Creating Budgets

This chapter provides overviews of budgets and budget patterns and discusses how to:

• Create budget pattern codes.

• Change budget pattern codes for a group of accounts.

• Enter annual budgets.

• Spread annual budget amounts to periods.

• Generate budget worksheets.

• Review budget comparisons online.

• Manage budget overages.

• Enter detailed budget amounts.

• Enter journalized budgets.

See Also

Forecasting and Planning Budgets

Understanding Budgets

Budgeting provides a projection of future expenses and revenues. Using budget history, you can compare actual amounts to your projections and use the information to improve your budgeting process.

You can enter annual budget amounts by business unit or account. Entering amounts by business units creates a budget by department, location, project, and so on. Entering amounts by account creates a budget that crosses business unit boundaries.

To review budgets, use an online review or a printed budget worksheet. With an online review, you can compare budget amounts with actual amounts. With the budget worksheet report, you can:

• Review your requested, approved, and final budgets for the next year.

• Compare budget amounts against actual amounts and projected amounts for the current year, and against actual amounts from the previous year.

• Show a projected amount and the percentage that the budget amount varies from the projected amount.

Budget Methods

To create a budget, use one of these methods:

See Also

Understanding the Fiscal Year Close for Budget Ledger Types

Understanding Budget Patterns

When a group of accounts have budgets that follow a predictable pattern, budget pattern codes can be used to define the percentages for spreading annual budget amounts among periods. For each business year, you can use the Revise Seasonal Patterns program (P09001) to:

• Spread amounts equally across the number of periods.

• Create an unlimited number of seasonal pattern codes.

• Bypass spreading amounts.

This table describes the three budget patterns:

The default budget pattern for the code blank evenly spreads an annual budget equally among periods; however you can change the instructions for the code blank.

You should assign the most common budget pattern the code of blank. For example, is your company rarely needs to spread an annual budget equally among the months, you can use the budget pattern code of blank to identify a seasonal pattern code that you frequently use, which speeds data entry of that code.

You do not need to define budget pattern codes if your company performs any of these tasks:

• Creates only annual budgets (no monthly budgets).

• Manually creates monthly budgets for all accounts.

• Creates annual budgets for all accounts with the annual amount being spread equally among the periods.

Example: Default Pattern

A coffee shop sells its products evenly throughout the year. It does not need to create a seasonal pattern code to identify percentages for revenues and expenses. The default budget pattern code (blank) spreads the annual budget evenly across periods.

The coffee shop enters an annual budget amount of 120,000 for an account and leaves the budget pattern code blank and then runs a program to spread the amounts among the periods. The program identifies the total number of accounting periods set up for the company as 12. The program assigns a budget amount of 10,000 (1/12 or 8.33 percent) to each period.

Example: Seasonal Pattern

A sports shop creates a seasonal pattern code called WIN to identify percents for revenues and expenses for its winter ski equipment. The shop allocates budget amounts to the winter months because little activity occurs for ski equipment in the summer months. The shop identifies these percentages for the winter months:

• November - 10 percent

• December and January - 25 percent each

• February and March - 20 percent each

The sports shop creates an annual budget amount for each applicable account and assigns the seasonal pattern code WIN to the accounts. The shop enters 120,000 to an account with a WIN pattern code and then runs a program to spread the amounts among the periods. Based on the percentages in the WIN budget pattern code, the system spreads 12,000 to November, 30,000 each to December and January, and 24,000 each to February and March.

Example: Do Not Spread Pattern

A company has an account with no predictable budget pattern, although the company spreads amounts for other accounts. The company enters an annual budget for the unpredictable account and assigns a budget pattern code of DNS (Do Not Spread) to that account. When the company runs a program to spread annual amounts among the periods, the program bypasses the account coded DNS.

Creating Budget Pattern Codes

This section discusses how to create a budget pattern code.

Forms Used to Create Budget Pattern Codes

Creating a Budget Pattern Code

Access the Revise Budget Pattern form.

Budget Pattern

Enter a unique three-character code that identifies a seasonal budget pattern. The system uses this code to calculate budget amounts for an accounting period. For example, you could enter SUM or WIN to identify a seasonal pattern code or blank to evenly spread an amount among all periods.

Period 01 –Period 14

For a seasonal pattern code or the DNS budget pattern code, enter a number that identifies the percentage of the total annual budget assigned to the period. You can enter: Whole numbers. For example, 20 for 20 percent. Decimal numbers up to four decimals. For example, .3333 for 33.33 percent. The system rounds more than four decimals to four decimals. Zero (no percentage for the period). For the DNS budget pattern code and each seasonal pattern code, the total of all percentages must equal 100 percent. Note. The default periods for the fiscal year are set up for company 00000 on the Date Pattern Revisions form.

Changing Budget Pattern Codes for a Group of Accounts

This section provides an overview of budget pattern code changes and discusses how to change a budget pattern code for a group of accounts.

Understanding Budget Pattern Code Changes

To change an existing budget pattern code assigned to a group of accounts within a business unit or company, use the Budget Pattern Code Change program (P1441) and observe these guidelines:  

• Change the code before you enter the annual budget amounts.

• Plan to spread your annual budget amounts among the periods.

The new code that you assign overrides the previous (old) code that was assigned. The system updates assigned codes in the Account Master table (F0901).

Form Used to Change Budget Pattern Codes for a Group of Accounts

Changing a Budget Pattern Code for a Group of Accounts

Access the Global Pattern Codes form.

From Account and Thru Account

These two fields identify a range of object accounts. If you specify an account in the From Account field, you must also specify an account in the Thru Account field. If you leave the From Account field blank, the default is 0000. If you leave the Thru Account field blank, the default is 9999.

Old Code and New Code

In the Old Code field, enter the three-character code that identifies the seasonal pattern that you want to change. In the New Code field, enter the three-character code that identifies the seasonal pattern that replaces the code in the Old Code field. Three asterisks (***) represent a blank value. To change a blank value to a new value, enter *** in the Old Code field. You can also enter *** in the New Code field to change an existing value to a blank value. Enter * in the Old Code field to change all of the old budget pattern codes to the value that you enter in the New Code field. Enter DNS in the Old Code field to change budget pattern codes from do not spread or in the New Code field to change to do not spread.

Entering Annual Budgets

This section provides overviews of annual budgets and budget cycles and discusses how to:

• Enter annual budget amounts by business unit.

• Enter annual budget amounts by account.

Understanding Annual Budgets

Using the annual budget method saves time when you enter budget amounts for each accounting period but still provides detailed amounts by period. The system distributes or spreads the annual amounts among accounting periods according to the budget pattern codes that you assign. You can assign budget pattern codes during any cycle of the annual budget process. You can enter annual budgets for amounts as well as units.

Organize your annual budget by one of these types of entries:

Understanding Budget Cycles

Depending on your business needs, you can use one or a combination of these budget cycles:

• Requested (cycle 1). You enter the initial budget amount, which the system copies to the approved and final amount.

• Approved (cycle 2). You enter or change the approved budget amount, which the system copies to the final amount. The requested amount, if one exists, remains unchanged.

• Final (cycle 3). You enter or change the final amount. Any requested and approved amounts remain unchanged.

Using three cycles provides an informal audit trail. Because the system carries forward amounts to the next cycle, using more than one cycle might require little or no additional time.

You set a processing option to define the cycle to use for current entries. Then during budget entry, you can override the processing option and change to a different cycle, as needed.

The system updates these fields in the F0902 table:

• BREQ: Requested budget amount

• BAPR: Approved budget amount

• BORG: Final budget amount

Example: Using Annual Budget Cycles

The budget in this example uses all three cycles:

The table shows how the system updates amounts in the F0902 during each cycle:

Prerequisite

Decide whether to enter budget amounts by business unit or by account across all business units.

Forms Used to Enter Annual Budget Amounts

Setting Processing Options for Requested by Business Unit (P14102) and Requested by Account (P14103)

The processing options for the Requested, Approved, and Final by Business Unit and the Requested, Approved, and Final by Account programs are the same, with the exception of the name of the first tab.

Budget by Business Unit

Spread Budget

Entering Annual Budget Amounts by Business Unit

Access the Budget by Business Unit form.

Budg Patt (budget pattern)	Enter the three-character budget pattern code.
Show Periods	Select this check box to display the period amount fields, which enable you to manually enter budget amounts on a period-by-period basis. To access the Period fields, scroll to the right if necessary. If you do not select this check box, the system automatically spreads the amount among the fields for the accounting periods.
Options	Select this check box to interactively change the processing options for budget spread. Then from the Form menu, select Options.
Requested, Approved, and Final	Select one of these options based on whether you want to enter or update a value in the Requested Amount, Approved Amount, or Final Amount field. If you select the Requested option, the system updates the BREQ field and, to expedite entry of the final budget, the BAPR and BORG fields in the F0902 table. If you select the Approved option, the system updates the BAPR field and, to expedite entry of the final budget, the BORG field in the F0902 table.
Budg Patt (budget pattern)	Enter a code that specifies how to spread budget amounts. If you enter DNS, you must manually enter the amounts for each period. With the Show Periods check box selected, access the Period fields by scrolling to the right. Alternatively, select Detail from the Row menu to access the Detailed Budget by Account form and manually enter the amounts.
Requested Amount, Approved Amount, and Final Amount	Enter a value in one of these fields. The field that is input capable depends on whether you selected the Requested, Approved, or Final option. If you entered DNS in the previous field, these fields are not input capable.

Entering Annual Budget Amounts by Account

Access the Budget by Account form.

Spreading Annual Budget Amounts to Periods

This section provides overviews of the methods for annual budget spreads and how the system spreads annual budget amounts and discusses how to:

• Spread annual budget amounts to periods during budget entry.

• Run the Spread Annual to Periods program.

• Set processing options for Spread Annual to Periods (R14801).

Understanding the Methods for Annual Budget Spreads

You can spread annual budget amounts:

• Interactively, during budget entry.

• Automatically, by running a program.

Interactively During Budget Entry

As you enter annual budget amounts, you can have the system spread the amounts to period amounts based on the budget pattern code for each account.

Spreading amounts during budget entry allows you to:

• Vary the results by making revisions without exiting the budget entry program.

• Change the rounding increment and balancing methods that are specified in the processing options.

• Change the annual amounts for the same cycle or a different cycle.

• Recalculate spread amounts as many times as necessary.

Note. If you enter a budget pattern code of DNS, you must manually enter the amounts in each of the Period fields on the Budget by Business Unit or Budget by Account form. The system accumulates the period amounts and displays the annual total for the account.

Automatically by Running a Program

An alternative to spreading annual amounts during budget entry is to run the Spread Annual to Periods program (R14801) to spread the amounts automatically. This might be a faster or more efficient approach.

You might choose to run the Spread Annual to Periods program if you have many amounts to spread and one of these situations applies:

• You upload annual budget amounts from one or more spreadsheets.

• You set up a blank budget pattern code with percentages or you change the existing percentages, and you want to update the spread for all accounts.

If the Override Budget Do Not Spread Code check box is selected on the Ledger Type Setup form, the Spread Annual to Periods program evenly distributes the budget amount among the periods. If the check box is not selected, the program does not distribute the amounts. You must manually distribute the amounts by period on the Budgets by Business Unit or Budgets by Account form.

Understanding How the System Spreads Annual Budget Amounts

The system uses the budget pattern code that is assigned to each account to determine how to spread amounts regardless of whether you enter budgets manually or run the Spread Annual to Periods program (R14801), with the exception of the DNS pattern code.

This table describes how the system spreads amounts:

Spreading Annual Budget Amounts to Periods During Budget Entry

Access the Budget by Business Unit or the Budget by Account form.

Note. You cannot enter an annual budget amount for an account if the posting edit code is N (no posting) or I (inactive).

1. Select the Show Periods check box.

2. Enter the budget pattern code.

3. Enter an amount in one of these fields:

   • Requested Amount

   • Approved Amount

   • Final Amount

4. Select Spread form the Row menu to evenly spread the amount entered in the previous step.

5. To change the amounts that the system spread in the previous step, select Detail from the Row menu to access the Detailed Budget by Account form.

6. To change the rounding increment or balancing method in the processing options, select the Options check box. Then from the Form menu, select Options.

7. Click OK to save your budget entries.

Running the Spread Annual to Periods Program

Select Budgeting (G1412), Spread Annual to Periods.

This program does not produce a report. To review the amounts that the system has spread, access the Detailed Budget By Account form.

Setting Processing Options for Spread Annual to Periods (R14801)

Use these processing options to specify how to spread budget amounts.

Do not change the data sequence for this program.

Budget Spread

Generating Budget Worksheets

This section provides overviews of budget worksheets and discusses how to:

• Run the Budget Worksheet.

• Set data selection and sequence for Budget Worksheet.

• Set processing options for Budget Worksheet (R14113).

Understanding Budget Worksheets

The Budget Worksheet (R14113) is a report that shows requested, approved, and final budgets. When you generate the Budget Worksheet, you can:

• Specify the level of detail, fiscal years to compare, report format, and how the system performs the calculations and totals the amounts.

• Print the report for selected companies, business units, and business unit category codes.

• Consolidate information if you have a consistent account structure and level of detail across all companies and business units.

The Budget Worksheet program uses AAI items FSxx to determine where to print interim total. Some examples for FSxx include:

• FS04: Gross margin

• FS05: Operating income

• FS99: Net income (loss)

Depending on how you set the processing options, the Budget Worksheet provides this type of information:

Running the Budget Worksheet

Select Budgeting (G1412), Budget Worksheet.

Setting Data Selection and Sequence for Budget Worksheet

You must specify the range of object accounts in the data selection. If you post to the F0902 table by currency, select a specific currency code or all currency codes.

This report prints totals and starts new pages based on the data item immediately preceding the object account in the data sequence. You can use these data items in the data sequence:

• Company

  For the reporting date to be company-specific, you must sequence your report by company.

• Business unit category codes 1–30

• Account master category codes 1–23

• Business unit

• Object account (required)

• Subsidiary account (required)

If you do not specify a company or business unit as the first item in the sequence, the system uses the current fiscal period for company 00000.

To print a report for a business unit, or one that consolidates all business units or companies, enter one of these data sequences:

Important! If you change the data sequence, a sequence other than one of the previous sequences can produce undesirable results.

Setting Processing Options for Budget Worksheet (R14113)

Use these processing options to specify dates, ledger types, level of detail, and so on.

Date

Ledger Types

LOD

Signs

Computations

Headings

Reviewing Budget Comparisons Online

This section provides an overview of the Online Budget Comparison program (P09210A) and discusses how to:

• Set processing options for Online Budget Comparison (P09210A).

• Review budget comparisons online.

Understanding the Online Budget Comparison Program

After you spread annual budget amounts to the fiscal periods, you can compare budget amounts with amounts from other ledgers. Comparing amounts from two ledgers is especially helpful when you need to review budget and actual amounts, and analyze budget variances.

Online comparisons show information from the F0902 table.

AAIs Used by Online Budget Comparison

The Online Budget Comparison program uses these two AAIs:

• GLG6: Beginning Revenue

• GLG12: Ending Profit and Loss

These AAIs are used to distinguish balance sheet accounts from income statement accounts so that the correct cumulative balance is calculated. Balance sheet accounts include the prior year cumulative amount in the cumulative balance. Income statement accounts do not include a beginning balance amount.

See Also

Reviewing Trial Balances, Ledgers, and Subledgers

Form Used to Review Budget Comparisons Online

Setting Processing Options for Online Budget Comparison (P09210A)

Use these processing options to specify the default values, such as the ledger types and the calculation method to use to compare budgets.

Default

Display

Currency

Select

Reviewing Budget Comparisons Online

Access the Trial Balance / Ledger Comparison form.

Managing Budget Overages

This section provides overviews of the management of budget overages and the budget checking calculation and discusses how to:

• Run the G/L Budget Checking Report.

• Set processing options for G/L Budget Checking Report (R14115).

Understanding the Management of Budget Overages

Before you post transactions to an account, you might want to verify that the actual and planned expenditures are within budget. For example, assume that you have entered a batch of vouchers. Before posting the batch, you want to see whether the totals in the affected accounts exceed the budget.

You can use the G/L Budget Checking Report (R14115) to identify transactions that will create budget overages. The appropriate person in your organization can then approve the expenditures or notify the affected departments to change or delete transactions for these accounts before posting.

The G/L Budget Checking Report selects unposted records from the F0911 table. It bases calculations on information in the F0902 table. Using a predefined calculation, the report:

• Calculates the available budget for each specified account or level of detail.

• Adds new, unposted transactions to posted totals.

• Determines whether posting new transactions creates a total that exceeds the budget.

• Generates an exception report that lists the unposted transactions in the F0911 table that will cause budget overages.

  The exception report is for information only and is sequenced by company, account, and detail.

The G/L Budget Checking Report does not update any tables.

Understanding the Budget Checking Calculation

The G/L Budget Checking Report uses this predefined calculation:

Primary ledger – (second ledger + third ledger) = available budget amount

Example: Budget Checking Calculation

For account 3.8605, these default ledgers contain the totals indicated:

• BA (budget amount) for the year: 1,000

• PA (encumbered amount) balance to date: 320

• AA (actual amount) balance to date: 420

Using the totals for the ledgers, the calculation is:

1,000 – (320 + 420) = 260

If any unposted transactions in the F0911 table cause the account to exceed the available budget amount of 260, the transaction appears on the report.

You can substitute other ledgers for the default ledgers in the processing options. You also choose the level of detail to use to accumulate the balances and the calculation method to use to determine the total budget amount.

The calculation for the budget variance includes any vouchered amounts already encumbered by purchase orders. If a vouchered amount that is encumbered by a purchase order appears in the AA ledger as an unposted amount, the system does not count it twice.

Note. Run this program during off-peak hours, if possible. The number of records in the F0911 table might require significant processing time.

Amounts and Encumbrances

This table describes how the G/L Budget Checking Report processes amounts and encumbrances:

Running the G/L Budget Checking Report

Select Budgeting (G1412), G/L Budget Checking Report.

Setting Processing Options for G/L Budget Checking Report (R14115)

Use these processing options to specify the ledgers to use for calculations, the calculation method, and so on.

Ledger Type

Budget Year

Calculation Methods

LOD

Subledger

Entering Detailed Budget Amounts

This section provides an overview of the Detailed Budget by Account program and discusses how to enter detailed budget amounts by account.

Understanding the Detailed Budget by Account Program

Even if you do most of your budgeting on an annual basis, you might need to use the Detailed Budget by Account program (P14101) for any of these reasons:

• To set up budgets by periods for specific accounts that have no predictable seasonal pattern.

• To change the results that the Spread Annual to Periods program created.

• To review budget amounts by period both before and after annual budgets are spread.

You can also use the Detailed Budget by Account program to enter budget amounts for each period and account. When you use this program to enter budget amounts, the system does not create records in the F0911 table. Instead, it updates:

• Final budget and net posting amounts for the budget ledger records in the F0902 table.

• Budget pattern code in the F0901 table to DNS.

  This code ensures that the spread program does not overwrite the amounts that you enter.

  Note. You can enter monthly amounts on the Budget by Business Unit form instead of using the Detailed Budget by Account form. With the Show Periods option selected, each period appears as a column in the detail area.

Forms Used to Enter Detailed Budget Amounts

Entering Detailed Budget Amounts by Account

Access the Detailed Budget by Account form.

Entering Journalized Budgets

This section provides overviews of journalized budgets and discusses how to enter budget journal entries.

Understanding Journalized Budgets

Although most organizations do not need a formal audit trail for budgeting, some do. For example, construction companies use cost accounting, and governmental agencies record supplemental appropriations for the original budget. For these types of organizations, journalized budgets provide a formal audit trail.

Budget entries for a journalized budget are the same as journal entries, but you assign a budget ledger type. You create the budget by entering budget amounts as journal entries, which you then review and post like other journal entries. Batches with budget entries have the same batch type (G) as other journal entries. The system updates journalized budgets in the F0911 table. When you post the batch, the system updates the F0902 table. However, the system does not update the budget amount fields BREQ, BAPR, and BORG in the F0902 table.

To change a budget that you entered as a journalized budget, you must use the Journal Entry form. Do not use the annual or detailed budget method to change a journalized budget entry. Budget journal entries typically do not have to be in balance. You specify whether your budget ledgers are required to balance in the Ledger Type Master Setup program (P0025).

Prerequisites

Before you complete the tasks in this section:

• Specify a budget ledger type, such as BA, in the processing options.

• Verify that you have set up your fiscal date patterns.

• (Recommended) Set up a document type, such as BX, for budget journal entries instead of using document type JE.

See Also

Entering a Basic Journal Entry

Forms Used to Enter Journalized Budgets

Entering Budget Journal Entries

Access the Journal Entry form.