Difference between Budgetary Control and Encumbrance Accounting

These are the differences between Budgetary Control and Encumbrance Accounting.

Budgetary Control

• Orchestrates the spending control process by validating if transactions have sufficient funds and if they're subject to spending control.

• Stores the budget, performs funds check and funds reservation when transactions are submitted or approved.

• Maintains budgetary control balances for expense accounts, including budget, funds reserved (commitments, obligations, and expenditures), and funds available balances based on the budget calendar and control budget structure (chart of account segments you control by), without any journal entries. Revenue, liability, and equity account types aren't supported.

Encumbrance Accounting

• Creates encumbrance journal entries for requisitions and purchase orders. Also creates actual journal entries for invoices and journals using the Standard Accrual with Encumbrances accounting method in the Subledger Accounting module when the user submits or schedules the Create Accounting process.

• Optionally creates Invoice Encumbrances to report actuals at the payment rather than invoice validation.

• Stores and maintains the encumbrance and actual account balances in General Ledger based on the ledger's accounting calendar and chart of accounts.

• Loads budget balances into General Ledger for comparison with actual balances.

• Doesn't automatically maintain funds available balance in General Ledger. It is only automatically maintained in the Budgetary Control module.