Understanding Encumbrance Processing

This overview discusses:

  • Encumbrance processing options.

  • Encumbrance calculations.

There are two options for processing encumbrances:

  • Batch processing.

    You use batch processing to create baseline encumbrances for a fiscal year and to update encumbrances on an ongoing basis.

    Note: You should run the batch encumbrance processes regularly to ensure that your encumbrances reflect job data and position data changes that occur during the fiscal year and to liquidate unused pre-encumbrance and encumbrance amounts from the budget.

    There are separate batch processes for calculating encumbrance amounts and for posting the encumbrance data to PeopleSoft Financials.

  • Real-time budget checking.

    Real-time budget checking processes job data and position data changes as they occur. Depending on how you've configured the system, changes to job data and position data can be processed immediately, with feedback to the user who makes the change, or the budget checking can be deferred, in which case you use a separate budget-checking component to initiate processing.

    For both immediate and deferred budget-checking, the system calculates encumbrance amounts and sends the data to PeopleSoft Commitment Control, which supplies a return message indicating whether there are sufficient funds for creating the encumbrance.

Note: Encumbrance processing calculates and posts encumbrance data only for departments that are specifically configured to use the Commitment Accounting business process. Configure departments for commitment accounting on the Departments - Comm. Acctg. and EG page (DEPARTMENT_TBL_CA).

This topic describes how the system calculates earnings and fringe encumbrance amounts.

Earnings Encumbrances

The system calculates earnings encumbrances through the funding end date of each earnings funding source.

When a funding source does not have a funding end date, the process calculates earnings encumbrances through the end of the current fiscal year. If the funding end date is prior to the current fiscal year end date, the process calculates earnings encumbrances for the entire fiscal year, and the earnings encumbrance from the funding end date through the fiscal year end date is placed into the suspense account.

The system uses funding information from the Job Earnings Distribution page, Job Data - Payroll page, or Dept Budget Earnings page (DEPT_BUDGET_ERN) to determine funding sources for earnings. Because the Dept Budget Earnings page is the only place to specify earnings funding end dates, calculations based on data from the other pages always calculate earnings encumbrances through the end of the current fiscal year.

Fringe Encumbrances

Use the Encumbrance Definition page (ENCUMB_DEFN) to configure calculations, funding sources, and funding end dates for employer-paid deductions and taxes

The system calculates deduction and tax encumbrances as a percentage of earnings plus a flat amount. When you configure fringe calculations, you can use constant percentages and flat amounts, or you can reference a fringe matrix code that finds the appropriate percentages and amounts based on the employee's company, pay group, employee classification, employee type, full/part-time status, and salary.

For the current fiscal year, the system calculates fringe encumbrances through the end of the fiscal year. If the funding end date is prior to the current fiscal year end date, the fringe encumbrance from the funding end date through the fiscal year end date is placed into the suspense account.

For future fiscal years, the encumbrance process calculates fringe encumbrances through the earlier of the funding end date for the fringe funding source or the funding end date of the earnings on which the fringe calculation is based. If the fringe funding source does not have a funding end date, the process calculates fringe encumbrances through the earlier of the earnings funding end date and the end of the current fiscal year.

Note: When calculating fringe encumbrances, the system doesn't look at a person's actual benefits enrollment and tax situation. Instead, it estimates these based on the information on the Encumbrance Definition page.

Future-Dated Changes

Future dated changes are processed only when the effective is within the current fiscal year.

The encumbrance process calculates encumbrances through the funding end date for your earnings and fringe funding sources or, when no funding end date is specified, through the end of the specified fiscal year.