What typically happens to lapsed encumbrances at the end of the budget period?

At the end of the budget period, lapsed encumbrances are typically automatically reappropriated. This means that any funds that were set aside for encumbrances that have not been utilized during the budget period are carried over into the new budget period. This action allows for the maintenance of financial control and accountability, ensuring that the resources are still available for their intended purposes in the upcoming fiscal year.

Reappropriating lapsed encumbrances helps in financial planning as it acknowledges prior commitments and reduces the risk of underfunding for ongoing projects or obligations. By automatically reappropriating these encumbrances, governments and organizations can effectively manage their budgets while also addressing any delays in expenditures that may have occurred within the previous period.