Understanding General Ledger Standard Budgets

Before you enter amounts in a budget ledger, you must:

1. Define a ledger template.

2. Link the template to a detail budget ledger.

3. Add the budget ledger to a budget ledger group.

4. Activate the budget ledger groups for business units.

You can set up standard budgets based on fixed amounts or percentages. In addition, you can set up standard budgets by:

• Copying amounts from other ledgers.

• Cloning existing budgets or loading data from spreadsheets.

• Using automatic replication and spreading.

• Creating an unlimited number of budget versions.

• Configuring budget worksheets with PS/nVision.

You can also set up standard budgets that:

• Budget at any level in the organization.

• Budget for any period of time.

• Reflect potential organizational changes in budget reports without affecting current financial reports.

  You can use PeopleSoft Tree Manager to do this.

See PeopleSoft Enterprise Planning and Budgeting

Typically, you maintain budgets in an unbalanced ledger. With expense budgets and sales forecasts, for example, you are normally concerned with only one side of the accounting equation. Because you use most budgets for planning and analysis (and you continually modify and round them), you may not need to create an exact offset every time that you change a budgeted amount. The Detail Budget Maintenance pages that enable you to modify budget rows directly are supported against unbalanced ledgers only.

In General Ledger, you can:

• Enter and modify budget amounts by sets of ChartFields or by period.

• Enter a lump sum to be spread across multiple periods for a ChartField combination.

• Copy any combination of ledger rows from existing ledgers.

• Import budgets from spreadsheets.

• Allocate amounts to a budget ledger.

• Enter budget journals.

  Except when entering allocations and budget journals, you update the ledger balances table directly with no audit trail. By entering journals and posting them to the budget ledger or selecting the Request Allocations option to create journals in allocations, you maintain the same audit trail as with actuals (recording) transactions.

• Create an all-encompassing and detailed budget by cloning the actuals ledger, and then you can generate a budget summary ledger to maintain higher-level information.

• Create a budget using an across-the-board percentage, such as a payroll increase based on a 4.5 percent cost-of-living index or a sales target forecast that is 10 percent higher the following year.

  Simply copy the amounts from the actuals ledger and have General Ledger automatically adjust those amounts by the specified percentage.

• Spread a given amount (for example, 15 million USD budgeted for equipment) evenly across specific ChartFields or according to a basis (such as the statistics code for employee head count).

• Adjust budget amounts for each individual ChartField combination by period.

The budget spreading and repeating processes provide an alternative to the often time-consuming job of specifying budget amounts on an amount-by-amount, period-by-period basis. You can enter a lump sum budget amount or a percentage of an existing amount for a ChartField combination.

General Ledger can automatically spread an amount or apply a percentage across the periods in a fiscal year. The amounts can be:

• Added by period.

• Repeated by period.

• Spread evenly across the periods.

  You can also use percentage changes by period.

Spreading or repeating a fixed amount or percentage over a range of periods reduces data entry. Here is an example:

Suppose that you send a memo to the manager of the account management department indicating that the monthly office party expense for January through June will be 1,200.00 USD. The manager repeats the 1,200.00 USD amount for each month during that period.

When you review the sales department's budget, however, you realize that you have made a mistake, and you send another memo clarifying that 1,200.00 USD is the entire amount for the half-year period, and it must be divided evenly among the six months. The manager decides to spread a negative 6,000.00 USD evenly across the January through June time period. This leaves 200.00 USD in each monthly period and corrects the error.

Now suppose that after you consider the number of new employees, you decide to add 200.00 USD to each monthly period for a total expense of 2,400.00 USD. However, before the budget is finalized, you receive a memo from the budget committee directing you to reduce all nonessential sales and all general and administrative expenses by 50 percent. After you reduce the selected monthly expenses by the required 50 percent, you have 1200.00 USD for the final office party budget for the six months period.

This table shows the transactions:

Remember the following points when you spread amounts:

• You cannot spread amounts to closed periods.

• You cannot spread amounts to balanced ledgers or to summary ledgers.

• You can spread positive or negative amounts.

The Budget Copy feature is ideal for creating multiple versions of a budget. You set up what-if scenarios or assess the impact of each level of review. You can use this feature to create a new budget based on an existing ledger or to update an existing budget and have General Ledger automatically increase or decrease the amounts copied by a percentage that you specify.

The Budget Copy process updates or inserts new rows of data into the selected target ledger. If data for the specified ChartField values in the pool (source) ledger already exists in the target ledger, the system updates (or overwrites) that data for the year and periods specified. If no data exists in the target ledger for the specified ChartFields, General Ledger adds those rows to the target ledger. Any rows that do not meet the pool ledger criteria remain unaffected.

Here is an example:

Suppose that the sales manager for corporate headquarters expects that the revenue for the eastern and central regions will increase by 128 percent in the year 2000. To create a sales projection for the year 2000, the manager copies the actuals amounts from 1999 to the budget ledger. From the actuals ledger, the manager selects a range of revenue accounts (400000–401000) and the appropriate sales departments (21200 and 21300). All products and services are included. The system copies only those account balances that match the ChartField values that the manager entered. Any other rows of data that already exist in the budgets ledgers are not affected. Next, the manager selects the appropriate value in the Factor % (factor percentage) field. In this case, it is 128 percent of the actuals balances.

To populate a year's worth of budgets with a one-to-one copy from the actuals ledger to the budgets ledger, you set up a period-to-period copy. Then you run it 12 times in the Budget Copy process request using a different as-of date for each request. You cannot use a multiperiod time span (such as All Year) in the pool definition because the Budget Copy process sums the entire year in one row rather than as period 1, period 2, and so on. You could spread that amount to one period at a time or over an entire year, but you would not perform a one-to-one copy.

Allocations processing in General Ledger enables you to spread either fixed amounts or a pool of complex pro rata amounts from multiple ChartFields. You can use statistical and monetary accounts from any ledger (or combination of ledgers) as the basis. Allocations provide complete flexibility in mapping ledger amounts across the chart of accounts. You can use allocations to generate large volumes of budget entries quickly and easily. Allocations processing supports top-down budgeting and the dynamic generation of budgets based on any segment of the organization at any given time.

Allocations enable you to spread amounts from any ledger to the budget ledger so that you can devise budgets and forecasts based on the strategic information already stored in your database. Here is an example:

Suppose that your sales manager is preparing next year's monthly sales targets for the eastern sales division, as well as a budget for travel expenses. The sales manager bases the forecast on a number of factors:

• 2004 revenue should be 128 percent higher than 2003 amounts.

• Because of unusual market fluctuations in 2003, the manager wants the 2004 forecast to reflect the 2002 monthly sales trends.

• The travel expense budget will be 10 percent higher than last year, allocated using the new sales projections as a basis.

First, the sales manager uses the Budget Copy Definition pages to copy 2002 eastern sales region revenue figures from the actuals ledger into the budget ledger for 2004.

The manager uses the Factor (%) field to increase by 128 percent the 1998 actuals amounts. Then the sales manager does the same for the travel expense accounts, increasing them by 10 percent.

Next, the sales manager uses the Budget Allocation process to reallocate revenue amounts according to 2002 sales trends, using the 2002 amounts in the sales revenue account for all departments as the basis. In this way, sales figures for the eastern division are spread according to the general sales trends for 2002.

As the final step, the sales manager uses the new 2003 sales revenue forecast amounts as the basis for allocating the travel expenses.