Setting Up, Allocating, and Inquiring On Funding Sources

Budget Definitions with Funding Source Tracking and Control

Funding source control is done using optional functionality that tracks and controls expenditures against the following sources:

• Expenditure budgets

• Recognized revenue

• Collected revenue

  Note: Expenditure budget is a funding source; budgeted revenue is not applicable as a funding source until it is recognized or collected.

Funding sources represent expenditure budget amounts and recognized or collected revenue from such things as appropriations, grants, donations, and endowments. By nature, budgeted expenditure amounts are immediately available for spending by funding source. However, revenue is available for spending by funding source only upon being recognized or collected.

At any time after defining the expenditure and revenue control budgets, you can set up funding source functionality to track and control transactions by funding source at the same time that these transactions are also being budget checked and controlled by the overall control budget.

To use funding source functionality with recognized and collected revenue, you must define an associated revenue control budget to be used with the expenditure budget.

By nature, when a revenue budget is associated with a related expenditure budget, it is to provide additional spending authority from revenues. You can use funding source in conjunction with the associated revenue budgets to allocate recognized and collected revenue for spending by the related expenditure budgets.

Use the Budget Definitions component to define a control budget definition with funding source tracking and control. After you create the expenditure control budget definition, you can have the system automatically define a related revenue control budget to support the tracking and control of transactions using funding source functionality.

The system-created revenue budget definition uses the same budget Control ChartField as its related expenditure budget for its Control, Ruleset, and Key ChartField. You must add an additional key ChartField to the revenue budget definition to further refine the identification of revenue when multiple funding sources are allocating recognized and collected revenue.

Funding sources can be allocated to expenditure budgets (ledger groups) as available spending using either the percentage or priority method but not by both methods within the same funding source allocation.

Information about the total allocation of each funding source, which budget funds are allocated to, and the expenditures against each funding source are readily available using delivered inquiries.

See Setting Up Control Budget Definitions.

Basic Budget Setup Procedures with Funding Source Control

To set up budgets with funding source control, you set up the associated expenditure and revenue budgets, define the funding sources, and allocate the funding sources to the expenditure budget.

The following are basis setup procedures:

1. Set up commitment control ledgers and a ledger group for an expenditure budget definition and revenue budget definition.

   Define the budget definition using the Budget Definitions (KK_BUDGET) component. If a commitment control ledger is set to NOT Affect Spending Authority as is sometimes done for the pre-encumbrance ledgers, the spending for that ledger is not distributed to the Funding Source Distribution tables, and is excluded from funding source editing and inquiry.

   You can have the system automatically generate an associated revenue budget definition by entering the revenue ledger group in the Revenue Track field under Funding Source Control on the Control Budget Options page of the expenditure budget definition.

   You can use any ChartField as the Control ChartField for a funding source-enabled budget. However, the Control ChartField and Ruleset ChartField must be the same.

   Typically, funding source control is used with project budgets. For funding source-enabled project expenditure and revenue budgets the Control ChartField and Ruleset ChartField must be Project ID. In addition, Project ID is the only key ChartField that you can use for funding source-enabled project expenditure budgets.

   See Project Costing and Control Budgets with Funding Source.

2. On the Control Budgets Options page select the Enable Funding Source check box and in the Revenue Track field, enter the revenue ledger group that is to provide the funding source revenue amounts.

3. Select the FS Required (funding source required) check box for the budget Control ChartField on the Control ChartField page of expenditure and, if applicable, the revenue budget definition.

   When you are allocating a budgeted funding source to one specific control ChartField, it has to be on the expenditure budget definition's Control ChartField page with FS Required selected.

   When allocating a revenue type funding source to one specific control ChartField, it has to be on the revenue budget definition's Control ChartField page with FS Required selected.

4. Define funding sources on the Commitment Control Funding Source page.

   Enter funding source amounts and adjustments on the Funding Source Transaction Logs grid. The page calculates the total funding source amount by aggregating the amounts that you enter on the grid and also displays a running total of the amounts applied using the funding source allocation page.

   Define fund sources by all business units or control access to fund source information by defining a funding source by a single or multiple business units that are accessible to selected users of your choosing.

   Using the Installation Options - Commitment Control page, you can activate and use three user-defined fields to report and track fund source information.

   When activated, the two additional character fields and one date field are available on the Funding Source Definition page. The fields are for information only and do not programmatically affect the allocation process or spending against funding allocations.

5. Attach funding source-enabled expenditure and revenue ledger groups to a specific business unit that requires funding source control using the Ledger for A Unit component.

6. On the Commitment Control Funding Source Allocation page, enter the overall spending amount approved for the budget and allocate funding sources and amounts for each Control ChartField for which you require the use of funding source tracking. Use one of the following methods to allocate funding sources:

   • Percentage: You can define funding source amounts as a percentage of the overall spending amount, and establish a spending cap amount for each funding source.

   • Priority: You can choose to allocate and expend against the overall spending amount by priority. Establish a spending cap amount for each funding source.

     For example, you decide that you want to first spend against FS5 (fund source 5) and then by FS1 (funding source 1), and so on according to the spending priority that you define.

     The page automatically sums up the spending caps and puts the sum in the Allocated Amount field. For both methods, the allocated amount has to be equal to the overall spending amount for the budget processor to be able to use the allocation. If the allocated amount is greater than the overall spending amount, you cannot save the page. But if the allocated amount is less than the overall spending amount, you can save the page, but the budget processor is not able to use this allocation because the Funding Source Error flag is activated in such cases.

     Note: The percentage and priority methods are mutually exclusive and the two methods cannot be used in combination for the same funding source allocation.

     You can save a funding source allocation for which you have not yet fully completed the allocation; however, the system will not process expenditures against the funding source allocation until you have reopened the Commitment Control Funding Source Allocation page and fully allocated the overall spending amount that you assigned to the funding source allocation. You cannot override a partial allocation or a zero priority number error generated by Budget Processor.

7. Enter expenditure budget journal entries for the budgeted funding source allocation rows and process revenue transactions to provide recognized, or collected, revenue for the revenue type funding source allocation rows.

   The Commitment Control Budget Posting Application Engine (FS_BP) process validates that a referenced funding source allocation for a transaction is already defined and that the sum of the budget journal amounts for a funding source does not exceed the spending cap defined on the Funding Source Allocation page. The Commitment Control Budget Checking process prevents spending against a Control ChartField that is funding source-enabled but for which the funds have not yet been fully allocated.

Sample Budget Setup with Funding Source

The following is a sample budget setup for business unit FS01. Only user IDs that have access to FS01 information will have access to the funding source information. You can specify all or one or more business units depending on the level of access to the funding source that you want to grant users. Funding source access depends on the security access that is granted to a user ID for business unit and ledger groups.

Something that is not shown in this table is the assumption that the expenditure ledger group FS_EXP contains the commitment control ledgers BUD, ENC, PRE, and EXP, and the associated commitment control revenue ledger group FS_REV contains the ledgers RBUD (revenue budget), REC (recognized revenue), and COL (collected revenue). The table depicts a basic budget setup and environment for the funding source examples that follow the table:

Funding Source Examples Using Percentage Allocation

Assume the following funding source setup using the percentage method:

The 5000 overall amount is the total amount approved for expenditure that must be funded by some combination of expenditure budget and recognized revenue for the Control ChartField Aero, which identifies the applicable control expenditure budget that is being funded.

The table also reflects the posting of an expenditure budget journal entry in the amount of at least 2500 and of an additional source transaction entry recording recognized revenue of 2500 for a total of 5000 in the available amount column and is available for spending by the Aero project.

For example, when an expenditure (AP1) is entered through Payables for project Aero in the amount of 3000, the full amount is recorded by the system in the budget ledger table as an expenditure against the specified overall project budget. At the same time the budget processor also checks the expenditure against the funding source allocation for available amount and for the applicable percentages that you specified for expenditure by the funding sources.

The AP1 expenditure is allocated to the funding sources as specified by the funding source percentages as shown in the following table:

The budget processor checks each line for available budget or revenue, liquidates encumbrances, records the expenditure, and calculates the RSA:

The following example illustrates a source transaction error that results when a defined funding source allocation exists but funds for that funding source are unavailable.

A requisition pre-incumbrance is allocated to the funding sources as specified by the funding source percentages as shown in the following table:

Assume that the recognized revenue that is allocated for FS2 does not occur (is not earned and recognized) by the time the pre-incumbrance transaction (PINC1) in the amount of 3000 is processed. Fifty percent of the pre-incumbrance, or 1500, is covered by the expenditure budget that is allocated to FS1 and passes funding source checking. However, when the budget processor checks FS2 for available recognized revenue for the remaining 50 percent of the pre-incumbrance, the budget processor errors out the source transaction (PINC1) with a budget header status of E for error:

By clicking the E status link (located on online transaction pages), you access the source transaction exception page, where the message Available Funding Insufficient is displayed for this type of error.

When a Control ChartField (expenditure budget) is funding-source enabled, a transaction can pass budget checking at the overall expenditure budget level but fail budget checking at the associated funding source level. The end result is that the transaction fails budget checking (has a budget header status E).

Because the transaction has failed budget checking, nothing is recorded against the overall budget or funding source and no synchronization issue occurs. You must determine the cause of the problem and fix it for the transaction to be able to pass budget checking and get a valid budget header status.

The percentage funding source examples so far have assumed a budget control option of Control.

The following list describes the action of each budget control option if the Control ChartField on source transaction is by percentage allocation and transaction exceeds the available funding for a funding source:

• Control: If the transaction exceeds the available funding allocation for its fund source, the transaction errors out with the exception Available Funding Insufficient logged for the specific funding source or sources, and must be corrected.

  If a user has access and overrides the exception, the overage is applied by relative percentage allocation to the funding sources within the allocation. In such cases, a warning exception Override 'Fund Insufficient' is logged for the specific funding source or sources.

  Note: The priority method exhibits different control behavior, which is discussed in the section dealing with the priority example.

• Track With Budget: The transaction passes budget checking and any overage is applied by relative percentage allocation to the funding sources within the allocation. In such case, a warning exception Exceeds Available Funding is logged for the specific funding source or sources.

• Track Without Budget: The same scenario occurs as for Track With Budget.

• Control Initial Document: For the initial transaction document (such as the requisition in the procure-to-pay document flow), the scenario is the same as that for Control, but all subsequent documents (such as the purchase order and voucher in the procure-to-pay document flow) are treated as Track With Budget.

Credit of Expenditure Transactions Using Percentage Allocation

Reductions of charges or credit to expenditures, such as credit memos or other credit transactions, can be used to increase the funding source available amount. In effect, the increase is reestablishing amounts previously charged against the funding sources by adding back to the funding sources the credit amount without regard to the RSA effect at the business unit and ledger group level.

Credits are applied using the following logic and is true for all control options:

• A credit transaction is processed against all funding sources using the existing relative percentage allocations.

• The credit transaction amount can exceed the available amount for one or more funding sources after the distribution, and a warning is provided.

• If the credit amount exceeds the overall amount (the total of all funding sources) defined on the Funding Source Allocation page, the transaction errors out without provision for override.

  Such a condition might occur when an erroneous entry is made with too many zeros.

Funding Source Examples Using Priority Allocation

The priority method enables you to allocate expenditure budget amounts and recognized or collected revenue to funding sources and use the funding sources in sequence against source transactions associated with a project ID or other Control ChartField (that identifies a control budget). Basically, the funding source that you assign as first priority is drawn down by application of source transactions and when it is exhausted, the remaining and future transaction amounts (pre-incumbrances, encumbrances, and expenditures) are applied to the funding sources in an order defined by you for the second, third, and so on priorities.

The priority funding source distribution examples use the same budget setup, business unit, ledgers, and ledger groups as the previous percentage examples, but the focus is changed to the budget having the Devl Control ChartField. While the example is the same in that the allocation of expenditure budget amounts and recognized or collected revenue for expenditure is still by funding source, it is different in that a user-defined priority exists in the sequence of availability of the funding sources for source transactions.

As with the percentage method, source transactions (pre-encumbrances, encumbrances, and expenditures) that are budget checked against the available funding can pass the overall budget (in this case Devl) but still fail funding source budget checking.

Assume the following funding source setup using the priority method:

Assume that the expenditure budget journals for FS3 and FS2 are posted and the following expenditures are processed by the budget processor for the Devl project budget. (For the sake of simplicity, assume that no prior encumbrances exist but only expenditures.)

The budget processor distributes the source transaction lines according to the priority of the allocation for the funding sources in the following way:

The AP3 source transaction passes budget checking because sufficient funding is in the priority one funding source FS3 with 500 in funding left over to cover the GL1 transaction. However, the GL1 source transaction fails because FS5 and FS1 are skipped by the system due to no recognized revenue having been journaled and because the available budgeted amount for FS2 (3000) is not sufficient to cover the 5500 (6000–500) expenditure for GL1. If, however, the GL1 source transaction were reduced to 3500 instead of 6000, it would pass budget checking for funding source.

The priority funding source examples assume the budget control option of Control.

The following list describes the action of each budget control option if the Control ChartField on source transaction is by priority allocation and transaction exceeds the total available funding for the allocation:

• Control: If the transaction exceeds the total available funding for its fund sources, the transaction fails budget checking and errors out with the exception Available Funding Insufficient logged for all funding sources.

  If you override the exception, the overage is applied to the last priority funding source used (that is to say, the most currently used). In such cases, a warning exception Override 'Fund Insufficient' is logged for all funding sources.

• Track With Budget: Source transaction that exceeds the total available funding amount passes budget checking, and the overage is applied to the last priority funding source used. In such case, a warning exception Exceeds Available Funding is logged for all funding sources.

• Track Without Budget: The same scenario occurs as for Track With Budget.

• Control Initial Document: For the initial source transaction document, such as requisition in the procure-to-pay document flow, the scenario is the same as that for Control. All subsequent source transaction documents, such as purchase order and voucher in the procure-to-pay document flow, are treated as Track With Budget.

Credit of Expenditure Transactions Using Priority Allocation

Reductions of charges or credit to expenditures, such as credit memos or other credit transactions, can be used to increase the funding source available amount. In effect, the increase is reestablishing amounts previously charged against the funding sources by adding back to the funding sources the credit amount without regard to the RSA effect at the business unit and ledger group level.

Credits are applied using the following logic and is true for all control options:

• A credit transaction is processed against the current funding source, where current is defined as the first funding source to have available amounts not yet spent.

• If the credit transaction amount exceeds the total available amount for the current funding source, the process passes the credit transaction in full and provides a warning.

• If the credit transaction amount exceeds the overall amount (the total of all funding sources) defined on the Funding Source Allocation page, the transaction errors out without provision for override.

  Such a condition might occur when an erroneous entry is made with too many zeros.

Allocation of Revenue Transactions

Two types of revenue are available for funding source:

• Recognized

• Collected

Recognized and collected revenue become available for use by a funding source when revenue source transactions are recorded in the PeopleSoft General Ledger, Billing, or Receivables applications as a receivable (when due or earned) and as collected (when actual cash is received.)

Revenue budgets typically are used to track the recognition and collection of revenue and are sometimes used to control the total mount of revenue that can be received. Revenue budgets might or might not equal the amount of a related expenditure budget, and they do not track and control spending. That is the function of the expenditure budget. However, revenue transactions when they are linked to an expenditure budget can add to the spending authority over and above the amount of the expenditure budget.

In a similar manner, encumbrances and expenditures can be tracked and controlled by funding source using allocated amounts from related expenditure budgets and also from:

• Recognized revenue from a related revenue ledger group.

• Collected revenue from a related revenue ledger group.

If you use the system to automatically create the revenue budget definition using information that is available from the expenditure budget definition, the default is for the system to also use the expenditure Control ChartField and option setup for the revenue Control ChartField and option setup. Funding source enabled expenditure and linked revenue budget definitions must have the same control ChartField. You might want to use a second Key ChartField, such as department, program, or fund, in conjunction with the revenue Control ChartField to distinguish the allocation of revenue transactions when the revenue type is recognized or collected for more than one funding source in a funding source allocation. This is because the system does not allow the same revenue to go to different funding sources in the funding source allocation.

You can specify that the percentage available from recognized or collected revenue be less than or equal to 100 percent for a particular funding source in a funding source allocation, but the remaining collected or recognized revenue is no longer available for allocation. However, if for example you want two funding sources in the same allocation to use the revenue type of recognized, the second Key ChartField is required to distinguish the revenue funds that you intend to be available to each of the funding sources. If a second key were not used to record and allocate the revenue, you could not enter more than one funding source with the revenue type spending option. The second Key ChartField is necessary when revenue funds are expected to be shared by multiple funding sources and to prevent overspending of recognized or collected revenue.

Changes in available revenue for a funding source might result in the funding source available amount being reduced or even result in a negative amount (in such cases, the amount available to the Funding Source Allocation page is zero) because of such things as customer refunds or retraction of proffered funding from a particular entity. The result of recording such accounting transactions is a reduction in the recognized revenue and a resulting reduction of available spending for funding sources dependent on that revenue.

If this occurred under the percentage allocation method, it might result in future failure of funding source budget checking for expenditures that you must deal with depending on the budget control option that you originally selected.

Under the priority method, any funding source that has a negative available amount is considered by the system to have a zero available balance and the budget processor moves on to the next funding source with available funding in the sequence of priority that you established.

Tolerances, Caps, and the Impact of Allocation Changes

Tolerances are not supported for funding source-enabled budgets. If you enter them, they are ignored for funding source budget checking and remaining spending calculations.

Caps provide upper limits on availability of a funding source for spending within an overall allocation. The cap and the overall amount that are approved for the funding source allocation and Control ChartField budget, which in most cases is the total amount of a project budget, are related. For both Percentage and Priority methods, you can enter in the Cap field the maximum amount of the funding source that can be spent for the budget that is entered in the Overall Amount field. However, for the Percentage method only, the system calculates and displays the percentage of the overall amount in the % of Overall field. For the Percentage method, you can also choose to enter an amount directly in the % of Overall field, and the system calculates the spending cap amount.

Changes to funding source parameters have only a forward effect after spending against them begins. No restatement or rebudget checking is available. If setup is modified, the budget processor checks future transactions based on available spending and the current allocation setup.

Funding source allocation does not restrict you from decreasing an allocation amount or cap that is in conflict with the spending to date. However, a warning message is displayed by the system when you do so.

Use of the Parent Child Budget Structure with Funding Source

Funding source must be enabled at the highest parent budget level.

For example, assume the following budgetary hierarchy:

• Grand parent

• Parent

• Child

In this example, funding source must be set up at the grand parent Control ChartField level. All three budget ledger groups must have the same Control ChartField but each level can have additional Key ChartFields.

To use the functionality that creates the parent from the child budget journals, enter the budget journals at the child budget level and enter the funding source that is to be used by the system in the creation of the highest level budget journals.

See Generating Parent Budgets, Budget Adjustments and Budget Transfers Automatically.

Associate related revenue budgets with the highest-level expenditure budget and funding source distribution setup. Checking is done at the highest budget level. However, commitments and expenditures are processed at the lowest budget level and must be translated to the highest level where funding source tracking and control occurs.

Funding Source Inquiry

Two inquiries provide information about funding source allocation and activities based on the current date. Both inquiries check the result against row-level security and commitment-control security and show results that pass security checking.

• Review Fund Source Allocation.

  View allocations of funding sources and see the distribution of sources (budget and revenue) by funding source or by Control ChartField. Selection criteria is not required but, depending on the criteria that you provide, a variety of information presentation is possible.

  You must select the view by option; other criteria is optional.

  If you want to view the funding source allocation for a specific ChartField, enter a business unit value that is used for filtering the ChartField and its values because both are SetID-based.

  However, the business unit is not used as part of the inquiry criteria. Results display all business units that have funding source allocations set up if the data passes checking based on the row-level securities and commitment control securities. The business unit is used only for filtering data that is displayed in prompts on the ChartField and its values when you click the prompt button.

• Review Fund Source Activities.

  Shows the expenditures and encumbrances for the funding source specified. You can further drill down on amount types to see the source transactions that make up the amounts distributed by funding source. You must specify the funding source but, depending on the other criteria that you specify, you can effectively filter the transactional activity displayed by the Control ChartField and Control ChartField value.

  This inquiry provides a summary view that is broken down by Control ChartField. You can view the spending activities based on a specific ChartField. You can then click the amount to drill down to the summary for the business unit and ledger group. You can then drill down to the activity logs that show the detail of the transaction. Finally, you can drill down to the source transaction.

  Note: If the expenditure ledger does not have the Affect Spending Authority option selected for the ledger groups, the budget process does not record for the spending ledger on the funding source level (LEDGER_KK_FS). It records only at the ChartField level in LEDGER_KK. Therefore, you might see a zero amount for a spending type while actual transactions exist that already passed budget checking.

Commitment control security augments the security provided by PeopleSoft applications and PeopleTools for row-level security for business units and ledger groups. However, the displaying of results for funding source inquires is primarily based on commitment control security setup.

Funding source inquires reference the commitment control Budget Inquire (INQUIRE) security event and your particular related securities setup and rules to determine which business units and ledger groups that are found by any given search criteria are displayed in the search results for a particular user ID.

Access to data for funding source allocations and activity inquiries depends on both commitment control and row-level security. However, the total allocation amount and amount not allocated, which is the total defined funding source amount less the sum of the allocations that were already set up across business unit and control ChartField, are calculated regardless of row-level and commitment-control security.

This diagram shows security behavior and the allow and disallow rules as applied to inquiry.

Inquiry security flow chart

See Understanding Commitment Control Security.

Workflow

The Notify button at the bottom of the Commitment Control Funding Source and Commitment Control Funding Source Allocation pages enables a user ID to access the Send Notification page to enter a personal message and send an email or worklist notification to an individual or group when an event occurs that requires the notification of others.

The Send Notification page references the routing preferences for each recipient to determine the default delivery options. The system assumes that:

• Security administrators set appropriate values for any user on the User Profile page.

• Users set the appropriate values on their My System Profile pages.

Notifications can be sent by way of worklist or by email.

See Delivered Workflows for PeopleSoft Commitment Control.

See Understanding Exception Handling and Notification.

See PeopleTools: Workflow Technology, Administering PeopleSoft Workflow

Archiving Funding Source Records

Archiving of the LEDGER_KK_FS, KK_LQD_FS, and KK_ACT_LOG_FS tables is supported by PeopleSoft archiving functionality.

See Understanding Archiving for Commitment Control.

View by the Funding Source Inquiry Perspective

From the funding source perspective, you can:

• View inquiry results by funding source for all Control ChartFields, and all ChartField values for all funding sources.

  To do so, select Funding Source from the view by drop-down menu. If you leave funding source, control ChartField, and ChartField blank, the result includes all funding sources, all control ChartFields, and all ChartField values for which you have funding source allocations set up.

• View inquiry results by funding source but limit the results to only a Control ChartField of interest, all its control ChartField values, and all funding sources.

  To do so, select Funding Source from the view by drop-down menu. Select a business unit from the prompt for Unit for Chartfield and Value field, select a control ChartField from the prompt, and leave the ChartField Value field blank.

• View inquiry results by funding source but limit the results to a specific fund source, control ChartField, and ChartField value.

  To do so, select Funding Source from the drop-down menu. Select a business unit from the prompt for the Unit for Chartfield and Value field, select a Control ChartField from the prompt, and select a valid value from the Chartfield Value prompt.

• View inquiry results by funding source but limit the results to Control ChartField values of interest and all applicable funding sources.

  To do so, select the funding source from the drop-down menu, select a control ChartField, and specify a control ChartField Value while leaving the Funding Source field blank.

View by the Control ChartField Inquiry Perspective

From the control ChartField perspective you can:

• View inquiry by Control ChartField for all Control ChartFields, all control ChartField values, and all funding sources.

  To do so, select the Control ChartField from the view by drop-down menu and leave the Funding Source, Control Chartfield, and the Chartfield Values fields blank.

• View inquiry by Control ChartField for a particular Control ChartField, all values for the Control ChartField, and all funding sources.

  To do so, select Control Chartfield from the view by drop-down menu. Select a business unit from the prompt for the Unit for Chartfield and Value field, select a control Chartfield from the prompt, and leave the Chartfield Value field blank. Also, leave the Funding Source field blank.

• View inquiry by Control ChartField for a Control ChartField, a particular control ChartField value, and all funding sources.

  To do so, select Control Chartfield from the view by drop-down menu. Select a business unit from the prompt for the Unit for Chartfield and Value field, select a control Chartfield from the prompt, and select a valid value from the Chartfield Value field prompt. Leave the Funding Source field blank.

• View inquiry by Control ChartField for a Control ChartField, a control ChartField value, and a funding source.

  To do so, select Control Chartfield from the view by drop-down menu. Select a funding source. Select a business unit from the prompt for the Unit for Chartfield and Value field. Select a Control Chartfield from the prompt, and select a valid value from the Chartfield Value prompt.