Control Budgets

Control budgets default one of these processing types depending on its purpose:

• Procure to pay control budgets track and validate spending of expenses against the budget
• Cash control budgets track and validate payments against the cash budget

Procure to Pay Control Budgets

Use control budgets to check the spending against a ledger, project, or both, and apply validations during budgetary control. You can specify the segments, budget periods, currency, control level and tolerance.

Budget balances can be loaded from a number of sources. For more details, see Budget Balance Sources in the Load Budget topic. You can find the link to the Load Budget topic in the Related Topics section.

Each control budget keeps track of spending against budget in the budget currency by maintaining these categories of balances

• Budget balances

• Funds reservation balances

• Funds available balances

These balances are maintained for control budget accounts and periods of the control budget. Control budget accounts are based on the combinations of budget segment values, which can be either at a detailed or a parent level.

To accommodate the different levels of detail at which budget is stored versus spending is checked, you can set up and link detail and summary control budgets with these structural differences to align with the corresponding needs.

• For the detail control budget, include segments you use to prepare your budget and use a budget calendar with the same periods as budget is prepared, such as monthly. If budget is prepared at a parent level, specify a control label in the segment hierarchy to identify those parent segment values. If you need to report on control budget balances with transaction account distribution details for unbudgeted segments, you can include those segments in the detail control budget.

• For the summary control budget, include only those segments by which budget is controlled. If a given segment is controlled at a parent level, specify a control label in the segment hierarchy to identify those parent segment values. Use a budget calendar with periods in budget is controlled, such as yearly.

For more information about detail and summary control budgets, see the link to Budgetary Control and Encumbrance Accounting Best Practices white paper in the Related Topics section at the end of this topic.

Note:

You don't need to set up project-based control budgets in Budgetary Control. They're automatically created when you baseline project budgets in Oracle Project Management.

When transactions are validated and recorded by the control budget, control budget accounts are derived from the account combination and project information on the distribution of the transactions.

Cash Control Budgets

When you enable cash controls for a ledger, a cash control budget is created for a ledger with these defaults:

• Budget calendar is created automatically with one period for the entire date range of ledger.
• Control level defaults to Absolute.
• Project defaults to Any or no project on the transaction.
• Budget segment defaults to the balancing segment.

The cash control budget is created with the Not ready for use status. You can modify to meet your enterprise budgeting requirements such as:

• Add the natural account as an additional budget segment.
• Assign tree hierarchies to budget segments to control at a parent level.
• Create supplemental rules for exceptions to the control level.
• Supplemental rules can be created for budget import unlike procure to pay control budgets. If control level is none for budget entry business function, budget balances aren’t updated.

When the control budget is put in use, the budget period status is set to Open.

Source Budget Types

Control budgets are classified by source budget type that defines the application from which budget balances are originated. Some source budget types limit budget to be loaded by the originating system; direct budget entries and budget load features offered by Budgetary Control aren't available to enforce data integrity. See the Budget Entry topic to determine a proper classification of source budget type for your control budgets. You can find the link to the Budget Entry topic in the Related Topics section.

Source Budget Name

Source budget name is defaulted from control budget name for detail control budgets. For summary control budget, select the detail control budget as the source budget name. Source budget name is used in budget import to derive the control budgets.

Account Hierarchies

You use trees, also called account hierarchies, in Budgetary Control setups to import budget and validate spending in this scenario:

• when budget is recorded and controlled at a higher segment value than that of the transactions.

These trees are automatically made available to you for use in Budgetary Control reporting.

You don't use trees in Budgetary Control setups in this scenario:

• when budget is recorded and controlled at detail segment values.

You can use trees that aren't used in Budgetary Control setups for Budgetary Control reporting.

You can also use trees in General Ledger for reporting, allocations, and other processing setups. And you can also share trees between General Ledger and Budgetary Control.

If you use trees in Budgetary Control setups, you need tree labels. When you set up a tree for use in a control budget, assign a common label to the parent segment values at which the control budget records and controls budget. And when you set up the related segment in that control budget, specify the tree and label to indirectly indicate the parent segment values at which budget is recorded and controlled.

Sometimes you need to assign more than one label to differentiate parent segment values at different levels in a tree. For example, consider this scenario:

• A tree is used in a detail control budget for recording budget that's prepared at lower parent segment values

• The same tree is used in a related summary control budget for controlling budget at higher parent segment values

In this case, when you set up the tree:

• Assign one common label to those lower parent segment values at which budget is recorded for the detail control budget

• Assign another common label to those higher parent segment values at which budget is controlled

When you set up the related segment in the two control budgets, specify the tree and the corresponding label.

Tip:

Each detail segment value that's subject to budgetary control must roll up to one and only one parent segment value in the tree with the specified label in each applicable control budget.

When you specify a tree and label in a control budget, you can optionally specify a default segment value in the Transaction Value Not in Tree field. If this value is specified, transactions with account distributions that can't be rolled up to a control labeled parent segment value are allowed to proceed by recording the transaction using the default segment value.

You can define trees using one of these methods:

• Manage Account Hierarchies or Manage Trees and Tree Versions setup task

  • Pre-Definition: Create labels as a prerequisite using the Manage Account Hierarchy Labels or Manage Tree Labels setup task

  • Post-Definition: After creating or updating the tree, audit, activate, and flatten it

• Create Chart of Accounts, Ledger, Legal Entities, and Business Units in Spreadsheet setup task - use the segment worksheets of the downloaded rapid implementation spreadsheet

  • Pre-Definition: No need to create labels as a prerequisite; labels are generated based on the configurable column header label of the Parent columns under which parent segment values are placed

  • Post-Definition: No need to flatten it; the process auto-flattens it already

• Import Segment Values and Hierarchies file-based data import template, use the hierarchy worksheet

  • Pre-Definition: Creating labels as a prerequisite using the Manage Account Hierarchy Labels or Manage Tree Labels setup task is optional. If the label specified in the hierarchy worksheet doesn't exist, it will be generated automatically

  • Post-Definition: After importing the tree, flatten it using the Manage Account Hierarchies or Manage Trees and Tree Versions setup task

Refer to the Import Segment Values and Hierarchies section in the File-Based Data Import for Financials guide.

For all methods, you need additional steps that depends on how you use the trees:

Tree Usage	Additional Steps
Budgetary Control: When the tree version is added to a control budget	Prepare the control budget for use that uses the tree
Budgetary Control: If the tree version is updated and is used in at least one control budget that has been put in use at any time	Put all control budgets that use the tree version to a closed or redefining status as a prerequisite (see exceptions below) Submit the Refresh Tree for Budgetary Control process Put the control budgets to in use (see exceptions below)
Budgetary Control Reporting Only	Submit the Add Reporting Tree to Budgetary Control Cubes process
General Ledger Allocation or Reporting	Publish Account Hierarchies setup task or Submit the Process Account Hierarchies process Note: If you use this process and the tree version is used in at least one control budget that has been put in use at any time, you need to close or redefine the control budgets as a prerequisite before running this process and you need to put the control budgets back in use afterwards unless you meet the exceptions below.
Exceptions: You don't need to close the control budgets and put them back to use while the tree or hierarchy process runs if both of the following conditions are met: Control budgets that use the tree version are defined with the Transaction Value Not in Tree field set to Failed transaction. Changes to the tree are limited to adding new detail values to an existing branch or adding new parent and detail values as a branch.

Tree: Example

This table provides an example of a tree created for the Department segment:

Parent Value	Parent Value	Detail Value	Label
All Parks			Top
	North Side Parks		Level1
		Cedar Park
		Fir Park
	South Side Parks		Level1
		Glendale Park
		Burton Park

This table shows the applicable department segment values at which budget is captured and controlled and at which budget balances are maintained, based on the tree and label assigned to the control budget:

Control Budget Department Segment: Department Tree | Label: Top	Control Budget Department Segment: Department Tree | Label: Level1	Control Budget Department Segment: No Tree
All Parks	North Side Parks South Side Parks	Cedar Park Fir Park Glendale Park Burton Park

Funds available balances are maintained for each period in the control budget and control budget account. Since balances are maintained based on the budget periods and tree label assigned to the control budget, reporting and inquiry is available only at that level or above.

For example, if a control budget is set to control at Level1 for Department, you can report on All Parks, but not on Cedar Park, Fir Park, Glendale Park or Burton Park. Similarly, if a control budget has a monthly calendar, the application will summarize monthly balances into quarterly and yearly balances for reporting. However, if a control budget has an annual calendar, then monthly and quarterly balances aren't available for that control budget.

Override Budgetary Control Failures

You can define your control budget to allow overrides. There are two types of overrides:

• Insufficient funds to override and reserve an insufficient funds failure

• Closed period to override and reserve a close budget period failure

During budgetary control validation, if validation fails because insufficient funds or closed budget period, the user can request an override. The assigned overrider can perform an override action to reserve the transaction.

To create an override, check the Allow overrides checkbox which enables the Override Rules region to be displayed on the Create Control Budget page. Specify a maximum override amount allowed for the control budget. Enable notifications to notify the budget manager when no overrides are available or when overrides are taken.

There are two types of configurable in-app and email notifications available for use:

• Budget Override Request

• Budget Override Taken

Supplemental Rules

Supplemental rules create exceptions to the control level and tolerance settings defined in the control budget header. When multiple supplemental rules apply, the highest control level and the lowest tolerance amount or percentage are used.

You can define supplemental rules using the following attributes:

• Business unit

  • If you enter a business unit, this rule won't apply to transactions that don't have a business unit, such as journal entries

• Control budget segment values

  • You can select a range to populate the segment values

  • You can select a parent value to populate all detail segment values assigned to that parent

• Additional segment values

  • You can specify any chart of accounts segment that's not a control budget segment and if a tree hasn't been specified, you can select a range to populate the segment values

  • If control budgets are created from Projects, you can specify any project attributes that aren't a control budget segment

  • Additional segment filters aren't used for budget entry transactions.

• Transaction attributes

  • Business function:

    • Procure to pay control budget: All, Requisitioning, Procurement, Expense management, Receiving, Payables invoicing, Project accounting, and Journal entry.
    • Cash control budget: All, Journal entry, Payables payment, Billing and revenue management, and Budget entry.

  • Journal source: Journal sources defined in GL, All, and No value

  • Journal category: Journal categories defined in GL, All, and No value

  • Natural account type: All, Asset, Budgetary credit, Budgetary debit, Expense, Liability, Owner's equity, and Revenue

  • Receiving destination type: All, Expense, Inventory, and No value

Note:

If you select All, the supplemental rule applies to all transactions, regardless of whether a transaction attribute is blank or has a value. If you select No value, the supplemental rule only applies when the attribute is blank. For example, if a supplemental rule is defined with the Receiving Destination Type set to No value, only transactions without a Receiving Destination Type are subject to this supplemental rule.

Note:

Budget import for cash control budgets can use supplemental rules to assign a control level different from the control level defined on the control budget header. If the control level is none, budget balances aren’t updated. This is unlike procure to pay control budgets with the control level of none, that update the budget balances and don’t consider supplemental rules.

This table shows how the control budget processing type updates budget balances and considers supplemental rules on budget import.

Control Budget Processing Type	Update Budget Balances when Control Level is None	Consider Supplemental Rules on Budget Import
Procure to pay	Yes	No
Cash	No	Yes

Funding from Revenue

You can define your control budget to allow funding from revenue. The Create Budget Entry from Revenue process automatically increases budget for the control budget from the revenue funding rules when this option is selected.

To create revenue funding rules, check the Allow funding from revenue checkbox which enables the Revenue Funding Rules region to be displayed on the Create Control Budget page.

This option can be enabled when:

• the source budget type is Other.
• the processing type is Procure to pay.
• the control budget currency is the same as the ledger currency.

Note: The control budget must have a Budget Chart of Accounts before revenue funding rules can be added. To add the chart of accounts when the control budget is in Not ready for use - defining status, select the Assign Budget Flexfield button in the Revenue Funding Rules region.

The control budget goes offline while the budget chart of accounts is added to the control budget. The status is updated to Not ready for use - preparing definition status. When the budget chart of accounts has been added to the control budget, changes to the control budget structure are no longer allowed. The revenue funding rules can be added when the control budget is back to Not ready for use - defining status.

Note: The revenue funding rules apply to all summary control budgets sourced from control budgets with the Allow funding for revenue option. Budget balances are automatically increased from revenue for these control budgets as well.

Revenue Funding Rules

You define revenue funding rules in the Create Revenue Funding Rule window with the following attributes:

• Funding target budget accounts
  • Budget is added to these accounts.
  Note: If a rule has multiple funding target budget accounts, the budget entry amount is created using the funding target percentage.
  Note: If the funding target budget account in the Create Revenue Funding Rule window is disabled, a new budget flexfield was created when assigning the budget flexfield to the control budget. The application needs to be refreshed before creating a new rule by logging out of the application.
• Revenue source ledger and segment values
  • The revenue balances are calculated from all account combinations matching the segment values for the ledger.
  Note: Only detail segment values can be added.
  Note: The ledger can be a secondary ledger of the control budget’s ledger. If you use a modified accrual accounting method and you want to use collected revenue balances instead of accrued revenue balances, define a secondary ledger with a cash basis accounting method and enter the secondary ledger as the revenue source.
• Funding target maximum funding limit type
  • The limit is the maximum amount that can be added to the budget from this rule. It can be unlimited, a fixed amount, or from revenue estimates.
  Note: When revenue estimate is selected, add the budget scenario with the revenue estimate balances. The estimate balances are calculated from all account combinations matching the revenue source segment values.
• Revenue source minimum revenue threshold limit type
  • The threshold is the amount the revenue balance must be before the budget can be added from revenue. It can be no minimum, a fixed amount, or from revenue estimates.
  Note: When revenue estimate is selected, the budget scenario with the revenue estimate balances. Revenue estimate balances are derived from all account combinations matching the revenue source segment values.

Related Video

• Automatic Funding of Expense Budgets from Revenue Demo