Year-End Carry Forward with GL Account and Project Level Control: City of Sunshine

The City of Sunshine is in North America and has one year budgets with budget year from Jul-1 to June-30. Spending is budgetary controlled at the project and the general ledger account level.

Budget ordinance allows for some purchase order obligation and the equivalent budget amounts to be carried forward into the next year. Surplus funds can't be carried forward to the new year.

At the year end, these business processes occur that impact the budget and funds available balances.

• Requisitions are canceled
• Purchase receipts that aren't invoiced are accrued
• Purchase orders that don't meet the budget ordinance for continuation into the next year are canceled
• Invoices on hold that are matched to purchase orders are either processed or canceled

Since purchasing and payables invoicing processes are centralized, but receipt entry is decentralized, the finance department includes cross subject area experts in the year end planning.

Preparing for Purchase Order Carry Forward

In order to prepare for the PO Carry forward process, City of Sunshine begins planning the year end close process and identifies the key participants in the process and the steps performed. From April 1 to April 30, the Year-End Close committee meets to discuss deadlines and begin the planning process. The committee includes these members:

• Savannah (General Accounting Manager)
• Sally (Budget Manager)
• Brett (Purchasing Manager)
• Mike (Accounts Payable Manager)
• Key Subject Matter Experts

Three key phases are identified in the process:

• Preparation stage: Stage where key tasks are performed to get ready for the Carry Forward Purchase Order Budgetary Control Balances process (60 days before fiscal year end).
• Process stage: Stage where key processes (Create Uninvoiced Receipt Accrual and Carry Forward Purchase Order Budgetary Control Balances) are run (first 1-2 days after fiscal start date).
• Completion stage: Stage where any remaining tasks after successfully running the Carry Forward Purchase Order Budgetary Control Balances process are completed (1 + days after the process is run).

These are the key tasks performed by participants at each stage:

Preparation Stage: May 1 to June 30

This table describes the key tasks that participants perform at the process stage.

Budget Manager (Sally)	Department End Users	Purchasing Manager (Brett)	Accounts Payable Manager (Mike)	General Accounting Manager (Savanah)	Project Manager (Mark)
Unarchive the Budgetary Control Carry Forward Sample Reports and modifying the reports as required and reviewing output.				Ensure that all due dates are clearly communicated and that department end users have entered all receipts into the application.
Ensure that the June (from) period and July (to) periods are open in Budgetary Control.	Identify requisitions that are no longer needed and request closure from purchasing staff. Identify purchase orders that are no longer needed and request closure from purchasing staff. Ensure that all uninvoiced expenses are properly received in the application.	Close all purchase orders that have expired, closure has been requested by departments, or purchase orders with small balances without uninvoiced receipts.			Extend the end date of projects that are ending in current fiscal year and are required for next fiscal year. Request Purchasing manager to close the purchase orders associated with the projects that are ending in current fiscal year and aren't required for next year.
	Ensure that any pending change orders are entered and approved.	Complete or cancel all pending change orders on purchase orders. Cancel requisitions requested from department staff.
Establish the budget calendar for the next fiscal year. Load the next fiscal year budget into Budgetary Control, while in Available for Budgeting Status and verifying output.		Ensure that all open purchase requisitions are converted to purchase orders. Analyze purchase orders with Remaining Obligation Balances on reports such as Purchase Order Control Budget Balances Report included in the Budgetary Control Carry Forward Sample Reports.	Ensure that all accounts payable invoices that are matched to a purchase order and receipt are paid.	Establish the accounting calendar for the next fiscal year. Opening the encumbrance period for the next fiscal year.
Test the Carry Forward Purchase Order Budgetary Control Balances process in a testing environment to determine what parameters will be selected when she is ready to run the process in Production. Ensure that all key participants are available to address any errors when running the process (General Accounting Manager, Accounts Payable Manager, Purchasing Manager, and any other relevant individuals).				Request production to be copied to test pod.

Process Stage: July 1 to July 2

This table describes the key tasks that participants perform at the process stage.

Budget Manager (Sally)	Department End Users	Purchasing Manager (Brett)	Accounts Payable Manager (Mike)	General Accounting Manager (Savanah)
Receive confirmation from Mike that all accounts payable invoices that have been matched to a purchase order and receipt have been paid. Receive confirmation from Savannah that the Create Uninvoiced Receipt Accrual process has completed successfully. Receive confirmation from purchasing that there are no pending change orders or active purchase requisitions. Run the Carry Forward Purchase Order Budgetary Control Balances process in Draft mode, review the output of the process, and request corrections for any errors identified. Corrections that required could include canceling or completing any pending change orders or canceling or paying any pending project accounts payable invoices. Receive confirmation from the City Manager to approve processing the budget adjustment based upon the output of the initial process run in Draft mode. Once all errors identified are corrected on July 2 and after business hours to not disturb any in progress transactions, Sally runs the process in final mode with the parameters of option B as City of Sunshine does not require Council approval for the budget adjustment related to the encumbrances carried forward to the following fiscal year. Notify end users that the Carry Forward Purchase Order Budgetary Control Balances has successfully completed. Notify end users that they may now submit invoices for the new fiscal year on the re-opened purchase orders.	Ensure that no new transactions (purchase requisitions, change orders, invoices) are submitted until communication from Sally is received.	Ensure that no new purchase requisitions are entered, no new change orders are created, and no new receipts of goods or services are created. Available to answer any questions or address any transaction issues that may be found while running the process.	Ensure that no new accounts payable invoices that will be matched to a purchase order are entered or paid. Available to answer any questions or address any transaction issues that may be found while running the process.	Run the Create Uninvoiced Receipt Accrual process to record an accrual journal entry for all purchase order expenses that have been received but not yet invoiced. Review output of the Create Uninvoiced Receipt Accrual process and communicating successful completion of the process to Sally. Run and reviewing the Create Accounting process for Receipt Accounting and posting the activity to the General Ledger. Available to answer any questions or address any transaction issues that may be found while running the process.
Run the Carry Forward Purchase Order Budgetary Control Balances process in the Draft mode, review the output of the process and request corrections for any errors identified. Corrections could include canceling or completing any pending change orders or canceling or paying any pending project accounts payable invoices. Receive confirmation from the City Manager to approve processing the budget adjustment based upon the output of the initial process run in the Draft mode.				Being available to answer any questions or address any transaction issues that may be found while running the process.
Once all identified errors are corrected on July 2, Sally runs the process in final mode with the parameters of option B as City of Sunshine does not require Council approval for the budget adjustment related to the encumbrances carried forward to the following fiscal year.
Notify end users that the Carry Forward Purchase Order Budgetary Control Balances has successfully completed. Notify end users that they may now submit invoices for the new fiscal year on the re-opened purchase orders.

During testing, Budget Manager Sally runs the process in the Draft mode for one PO Charge account that has one purchase order equal to $1,000 to consider the options for a budget adjustment that is available.

She reviews the output of the process and then compares these options as described in the table.

Options	Keep funds available unchanged in the carry forward from year	Include budget for purchase orders in the carryforward to year	Budget Adjustment -Year 1	Budget Adjustment -Year 2	Encumbrance-Year 1	Encumbrance-Year 2
Option A	Yes	Yes	-$1,000	$1,000	-$1,000	$1,000
Option B	No	Yes	$0	$1,000	-$1,000	$1,000
Option C	Yes	No	-$1,000	$0	-$1,000	$1,000
Option D	No	No	$0	$0	-$1,000	$1,000

Completion Stage: July 3

This table describes the key tasks that participants perform at the completion stage.

Budget Manager (Sally)	Department End Users	Purchasing Manager (Brett)	Accounts Payable Manager (Mike)	General Accounting Manager (Savanah)	Project Manager (Mark)
Close the prior year budget period.	Resume normal transaction processing.	Resume normal transaction processing.	Resume normal transaction processing.	Continue to analyze activity during the normal fiscal year end close process.	Update the Expenditure Item Date for carry forwarded purchase orders, if they are required to be reported in next fiscal year in Project Management. Create Budget adjustments for the projects-related purchase orders. Budget adjustments might not be required if the project control budget uses a single budget period across fiscal years. Continue to analyze activity during the normal fiscal year end close process.