Budgetary Control and Encumbrance Accounting

You can ensure that budget funds are available before a requisition for an internal transfer is submitted for approval.

Budgetary Control

Depending on your budgetary control configuration, the funds will be reserved either at the time the requisition is submitted for approval, or when the requisition is approved. Insufficient funds override rules and approvers can be configured as part of budgetary control setup. Cost Management liquidates the commitment and books an expenditure at the time of delivery when a receipt is required, or at the time of shipment by creating a virtual receipt when the receipt isn't required. The Requisition for Internal Material Transfer transaction subtype has been added to enable budgetary control of requisitions for internal material transfers.

You can enact budget control checks for internal material transfers, or transfer orders, across organizations as it's for purchases from suppliers. You can also correctly budget check, cost, and account the receipt returns for expense destination transfer orders or inventory destination transfer orders that are put away into a subinventory that's not tracking on-hand quantity and is under budget control.

A department might use a budget and consume from the same when it receives the material. When excess or unused material is returned to the stockroom, budget balances should be recovered increasing the funds available for the returning department. So when processing the return event in Receipt Accounting, a reversal distribution for the actual expense will be booked and a fresh commitment won't be generated.

Encumbrance Accounting

Encumbrance accounting entries are created for transactions subject to budgetary control and encumbrance accounting when the Create Accounting process is run. Cost Management liquidates the reserve for the encumbrance account and creates journal entries for the actual expense value.

Note:

When budgetary control is enabled, Receipt Accounting will create the Deliver to Inventory events so that the transactions are interfaced to budget control module. If encumbrance accounting isn't enabled, the status of the corresponding transactions will be set to Excluded from accounting.