Skip to Main Content
You are now in the main content area

Encumbrance Details

An encumbrance refers to funds that have been reserved for goods or services ordered but not yet received or paid for, including hiring commitments up to the end of the TMU fiscal year.

The main benefit of encumbrance accounting is to avoid overspending against approved budget plans. Once the commitment has been paid, the encumbrance is released and actual expenses will increase. There are three types of encumbrances.

Salary and benefit encumbrance

When a full-time employee is hired and entered into the HR system, an encumbrance is generated to commit the total cost of the salary and benefit for the remaining fiscal year. 

For a term employee, the encumbrance is calculated up to the contract end date but not beyond the fiscal year. Those funds are no longer available for use for other transactions and have been deducted from the budget balance available (BBA).

Purchases encumbrance

At the start of the purchasing process, funds are placed aside for that transaction. Those funds are no longer available for use for other transactions and have been deducted from the budget balance available (BBA).

Manual encumbrance

At times, budget managers may manually commit funds in anticipation of an expense that will occur during the fiscal year. In those instances, the committed funds no longer show as available for use and will be deducted from the BBA.

To commit funds manually, please email a request to your department’s financial advisor or analyst. Such requests should include the amount, distribution code and a description of the reason for having funds encumbered.

Viewing encumbrance details in the financial system

There are two reports that show encumbrance in the  Financial Information System (FIS or Oracle):

  • Summary View: RU Revenue/Expense Summary - 3 Selections or TMU Revenue/Expense - 3 Selections - XML
    • (Displays the budget balance available (BBA), budget actuals and encumbrances)
  • Detailed View: RU Commitment Detail Report
    • (Displays details of posted encumbrance transactions for a specific cost centre)
  • Details of payroll encumbrance are available through eHR reports