Example of Commitment Control Budget Setup and Usage

The following highly simplified example shows how to set up an expenditure budget and budget-check the procurement life cycle of an expense transaction.

Setup and Budget Entry

This example assumes certain processing rules, which is not discussed here and for the sake of simplicity, it does not include tolerances and revenue budget linkage that increase available spending even when the expenditure budget is exceeded. This scenario can vary, depending on the rules you define for the control budgets and source transaction types.

  1. Presupposes that you define a general ledger business unit and ledger group in PeopleSoft General Ledger.

    Business Unit Ledger Group ChartFields

    EG004

    ACTUALS

    ACCOUNT, DEPTID, PRODUCT, AFFILIATE

  2. Define an expenditure-type Commitment Control ledger group.

    Commitment Control Ledger Group Ledgers

    ORG

    ORG_BUD

     

    ORG_PRE

     

    ORG_ENC

     

    ORG_EXP

  3. Set up a budget period calendar.

    Budget Period Dates

    Q113

    01/01/2013 to 03/31/2013

    Q213

    04/01/2013 to 6/30/2013

    Q313

    07/01/2013 to 09/30/2013

    Q413

    10/01/2013 to 12/31/2013

  4. Set up the control budget definition for the Commitment Control ledger group.

    The following are the key ChartFields and the budgetary-level ChartField values.

    ChartField Values

    ACCOUNT

    600000, 640000

    DEPTID

    000

    BUDGET_PERIOD

    Q113, Q213, Q313, Q413

    You usually set up budget control at a summarized ChartField value level instead of establishing a budget for each detail ChartField value combination. You set up ChartField translation trees to roll detail (transaction level) values up to budgetary-level values.

    Summary Budgetary ChartField Value Level Detail ChartField Value Level

    Account 600000

    Account 601000 rolls up to 600000.

     

    Account 602000 rolls up to 600000.

     

    Account 603000 rolls up to 600000.

    Account 640000

    Account 641200 rolls up to 640000.

     

    Account 641500 rolls up to 640000.

    Department ID 000

    Department ID 100 rolls up to Department ID 000.

     

    Department ID 200 rolls up to Department ID 000.

     

    Department ID 400 rolls up to Department ID 000.

  5. Associate the Commitment Control ledger group with the general ledger business unit and actual ledger group shown in step 1.

  6. Enter budget amounts for each budget.

    Account DeptID Budget Period Budget Amount

    600000

    000

    Q113

    4000

    600000

    000

    Q213

    5000

    600000

    000

    Q313

    5000

    600000

    000

    Q413

    5000

    640000

    000

    Q113

    2000

    640000

    000

    Q213

    2000

    640000

    000

    Q313

    2000

    640000

    000

    Q413

    2000

Budget Checking

The following is an example of simple expenditure cycle.

  1. Create a requisition.

    GL BU Date Acct DeptID Prod Budget Date Qnty Amt

    EG004

    06/15/13

    601000

    100

    NB100

    06/15/13

    5

    500

  2. Budget-check the requisition.

    In the budget-checking process, the transaction ChartField values are translated to the budgetary values Account 600000 and DeptID 000. The budget date is translated to Budget Period Q213.

    If this is the first transaction, there is 5000 available in the budget for Account 600000, Dept ID 000, and Budget Period Q213, so the requisition passes budget checking. The Budget Processor updates the pre-encumbrance ledger for the budget.

    Budget Amount Pre-encumbr Amount Encumbr Amount Expense Amount Available Budget Amount

    5000

    500

    0

    0

    4500

    Note:

    This table is laid out for explanatory purposes only and does not reflect the structure of the data stored in the system. Note also that in reality available budget is a calculated amount, not a stored amount.

  3. Create a purchase order for this requisition.

    GL BU Date Acct DeptID Prdt Budget Date Qnty Amnt

    EG004

    06/20/13

    601000

    100

    NB100

    06/20/13

    5

    550

  4. Budget-check the purchase order.

    The amount for the purchase order is 550, while the amount for the requisition is 500. When the Budget Processor liquidates the pre-encumbrance (requisition), there remains 5000 available in the budget, so the 550 purchase order passes budget checking.

    The Budget Processor liquidates the requisition and updates the pre-encumbrance and encumbrance ledgers for the budget.

    Budget Amount Pre-encumbr Amount Encumbr Amount Expense Amount Available Budget Amount

    5,000

    0

    550

    0

    4450

    Because the purchase order amount exceeds the requisition amount, the system fully reverses the pre-encumbrance, leaving a zero balance. Pre-encumbrances do not become negative when they are liquidated.

    Note:

    Had the purchase order been equal to or less than the requisition amount, the Budget Processor would have liquidated the pre-encumbrance (requisition) and updated the encumbrance ledger with the purchase order amount without budget checking.

  5. Create a Payables voucher when you receive the goods from the supplier.

    GL BU Date Acct DeptID Prdt Budget Date Qnty Amnt

    EG004

    06/30/13

    601000

    100

    NB100

    06/30/13

    5

    540

  6. Budget-check the voucher.

    The Budget Processor liquidates the encumbrance and updates the expense ledgers for the budget.

    Budget Amount Pre-encumbrAmount Encumbr Amount Expense Amount Available Budget Amount

    5,000

    0

    0

    540

    4460

    You can elect quantity-based or monetary amount-based liquidation. Quantity based liquidation is done through the various applications that feed into Commitment Control. The above example assumes you chose to use quantity based liquidation. Therefore, the Budget Processor reverses the full 550 purchase order amount for the five units, rather than the lower 540 amount indicated on the voucher.

    The example below assumes you had chosen instead to use monetary amount based liquidation, only 540 of the encumbrance would have been reversed, leaving a balance amount of 10 in the encumbrance ledger.

    Budget Amount Pre-encumbr Amount Encumbr Amount Expenditure Amount Available Budget Amount

    5,000

    0

    10

    540

    4450

    When you close your purchase orders, the Budget Processor checks the purchase order again, relieving the 10 encumbrance amount.

    Budget Amount Pre-encumbr Amount Encumbr Amount Expenditure Amount Available Budget Amount

    5,000

    0

    0

    540

    4460

  7. You can then use the system within Payables to post the voucher, create its journal entry using Journal Generator, and mark the journal as budget checked so that it is not budget-checked again when you post it to the actuals ledger in General Ledger.

Closing for Purchase Orders and Requisitions

The following example shows the entries generated in the Commitment Control activity log if purchase orders and requisitions are budget checked and closed through the PO Close process.

Example 1: A purchase order is budget checked and closed within accounting period 1.

Action Entry Num (line reference) Doc Seq Num Acct Per Rvrsl_flg Close Flag Ledger Amt

Budget Check

1

PO

0

1

N

N

ENC

500

PO Close

2

PO

0

1

N

Y

ENC

-500

PO Unclose

The system deletes line 2 and reestablishes line 1.

              

Example 2: After budget checking a purchase order for 500 USD, a voucher is created for 400 USD relieving the purchase order for the same amount and the balance of the purchase order, 25 USD, is closed all within the same accounting period.

Action Entry Number (line ref) Document SeqNumr Acct Per Rvrsl_flg Close Flag Ledger Amt

Budget Check

1

PO

0

1

N

N

ENC

500

Voucher

  

Voucher

0

1

N

N

EXP

400
   

Voucher

0

1

N

N

ENC

-400

PO Close

2

PO

0

1

N

Y

ENC

-25

PO Unclose

The system deletes line 2 and reestablishes line 1.

              

Example 3: In this example the purchase order is dated and budget checked in accounting period 1. The date is changed and the purchase order is reassigned to accounting period 2. The purchase order is later closed in period 2. An unclose in period 2 results in deletion of line 4 that effectively leaves the purchase order open for period 2.

Action Entry Num (line ref) Doc SeqNumr Acct Per Rvrsl_flg Close Flag Ledger Amount

Budget Check

1

PO

0

1

N

N

ENC

500

Change Date

2

PO

1

2

Y

N

ENC

-500
 

3

PO

1

2

N

N

ENC

500

PO Close

4

PO

1

2

N

Y

ENC

-500

PO Unclose

When unclosed to period 2, the system deletes line 4.

              

Example 4: In this example a purchase order is budget checked in accounting period 1 and then the date is changed and reestablished in period 2. The purchase order is subsequently closed in period 3 and then unclosed in period 3.

Action Entry Number (line ref) Document SeqNumr Acct Per Rvrsl_flg Close Flag Ledger Amt

Budget Check

1

PO

0

1

N

N

ENC

500

Change Date

2

PO

1

2

Y

N

ENC

-500
 

3

PO

1

2

N

N

ENC

500

PO Close

4

PO

2

3

N

Y

ENC

-500

PO Unclose

5

PO

2

3

Y

N

ENC

-500
 

6

PO

2

3

N

N

ENC

500
 

The system deletes line 4.