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 Future Advisor Webcasts

Day, Date, 2004

time p.m. ET Access:
Teleconference Upcoming live webcasts and recent recordings:
•Teleconference
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 Safe Harbor Statement

The following is intended to outline our general

product direction. It is intended for information
purposes only, and may not be incorporated into
any contract. It is not a commitment to deliver any
material, code, or functionality, and should not be
relied upon in making purchasing decision. The
development, release, and timing of any features
or functionality described for Oracle’s products
remains at the sole discretion of Oracle.

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 <Insert Picture Here>

Budgetary Control in Purchasing

Vanha Le
Principle Support Engineer
AGENDA

 Overview
 Purchasing Flow
 Setup
 Options and Usage
 Troubleshooting Tips
 Demonstration

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 6

AGENDA

 Overview
 Purchasing Flow
 Setup
 Options and Usage
 Troubleshooting Tips
 Demonstration

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 Why Budgetary Control?

 Private sector organizations focus on the ability to manage

accounting for profit.
 Not-for-profit organizations manage accounting for budget.
 Answers to the following questions:
• How much funds do I have?
• What can I use my funds for?
• How much do I have left to spend?
 Advantages when using budgetary control includes:
• Ensure sufficient funds are available.
• Help in planning for future cost.
• Balance the budget cycle with General Ledger to ensure information
integrity.
• Report funding and accounts separately to show how the funds were
used.

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 Overview of Budgetary Control

 Budgetary control refers to the process of recording budget data,

tracking encumbrance and actual data against a budget.
 Funds reservation is the feature of budgetary control that helps
prevent overspending budgets by verifying available funds online
before processing a transaction.
 Funds checking with budgetary accounts records encumbrances as
actual entries, not as budget entries, generally used in Federal
agencies.
 Funds checking with encumbrance accounting is most common to
record budget, encumbrance, and actual data using the formula:
Funds Available = Budget – Encumbrances - Actual

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 9

AGENDA

 Overview
 Purchasing Flow
 Setup
 Options and Usage
 Troubleshooting Tips
 Demonstration

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Sample Flow of Purchasing Encumbrance

Requisition Purchase Order Receipt/Invoice

• Commitment • Obligation • Actual

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Encumbrance Data Flow

Purchasing

Reserve Journal Import

11i GL_BC_PACKETS GL_JE_HEADERS
GL_JE_LINES

Reserve
R12 PO_BC_DISTRIBUTIONS
GL_BC_PACKETS

XLA_EVENTS Transfer Journal GL_JE_HEADERS

XLA_AE_HEADERS Entries to GL GL_JE_LINES
XLA_AE_LINES

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Active Encumbrance
 Active Encumbrance is the difference between the amount
encumbered for Purchase Order Distributions and their
encumbrance reversals.

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Encumbrance Effect

Control Action Cancel Finally Close All others

Accrues At Outstanding Outstanding No effect
Receipt encumbrance encumbrance
(undelivered (undelivered
amount) is reversed amount) is reversed
Accrue at Period Outstanding Outstanding No effect
End encumbrance encumbrance
(lesser of unbilled (unbilled amount) is
and undelivered) is reversed
reversed
Encumbered Amount = Amount Ordered – Amount reversed by PO
Active Encumbrance = Encumbered Amount on PO –
Encumbrance Reversals by Payables/Costing*
*Encumbrance is reversed by AP when the invoice is paid and accounted for expense PO, and
reversed by CST when the delivered transaction is fully costed and accounted for Inventory PO.

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 14

AGENDA

 Overview
 Purchasing Flow
 Setup
 Options and Usage
 Troubleshooting Tips
 Demonstration

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Ledger Setup – R12
 GL > Setup > Financials > Accounting Setup Manager > Accounting
Setup

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Set of Books Setup – 11i
 GL > Setup > Financials > Books > Define

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Subledger Accounting Method Setup – R12
 In Ledger Definition, setup the Subledger Accounting Method.

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Subledger Accounting Method – R12
 PO > Setup > Subledger Accounting Setups >Accounting Methods
Builder > Methods and Definitions > Subledger Accounting Methods

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Application Accounting Definition – R12
 PO > Setup > Subledger Accounting Setups >Accounting Methods
Builder > Methods and Definitions > Application Accounting
Definitions

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Setup Budget
 Use General Ledger to setup budget
 Perform budget setup, including:
• Define Budget
• Define Budget Organization
• Allow Budgeting and Posting for budget accounts
• Enter Budget Amount
• Summary template

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Purchasing Encumbrance Options – R12
 PO > Setup > Organizations > Financial Options

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Purchasing Encumbrance Options – 11i
 PO > Setup > Organizations > Financial Options

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Profile Options
Profile Options Function Values
Budgetary Control Enforces budgetary control User defined group
Group options by transaction type name
PO: Override Funds Indicates whether the GL Yes
Reservation Funds Override capability No
should be utilized
PO:Validate GL Indicates whether to validate Yes
Period GL period in addition to PO No
period when reserving funds Redefault: reset GL
date if that falls into a
closed period
PO: AutoCreate GL Uses AutoCreate date or AutoCreate Date
Date Option Requisition GL date when Requisition GL Date
autocreate PO
PO:Use Document Uses the GL date of the Yes
GL Date to Unreserve document for encumbrance No
reversal actions

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 24

AGENDA

 Overview
 Purchasing Flow
 Setup
 Options and Usage
 Troubleshooting Tips
 Demonstration

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 25

Funds Check Levels
 Set Funds Check levels for an account or range of accounts.
 Optionally, use Budgetary Control Group.

None Do not perform budgetary control for the account.

Advisory Reserves funds whether or not there are funds available. If not
sufficient funds are available, display a warning message.

Absolute Reserves funds only if sufficient funds are available.

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Control at Account Level
 Set budgetary control at the account or account range level
 GL > Budget > Define > Organization

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Effect of Account Control

Control None Advisory Absolute

Sufficient funds Pass Pass Pass

Not sufficient Pass Pass with Fail

funds Warning

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Budgetary Control Group
 Define Budgetary Control Group to set override amount or tolerance
at transaction level.
 GL > Budget > Define > Controls

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Budgetary Control Group Profile Option
 System Administrator > Profile > Systems
 Set profile options
• Budgetary Control Group
• PO:Override Funds Reservation

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Budgetary Control Group
Use BCG to modify funds check level the following three ways:

Advisory None

Advisory Absolute

Override Amount/
Absolute Tolerance % or
Amount

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 Effect of Budgetary Control Group
Account BCG Set? BCG Enough Tolerance/ Result
Value Funds? Override
Amount
met?
Advisory No - Yes - Pass
Advisory No - No - Pass with
Warning
Advisory Yes None Yes - Pass
Advisory Yes None No - Pass
Advisory Yes Absolute Yes - Pass
Advisory Yes Absolute No Yes Pass*
Advisory Yes Absolute No No Fail
Absolute Yes Absolute Yes Yes Pass
Absolute Yes Absolute No Yes Pass*

*If within override limit

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 32

AGENDA

 Overview
 Purchasing Flow
 Setup
 Options and Usage
 Troubleshooting Tips
 Demonstration

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 33

Recommended Patches

 R12 : Apply the latest critical patch for Public Service Applications:
• Patch:12359561:R12.PSA.B for 12.1
• Patch:12359561:R12.PSA.A for 12.0
 11i: Apply patches for Extended Support, note 883202.1.
 Apply latest version for package
PO_ENCUMBRANCE_POSTPROCESSING, file POXENC2B.pls.
The following are latest version as of March 2013:
• Patch 16010392:R12.PO.B for 12.1 version 120.40.12010000.27
• Patch 13984592:R12.PO.A for 12.0 version 120.39.12000000.29
• Patch 13910119 version 115.35.11510.13

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Common Issues

Error Action
PO in Pre-Approved status Return PO to approver, perform funds
check, or reserve only to verify available
funds, and/or any problem with Approval
workflow
Error related to insufficient funds Enter a Manual Encumbrance Debit Journal
against the same budget account used in
the purchase document to verify sufficient
funds is available
Display values in Funds Available Use Period Balances to drilldown to
Inquiry form is not correct encumbrance journals, and detail
transactions of the journals
PSA_BC_XLA_PUB.Budgetary_Control -Use adadmin to compile invalids
returns an error without any details to -R12 – Run Validate Application Accounting
the calling procedure Definitions concurrent program with
PO_ENCUMBRANCE_POSTPROCES Parameter “Uncompiled Status only” = No
SING.execute_gl_call

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Encumbrance Values Issues

Issue Action
Commitment does not turn Ensure both PO and associated requisition are
into Obligation approved and GL date are for the same period
Obligation does not turn -Inventory destination PO: Destination INV
into Actual organization has Reverse Encumbrance option
enabled, delivery transaction costed,
accounted, and posted
-Expense destination PO: Matched invoice
validated, accounted, and posted
Negative Active Review the Active Encumbrance formula.
Encumbrance, or Note: This is a calculated field, thus decimals
Active Encumbrance exist should be ignored

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 36

Use Diagnostic Script

 R12: Diagnostic Script to help troubleshoot Purchasing

Encumbrance Issues [ID 1483743.1]
 1. Download the file POAccountDiagAll.sql
Note: It is very important to download the newest version of the
script from the note everytime you run it!
 2. Run the SQL file
 3. The diagnostic script will create an output file of the
format POAccounting_DOCUMENT_NUMBER._RRELEASE_NUM
BER.html in the same directory from where you run the diagnostic
script
 4. Review the output file to determine if there is any message
indicating possible cause of your issue

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 37

Helpful Documents

 Master Note For Oracle EBS Procurement Suite - Encumbrance And

Accrual Accounting (Doc ID 1138043.1)
 R12: Purchasing Documents Fail Funds Check Or Going To Pre-
approved Status Due To Budgetary Control Exceptions -
Troubleshooting [Doc ID 603057.1]
 Vision Demo - How To Demonstrate The Encumbrance Flow In
Oracle Purchasing (Doc ID 1384470.1)
 Purchasing Encumbrance Accounting Concepts and Process Model
[Doc ID 121858.1]
 How to Use Budgetary Control Groups in the Purchasing Application
(Doc ID 297949.1)
 R12: Diagnostic Script to help troubleshoot Purchasing
Encumbrance Issues [Doc ID 1483743.1]

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 38

AGENDA

 Overview
 Purchasing Flow
 Setup
 Options and Usage
 Troubleshooting Tips
 Demonstration

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 39

D E M O N S T R A T I O N

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Copyright © 2013, Oracle and/or its affiliates. All rights reserved. 41
 How to find the questions asked during the webcast?

Navigate to the Procurement community find a post with the name “ADVISOR WEBCAST: Budgetary Control in
Purchasing ”

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 How to know about the upcoming webcasts?

1- From the Procurement Community , open the

Procurement Webcasts section, you will find a list for the
upcoming webcast and the archived one

2- Use document ((Doc ID 1456150.1)) to register and to

find the Procurement upcoming and archived webcast

What are the next upcoming webcasts?

Title Date/Time Document
Requisition Imported from other Modules (WIP, OM, …) Apr 23, 06:00 PT (Doc ID 1520622.1)

EMD - Earnest Money Deposit in Oracle Sourcing . May 14, 2013 07:00 PT (Doc ID 1542905.1 )

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 THANK YOU

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