ENTRY NO. A–8, ACCRUE ACCOUNTS PAYABLE - 10608

(Revised: 06/2023)

Purpose: To accrue the amounts for (1) obligations (goods/services received/performed as of June 30 but not yet scheduled for payment) and (2) encumbrances (goods/services not received/performed as of June 30). This entry is reversed in the new fiscal year. See SAM Section 10609.

 

To determine the amounts for obligations and encumbrances, agencies/departments will:

• Review all unliquidated encumbrances to identify whether they are valid obligations or encumbrances of the year just ended.
• Accrue any obligations that were not previously encumbered.
• Accrue any obligations of prior fiscal year appropriations that have not yet reverted to the applicable fiscal year.
• Accrue any obligations of reverted appropriations to a like appropriation of the fiscal year just ended.

These procedures permit all valid obligations of state funds to be reflected in year-end financial reports.

Once the encumbrances and obligations have been determined, agencies/departments will:

• Record expenditures in the applicable appropriation accounts.
• If applicable, reduce or liquidate obligations or encumbrances for the accrual amount.
• Record liabilities in the accounts which identify to whom the amount is due.
• Accrue the reimbursement if any encumbrances are to be funded by reimbursement.

References: SAM Sections 7600, 7952, 8340, 8360, and 10465

 

Accrue Expenditures for Obligations and Valid Encumbrances

Debit/ Credit	Account	Legacy Account	Account Description	Note
Debit	5xxxxxx	9000	Appropriation Expenditures	a
Debit	5802000	9893	Prior Year Appropriations Adjustments	b
Credit	2000xxx	3010	Accounts Payable	c
Credit	201xxxx	31xx	Due to Other Funds or Appropriations	d
Credit	202xxxx	32xx	Due to Other Governments	e

 

Record Encumbrance Liquidation

Debit/ Credit	Account	Legacy Account	Account Description	Note
Debit	Not used	5350	Reserve for Encumbrances	f
Credit	Not used	6150	Encumbrances	f

 

Note:

1. Encumbrances and obligations as of June 30 payable from appropriations available for encumbrance during the fiscal year just ended.
2. Encumbrances and obligations as of June 30 payable from prior year appropriations not available for encumbrance during the fiscal year just ended.
3. Obligations in Notes a and b due to private entities.
4. Obligations in Notes a and b due to other funds or appropriations.
5. Obligations in Notes a and b due to other governmental entities.
6. Encumbrance documents reduced or liquidated for the accrual amount. Agencies/Departments deferred/exempt from using FI$Cal will use the balance of Legacy Accounts Nos. 5350 and 6150 as of June 30.

For agencies/departments using FI$Cal, the Commitment Control ledger liquidates encumbrances by canceling or closing purchase orders within the Purchasing module or by encumbrance journals in the General Ledger module.