FN - Nightly Encumbrance Process

GENERAL DESCRIPTION:

The University of Wisconsin calculates encumbrances using either the fiscal year encumbrances process (UW_ENCAN) or the nightly encumbrances process (UW_ENCNT). The fiscal year encumbrances process creates the baseline encumbrance data for the entire fiscal year; whereas the nightly encumbrances process reverses the original calculation and recalculates the encumbrance with the updated data. Specific changes will trigger a recalculation.

PROCESS CONSIDERATIONS:
You may click on the links below to navigate directly to a section:


A. Nightly Encumbrance Process Overview

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B. Encumbrance Triggers

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C. Encumbrance Exceptions

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D. Encumbrance Calculations Not Uniform

    Empl Class Session Comp Frequency Approx. Days
    University Staff
    CE H 364
    Faculty/Academic Staff/Limited Appointment (FA/AS/LI) Employees FY M 365
    FA/AS/LI Employees AY 9M 273


    E. How to Manually Calculate Encumbrances

    1. Obtain the following information from Job Data and Budget Funding Data Entry, using the following HRS navigation paths:
    • Workforce Administration > Job Data
        • FTE:  Job Information tab, Standard Hours section
        • Pay Basis: Job Information tab, Job Information section
        • Compensation Rate: Compensation tab, Compensation section
    • Set Up HCM > Product Related > Commitment Accounting > Budget Information > Budget Funding Data Entry
    • Accessible from the Finance WorkCenter found at Payroll for North America>Payroll Distribution>Commitment Accounting USA>UW Finance WorkCenter. For more information about the WorkCenter, see KB PD - WorkCenter .
        • Review funding string
    2. Determine how many calendar days remain to be paid in the current fiscal year for the employees Pay Group.
    • Start counting the number of calendar days remaining in the fiscal year from the day after the most recent pay period end date.  This is found in HRS on the “Review Paycheck” page, searching for Empl ID and selecting the most recent paycheck.

    • Payroll for North America > Payroll Processing USA > Produce Payroll > Review Paycheck
    Review Paycheck
    • A-Basis end date is always June 30.
        • In the above A-Basis employee example, there would be 212 days remaining in the fiscal year (31-Dec. + 31-Jan. + 28-Feb. + 31-Mar. + 30-Apr. + 31-May + 30-June) = 212.
        • There are a total of 365 days in an A-Basis year.
    • C-Basis end dates vary by institution and year, ranging from approximately May 17 through June 5.
        • Academic year calendars for all institutions can be found here:  https://uwservice.wisc.edu/calendars-schedules/academic-payroll/; click on the institution and year; scroll to the bottom of the page and note the last day in the bottom row of dates for that institutions end date. 
        • There are a total of 273 days in a C-Basis year.
    • H-Basis end dates will vary by fiscal year, ranging from approximately June 24 through July 6.
    3. Encumbrance Calculation Formula for A-Basis (monthly) employees:
    A-Basis Calculation
    Example:  A .50 FTE A-Basis employee with a monthly compensation rate of $9,427.25 charged 75% to 101-030500-1 and 25% to 101-481505-2 with 259 remaining calendar days would calculate encumbrance as:
    A-Basis example 1

    A-Basis example 2
    Note: for Calendar Days Remaining in FY, if calculating encumbrance effective 10/15/20XX, there are 259 calendar days through 6/30/20XX.
    4. Encumbrance Calculation Formula for C-Basis (academic) employees:
    C-Basis Calculation
    Example:  A .50 FTE C-Basis employee with a monthly compensation rate of $5,370.55 charged 75% to 101-030500-1 and 25% to 101-481505-2 with 144 remaining calendar days would calculate encumbrance as:
    C-Basis example 1
    C-Basis example 2
    Note: for Calendar Days Remaining in FY, if calculating encumbrance effective 1/1/20XX, there are 144 calendar days through the end of the academic year ending on 5/24/20XX (academic end dates vary by institution).
    5. Encumbrance Calculation Formula for H-Basis (hourly) employees:
    H-Basis Calculation
    Example:  An H-Basis employee with 32 standard hours and an hourly compensation rate of $20.4350 charged 75% to 101-030500-1 and 25% to 101-481505-2 with 257 remaining calendar days would calculate encumbrance as:
    H-Basis example 1

    H-Basis example 2
    Note: for Calendar Days Remaining in FY, if calculating encumbrance effective 10/15/20XX, there are 257 calendar days through the end of the last day of the pay period in fiscal year on 6/28/20XX.
    6. HRS encumbrance calculation formulas vs. user expectations.
    HRS calculates encumbrances using a formula different from most user’s expectations, which may be addressed as Service Center resources become available.

    Example:  A 1.00 FTE A-Basis employee with a monthly compensation rate of $5,000.00 charged 100% to UWSYS-136-601000-1 would have encumbrance calculated as follows as of 7/31:

    HRS Balance - {[1.00 FTE X ( ($5,000.00 *12)/365 )] x 334} x 100% Funding = $54,904.11

    Actual Balance - At the end of July, the employee was only paid $5,000.00, resulting in an encumbrance balance of $55,000 ($60,000 annual encumbrance - $5,000 of actual pay).

    Difference between Actual ($55,000.00) and HRS ($54,904.11) balances = $95.89.  Throughout the year, the difference between Actual and HRS will change based on the number of days remaining (instead of months remaining).


    ADDITIONAL RESOURCES

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