Accounting Office changing procedures for City National Bank credit cards

Please note that starting with the statement ending 1/30/23, the Accounting Office will be ENCUMBERING the balance of all City National Bank VISA charges to cardholders fund 10 accounts. 

What is Encumbering?
Encumbering is holding the funds from the budget so that the available budget umbrella (60000 account) is LOWERED by the encumbrance. 

Why is this being done?
This encumbrance will be done for all card holders for each statement that there are charges on their card. This is necessary to ensure there is not overspending of allocated budget due to timing differences in expense report submittals. Unfortunately, delays in expense report submittals on the new system have been prevalent.  Encumbering is a way to ensure cardholders charges are accounted for as timely as possible. 

What will I see on my budget?
Cardholders will see an encumbrance on their fund 10 account with the account 10-XXXX-64919-01. This account 64919 is labeled Credit Card Expense Hold and will only be used to encumber credit card charges. This encumbrance will be done on cardholders operating budgets (fund 10) only REGARDLESS of where the card holder codes the charges for their respective charges.  Once all expense reports are submitted, Accounting will import in the charges to the expense accounts listed on the cardholders expense reports and reverse the encumbrance. 

Why is the encumbrance only being done on my operating budget?
Most non-operating accounts (funds 20-70) do not have allocated budgets.  Encumbering only works for departments that have a budget. By using cardholders operating accounts, Accounting is assured that the encumbrances record the use of funds systematically and consistently across all cardholders. 

What happens if this encumbrance puts me over budget on operating (fund 10) but I used another fund (20-70) to cover these charges?
As this encumbrance is a temporary hold on budget dollars, this is not a permanent issue.  As soon as all cardholders submit their expense reports, Accounting can record the charges per the cardholders coding on the expense reports and reverse the encumbrance. Therefore, it is important to all cardholders to get expense reports in as soon as possible.  Cardholders will need to address budget overage concerns through their division heads to the Budget Office.  Please note that if departments are over budget, Accounts Payable will not process payments on PO’s submitted. 

What if I don’t have an operating budget because my position is grant funded?
Whichever division the grant is under will receive the encumbrance; Accounting will not encumber to non-fund 10 accounts.