Guidance on Budget Adjustment for Prior-Year Encumbrance Issues

We would like guidance on the appropriate approach for determining the required budget adjustment for prior-year transactions.

We are now operating under a new fiscal-year budget; however, issues from the previous year are affecting our current balances.

In the previous fiscal year, several Purchase Orders (POs) were created without a fund reservation because budgetary control was not enabled at the PO stage. As a result:

• Requisition encumbrances (commitments) were not relieved
• PO obligations were not recorded
• When receipts were processed, funds were reserved at the receipt level, resulting in negative balances

Additionally, the expected transition of amounts from requisition commitments to PO obligations did not occur, leaving commitments overstated and obligations understated.