by the system once
the journal import is completed (Refer 5.1.2.2 Create Encumbrance On Imported Transaction
from Purchasing / Payables)
Create Encumbrance Journals using Manual Entries
Navigation: Journals -> Encumbrance

The source of the journal can be Encumbrance, which cannot be modified. Choose the
appropriate category and enter the journals.
Create Encumbrance on Imported Transactions from Purchasing / Payables
Users can run Journal Import Program to create journal entries for the Encumbrance transactions
entered in other modules.
Navigation: Journals -> Import
Choose the source as Purchasing / Payables and enter the relevant columns.
If automatic import was selected while running the General Ledger Transfer Program, there is no
need to run the Journal Import Process again as the GL Transfer program would have created all
journal lines for the transactions created in AP.
Reviewing Encumbrances in GL
Reviewing Encumbrance entries can be done as listed below:
 Create Journal Entries Form by querying the specific journal
Navigation Path: Journals -> Enter
 Create Encumbrance Form by querying the specific journal
Navigation Path: Journals -> Encumbrance
 Account Inquiry Window
Navigation Path: Inquiry -> Account
Select the Primary Balance Type as Encumbrance and then select the encumbrance type if
required. Provide required selection criteria and from the view output. Users can further
drill down to the Journal level and then further to the sub-ledger details.
 Journals Inquiry Window
Navigation Path: Inquiry -> Journals
If only the encumbrance journals are to be inquired, without giving any other criteria, click on
the more button on the Find Journals window and select the Balance Type as Encumbrance.

Encumbrance Accounting and Relief in Various Scenarios
Relieving Encumbrance means the reversal of funds reserved on a particular transaction. It is
achieved through reversal of the original entry created for funds reservation. Relieving of
Encumbrance is done in the following ways.
Creating another Encumbrance Entry
Creating another encumbrance entry can do relieving Encumbrance. For example when the
Purchase order is created for a requisition, the encumbrance created on the requisition is
reversed. A Distribution line is created to relieve the encumbrance created on the requisition and
the encumbrance is created for the Purchase Order. Similarly the encumbrance is relieved at the
subsequent stage. For example, for purchase order, the encumbrance is created on receiving the
goods or on creating the accrual for the purchase order and so on.
Final Close of a Requisition
First an Encumbrance is created for the creation of the PO and the encumbrance created on a
requisition is reversed.
The Transaction created can have the following features:
Encumbrance Type = REQ (Requisition)
Accounting = Cr Encumbrance / Charge Account
Dr Reserve for Encumbrance Account
Final Close of a Purchase Order
First an Encumbrance is created for creation of the receipt and the encumbrance created on a PO
as is reversed.
The Transaction created can have the following feature
Encumbrance Type = PO (Purchase Order)
Accounting = Cr Encumbrance / Charge Account
Dr Reserve for Encumbrance Account

Creating an Invoice and matched against a PO
If the invoice is created and matched with PO and the amount matched equals to PO, then the
encumbrance type can be reclassified from PO to INV and no additional entries are generated.
Without creating another Encumbrance Entry
Encumbrance created once can be relieved without creating another encumbrance entry as
explained above. This can be achieved as follows.
Canceling a Requisition
Accounting = Dr Encumbrance / Charge Account (-ve)
Cr Reserve for Encumbrance Account
(-ve)
Canceling a Purchase Order
Cr Reserve for Encumbrance Account (-ve)
Rejecting the Receipt
The following accounting entries are created on rejecting the receipt
Cr Accrual (-ve)
Canceling a matched / unmatched invoice

For the Entry created and the invoices matched with exact amount of the purchase order, the
balance type can be simply changed from INV to PO, as at the time of matching, only the balance
type is changed and no entry is created.
Where the matching is done for different amount and the variance account is created, and then
the reversal can be as follows:
Cr Reserve for Encumbrance Account (-ve)
Relieving Encumbrance Manually
Users can also relieve encumbrances manually in General Ledger. To do so, Users must make an
encumbrance entry.
To relieve encumbrances manually:
1. Navigate to the Enter Encumbrances window.
2. Enter or query an encumbrance batch.
3. Choose More Actions.
4. Choose Reverse Batch.
5. Enter the Period to which to reverse the original encumbrance entry. The default period is
the current accounting period.
6. Post the reversal batch to relieve the encumbrances.
Viewing Funds Available
Availability of Funds can used to identify the maximum amount that can be spent in a given
period of time and is used for better funds management. This can also prevents over spending
than the budgeted amount. Funds Availability can be viewed from the Funds Inquiry window.
Navigation Path: Inquiry -> Funds
Year-End Carry-Forward of Encumbrance Processing
Perform year–end processing to identify outstanding purchase order and requisition
encumbrances, to cancel some or all of these encumbrances, and to carry forward encumbrance,
budget, and funds available balances into the new fiscal year. Users can carry forward
encumbrances into the next fiscal year. Users can also carry forward an equivalent budget

amount or funds available. If users do not carry forward encumbrances, users might want to
cancel existing requisitions and purchase orders behind the encumbrances. Users can easily
identify purchase orders and requisitions behind encumbrances.
When users carry forward year–end encumbrances, the Carry Forward rule specified determines
how General Ledger calculates the amount to be carried forward. Note that General Ledger
carries forward encumbrances, not as period activity, but as beginning balances.
Users can keep a checklist as they execute the year-end carry forward. Perform one company at
a time, or one encumbrance type at a time, and check off each company or encumbrance type as
processed.
Year End Carry Forward Check List
Before Users Start
 Run receipt accruals
 Post outstanding encumbrance journal entries
 Post outstanding budget journal entries
 Post outstanding actual journal entries
Mass Cancel In Oracle Purchasing
 Run Encumbrance Details Report to review purchase orders and requisitions behind
encumbrances
 Define Mass Cancel for purchase orders
 Review Run Mass Cancel Listing to verify cancelled purchase orders
 Run Mass Cancel for purchase orders
 Define Mass Cancel for requisitions
 Review Run Mass Cancel Listing to verify cancelled requisitions
 Run Mass Cancel for requisitions
 Post encumbrance journal entries from cancellations
Year-End Carry Forward in Oracle General Ledger
 Run Encumbrance Trial Balance for audit trial of encumbrance before year-end carry
forward

 Close last period in old year
 Open first period in New Year
 Open the next encumbrance year
 Open the next budget year
 Run Year-End Carry Forward with Preview Option set to YES
 Review the Carry Forward Report showing proposed carry forward accts and
amounts
 Run Year-End Carry Forward with Preview Option set to NO
 Review the Carry Forward Report with the updated balances
 Run Encumbrance Trial Balance for audit trial of new encumbrance position

5. Important Terms Used in Encumbrance Accounting
Commitment: An encumbrance entry of the type commitment is created by a requisition in PO
module. This is created when a requisition is approved & reserved. The requisition amount
created is called a commitment. This requisition amount is deducted from the Budget.
Obligation: A Purchase Order creates an encumbrance of the type obligation. This is created
when a Purchase Order is approved & reserved. The PO amount is called an obligation. This PO
amount is deducted from the Budget.
Encumbrance Types: Encumbrance type classifies and track expenditures according to the
purchasing approval process. Users can define encumbrance types in addition to the General
Ledger standard encumbrance types or disable existing encumbrance types. There is no specific
validation for the Encumbrances type. The main reason for defining Encumbrances type would be
to distinguish expenditures blocked at what level that is at the time of creating of Requisition or
Raising of Purchase order or at the time of approval of invoice. One specifies an encumbrance
type when one enters an encumbrance and when one perform inquiries.
Encumbrance Entry: An encumbrance entry is created when users reserve a requisition or a PO
or create an unmatched invoice – the type of encumbrance created is either a Commitment or
Obligation. This creates an encumbrance entry in the interface table called the GL_BC_PACKETS.
One can enter encumbrances only in the functional currency
Reversal of An Encumbrance Entry: Whether the system accrues expenses on receipt of
goods or on processing of invoices, the system creates expense distribution lines from purchase
order lines at the appropriate time and automatically relieves the purchase order enc umbrance.
Users can also relieve encumbrances manually in General Ledger. To do so, users must make a
reversal encumbrance entry. The action of nullifying the encumbrance is called De-encumbering.
Following are different scenarios: -
a) Cancel a PO or a Requisition or an Invoice?
b) Return or Reject a PO or a requisition
c) Finally close a document
Funds reversal occurs when documents are cancelled or finally closed. Negative debit entries are
created to the respective accounts to nullify the encumbrance. When the above occurs reversing
transactions occur which de-encumbers the previously created encumbrance transactions. The
encumbrance entries get relieved on reversal of the journal entries.
When you make changes against the price or the quantity of the PO/Requisition.

Users can make changes to a purchase order for which funds have already been reserved (or
encumbered). Temporarily unreserving the document, making the desired changes, and
reserving the document again can do this. The unreserved action takes place at the header level
only; it affects all lines on a purchase order, and changes the document's status to Requires
Reapproval.
Note: Users have to make sure that the Unreserve Date falls within an open reserve period.
Budget Accounts: Budget Accounts are defined as accounts against which pre-allocated amount
or budget is specified. This could be at the Summary level or the detail level.
Carry Forward Of Encumbrance Accounts: Perform year–end processing to identify
outstanding purchase order and requisition encumbrances, to cancel some or all of these
encumbrances, and to carry forward encumbrance, budget, and funds available balances into the
new fiscal year. Users can carry forward encumbrances into the next fiscal year. Users can also
carry forward an equivalent budget amount or funds available. If they do not carry forward
encumbrances, they might want to cancel existing requisitions and purchase orders behind the
encumbrances. Users can easily identify purchase orders and requisitions behind encumbrances.
When Users carry forward year–end encumbrances, the Carry Forward rule specified determines
how General Ledger calculates the amount to be carried forward. Note that General Ledger
carries forward encumbrances, not as period activity, but as beginning balances.
Users can choose one of the following Carry Forward rules:
Encumbrances Only: General Ledger calculates the year-to-date encumbrance balance as of
the end of the year and carries that balance forward into the beginning balance of the first period
of the next fiscal year.
Encumbrances and Encumbered Budget: General Ledger calculates the year-to-date
encumbrance balance as of the end of the year and carries forward that balance, plus an
equivalent budget amount, into the beginning balance of the first period of the next fiscal year.
Funds Available: General Ledger calculates the funds available as the year-to-date budget
balance less year-to-date actual and encumbrance balances. General Ledger then carries forward
that amount into the beginning balance of the first period of the next fiscal year.
Users can print a preview report to view the effects of a year-end carry forward before Users
initiate the carry forward process. If users do not use the Year–End Carry Forward window to
carry forward encumbrances at the end of the fiscal year, all encumbrances automatically go to
zero. Users can execute year–end carry forward a number of times for different ranges of
accounts and different encumbrance types.

Encumbrance Reconciliation: Encumbrance journals created by sub-ledgers (Especially
Payables & Purchasing) should be reconciled on a regular MONTHLY basis. Without monthly
reconciliation, encumbrance issues are usually identified at an organization's year-end when
funds and time are very limited.
Encumbrance Reconciliation Tips:
 Payables encumbrances should clear to zero each period.
 Purchasing encumbrances in the ledger should balance to the Encumbrance Detail
report in Purchasing.
If they do not:
1) Ensure that the Program - Create Journals and Payables Transfer to ledger have been
run. Post all encumbrance entries.
2) Check for outstanding rows in the gl_bc_packets table. Please note that unposted
entries in the ledger can NOT clear the gl_bc_packets table until they are posted.
Funds Available: Funds Available = Budget – (Actual Expenses + Encumbrances)
Funds available are the amount of Funds, available to be encumbered. The difference between
the amount that are authorized to spend and all actual and anticipated expenditures. In other
words, funds available are the amount budgeted less actual expenses and encumbrances of all
types. Oracle provides the facility to let users check funds available online for requisitions,
purchase orders, and invoices.
When a user enables budgetary control on the set of books and enables encumbrances on
requisitions, purchase orders and or invoices this enables the functionality of the "funds checker"
(a library owned by GL). This library inserts records into the table gl_bc_packets whenever a
calculation might affect the funds available. If Users do not use requisition encumbrance, then
funds checker cannot kick off and there can be no records in gl_bc_packets.
When Users inquire on funds available, the amount type Users specify determines how General
Ledger calculates funds available.
Below table displays how the system calculates the funds availability in different scenarios.
Amount Type How the System Calculates Funds Available
Period–to–Date Calculates funds available as the budgeted amount for the period,
less actuals and encumbrances for the period.

Quarter–to–Date
Extended
Calculates funds available as the budgeted amount to date for the
quarter, less actuals and encumbrances to date for the quarter. For
example, Users budget $100 to an account for each of the three
months in a quarter. The available amount for the second month of
the quarter is $200.
Quarter–to–Date
Extended
quarter, less actuals and encumbrances to date for the quarter. For
example, Users budget $100 to an account for each of the three
months in a quarter. The available amount for the second month of
the quarter is $200.
Year–to–Date
Extended
year, less actuals and encumbrances to date for the year. For
example, Users budget $100 to an account for each of the 12
months. The available amount for the first half of the year is $600.
Project–to–Date Calculates funds available as the budgeted amount to date, less
actuals and encumbrances to date.

6. Important Tables Used for Encumbrance
The following tables are used for the encumbrance transactions.
 GL_BC_PACKETS
 GL_BC_PACKET_ARRIVAL_ORDER:
 GLBV_ENCUMBRANCE_BALANCES
 GLBV_ENCUMB_JOURNAL_BATCHES
 GLBV_ENCUMB_JOURNAL_ENTRIES
 GLBV_GL_ENCUMBRANCE_TYPES
 GLFV_ENCUMBRANCE_BALANCES
 GLFV_ENCUMB_JOURNAL_BATCHES
 GLFV_ENCUMB_JOURNAL_ENT RIES
 GLFV_GL_ENCUMBRANCE_TYPES
 GL_ENCUMBRANCE_TYPES
 GL_ENCUMBRANCE_TYPES_CURRENT_V
 GL_ENCUMBRANCE_TYPES_V
 RG_ENCUMBRANCES_V

Encumbrance Accounting

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Similar a Encumbrance Accounting

Similar a Encumbrance Accounting (20)

Más de Baker Khader Abdallah, PMP

Más de Baker Khader Abdallah, PMP (20)

Último

Último (20)

Encumbrance Accounting