After the annual budgets have been established and loaded into the Accounting Information System, departmental or budget center staff should encumber recurring costs such as estimated annual expenditures for telephone, postage, and office supplies. The remaining unencumbered balance reflects the portion of funds over which departments have more discretion, provided encumbrances have been estimated accurately. Encumbrances should be reduced as payments are processed for encumbered items.
Budget Status Reconciliation
Budget status reports should be reconciled each month to verify the charges posted and those still outstanding. Expenditures for vouchers/requisitions processed but not appearing on the budget status report within a reasonable time, should be investigated. In cases involving requisitions/purchase orders, a follow-up on shipping, invoices and/or receiving reports may be needed. This becomes more critical near the end of a fiscal year and should be monitored very closely to assure goods, invoices and receiving reports are received timely in order to charge the appropriate fiscal year.
Salary budgets should be monitored very close, since the major portion of most budgets is for salaries. Salary lapses should be projected regularly. This can be done by multiplying the latest pay period costs by the number of remaining pay periods in the fiscal year (including the accrual at year-end), adjusted for additional savings or costs for projected future vacancies and appointments. The level of administrative control at which salary lapses are projected and re-allocated varies from one budget center to another depending upon the policies of the budget center. Budgetary policies established at the budget center level should be communicated to units within the budget center.
Salary Adjustments, Merit Increases And Reclassifications
Salary adjustments, merit pay increases and reclassifications should be monitored and the total costs compared with funds allocated by the University, if applicable. Increases granted in excess of applicable University allocations must be absorbed by the budget center. Generally, such increases above University allocations must be absorbed from sources such as block funding, shifting funds from non-salary budget categories, from salary savings due to appointments at less than budgets or eliminating positions.
Budget Review And Reporting
Budgets should be reviewed on a regular basis by department and budget center management. Summary budget reports prepared by departmental or budget center staff would be very helpful to department and budget center management. The reports should inform management on budget items such as, projected revenue shortfalls, revenues in excess of current budgets, expenditure overruns, etc. After budgetary review by the appropriate administrators, budget revisions should be processed as needed in order to keep budgets current and reflect management's budgetary decisions.