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If your fiscal year-end is fast approaching, you might want to review information pertinent to encumbrance/commitment accounting as it pertains to the JDE World software.

 

An encumbrance accounting system allows you to reserve budgeted funds for outstanding obligations. In the World Procurement system, an encumbrance is represented by an open purchase order or contract. Since funds are typically expended on a fiscal year basis, an encumbrance should be negated (relieved) in the same fiscal year in which it was encumbered.

 

The terms ‘commitment’ and ‘encumbrance’ are interchangeable in the World Procurement applications. The term commitment is typically used for non-stock purchasing or managing contracts. The term encumbrance is typically used in conjunction with services and expense based purchasing.

 

The system tracks encumbrances and actual amounts logged against each pertinent account number for the fiscal year to determine the remaining budget available.

 

Encumbrances versus Actual Amounts, points to remember:

 

  • An encumbered expense is one that pertains to an ‘open’ purchase order. Encumbered amounts are tracked in the Account Balances file (F0902) using a ‘PA’ ledger type.
  • An actual expense is one that represents an actual cost incurred. Actual amounts are tracked in the F0902 using an ‘AA’ ledger type.
  • An encumbered amount becomes an actual amount when a purchase order is either:
    • Received via the Enter Receipts program (P4312) using a 3-way match and the resulting batch is posted
    • Matched to the invoice using the Voucher Match program (P4314) via a 2-way match and the resulting batch is posted.

 

Encumbrance dates to remember:

 

  • An expense is encumbered as of the G/L Date entered on the purchase order line.
  • An encumbrance is relieved as of the G/L Date assigned to the journal entries created at P4312 or P4314 (as of the A9.1 release), OR as of the date the purchase order is cancelled.

 

The cancel date for a purchase order line is recognized as the date the cancellation occurs. However, the cancel date is not maintained in any file. If you run the repost, the commitment date is used as the cancel date.

 

When encumbrance amounts display incorrectly on the Commitment Information (P40230), OR Budget Comparison (P43121) videos, you may want to run the purge, rebuild and repost processes to recalculate the amounts. For more information about these processes, see Commitment/Encumbrance Accounting (Doc ID 626811.1).

 

At fiscal year-end you must either close or rollover all open purchase orders to the next fiscal year. The Encumbrance Rollover program (P4317) is an automated batch process you can use to:

 

  • Cancel all open purchase order lines in the prior year.
  • Roll over open purchase order lines and amounts from the prior fiscal year to the new year.

 

For information about P4317, please see Encumbrance Rollovers (Doc ID 626672.1). Important changes to the program were made in the A9.3 release. For information regarding the changes, please see doc ID 1908390.1 – Program Changes for Encumbrance Rollover.  As well, a 2014 archived webcast is available titled JD Edwards World: Reviewing Encumbrance Rollover (P4317) & Program Changes in Release A9.3 Update 1 (Doc ID 1455377.1).

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