Encumbrance Tracking

This topic discusses encumbrance tracking in Costpoint, in general terms. Specifics on the setup and processing of encumbrances are also discussed.

Encumbrance accounting is used primarily by non-profit organizations to track the expenditure of funds as they are appropriated, or encumbered. These organizations frequently deal with agencies that grant limited amounts of funds. As the organization reaches the limit of these funds, they make requests to the agency for additional funding. Therefore, the organization needs to track expenditures and, if the fund limit is exceeded, they must not post transactions until additional funds are requested and approved.

You can use encumbrance tracking in Costpoint Budgeting and ETC to track expenditures, for both posted and unposted transactions, on an individual project basis. You can enter budget ceilings at the account level. After you enter the transactions, over-budget amounts are computed and printed on a report before the transactions are posted. You have five options for handling the over-budget transactions:

• Increase the ceiling amount for the project/account.
• Set up new budget revisions, designate them as Current, and enter new budget accounts and amounts.
• Modify the project/account charge point combination on the transactions.
• Manually remove the over-budget flag from the transactions.
• Hold the transactions from posting until additional funds have been granted.