Processing Transactions Against Budgets with Different Funding States
This section provides an overview of the United States federal government accounting requirement for processing source transactions related to unexpired and expired budgets and discusses how to:
Define current, unexpired, expired and closed budgets.
Set up authorization to process against unexpired and expired budgets.
Use entry events to generate budgetary entries automatically for upward and downward adjustments.
Set up entry events to process upward and downward adjustments.
The United States federal government requires varying accounting treatment for source transactions based on whether the associated budget, or appropriation, is current, unexpired, expired or closed. During the unexpired funding period, budget authority is available for incurring "new" purchase orders. New contracts can be entered into during this phase and disbursements (vouchers) to liquidate purchase orders can be made. This phase lasts for a set number of years and does require upward or downward adjustments. The budget is said to be expired after the current period, or period of availability, has passed. The expired budget remains open to recording, adjusting, and liquidating properly chargeable amounts until the expiration period has ended and the budget is closed (cancelled) based on the end date that you specify. All transaction activity subsequent to the expiration date should be driven by existing obligations recorded during the budget's period of availability. With some exception, no new commitments or obligations are allowed after the budget has expired.
When you choose to use budget expiration functionality, the system does not allow you to process activity against closed budgets, or budgets that exceed their end dates specified on the Prior Year Adjustment ChartField page. After the budget is closed (cancelled), the United States federal government allows payments to be processed against your current year budget if the payment does not exceed 1 percent of the new budget.
See Processing Transactions Against Budgets with Different Funding States.
This section also deals with setting up for processing and automatic generation of budget entries to USSGL accounts that reflect upward or downward adjustments to obligations that are properly chargeable against expired or unexpired budget authority.
You do processing for expired funding for those transactions that were initially incurred while the related budget was current. Commitment Control provides an error message, which can be overridden, that informs you when you are attempting to process a transaction against expired funding, and the transaction reduces remaining spending authority. The system also determines if you are attempting to process a new obligation to an expired budget. Only approvers that you authorize have the ability to override the resulting error message and process transactions that are in addition to the original obligations incurred or to post the transaction to a new current year.
You receive an error message for expired funding if you are processing an upward adjustment—for example, the voucher is greater than the purchase order. This is because you are spending more than originally designated by the purchase order and this requires approval, or override.
You do not receive an error message if, for example, the vouchers are for the same amount (no adjustment) or less than (downward adjustment) the original purchase order. Downward adjustments denote that the funds set aside previously by a purchase order are not to be utilized and no error message is necessary.
Use Commitment Control budget override functionality to authorize a user to do an override of an upward adjustment error message and to continue processing. You will not receive an error for unexpired funding from the budget processor. Unexpired funding is still considered current but has other considerations for additional accounting.
Note: Upward and downward functionality is predicated on liquidation by amount only. If you choose to liquidate by quantity, the accounting results for downward adjustment transactions as specified by the U.S. Treasury are not created.
See Budget Definition - Prior Year Adjustment ChartField Page.
Use the Budget Definition - Control Budget Options page to select one of the ChartFields supported in Commitment Control as budget keys to identify the budget that you are controlling for current, expired, unexpired and closed status. Processing transactions against expired, unexpired or closed budgets are predicated on these dates. Budget Period is not available for this purpose. Budget period must be between begin and expiration dates to be considered for unexpired accounting adjustment, while budget period must be between expiration and end dates to be considered for expired accounting adjustment.
Use the Budget Definition - Prior Year Adjustment ChartField page to define the values for the Prior Year Adjustment ChartField and the begin date, unexpired option, expiration date, and the end date for an Prior Year Adjustment ChartField value.
See Budget Definition - Prior Year Adjustment ChartField Page.
After defining Prior Year Adjustment ChartFields and expiration dates, if you attempt to post previously unrecorded obligations applicable to an expired budget you receive an error message. To override this error you must have security authorization.
Processing against expired budgets is a Budget Override security event. Use the existing functionality in PeopleSoft security to allow an authorized user to override an upward adjustment error and continue processing.
You can establish security for any ChartField that is defined as a key ChartField in the control budget definition. PeopleSoft recommends that you not change this unless you are configuring Commitment Control ChartFields.
For adjustments or change orders the Entry Event (EE) processor ensures that the original transaction's Budget Fiscal Year is less than the adjustment transaction's Accounting Fiscal Year to determine if the transaction meets the criteria for unexpired adjustment accounting. For original transactions the budget processor ensures that the Budget Fiscal Year is less than the Accounting Fiscal Year to determine if the transaction is subject to unexpired adjustment accounting. Unexpired check box has to be selected on the Budget Definition - Prior Year Adjustment ChartField Page, to indicate that ChartField value is subject to unexpired upward and downward adjustment accounting.
Upward and downward adjustments primarily affect Purchasing and Payables.
In Purchasing, when purchase orders are budget checked, the system determines if the obligation is associated with an unexpired or expired budget. If it is against an unexpired or expired budget then entry event can be set up to generate upward or downward adjustments.
Purchase Orders are considered for unexpired upward and downward adjustment accounting if the transaction budget date falls between the defined Begin Date and Expiration Date for the control budget. As an additional criteria, if the PO is a change order, the Accounting Fiscal Year of the adjustment must be at least one year greater than the original transaction's budget fiscal year. However, if the PO is an original transaction, then the Budget Fiscal Year must be less than the Accounting Fiscal Year.
PO Vouchers are subject to unexpired adjustment accounting under the following conditions:
The funding is designated as Unexpired on the control budget definition.
The budget date of the voucher falls between the Begin and Expiration dates on the control budget definition.
The PO Budget Fiscal Year is less than the Voucher Accounting Fiscal Year.
The PO Voucher line amount is greater than the referenced PO line amount.
The PO Voucher line is marked as final and is less than the referenced PO line amount.
Direct Vouchers are subject to unexpired adjustment accounting under the following conditions:
The funding is designated as Unexpired on the control budget definition.
The budget date of the voucher falls between the Begin and Expiration dates on the control budget definition.
The Budget Fiscal Year is less than the Accounting Fiscal Year.
Accounts Payable is impacted by upward and downward adjustments in the following important situations:
When you create PO Vouchers (purchasing vouchers) that are for more or less than the original purchase order amount, it is considered an adjustment.
Any upward change related to an expired budget is failed by the Commitment Control budget processor and must be overridden by an authorized user.
When you create a PO Voucher that is for less than the purchase order amount and it is marked as Final, it is considered for an adjustment.
Subsequent adjustments to prepaid PO Vouchers must be done through AP Journal Vouchers (accounts payable vouchers).
When you create AP Journal Vouchers, care must be taken to select the correct entry event manually.
Commitment Control accumulates voucher activity against the purchase order. The accumulated activity is used by entry event to calculate upward and downward adjustment amounts.
The Commitment Control budget processor recognizes a budget as expired when the expired date is attained for that budget. Additionally, it recognizes a budget as unexpired if all of the previously designated criteria are met. Entry event uses this information to trigger creation of upward or downward adjustments derived from the difference between the accumulated voucher amounts and the applicable purchase order or orders for the expired budgets. The entry event processor uses the steps defined for expired or unexpired upward and downward adjustments to create accounting entries.
See Upward and Downward Adjustments.
See Using Entry Event Codes for Upward and Downward Adjustments in Unexpired and Expired Funding
To provide spending limits and to prevent improper payment against closed funding the United States federal government provides for payment of closed obligations against new current budgets to a limit of 1 percent of the new budget.
The Commitment Control budget processor recognizes a budget as closed when the end date is attained for that budget and rejects further payments.
To process payments associated with closed budgets you establish additional budgets as part of the new current year budgeting process for specific spending that is associated with closed-year obligations. For example, you are aware that a closed budget has unpaid obligations. As a part of the new budgeting for the current year you create an adjunct to the new current year budget, or a budget of 1 percent of the new budgeting total amount. Ninety-nine percent of the new budget is placed in its own budget and reserved for new obligations. The 1 percent budget is its own budget having its own budget keys. For example, it can be distinguished as Fund 100X within the overall current budget. Closed budget liquidations cannot exceed the 1 percent limit of current year funding.
These steps illustrate the use of 1 percent budgets and liquidations when you are using Prior Year Adjustment ChartField and dating functionality:
If you attempt to post a payment or liquidation against a closed budget (or closed funding), the system does not allow the transaction because the budget is closed and no funds are available to process the liquidation, or payment.
To accommodate these payments you create a current year 1 percent budget after determining the necessary account, or budget and ChartField keys.
Creating the required budgets entails:
Establishing a 1 percent budget covering obligations for budgets that are now closed and subject to the 1 percent rule of Public Law 101-510.
Establishing a revised current year budget representing the normal current funds available for obligations and liquidations.
This is typically established at a minimum value of 99 percent of the total funds available for the current year.
When processing liquidations subject to Public Law 101-510, record the expenditures against the 1 percent budget.
Current budget processing validates that the user does not exceed the 1 percent budget. However, no new purchase orders or obligations should be allowed against the 1 percent budget. The account (budget) should only be used for liquidations against obligations established in the funding year where the budget is now closed.
This example illustrates the process:
A single year appropriation ABC2006 expired on September 30, 2006.
The funds were still available for processing liquidations against previously established purchase orders for a period of five years, ending on September 30, 2011. At that time, the appropriation was closed with an unliquidated balance of 100 USD that was cancelled.
In May 2012, you receive a 10 USD voucher against an existing purchase order associated with account ABC2006.
You attempt to post the voucher against ABC2006 and receives a failure warning indicating that the budget is closed.
To post this voucher to current year account, the ChartField combination should be revised on the transaction to post against the current year 1 percent budget.
This is accomplished by taking the current year Appropriation ABC2012 for a total of 5000 USD available and establishing two sub-budgets. One is the 1 percent of the current ABC2012 budget (50 USD) and the remainder of 4550 USD is recorded to a second budget.
You post any subsequent vouchers for the same purchase order against the 1 percent current year budget, which is subject to normal budget checks for funds availability within the 1 percent budget.