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The report from the Office of the City Auditor addresses the need for departments in San José to regularly review encumbrances to ensure timely liquidation. It highlights that in the FY 2024-25 Proposed Operating Budget, $84.5 million was reserved for encumbrances in the General Fund, with an additional $133 million across special operating funds. The report identifies issues with over a third of encumbrances being unused or expired, suggesting that approximately 1,300 encumbrances totaling up to $30 million should be reviewed. The report includes recommendations for improving monitoring and reporting of encumbrances to facilitate timely liquidation. It will be presented at a City Council meeting on September 19, 2024.
Key points
The General Fund has $84.5 million reserved for encumbrances, about 5% of total uses.
An additional $133 million is reserved across special operating funds.
More than a third of the 3,500 encumbrances are unused or expired.
Approximately 1,300 encumbrances totaling up to $30 million should be reviewed.
The report includes 5 recommendations for improving encumbrance management.
Limitations
The report indicates it is a draft and may contain unresolved placeholders.
Specific dates and dollar amounts are mentioned but not fully detailed in the summary.
Generated for convenience from extracted text using AI. Review the official source document before relying on this summary.
Extracted text preview · 57,642 chars
Office of the City Auditor Report to the City Council City of San José ENCUMBRANCES: DEPARTMENTS SHOULD REGULARLY REVIEW ALL ENCUMBRANCES TO ENSURE TIMELY LIQUIDATION Report 24-04 September 2024 This page was intentionally left blank Office of the City Auditor Joe Rois, City Auditor September 12, 2024 Honorable Mayor and Members Of the City Council 200 East Santa Clara Street San José, CA 95113 Encumbrances: Departments Should Regularly Review All Encumbrances to Ensure Timely Liquidation In the FY 2024-25 Proposed Operating Budget, the General Fund had $84.5 million reserved for encumbrances, or roughly 5 percent of total General Fund uses. An additional $133 million was reserved across the special operating funds, and further reserves were budgeted in the City’s capital funds. An encumbrance is an amount of money set aside to pay the estimated expenses for contracted goods or services. Departments establish an encumbrance when they have a purchase order for goods or a contract for professional services. Departments are expected to liquidate the encumbrance when it is no longer necessary. Upon liquidation, any remaining balance on older encumbrances is recognized as excess fund...
Official source link unavailable.
The file was imported, but the current source metadata does not include a public document URL.
Generated summaryAI-assisted
The report from the City Auditor discusses the need for departments to regularly review encumbrances to ensure timely liquidation. It highlights that in FY 2024-25, the General Fund had $84.5 million reserved for encumbrances, and more than one third of the 3,500 operating fund encumbrances should be reviewed. The report identifies potential inaccuracies and outdated encumbrances totaling up to $30 million. It includes recommendations for immediate review and better monitoring of encumbrances by the Finance Department.
Key points
The General Fund had $84.5 million reserved for encumbrances in FY 2024-25.
Departments must liquidate encumbrances six months after the agreement term ends.
More than one third of operating fund encumbrances should be reviewed for liquidation or correction.
Up to $30 million in encumbrances may be unnecessary or inaccurately reported.
The report includes five recommendations to improve encumbrance management.
Limitations
The text does not specify the exact date of the report's issuance beyond September 2024.
There are unresolved placeholders regarding specific details of the encumbrances.
Generated for convenience from extracted text using AI. Review the official source document before relying on this summary.
Extracted text preview · 3,248 chars
Encumbrances: Departments Should Regularly Review All Encumbrances to Ensure Timely Liquidation A Report from the City Auditor Issued September 2024 http://www.sanjoseca.gov/auditor Presenters: Joe Rois, City Auditor Alison Pauly, Supervising Auditor Public Safety, Finance and Strategic Support Committee Agenda Item (d)1 1 Background • In FY 2024-25, the General Fund had $84.5 million reserved for encumbrances (5 percent of total General Fund uses). • The City Policy Manual includes an Encumbrance Policy. • Departments are required to liquidate encumbrances six months after the term of the agreement ends or when the encumbrance is no longer needed. An encumbrance is an amount of money set aside to pay the estimated expense for contracted goods or services. Timely liquidation ensures that funds are released promptly to pay for other City needs. 2 Finding I: City Staff Should Review Expired and Unused Encumbrances • More than one third of the 3,500 operating fund encumbrances should be reviewed for liquidation or correction. • Up to $30 million in encumbrances may not still be necessary or are inaccurately reported. • Some encumbrances are fully liquidated and reported...