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:
1. 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.
2. 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.
3. 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.

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