What is a salary encumbrance?
A salary encumbrance is a payroll commitment that is chargeable to an account. In other words, it is a future commitment to spend current funds. It ceases to be an encumbrance and is liquidated when paid out or when the actual liability amount is determined and recorded as an expense. Essentially, these commitments will encumber or reduce the balance of funds available in the account. In the past, the University has reported encumbrances related only to purchase orders. In this case, when an item is ordered a commitment to pay for that item in the future is made. Similarly, encumbrances on salary accounts take into consideration how much current employees are expected to be paid during the remainder of the fiscal year.
