In government budgeting, when are encumbrances typically reappropriated?

Encumbrances are commitments made by a governmental entity for future expenditures and are typically associated with purchase orders, contracts, or other agreements. The practice of reappropriating encumbrances often occurs at the end of the budget period. This is primarily because unspent appropriations that were previously encumbered can be carried over into a new budget year to ensure that the commitments are honored even if the original budget period has closed.

This process allows governments to manage their finances effectively by maintaining the integrity of their encumbrances, ensuring that funds allocated for specific purposes remain available until the obligations are fulfilled. By reappropriating encumbrances at the end of the budget period, governments can uphold accountability and transparency in their financial operations.

Other options suggest different timing for reappropriation that may not align with the standard practices observed in governmental accounting. Each of those options fails to capture the rationale for maintaining encumbrances across fiscal periods, which is why the end of the budget period is the appropriate timeframe for reappropriation.