GAP 200.036, Commitments

  1. General
  2. Expenses Not Committed
  3. Removal of Commitments

 


 

I. GENERAL

A commitment is the reservation of funds for a future expenditure. In SAP, commitment replaces the term encumbrance.

In SAP, commitments can be viewed in a variety of ways.

Commitments are viewed for a cost center by running the following report:

  • Cost Centers: Display Commitment Line items (for detail)
    When running this report ensure that the anticipated debit date on the selection criteria goes back a few years and goes forward a few years to ensure that all commitments are included on the report.

Commitments are viewed for a WBS element by running a variety of reports

  • Sponsored Programs One Line Summary
  • Project/Work Breakdown Structure: Inception to Date (with Plan)
  • Project/Work Breakdown Structure: Display Commitment Line items
    When running this report ensure that the anticipated debit date on the selection criteria goes back a few years and goes forward a few years to ensure that all commitments are included on the report.

Commitments are created by:

  • Purchase Requisitions, when the Purchase Requisition is created directly in SAP. The commitment is relieved and replaced by the commitment of the Purchase Order.
  • Purchase orders (except Framework Orders and any Purchase Orders coded to a balance sheet account or a perpetual inventory) automatically create a commitment when the purchase order is created. Any change orders done later to the Purchase Order automatically update the commitment. In SAP, each line item of a Purchase Order will be reflected as at least one commitment. If one line item has more than one delivery date, each delivery date will have a separate commitment.
  • Construction-Framework Orders automatically create a commitment when they are created. Any change orders done later to the Construction Framework Order automatically update the commitment.
  • Shopping Carts, when the fully approved Shopping Cart is created directly in the Buy@Duke Portal. The commitment is relieved and replaced by the commitment of the Buy@Duke Purchase Order.

The following transactions do not create commitments Accounts Payable Check Request, Miscellaneous Reimbursement Form, Travel Expense Form, Payroll, Interdepartmental Request, Internal Order, and Non-Construction Framework Order.

Commitments do not affect the cash balance of your cost object. However, they do affect the amount that can be invested. For questions regarding the amount that can be invested contact the Endowment Investment Office at (919) 668-0880. Interest expense is not charged on overdrafts created by commitments.

 

II. EXPENSES NOT COMMITTED

Certain types of expenses never create commitments. These G/L accounts should not be used in purchasing; therefore, the following G/L accounts should not be used on Purchase Requisitions.

  • Payroll and Fringe Benefits (60xxxx/61xxxx G/L accounts)
  • Scholarships and Fellowships (63xxxx G/L accounts)
  • Recharges and Expense Credits (7xxxxx G/L accounts)
  • Transfers and Appropriations (8xxxxx G/L accounts)
  • Cost Allocations (9xxxxx G/L accounts)

Additionally, charges to asset (1xxxxx), liability (2xxxxx), and revenue (3xxxxx) G/L accounts never create commitments.

 

III. REMOVAL OF COMMITMENTS

Commitments are automatically reversed when the actual expense is recorded.

  • Purchase Order commitments and Construction Framework Orders are reversed when the invoice for a charge is received by Accounts Payable and entered into the system. A partial commitment will remain until the entire quantity has been paid or the commitment has been removed.

If there is a commitment on your financial statement that should not be there, you should have the commitment removed.

  • If the commitment is for a Purchase Order or Construction Framework Order that should be cancelled, send an e-mail to Procurement Services stating that the Purchase Order or Construction Framework Order should be canceled and the commitment removed. State the Purchase Order number or Framework Order number, vendor, and amount to be removed in the e-mail. If preferred, fax the “Commitment Line Item” report to Customer Support (919 684-4344) noting which items should be removed.
  • If the commitment is for a Purchase Order or Construction Framework Order that has a remaining balance after the order has been paid for in full, send an e-mail to Procurement Services stating that the Purchase Order or Framework Order is complete and the remaining commitment should be removed. State the Purchase Order number or Framework Order number, vendor, and amount to be removed in the e-mail. If preferred, fax the “Commitment Line Item” report to Customer Support (919 684-4344) noting which items should be removed.