Accounting Office / Accounts Payable

Definition:
An encumbrance is a commitment to disburse funds in the future. Recording encumbrances helps prevent over-spending the amount available in the account.

Encumbrances can be created by:
  • Creating a Purchase Order for payments to vendors outside the university
  • Obtaining services from Telecommunications or Information Technology Services
  • Submitting an Electronic Personnel Action for a salaried employee
  • Entering an Authorization or Air Ticket Requisition on the Employee Reimbursement System.
Examples:
Purchase Orders are created by submitting a Web Requisition to the Purchasing Department. After the Web Requisition is approved by the Purchasing Department, they create a Purchase Order, which encumbers your fund(s) for the amount(s) specified. The encumbrance is not affected when vouchers are printed, but is relieved as the checks are printed.

Non-Equipment - Purchase Orders for all class codes other than 71100 are grouped as Non-Equipment.

Equipment - Purchase Orders for equipment on class code 71100 are grouped as a separate total.

In WebFM in AccessPlus you can view the outstanding encumbrance totals by category by entering your fund account number and clicking the Encumbrance menu option in the top left of the screen. You can drill down on the underlined PO, Travel or Payroll categories to see additional detail.

The detail of purchase orders in the EA browse may not match the summary totals from the ET function for the following reasons:

  • Equipment and non-equipment encumbrances are shown in the same browse. You need to add the items with the 71100 class code separately.
  • Only items highlighted in green are included in the Purchase Order encumbrance totals.
    • Negative and zero amounts are not included in the totals.
    • Purchase Orders created earlier today are not included in the totals.
    • Purchase Orders starting in the next fiscal year are not included in the totals.
  • The detail browse is updated real-time by the Purchasing Department as new purchase orders are created, or old ones canceled. WebFM is only updated three times per week, except in June when it is updated daily. New purchase orders not included in the summary totals are positive amounts but not highlighted.

All Purchase Orders starting with an "I" have fund accounts assigned and are encumbered. There are many contracts though Purchasing starting with a "C" that are not assigned to a specific account number, so they will not show up on this browse and are not encumbered. However, a C contract will be encumbered if it has an account number assigned.

If you change the pre-printed fund account, section-project or class code on a voucher, this will cause the encumbrance to not be relieved, and you will have to request a manual adjustment of the encumbrance through the Purchasing Department.

Payments made by wire transfer, ACH transfer or by foreign draft do not automatically relieve encumbrances. These require manual updating by the Accounting Office and Purchasing Department. You do not need to make a request for this, as we already have a procedure in place. However, there may be a delay of a few days, compared to a payment made by Iowa State University check.

Encumbrances for both "I" and "C" contracts are reduced as payments are made on the contracts. However, the residual amount will remain for "I" encumbrances until the order is marked "COMPLETE" (i.e., the last listed item has been paid). Residual amounts for "C" contracts will be remain until after the third Friday in August, at which time they will be summarily removed.

Information Technology Services (f/k/a Administrative Technology Services and Administrative Data Processing) allows departments the option of setting up an encumbrance for the estimated annual amount of charges, which is reduced throughout the year as intramural charges are posted. Please contact Vicki John at 515-294-2128 if you have questions.

Travel Encumbrances are created by entering an Authorization or Air Ticket Requisition on the Employee Reimbursement system. The Authorization encumbrance is relieved in full when the first Reimbursement for that travel event number is posted. The Air Ticket Requisition encumbrance is relieved in full when the air ticket intramural charges are posted at the end of the month.

The travel encumbrance file is only updated on Friday evenings, and the change will not be reflected on WebFM until the following Wednesday morning. The detail of travel encumbrances is available on your monthly departmental statement, as well as WebFM.

Payroll Encumbrances are created for salaried employees after the Electronic Personnel Action is approved. The annual amount is encumbered, and reduced throughout the year as the payroll expenditures are posted. Payroll encumbrances on state-appropriated funds do not include benefits, but other accounts do. In WebFM you can use the PN function to browse the detail of payroll encumbrances by name, or use the PC function to browse by class code.

Telephone Encumbrances are created for the annualized amount of the monthly recurring data and voice charges. These amounts are reduced by the monthly intramural charges posted. No amounts are encumbered for non-recurring charges or long-distance charges.