How Funds Are Reserved for Requisitions

Budget control is available for requisitions. Based on the control budget setup, funds are reserved either when the preparer submits the requisition, or when the requisition is approved.

For requisitions that require a long approval process, reserving the funds when the requisition is submitted ensures the available funds aren't consumed by other transactions.

Key aspects of funds reservation for a requisition are:

How funds are reserved for a requisition
Setup needed for funds reservation
How encumbrance accounting interacts with reserve on submit
What happens to reserved funds if the requisition isn't approved
What you can do if funds aren't available in the budget

How Funds Are Reserved

Funds reservation is done automatically either when you submit a requisition or after the requisition is approved. Control budgets apply to a requisition line based on the charge of account, budget date, and project specified at the distribution level. Funds are reserved based on the setup for the control budget, when a requisition subject to budgetary control is submitted or approved.

Note: For imported requisitions either you can reserve funds after the requisition is approved or you can import an incomplete requisition using FBDI or the Purchase Request Web Service, submit it for approval after completion, and have funds reserved upon submission.

Setup Needed for Funds Reservation

You can enable budgetary control for ledgers, business units assigned to a ledger, projects, transaction types, and journal sources and categories.

Your organization can choose the point at which funds are reserved for requisitions, either on requisition submission or requisition approval. In the Setup and Maintenance work area, use the Manage Budgetary Control task in the Manage Budgetary Control and Encumbrance Accounting offering of the Financials functional area.

For the Requisition transaction type, you can enable budgetary control and encumbrance accounting for these transaction subtypes:

Transaction Type	Transaction Subtype	Description
Requisition	Non-project internal material transfer to expense	Internal material transfers to expense destination without project details. It doesn’t include intercompany transfers.
Requisition	Project internal material transfer to expense	Internal material transfers to expense destination with project details. It doesn’t include intercompany transfers.
Requisition	Requisition for supplier purchases	Purchase requisitions to expense destination with or without project details, and purchase requisitions to inventory destination without project details. It doesn’t include purchase requisitions for the Supply Chain integration flows such as back-to-back, drop ship and manufacturing destination types, outside processing, and requisitions with Procurement card.

Note:

When you turn off any of the transaction subtypes and the business unit is still enabled for budgetary control, the requisition line and its distributions will have Not Applicable funds status. If budgetary control is enabled at the BU level, all transactions are subject to budgetary control. But when you turn it off at the transaction subtype level, the application ensures your transaction carries a nonapplicable funds status, which is the same as having no control budget applicable for the transaction.

How Encumbrance Accounting Interacts with Reserve on Submit

Encumbrance accounting is created only upon implementation of the requisition, not when the requisition is submitted.

Note:

Use the Create Accounting process to generate journal entries for submission to Oracle Fusion General Ledger. This process creates encumbrance journals in the general ledger.

What Happens When the Requisition Is Not Approved

If a requisition for which funds have been reserved on submission is rejected during the approval process, any funds previously reserved are released and put back into the budget.

What Happens When Funds Are Not Available

When budget isn't available for a requisition, you can request a funds override to resolve the constraint if all of the following are true:

You have the Request Budgetary Control Override security privilege.
Funds override is enabled for the control budget
The overall override limit for the control budget hasn't been exceeded
A funds override approver can be identified for the transaction based on the control budget's override rules
As the requester or the approver, you have the Request Budgetary Control Override security privilege.

You can also request override if you're the approver, and have the needed security privilege.

The funds override process supports a funds override request, funds override approval and reserving funds with an override at approval.

How You Edit Budgetary-Controlled Requisitions

As an approver, you can edit a budgetary-controlled requisition submitted by a preparer, if the Allow Approvers to Update Budgetary-Controlled Requisitions feature is enabled for your application. You can edit the chart of accounts, project details, quantity ordered and so on. When you submit the edited budgetary-controlled requisition, the application runs budget checks and handles the funds reservation on either submit or approval, depending on the budgetary controls configuration.

If the budget check fails, you're notified with an appropriate error message. If you reject the requisition, funds won't be reserved if they haven't been already, and the requisition won't be submitted.

If you have the Request Budgetary Control Override security privilege, you can request override.

The Budgetary Control Analysis Account Activities is an Oracle Analytics Publisher report that helps you see which activities are consuming your budget. Approver edits of a Budgetary Control and Encumbrance Accounting-enabled requisition during the approval process results in the creation of the following entries in the report:

Action by Approver	Transaction Action
Approver clicks Edit button	Requisition withdraw
Approver clicks Funds Check button	Requisition check
Approver clicks Submit button	Requisition submit