Skip to main content

Encumbering Funds/Liabilities Against a Purchase Order

Purchasing and Payment Processing

View Official Policy: Encumbering Funds Liabilities Against a Purchase Order Policy

Purchase requests will not be processed on an account that does not have sufficient funds available in the appropriate account and expenditure object code to cover the amount of the request. The person submitting a purchase request is responsible for determining that sufficient funds are available prior to submitting the request.

The available balance in an account and object code is determined by subtracting the encumbrances and expenditures from the budget. This available balance must equal or exceed the amount of a purchase request in order for the request to be processed. It is important to note that the budget check is performed on the total account and on the relevant expenditure object code. Expenditure object codes designate categories of expenditures such as travel, operating expense, equipment, etc.

Departmental staff should carefully monitor account balances and avoid submitting purchase requests that cannot be processed due to insufficient available funds. Immediate action should be taken to correct budget issues that may result in delays in processing orders.

Funds obligated for a purchase will remain encumbered in the accounting system until a payment is processed for the purchase or until Procurement reduces the encumbrance. At the fiscal year end (June 30th) encumbrances on state funded accounts are converted to a liability in the accounting system. This conversion is indicated on a department’s final fiscal year end account status report by a journal voucher. The journal voucher does not mean that the encumbrance has been paid, and the department staff should continue to monitor the purchase order to ensure that all goods and services on the order have been received and all invoices on the order paid.


Responsible University Senior Administrator:  Vice President for Finance & Administration

Responsible University Administrator:  Associate Vice President for Finance Division

Policy Owner:  Accounts Payable

Policy Contact:  Patricia Sims

Phone Number:  706-542-2786

Date Issued: 01/01/2016

Last Reviewed/Updated: