Common Terms Used in Commitment Accounting

Field or Control	Description
Budget	A plan for expenditures related to staffing that includes head count (full time equivalents, or FTEs), salary, benefits, and employer paid taxes.
Encumbrance	A claim against funds. A projection of future expenses based on the situation, as you know it today. Encumbering funds isn't the same as spending them or even guaranteeing that you'll spend them. It just means that if the situation as it exists today doesn't change, you'll spend all of those funds by the end of the fiscal year.
Pre-encumbrance	An encumbrance that occurs before an employee/employer relationship exists. You encumber funds for an employee you have on staff; you pre-encumber funds for an employee that you anticipate hiring. For example, you would pre-encumber funds for a new position that has just been approved but not filled.
Actuals	The actual portion of the encumbered amount that you have spent to date. An encumbered amount becomes an actual whenever an encumbered amount is paid. When you process money for payment, for example, by running a payroll, you are creating actuals.