Closing Budgetary Accounts and Accounting for Allotments

If you only read one thing At year-end, budgetary accounts close out just like operating accounts. Allotments release the annual appropriation in smaller pieces during the year, rather than all at once.

Why This Matters

This closes the loop on everything FM3.3 through FM3.5 set up, the full lifecycle of a budgetary account, from adoption to close.

What’s Actually Going On

At year-end, the budgetary accounts, Estimated Revenues and Appropriations, get closed out, the same way operating accounts do, reversing the original budget entry. This is what allows next year’s budget to start clean, without last year’s authorized amounts lingering on the books.

Allotments work differently, and address a separate problem. Instead of releasing an entire year’s appropriation on day one, some governments release it in periodic pieces, quarterly is common, so spending stays paced across the year rather than front-loaded or back-loaded unpredictably.

The full appropriation still exists, it’s just paced out rather than fully available on day one.

How This Applies

If a fund seems to have plenty of appropriation left on paper but a department says it can’t spend yet, check whether allotments are in play, the money might be authorized for the year but not yet released for this quarter.