Understanding Receipt Accrual
The PeopleSoft Purchasing Receipt Accrual Application Engine process (PO_RECVACCR) can be run on demand and multiple times in the same accounting period. This aspect of the process involves backing out previous transactions before new transactions can be generated, so that you can create reversal transactions for the current and next periods.
Note: For the Receipt Accrual process to work as designed, both PeopleSoft Payables and PeopleSoft Purchasing must be installed, and you must use PeopleSoft Payables Matching to validate vouchers.
When you run the Receipt Accrual process, the receipt accrual liability account accrues, or in other words, is credited for the amount of unbilled receipts. Any associated expense accounts are debited for the amount of unbilled receipts. The encumbrance reclassifications are generated and thereby provide a more accurate picture of the operating budget. The Receipt Accrual process also generates reversal transactions for the next period. PeopleSoft Purchasing retrieves the expense account information from the associated purchase orders or non-purchase order receipts to give you an accurate forecast of the expense account balance, even if several receipts have not been billed yet.
For example, suppose that you received 20,000 USD in materials in a month, but were billed for only 5,000 USD. The Receipt Accrual process ensures that the expense accounts reflect the remaining 15,000 USD in upcoming debits. This helps reduce the impact of unexpected debits to the expense accounts. Without the Receipt Accrual process, this 15,000 USD is hidden until the debits bill and post to the expense accounts.
When you run the Receipt Accrual process, it reverses the entries of both the receipt accrual liability account and the expense accounts. This keeps you current with all the unbilled receipts, enabling you to manage the expense accounts closely.
If receipts remain unbilled when the Receipt Accrual process runs in the new period, the same process begins anew with credits to the receipt accrual liability account and debits to the expense.
Receipt accrual supports:
Expensed items where you have received the goods from the supplier, but the supplier has not yet invoiced the organization.
Expensed items where a non-purchase order receipt has been entered.
You can set up receipt accrual for one scenario, both scenarios, or neither.
Here is a more detailed description of the way in which the Receipt Accrual process works:
Before creating the accounting entries for accrual, the process creates reversal transactions to back out all accrued receipts in the staging record (RECV_LN_ACCTG) in the current period.
The accrued receipts must first have successfully run one of the following three processes: the Entry Event Generator, Comm Cntrl Budget Processor, or the Journal Generator.
The original transactions for which reversals have just been created are identified as canceled.
Next, the process generates new transactions for receipts that qualify for accrual and creates the following six transactions in the staging record for each receipt line:
An expense in the current period and an expense reversal in the next period.
ChartFields are inherited from the receipt distribution line. These transactions are budget-checked if commitment control is enabled. Entry events are generated if they are required on the Installation Options - Entry Event page. Journal Generator also processes the transactions.
An accrual in the current period and an accrual reversal in the next period.
This account uses ChartField inheritance defined by the user. The ChartFields are inherited according to user selections of inheritance options on the Chartfield Inheritance page. Values are:
Always Inherit: Value comes from the receipt line distribution table RECV_LN_DISTRIB.
Do Not Inherit: Value comes from Accounting Entry Template table DST_DFTL_CNTRL.
Inherit Within Unit: Value comes from Accounting Entry Template table DST_DFTL_CNTRL.
Use Unit Default: Value comes from Accounting Entry Template table DST_DFTL_CNTRL.
These transactions are not budget-checked but are processed by Journal Generator, and the entry events are generated if they are required on the Installation Options - Entry Event Entry page.
Encumbrance transactions are generated for the current period and reversal transactions are generated for the next period.
ChartFields are inherited from the receipt distribution line. These transactions are budget-checked, and entry events are generated if they are required on the Entry Events page. Distributed appears by default as the general ledger distribution status, so that the Journal Generator process does not process them. N appears by default as the budget header status and budget line status. Accrual and encumbrance transactions look exactly the same in the staging record except for the account type (RAC or ENR), general ledger distribution status, and the ChartFields. Encumbrance transactions are not created if commitment control is not installed or for receipts that are not associated with purchase orders.
Separate transactions are created to record miscellaneous charges that are derived from receipt landed cost transactions (RECV_LN_DIST_LC).
Multiple Currencies
If you use multiple currencies, the accounting entries post in both the transaction currency and the base currency. PeopleSoft Purchasing uses the conversion rate defined on the purchase order to calculate the base amount to accrue.
VAT and Miscellaneous Charges
If there are miscellaneous charges or landed cost charges associated with the purchase order, these charges accrue only if you select the Accrue Charge check box on the Misc Charge/Landed Cost Defn page and the Accrue PO Receipts check box on the Purchasing Definition - Business Unit Options page. In addition, only miscellaneous charge and landed cost transactions with these Accounting Entry Type definitions are eligible for accrual:
FRG (freight expense).
MISC (miscellaneous charge expense).
STX (sales tax expense).
UTX (use tax expense).
VIN (value-added tax input nonrecoverable).
The Receipt Accrual process accrues the nonrecoverable portion of the value-added tax (VAT) on noninventory receipt lines if the Landed Cost accrual option (RECV_LN_DIST_LC) is selected for the corresponding miscellaneous charge code on the purchase order. This value flows from the purchase order to the receipt through the Process Receipts process. This is a VAT accrual for goods received but not invoiced.
These miscellaneous charges accrue along with the merchandise amounts only if the charges are to be paid to the same supplier designated on the purchase order.
The Receipt Accrual process does not accrue receipt amounts that have been paid or matched by PeopleSoft Payables. This section describes criteria that the Receipt Accrual process uses to determine which receipts should be accrued in various situations.
Eligibility Requirements for Accrual
The following list provides eligibility requirements for accrual:
For both purchase order and non-purchase order receipts:
The receipt must not be fully matched and matching must be required.
The receipt status must be Moved, Not Recv'd (not received), Open, or Received.
If the receipt line is purchase order related then the purchase order line must have Receiving Required selected.
The receipt line cannot have a MFG Production ID and OP Sequence value. MFG Subcontract receipts are not accured.
For purchase order receipts, the Accrue PO Receipts check box in the associated PeopleSoft Purchasing business unit must be selected.
For non-purchase order receipts, the Accrue Non/PO Receipts check box in the associated PeopleSoft Purchasing business unit must be selected.
For inventory receipt accruals, the Accrue Federal Inventory Receipt check box in the associated PeopleSoft Purchasing Business Unit must be selected.
Inventory-Related Purchasing Transactions Accrual
The Receipt Accrual process does not accrue receipt amounts that have been paid or matched by PeopleSoft Payables. This section describes criteria that the Receipt Accrual process uses to determine which receipts should be accrued in various situations.
Processing an Inventory receipt accrual
Here is an example of how to process an Inventory receipt accrual:
For inventory receipt accruals, you must select the Accrue Federal Inventory Receipt check box in the associated PeopleSoft Purchasing business unit.
Create a Purchase Order for the inventory items.
Budget check, Dispatch, and run Entry Event for the PO.
Receive the item via a Receipt.
Run the Interface Receipt job which runs both the Receive Interface Push and Complete Putaway processes for the inventory receipt accrual.
Run the Accrue Receipts process to create proprietary receipt accrual accounting entries. The inventory item will be set to not journal generate.
Run Receipt Entry Event to generate budgetary accounting entries that can be journal generated to the GL.
Run PO Entry Event to reverse the PO accounting entries previously made via the PO.
Inspect the item, if required.
Run Inventory Transaction Costing and Accounting Line Creation process to create the proprietary inventory accounting entries.
Create a voucher referencing the PO Receipt.
Run Voucher Budget Checking, Matching, and Document Tolerance.
Run Voucher Post with Entry Event.
Run Accrue Receipts to reverse the proprietary receipt accruals. The inventory item will be set to not journal generate.
Run Receipt Entry Events to reverse the entries.
Run Inventory Transaction Costing and Accounting Line Creation process to create any needed adjustments.
Journal Generate the PO, Receipt, and Voucher entries.
To set up receipt accrual for a business unit:
Select the Accrue PO Receipts check box or the Accrue Non/PO Receipts check box on the Purchasing Definition - Business Unit Options page.
Select the Accrue Charge check box on the Misc Charge/Landed Cost Defn (miscellaneous charge or landed cost definition) page to accrue miscellaneous charges or landed cost charges.
You cannot override this value on the purchase order; it flows to the receipt through the purchase order value adjustment.
Select a journal template for receipt accrual on the Procurement Control - GL Templates page.
Select the template that you want to use in the Receipt Accrual field. The standard template for receipt accrual is REC_ACCRUE.
See Defining Procurement Controls for General Ledger Business Units.
Select the journal source and journal date on the Journal Generator Template - Defaults page.
When you set the journal source and date, you are ensuring that the accounting entries are reversed at the beginning of each subsequent period.
Define the liability account for receipt accrual in the Expenses Accrual field on the Accounting Entry Template page.
PeopleSoft Purchasing debits accrued receipt charges from the expense account designated on purchase order distributions. The alternate account designated on the Accounting Entry Template page applies only to the liability account defined here.
Select Do Not Generate Reversal as the reversal code on the Journal Generator Template REC_ACCRUE.
The upgrade process should accomplish this step; you should not need to complete it independently of the upgrade.
Open the Purchasing Definition on the Accounting Entry Definition page, and change the Record from RECV_LN_ACCTG to RECV_LNACCTG_VW.
This record includes all receipt accruals that are budget-checked and ready to be journal generated. It excludes any receipt accrual with transactions that failed the budget process.
The upgrade process should accomplish this step; you should not need to complete it independently of the upgrade.
If any ChartFields are designated on the Detail Ledger Group - Chartfield page as Balanced, you need to select the Always Inherit rule for those ChartFields on the Chartfield Inheritance page.
Set up ChartFields in the general ledger definition.
Set up ChartFields for the accounting entry definition.
Use the following process flow to use the Receipt Accrual process, the Entry Event Generator, and the Journal Generator process (FS_JGEN) to implement the receipt accrual business process:
Run the Receipt Accrual process from the Accrue Receipts page.
The Receipt Accrual process populates the RECV_LN_ACCTG table.
If Receipt Accrual commitment control check box is enabled, budget-check the receipt accruals from the Budget Check Request page.
Use the Receipt Accrual Accounting Entries to review Budget Exceptions and override them as necessary.
If you are using entry events, run the Entry Event Generator process from the Entry Event Run Request page.
Run the Journal Generator process from the Generate Journals Request page:
On the Generate Journals Request page, select REC_ACCRUE in the Template field.
The template that you select controls the accounting lines source and journal date.
Note: Reversal entries are not generated because Do Not Generate Reversal was selected as the reversal code on the Journal Generator template REC_ACCRUE as part of the setup process.
The Journal Generator process uses Receipt Accrual process entries in the RECV_LN_ACCTG_VW view as input to populate the PeopleSoft Journal Entry tables used by PeopleSoft General Ledger.
After you've created the journal entries for PeopleSoft General Ledger with the Journal Generator process, use the Journal Drill Down inquiry page to view and navigate to the accounting entries or to navigate PeopleSoft General Ledger.
Run the Receipt Accrual SQR Report process (PORC700) to review the totals for each expense account and the total accrued liability.