Purchase Orders and Commitments - The terms “commitment” and “encumbrance” are used interchangeably. Both terms mean a purchase order (PO) has been created to earmark funds for a specified purpose. When reviewing a report in the financial management system, the Budget-Actuals-Commitments is the available balance. Showing commitments on financial reports is a tool you can use to determine how much money remains on a PO that can be spent. The commitment will show on the project or general ledger string until the PO is invoiced against or closed out. If a PO is closed out before the end of a fiscal year, then the commitment will be reversed and the hold against the available balance will be removed. POs do not close out at the end of a fiscal year, which means commitments roll over provided that there is a balance on the PO.
Open POs and Funding - Commitments are a hold against an available PO balance. An open PO is a commitment and will lessen the available balance on a project string or general ledger string. Committed funds are not available for use for other purposes because they are set aside for payment of goods or services already ordered.
Commitments and Budgets - Closing a commitment does not change your budget amount. If you have a commitment at the end of a fiscal year and goods and services are not received before the fiscal year closes, then you should work with your department to secure funding for the following fiscal year as needed.
Open Commitments - All requisitions that are submitted for approval in RU Marketplace show as an open commitment in Oracle. When a requisition is approved and becomes a valid PO (RU Marketplace), then the requisition commitment is replaced with a PO commitment (Oracle). After an invoice is processed against a PO, the PO commitment is replaced with a charge to the Project or general ledger string. Once a month, the Controller’s Office manually removes open requisition commitments (Oracle) if the requisition was approved, withdrawn, rejected or returned. A cancel/close request can be submitted (RU Marketplace) to resolve a commitment issue if a PO number has been assigned.