Budget Control Is Legal Control
Use budgetary control to distinguish legal appropriation, management forecast, and accounting recognition.
Budgetary control protects the public authorization to spend. Three views, one transaction A government purchase can appear in three different control conversations. The legal budget checks authority. The forecast checks expected year-end position. GAAP checks recognition under the applicable basis of accounting. Each view is valid, but they answer different questions. Why encumbrances matter An encumbrance is not the same thing as a GAAP expenditure. It is a budgetary control signal. It warns that budget capacity has been committed before the invoice arrives, which prevents departments from using the same appropriation twice. Common trap The common trap is saying, "It…
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