Is your fiscal year-end is fast approaching? If so, you might want to review information pertinent to encumbrance/commitment accounting as it pertains to JD Edwards EnterpriseOne.

 

An encumbrance accounting system allows you to reserve budgeted funds for outstanding obligations. In EnterpriseOne Procurement, 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 relieved in the same fiscal year in which it was encumbered.

 

The terms commitment and encumbrance are interchangeable in EnterpriseOne 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 ledger type PA.
  • An actual expense is one that represents an actual cost incurred. Actual amounts are tracked in the F0902 using ledger type AA.
  • An encumbered amount becomes an actual amount when a purchase order is either:
    • Received via the Enter Receipts By Item or Enter Receipts by Order application (P4312) then Matched to the receipt(s) using the Voucher Match to Open Receipts application (P0411/P4314) using a 3-way match.  The resulting voucher batch, batch type V, is posted.
    • Matched to the purchase order using the Voucher Match to Open Receipts application (P0411/P4314) via a 2-way match. The resulting voucher batch, batch type V, is posted.

 

Encumbrance dates to remember:

  • An expense is encumbered as of the G/L Date entered on the purchase order detail line (F4311).
  • An encumbrance is relieved as of the G/L Date assigned to the journal entries created by P4312 or P4314 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.

 

For an outline of process flows for Two-Way Match for Commitments and Encumbrances, Three-Way Match for Commitments and Encumbrances and Purge/Rebuild/Repost see Commitment/Encumbrance Best Practices (Doc ID 646593.1)

 

When troubleshooting issues related to encumbrances and/or commitments, it is always beneficial to ensure the most up-to-date objects for the related processes are installed in your environment.  See Change Assistant Pre-Defined Query For Encumbrance / Commitment Objects (Doc ID 1945124.1).

 

If encumbrance amounts display incorrectly in Encumbrance Inquiry (P40230A) or Budget Comparison (P09210A), review Checklist for Troubleshooting Commitment/Encumbrance Integrity Issues (Doc ID 657403.1).

 

At fiscal year-end you must either close or rollover all open purchase orders to the next fiscal year. The Encumbrance Rollover program (R4317) 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 R4317, please see Encumbrance Rollover (R4317) (Doc ID 625473.1).