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Encumbrance and Pre-Audit Policy

Section I


Encumbrance Policy

Southwestern Oklahoma State University (SWOSU) follows the guidelines of the Office of State Finance (OSF) for encumbrance of treasury funds processed on campus. Encumbrances are handled by one of four basic methods.

  1. Single purchases of items qualified under Oklahoma State Regents of Higher Education (OSRHE) petty cash policies are exempt from encumbrance.
  2. Items over the petty cash limit will be encumbered on agency requisitions or authority orders.
  3. Purchases that are subject to Board of Regents for Oklahoma Colleges (BOROC) bid requirements will be encumbered on purchase orders.
  4. Transactions which are internal to the University do not require encumbrance. However, for better accounting records it is recommend that requisitions/P.O.'s be used.

Pre-Audit Policy

SWOSU uses the OSF pre-audit claims settlement procedure as the pre-audit guide. These reviews may be accomplished either by computer edits or manually.

  1. Reference materials to be used in addition to the pre-audit guide are the DCAR Updates and the Procedure Manual for the Office of State Finance.
  2. The pre-audit section reports to the Executive Vice President or the Senior Business Officer.

Section II


Encumbrance Procedures

Encumbrance procedures at SWOSU involve three distinct processes that include allotment control, budgetary assignment and requisition review.

Accounting Staff

Allotment control is the process that divides the University's budget to functional shares and is controlled by the Poise allotment program. The initial allotment as submitted on SRA-3 is entered and monitored throughout the year. The allotment report allows accounting managers to review the allotment by function, with the year-to-date (YTD) expenditures and the current encumbrance total. This includes the Authorization For Purchase (AFP) and purchase orders, the allotment balance, the remaining salary, wage and fringe benefits budgets and the free allotment balance.

Accounting and Accounts Payable Staff

Budgetary control is maintained in the Poise system by a line item budget, by department, that is reconciled with the allotment report. This basic budget control device is referenced during routine requisition and invoice processing to provide managers updated budget balances and notice of budget overdrafts.

Accounts Payable Staff

Requisition review is required on all traditionally encumbered items, such as supplies, materials and equipment, professional and personal service contracts, and maintenance contracts. The requisition entry process involves the entry of a requisition submitted by the department in advance that is coded, reviewed and entered for budgetary review. During this process, the AFP assignment is made if required and the balance of assigned AFP is reviewed. Items exceeding the BOROC bid requirements are processed as individual purchase order items and are entered as requisitions. Purchases that are non-encumbered items are either assigned a yearly requisition for reference and encumbrance, or pay on the basis of an AFP that is assigned during the early part of the budget process.

Requisition approval is divided into three levels of managerial review. Budget managers have approval authority up to $1,000 for purchases that meet the OSRHE petty cash guidelines. These items are subject to post-purchase review during disbursement approval. The next level of review includes budget manager approval as well as approval by the Purchasing Coordinator. This review is generally done for all items up to the University's quote level of $2,500. The final level of review is accomplished by the Director of Business Services and includes all items over the quote level and any other transaction that the Purchasing Coordinator deems necessary.