43 Manage Budget Overages

This chapter contains the topic:

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.

43.1 Overview


From General Accounting (G09), choose Budgeting

From Account Budgeting (G14), choose G/L Budget Checking

You can run the program that checks your G/L budgets to identify any 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.

This program selects unposted records from the Account Ledger table (F0911). It bases calculations on information in the Account Balances table (F0902). Using a predefined formula, it:

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

  • Adds new, unposted transactions to posted totals

  • Determines whether posting new transactions will create a total that exceeds the budget

  • Generates an exception report listing the unposted transactions in the Account Ledger table that will cause budget overages

This program does not update any tables. The exception report is for information only. It is sequenced by company, account, and detail. A warning message identifies each transaction that will create an overage if posted.

The program performs this calculation:

Primary ledger - (second ledger + third ledger)

Using the default ledgers, the calculation is:

BA - (PA + AA) or Budget Ledger - (Encumbrance Ledger + Actual Ledger)

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

The calculation for the budget variance includes any vouchered amounts already encumbered by purchase orders.

43.1.1 Example: G/L Budget Checking Calculation

The following ledgers contain these totals for the account 3.8605:

BA (budget amount) for the year: $1000

AA (actual amount) balance to date: $420

PA (encumbered amount) balance to date: $320

$1000 - ($420 + 320) = $260, the available (remaining) budget

If any unposted transaction in the Account Ledger table causes the account to exceed the available budget amount of $260, the transaction will be listed on the report.

Figure 43-1 General Ledger Budget Checking Report

Description of Figure 43-1 follows
Description of "Figure 43-1 General Ledger Budget Checking Report"

43.1.2 Before You Begin

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

43.1.3 What You Should Know About

Topic Description
No budget amount If an account has no record in the budget (primary) ledger, the program assumes the budget is zero. It subtracts the amounts from the second and third ledgers, resulting in a negative amount on the exception report.
Encumbrances These are budgeted amounts for which commitments or contracts have been made (such as through purchase orders). Encumbrances are also called commitments.
Foreign currency amounts Budgeted amounts are in the domestic currency only. Therefore, the program does not select transactions from the CA (foreign currency) ledger in the Account Ledger table.