1. © 2010 Brigham Young University–Idaho 1 © 2008 Brigham Young University–Idaho

2. © 2010 Brigham Young University–Idaho Changes to Encumbrances on Monthly Financial Reports 2 Controllers Group Conference – Sept 29, 2011

3. © 2010 Brigham Young University–Idaho Encumbrances Defined In management accounting, an encumbrance is a management tool used to reflect commitments to spend funds in the accounting system and attempt to prevent overspending. Encumbrances allow organizations to recognize future commitments of resources prior to an actual expenditure. At BYU-Idaho, encumbrances not finalized by December 31 are carried forward as additional budget in the new year. 3 Controllers Group Conference – Sept 29, 2011

4. © 2010 Brigham Young University–Idaho Examples of Encumbrances at BYU-Idaho Purchase order: a legal offer by the University Purchasing Department to buy products or services (not yet received or completed) Travel authorization: an approved trip for one or more individuals (not yet completed) Work order: a requested service from University Operations (not yet completed) 4 Controllers Group Conference – Sept 29, 2011

5. © 2010 Brigham Young University–Idaho The Problem The University accounting system only gathered information about budget encumbrances at the end of each month as part of the monthly closing process. This made it difficult for account stewards to manage department budgets—especially near year-end. 5 Controllers Group Conference – Sept 29, 2011

6. © 2010 Brigham Young University–Idaho The Solution Monthly financial reports will now show amounts currently encumbered at the end of each day. Stewards and supervisors will now have the most current information to determine funds available at any time. 6 Controllers Group Conference – Sept 29, 2011

7. © 2010 Brigham Young University–Idaho Questions ?? 7 Controllers Group Conference – Sept 29, 2011