Understanding PeopleSoft Commitment Control

Setup and Budget Entry

This example assumes certain processing rules, which is not discussed here and for the sake of simplicity, it does not include tolerances and revenue budget linkage that increase available spending even when the expenditure budget is exceeded. This scenario can vary, depending on the rules you define for the control budgets and source transaction types.

1. Presupposes that you define a general ledger business unit and ledger group in PeopleSoft General Ledger.

   Business Unit	Ledger Group	ChartFields
   EG004	ACTUALS	ACCOUNT, DEPTID, PRODUCT, AFFILIATE

2. Define an expenditure-type Commitment Control ledger group.

   Commitment Control Ledger Group	Ledgers
   ORG	ORG_BUD
   	ORG_PRE
   	ORG_ENC
   	ORG_EXP

3. Set up a budget period calendar.

   Budget Period	Dates
   Q113	01/01/2013 to 03/31/2013
   Q213	04/01/2013 to 6/30/2013
   Q313	07/01/2013 to 09/30/2013
   Q413	10/01/2013 to 12/31/2013

4. Set up the control budget definition for the Commitment Control ledger group.

   The following are the key ChartFields and the budgetary-level ChartField values.

   ChartField	Values
   ACCOUNT	600000, 640000
   DEPTID	000
   BUDGET_PERIOD	Q113, Q213, Q313, Q413

   You usually set up budget control at a summarized ChartField value level instead of establishing a budget for each detail ChartField value combination. You set up ChartField translation trees to roll detail (transaction level) values up to budgetary-level values.

   Summary Budgetary ChartField Value Level	Detail ChartField Value Level
   Account 600000	Account 601000 rolls up to 600000.
   	Account 602000 rolls up to 600000.
   	Account 603000 rolls up to 600000.
   Account 640000	Account 641200 rolls up to 640000.
   	Account 641500 rolls up to 640000.
   Department ID 000	Department ID 100 rolls up to Department ID 000.
   	Department ID 200 rolls up to Department ID 000.
   	Department ID 400 rolls up to Department ID 000.

5. Associate the Commitment Control ledger group with the general ledger business unit and actual ledger group shown in step 1.

6. Enter budget amounts for each budget.

   Account	DeptID	Budget Period	Budget Amount
   600000	000	Q113	4000
   600000	000	Q213	5000
   600000	000	Q313	5000
   600000	000	Q413	5000
   640000	000	Q113	2000
   640000	000	Q213	2000
   640000	000	Q313	2000
   640000	000	Q413	2000

Budget Checking

The following is an example of simple expenditure cycle.

1. Create a requisition.

   GL BU	Date	Acct	DeptID	Prod	Budget Date	Qnty	Amt
   EG004	06/15/13	601000	100	NB100	06/15/13	5	500

2. Budget-check the requisition.

   In the budget-checking process, the transaction ChartField values are translated to the budgetary values Account 600000 and DeptID 000. The budget date is translated to Budget Period Q213.

   If this is the first transaction, there is 5000 available in the budget for Account 600000, Dept ID 000, and Budget Period Q213, so the requisition passes budget checking. The Budget Processor updates the pre-encumbrance ledger for the budget.

   Budget Amount	Pre-encumbr Amount	Encumbr Amount	Expense Amount	Available Budget Amount
   5000	500	0	0	4500

   Note: This table is laid out for explanatory purposes only and does not reflect the structure of the data stored in the system. Note also that in reality available budget is a calculated amount, not a stored amount.

3. Create a purchase order for this requisition.

   GL BU	Date	Acct	DeptID	Prdt	Budget Date	Qnty	Amnt
   EG004	06/20/13	601000	100	NB100	06/20/13	5	550

4. Budget-check the purchase order.

   The amount for the purchase order is 550, while the amount for the requisition is 500. When the Budget Processor liquidates the pre-encumbrance (requisition), there remains 5000 available in the budget, so the 550 purchase order passes budget checking.

   The Budget Processor liquidates the requisition and updates the pre-encumbrance and encumbrance ledgers for the budget.

   Budget Amount	Pre-encumbr Amount	Encumbr Amount	Expense Amount	Available Budget Amount
   5,000	0	550	0	4450

   Because the purchase order amount exceeds the requisition amount, the system fully reverses the pre-encumbrance, leaving a zero balance. Pre-encumbrances do not become negative when they are liquidated.

   Note: Had the purchase order been equal to or less than the requisition amount, the Budget Processor would have liquidated the pre-encumbrance (requisition) and updated the encumbrance ledger with the purchase order amount without budget checking.

5. Create a Payables voucher when you receive the goods from the supplier.

   GL BU	Date	Acct	DeptID	Prdt	Budget Date	Qnty	Amnt
   EG004	06/30/13	601000	100	NB100	06/30/13	5	540

6. Budget-check the voucher.

   The Budget Processor liquidates the encumbrance and updates the expense ledgers for the budget.

   Budget Amount	Pre-encumbrAmount	Encumbr Amount	Expense Amount	Available Budget Amount
   5,000	0	0	540	4460

   You can elect quantity-based or monetary amount-based liquidation. Quantity based liquidation is done through the various applications that feed into Commitment Control. The above example assumes you chose to use quantity based liquidation. Therefore, the Budget Processor reverses the full 550 purchase order amount for the five units, rather than the lower 540 amount indicated on the voucher.

   The example below assumes you had chosen instead to use monetary amount based liquidation, only 540 of the encumbrance would have been reversed, leaving a balance amount of 10 in the encumbrance ledger.

   Budget Amount	Pre-encumbr Amount	Encumbr Amount	Expenditure Amount	Available Budget Amount
   5,000	0	10	540	4450

   When you close your purchase orders, the Budget Processor checks the purchase order again, relieving the 10 encumbrance amount.

   Budget Amount	Pre-encumbr Amount	Encumbr Amount	Expenditure Amount	Available Budget Amount
   5,000	0	0	540	4460

7. You can then use the system within Payables to post the voucher, create its journal entry using Journal Generator, and mark the journal as budget checked so that it is not budget-checked again when you post it to the actuals ledger in General Ledger.

Closing for Purchase Orders and Requisitions

The following example shows the entries generated in the Commitment Control activity log if purchase orders and requisitions are budget checked and closed through the PO Close process.

Example 1: A purchase order is budget checked and closed within accounting period 1.

Example 2: After budget checking a purchase order for 500 USD, a voucher is created for 400 USD relieving the purchase order for the same amount and the balance of the purchase order, 25 USD, is closed all within the same accounting period.

Example 3: In this example the purchase order is dated and budget checked in accounting period 1. The date is changed and the purchase order is reassigned to accounting period 2. The purchase order is later closed in period 2. An unclose in period 2 results in deletion of line 4 that effectively leaves the purchase order open for period 2.

Example 4: In this example a purchase order is budget checked in accounting period 1 and then the date is changed and reestablished in period 2. The purchase order is subsequently closed in period 3 and then unclosed in period 3.