Understanding the Commitment Control Feature in PeopleSoft Payables
The Commitment Control feature is an optional feature of Oracle's PeopleSoft Financials, Enterprise Service Automation, and Supply Chain Management product lines that enables you to control commitments and expenditures automatically by checking them against predefined, authorized budgets. It is a subsystem of PeopleSoft General Ledger that you can activate for specific products and business units.
With the Commitment Control feature, the procure-to-pay cycle is populated with pre-encumbrances, encumbrances, and expenditures, all of which are tracked against a designated budget. Here is a high-level overview of the procure-to-pay cycle when using the Commitment Control feature:
When you generate a requisition, a pre-encumbrance is created in the budget records by the budget-checking process.
When a requisition becomes a purchase order, the Commitment Control feature relieves the pre-encumbrance and creates an encumbrance.
When the purchased goods or services are delivered and the purchase order becomes a voucher, the Commitment Control feature relieves the encumbrance and creates an expenditure.
The Commitment Control feature deducts each type of financial obligation from the available budget amount and tracks them by obligation type so that you can see how much money you have committed in pre-encumbrances, encumbrances, and expenditures.
The Commitment Control feature enables you to receive advance warning about all activities that might send controlled budgets over their approved amounts, and it enables you to stop any transactions that might go over budget. When transactions exceed budget amounts, the Commitment Control feature issues exceptions, which trigger workflow so that responsible parties can take corrective action. You can specify the degree of control and corrective action that you want to allow individual users to exercise over exceptions.
In PeopleSoft Payables, budget checking occurs at voucher creation, deletion, closing, and posting. You also perform budget checking after the payment posting process to check exchange rate realized gains or losses and earned or lost discounts. You can run budget checking for a single voucher during voucher entry or for many vouchers using a batch process. In any case, when you enable the Commitment Control feature for PeopleSoft Payables, you cannot pass a voucher to the general ledger until it has been budget-checked and posted unless you use the Period End Accrual Process. And you cannot post a voucher if it is over budget (although you can give certain users the security clearance to override budget-checking for over-budget vouchers).
PeopleSoft Payables uses these Commitment Control source transaction types:
Term |
Definition |
|---|---|
Vouchers (AP_VOUCHER) |
The budget-checking process checks the distribution line's merchandise amount plus any prorated nonmerchandise amounts. The currency value is the general ledger business unit's base currency. |
Non-prorated (AP_VCHR_NP) |
The budget-checking process checks the nonprorated, nonmerchandise amounts, or sales and use tax, for the distribution lines. A sibling table of the distribution line joins the amounts with the accounts from the charge header table. The currency value is the general ledger business unit's base currency. |
Discount Earned (AP_ACCTDSE) |
The budget-checking process checks the discounts earned against the accounts that are posted to the general ledger for vouchers associated with open purchase orders. Note: You must budget-check this transaction type using the batch Budget Processor Application Engine process (FS_BP). Note that, because making payments may create voucher accounting lines, you should budget-check any such accounting lines after making payments. |
Discount Earned - PO Closed (AP_ACTDSEC) |
The budget-checking process checks the discounts earned against the accounts that are posted to the general ledger for vouchers associated with closed purchase orders. Note: You must budget-check this transaction type using the batch Budget Processor process. Note that, because making payments may create voucher accounting lines, you should budget-check any such accounting lines after making payments. |
Voucher Accounting (AP_ACCT_LN) |
The budget-checking process checks entries from the accounting line table for realized gains or losses, late charges, discounts lost, and closed vouchers. The amounts are checked against the original distribution line. The realized gains or losses, late charges, and discounts lost are checked against the accounts that are posted to the general ledger. Note: You must budget-check this transaction type using the batch Budget Processor process. Note that, because making payments may create voucher accounting lines, you should budget-check any such accounting lines after making payments. |
Voucher Accrual Encumbrance (AP_ACENC) |
The budget-checking process checks the encumbrance entries associated with purchase orders. These entries are created by the Period End Accruals process. You must budget-check this transaction type using the batch Budget Processor process. You should budget-check accounting lines after running the Period End Accruals process. |
Voucher Accrual Expense (AP_ACEXP) |
The budget-checking process checks expense entries from the accounting line table created by the Period End Accruals process. You must budget-check this transaction type using the batch Budget Processor process. You should budget-check accounting lines after running the Period End Accruals process. |
The Budget Processor process checks vouchers and voucher accounting lines against all control budgets that they are subject to, updates the Commitment Control ledger (LEDGER_KK), and updates the budget-checking status of the transactions.
You can budget-check individual vouchers when you create them online, or you can budget-check multiple vouchers and voucher accounting lines in batch mode. The online version and the batch version of the Budget Processor process perform exactly the same tasks. Batch mode is recommended for efficiency, and it is required if you budget-check voucher accounting lines.
Document tolerances are percentages or amounts by which related procurement documents (such as purchase orders and vouchers) are allowed to differ. The Document Tolerance Application Engine process (FS_DOC_TOL) enables you to set document tolerances between pre-encumbrances and encumbrances or encumbrances and expenses. If these tolerances aren't met, the system creates a document tolerance exception.
If the Commitment Control feature and document tolerance checking are enabled for the business unit, you must run both the Document Tolerance process and the Budget Processor process. You can initiate these processes by selecting the appropriate actions on the Invoice Information page and clicking the Run button.
If you run the Budget Processor process as a batch process using the Budget Check page, you must run the Document Tolerance process independently.
Transactions that fail budget checking are flagged by the system as exceptions. Exceptions fall into two categories: errors and warnings.
Errors are exceptions that have failed budget checking because they do not conform to the rules established for the control budget. Errors are not allowed to continue through the system. This type of control is strict. Errors stop at the budget-check stage and do not proceed until they are corrected. Most errors occur when a transaction has at least one line that exceeds at least one budget and is over tolerance. Depending on the configuration of the control budgets, the exact reason for a budget to have insufficient funds varies from budget to budget. The budget may be on hold, closed, or simply lacking a sufficient available budget amount.
Warnings are exceptions that do not conform to the rules of the control budget but that passed through the system anyway. They function as exceptions that are automatically overridden, as well as issues that do not conform to the use of the budget. For example, you might receive a warning if the budget and accounting dates differ. This type of control is loose. Warnings are allowed through the system because the transactions merely require some type of audit trail. You don't want to prevent them—you simply want to analyze them. If the control option for the control budget definition is Track without Budget, you receive only warning exceptions. If the control option for the control budget definition is Track with Budget, you receive only warning exceptions, unless there is no budget for a transaction. In that case, you receive an error exception.
You are notified of exceptions in two ways: online and through workflow notification.
With online notification, you receive a message regarding a transaction's status when the budget-checking process finishes. The message indicates the type of exception that the transaction created and enables you to directly access the appropriate transaction exception header page, where you can either view the warnings generated or view and override the errors.
With batch budget-checking, users are notified of exceptions through workflow, based on their individual security profiles in the system. The system generates an appropriate worklist for each user and may also generate an email message. Users have access to a list of budgets that caused exceptions or a list of transactions with exceptions. These two options are available through the PeopleSoft system navigation or through the worklist. This provides two ways to access exceptions and override them. As a user, you can choose a particular budget from a worklist and access the Budget Exception page to view a list of all transactions that have failed for a budget. Alternatively, you can select a particular transaction in a worklist and access the appropriate transaction exception header page to view a list of all budgets that have caused exceptions for the transaction. The worklist contains a complete list of exceptions, and it indicates the exact cause of the error or warning. These two pages enable you to inquire about exceptions and override them.
Correcting Errors
You can correct errors for transactions by:
Changing the amount on the transaction lines to conform to budget limits and then budget-checking again.
Changing the budget amounts to allow the transactions to pass budget checking.
Overriding the budget for a particular transaction.
Overriding the entire transaction for all affected budgets.
In each case, you must have appropriate security clearance.
In PeopleSoft Payables, you pay the voucher amount even if it is over budget. Because you can't adjust the voucher unless the voucher is itself in error, you usually make adjustments to the budget or perform an override.
Security for Budget Adjustments and Overrides
The security profile of a user determines which budgets that user can adjust and which budgets and transactions the user can override. You set up this authority when you set up the Commitment Control feature. Only superusers have budget and transaction override authority. A user ID and date-time stamp appear on the inquiry pages when a budget or transaction has been overridden.
Budget Overrides
Overriding a budget involves selecting a check box on the appropriate page. A superuser can access the Budget Exceptions page, the transaction header and line exceptions pages, or the exception details page for any transaction header to override a budget or transaction.