Using Partial and Final Liquidation
If you are using commitment control, you can specify partial or final liquidation of a requisition when it is sourced to a purchase order. When you create or modify a purchase order, you can designate that the purchase order is final, prompting the system to liquidate the preceding requisition. You can make your purchase order the final document to be affected by the preceding requisition, for less money than you originally authorized. You can also reverse the finalization of the document.
In PeopleSoft Purchasing, you can perform partial or final liquidations where the successor transaction references and liquidates its predecessor, including:
Requisition to purchase order.
Purchase order to payment voucher.
The system fully liquidates document lines automatically upon completion of the subsequent transaction when you designate the transaction as final. The system then creates the appropriate accounting entries to relieve outstanding pre-encumbrances and encumbrances, performing the reversing entry according to the document type and entry event of the referenced transaction.
Using partial and final liquidation, you can:
Liquidate requisition or purchase order lines and relieve the outstanding pre-encumbrance and encumbrance from the budget ledger.
Create the appropriate accounting transactions in the budget to relieve outstanding pre-encumbrances and encumbrances as applicable.
Perform the correct accounting and available (open) amount calculations for modifications and cancellations of predecessor or successor transactions.
Process final liquidations at the schedule line level of transactions, that is, orders can have some lines open while others are closed.
The corresponding voucher lines that reference (liquidate) the lines determine this.
At times, multiple transactions reference the same predecessor. If two payment vouchers for two invoices of 500.00 USD each are associated to the same 1000.00 USD purchase order, only the second payment voucher is considered final. The first 500.00 USD payment voucher is considered partial, because an additional 500.00 USD encumbrance remains outstanding. If the first 500.00 USD actually represents the last expected action against the order, you can designate the voucher as final for less and relieve the entire 1000.00 USD encumbrance.
Partial and Final Liquidation Example
For example, suppose that you create a requisition for 200.00 USD and run budget checking. The system shows an increase of 200.00 USD to the existing pre-encumbrance amount of 40.00 USD.
|
Ledger |
Amount |
|---|---|
|
Budget |
5,000,000.00 USD |
|
Expense |
0.00 USD |
|
Encumbrance |
1000.00 USD |
|
Pre-encumbrance |
240.00 USD |
Then create a purchase order that references this requisition for 165.00 USD. When you run budget checking, the pre-encumbrance decreases and the encumbrance increases by 165.00 USD.
|
Ledger |
Amount |
|---|---|
|
Budget |
5,000,000.00 USD |
|
Expense |
0.00 USD |
|
Encumbrance |
1165.00 USD |
|
Pre-encumbrance |
75.00 USD |
Create another purchase order that references this requisition for 25.00 USD, finalize the purchase order and run budget checking. The total for all purchase orders is 190.00 USD, but the pre-encumbrance is liquidated with the full requisition amount of 200.00 USD. The pre-encumbrance decreases and the encumbrance increases by 25.00 USD.
|
Ledger |
Amount |
|---|---|
|
Budget |
5,000,000.00 USD |
|
Expense |
0.00 USD |
|
Encumbrance |
1250.00 USD |
|
Pre-encumbrance |
40.00 USD |
To liquidate a requisition for an amount lower than the original:
Reduce the quantity or price total on the purchase order to the correct amount
Click the Finalize Document button.
Save the purchase order.
After approving the revised purchase order, run budget checking to confirm the correction.
You can also reverse finalization of a purchase order or voucher. The system then restores the original budgetary amount to the preceding documents that had previously been liquidated. If you do not declare a document final (for less), no additional liquidation takes place. The system replicates the partial or final status of a document down to all the document distribution lines associated with the given document schedule, adjusting all ledgers accordingly.
For example, you can process a requisition for 1000.00 USD, then create a purchase order for only 700.00 USD, without expecting to spend the remaining 300.00 USD that the requisition authorizes. You can declare the purchase order final (for less), thereby liquidating the pre-encumbered 300.00 USD from the requisition and freeing that money for other purposes.
If you find later that you need to spend another 250.00 USD on the purchase order from the original requisition, you should either click the Undo Finalize Line button or the Undo Finalize Entire Document button and save the purchase order. Then, select to budget check the revised purchase order document again. You can declare the purchase order partial, thus liquidating the requisition and freeing the last 50.00 USD for other purposes.
When you finalize the purchase order document on the affected requisition and then perform a budget check on the purchase order again, the Final field is selected and the Budget Line Status value on the Statuses tab is set to Valid on PO Distribution. Also, the Commitment Control Close Flag check box is selected on the Details tab on the Maintain Requisitions – Distribution page.
When you undo finalize on the purchase order document on the affected requisition and then budget check the purchase order again, the Final field is cleared, and the Budget Line Status field value on the Statuses tab is set to Valid on PO Distribution. In this case, the Commitment Control Close check box is deselected on the Details tab on the Maintain Requisitions – Distribution page.
To reverse a reduction:
Clear the final check box for the affected line or lines, or click the Undo Finalize Entire Document button.
Save the purchase order.
Run budget checking to confirm the correct amount.
You must budget check each purchase order after you declare it either final (for less) or partial. During budget checking, the system treats a finalized purchase order as a direct encumbrance, still subject to pre-encumbrance tolerance checking.
Note: If two or more purchase orders are linked to one requisition, none of those purchase orders can be finalized until all of those purchase orders have passed budget checking.
Note: You cannot change a purchase order's liquidation status while its budget-checking status is in Error or once the distribution has been canceled.
Note: You can only indicate that a purchase order is partial after it has successfully completed budget checking.
If you're using entry events, you must run them after budget checking. This generates your pro forma accounting entries, adjusted for finalization or partialization.