9.2 Understanding Budget Checking Expense Transactions
Purpose: Use this document as a reference for understanding budget checking expense transactions in ctcLink.
Audience: Finance and Business Office staff
Understanding Budget Checking Expense Transactions
- Encumbrance accounting allows you to reserve funds for an anticipated expense. Organizations that pre-approve travel expenses and wish to reserve funds for authorized trips can budget-check travel authorizations and expense reports. Budget checking records encumbrances, or the reservation of funds, in the commitment control budget and then reverses the encumbrances when actual expenses are recorded. Budget checking journal expense reports will reflect changes made to posted accounting distributions in the commitment control budget. Expenses delivers additional options for budget checking activity of expense transactions. Commitment control options supported in Expenses include the ability to cancel or close unused travel authorizations and reverse the associated encumbrances.
- Budget checking exceptions are transactions that fail budget checking validations. These exceptions may be errors or warnings. Errors prevent the system from recording the transaction. Warnings allow the system to record the transaction but inform you of the exception conditions. You may view these exceptions to determine the cause of the failure through Expenses or through the Commitment Control menu.
- Expense transactions may fail budget checking for a variety of reasons and they may fail against one or more budget ledgers. They may fail because:
- The ChartFields in the accounting distributions are incorrect;
- There are insufficient funds to support the expense;
- The budget is permanently or temporarily closed.
- If an expense transaction fails budget checking, or if warning conditions exist for an expense transaction, the budget processor marks the transaction as an error or warning exception. You can view these exceptions and override some error exceptions, with proper authority, on the budget exception pages. You can access errors and warnings through Expenses or the Commitment Control menu. Some exception conditions may be eligible for override, which enables an authorized user to force the transaction to record in the ledger. You must handle some exception conditions using the Expenses transaction pages. Check with your Commitment Control administrator to understand the control rules and authorizations associated with budget checking in Expenses.
- If your organization uses commitment control for any business unit, you may be required to budget check travel authorizations and expense reports. If any business unit in the expense report distributions (accounting detail) is enabled for commitment control, the transaction must be budget checked. You can set parameters for requiring budget checking for travel authorizations and expense reports prior to approval by enabling the options on the Expenses Options page (Navigation: NavBar > Navigator > Set Up Financials/Supply Chain > Business Unit Related > Expenses > Expenses Options). When you enable the options, you cannot approve expense transactions until the transaction budget check status is Valid. If there are multiple approvers, only the first approver is required to budget check successfully prior to approval . If an approver modifies any of the accounting details, budget checking is required again to reflect the changes.
- If you do not enable the options on the Expenses Options page, you can approve transactions prior to budget checking and you can perform budget checking any time during the approval process. However, Expenses requires you to budget check these transactions prior to posting liabilities. The system will not create or post accounting entries until the budget checking status is Valid. You can budget check expense transactions individually online or in batch through the budget checking run control . Only approvers can budget check online through the approval page(s).
- The budget date determines the budget period that you record or liquidate encumbrances. Expenses uses the following rules to determine which budget date to use for travel authorizations and expense reports:
- Budget date in the travel authorization defaults to the accounting date, which you typically set to the system date;
- Budget date in the expense report defaults to expense report accounting date.
- The accounting date determines the fiscal year and accounting period that the system records or liquidates encumbrances. When you liquidate travel authorizations through the expense report budget checking process, the system records the liquidations in the fiscal year and accounting period derived from the accounting date of the expense report. When you cancel travel authorizations, there are two ways in which the system records the encumbrance reversals, based on the Reversal Date Option on the Installation Options page (Navigation: NavBar > Navigator > Set Up Financials/Supply Chain > Install > Installation Options > Commitment Control).
- If you set the Reversal Date Option to "Current Date", the Travel Authorization Cancellation run control prompts you for an accounting date. This allows you to control the period in which you record reversals. If you do not enter a date, the system defaults to the system date. The system updates the accounting date on the travel authorization prior to budget checking and moves the original accounting date to a different field. If you set the Reversal Date Option to "Current Date", and you cancel a travel authorization on the Cancel Approved Travel Authorization page, the accounting date defaults to the current system date.
- If you set the Reversal Date Option to "Prior Date", the Travel Authorization Cancellation run control does not prompt you for an accounting date. The period in which the system records the encumbrance reversal derives from the original accounting date on the travel authorization. If you set the Reversal Date Option to "Prior Date", and you cancel a travel authorization on the Cancel Approved Travel Authorization page, the accounting date defaults to the original accounting date on the travel authorization.
- The Reversal Date Option applies to the fiscal year and accounting period. It does not affect the budget date or budget period.
- The rule for determining when a travel authorization, expense report, or journal expense report, is eligible for budget checking is based on several factors. When any of these transactions are eligible for budget checking, Expenses sets the budget status to N to indicate that the transaction requires budget checking. Transactions are eligible for budget checking if:
- Any of the distributions contain a business unit that is enabled for commitment control;
- The transaction was previously budget checked but is now being cancelled or denied;
- The amounts or distribution information were previously budget checked but were changed;
- The transaction was previously budget checked but is now being returned to the originator for revisions;
- The payment for an expense report is cancelled and voided (not to be reissued).
- You may individually budget check travel authorizations and expense reports online through the Manager Self-Service navigation. How you configure the commitment control ledgers determines your budget checking errors and warnings. Budget checking against ledgers that you define as Track without Budget will never fail but may give warnings when certain conditions exist. The Budget Checking icon appears on this page if you select the Budget Check option on the Summary Approval Options page (Navigation: NavBar > Navigator > Set Up Financials/Supply Chain > Product Related > Expenses > Management > Approval Setup > Summary Approval Options).
- Online liquidation of travel authorization encumbrances occurs when you associate a travel authorization to an expense report. The following rules apply to online liquidation of travel authorizations. If you create an expense report by copying from a travel authorization and accept all of the expense transaction lines, then the system liquidates the entire amount of the travel authorization.
- If you create an expense report by copying from a travel authorization and delete some of the lines, the system liquidates the lines that are matched in the expense report; however, the system does not liquidate lines that you deleted before the expense report was budget checked. In this case, the system sets a flag for the travel authorization that indicates to the Budget Processor to fully liquidate the remaining encumbrances during the next batch budget check.
- The system liquidates amounts based on the original travel authorization encumbrance amount. If you add new lines on an expense report, it will not have any effect on liquidation of travel authorization encumbrances.
- If an approver, project manager, or auditor denies an expense report at any point in the approval process, the system restores encumbrances for the associated travel authorization. If you delete an expense report, Expenses restores the travel authorization and makes it available for another expense report.
- Some transactions in Expenses automatically perform budget checking under certain conditions. You do not initiate budget checking except through an event and only if the transaction was previously budget checked. The budget checking process automatically executes to reverse the amounts when:
- An approver or auditor returns a travel authorization or expense report to the employee for revisions.
- An approver or auditor denies a travel authorization or expense report.
- You cancel a travel authorization through the Cancel Approved Travel Authorization page using the Employee Self-Service navigation.
- An administrator or authorized user uses the Rollover Travel Authorization process to move encumbrances from one fiscal year to a new fiscal year. Budget checking under these conditions reverses amounts originally recorded and removes any previous budget checking activity from the processing logs.
- You can configure your expense system with multiple approvers and auditors. When there are multiple approvers, only the first approver needs to budget check the expense transactions. Subsequent approvers do not need to budget check the expense transactions unless they make a change to a distribution line, or delete or add expense transaction lines.
- When an approver makes changes to a distribution or expense transaction line, Expenses tracks the change activity and displays the Budget Options link when budget checking is required. If you enable the option to require budget checking, the system inactivates the Approve button until the transaction is successfully budget checked.
- When an approver denies a travel authorization or expense report, the system automatically budget checks the transactions to reverse the recorded ledger amounts. When there are multiple approvers and one approver denies the transaction, the other approvers cannot reverse the denied status by approving it. When an approver denies an expense report that the employee created from a travel authorization, the system reinstates the encumbrances for the travel authorization. The system reinstates the travel authorization, making it available for the employee to use on a different expense report. In order to liquidate the encumbrances, you must cancel the travel authorization.
- When an approver or prepayment auditor encounters a budget exception that requires changes to distribution ChartFields or transaction line amounts, they can access the accounting distribution lines to make the change. The post payment auditor does not have access to make these types of changes.
- The commitment control source transaction governs some of the interaction between the budget processor and any defined expense transactions. The source transaction identifies eligible transactions for the budget processor based on specific fields and their values. For example, the definition for travel authorizations may identify transactions with a status of Submitted as the only transactions eligible for the budget processor. If you make changes to the delivered source transaction definitions for Expenses, you may also need to implement customized code to handle the change. Expenses only supports functionality based on the delivered source transaction definitions. Changes to source transactions must be done by an authorized administrator.
- Organizations may need to modify the distribution ChartFields or transaction line amounts that have already been recorded in the commitment control budget ledgers. An approver can have the authority to change the accounting distributions or amounts that have already been budget checked. If they make any changes, the transaction must be budget checked again to reflect those changes. If they are not successfully budget checked, Expenses does not allow you to post the liabilities for these transactions. The prepayment auditor can make changes to accounting distributions or amounts that have already been budget checked and recorded in the commitment control budget ledgers.
- The post payment auditor can only approve or deny a transaction.
- The Modify Approved Transactions functionality enables authorized approvers to approve or deny an expense report. However, the system allows approvers to make changes that may require budget checking. Use journal expense reports to make changes to accounting distributions for expense transactions that you have already posted. If you make a change through this feature in a commitment control-enabled business unit, you must budget check the changes that you have made. If changes are not budget checked, the commitment control budget ledgers will only reflect the last budget checking activity.
- Process complete.