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HISTORY Show More

Author(s): Andrew Lumpe

Creation Date: 18-Apr-2011
Update Date: 18-Apr-2011

DETAILS

1. Define Common Projects Configurations

The assumption of this case study is that you have already implemented Projects and you are able to create projects and
transactions within your operating unit. You should also have the ability to enter purchase orders in Oracle Purchasing and
supplier invoices in Oracle Payables.

If you need more information on overall steps for implementing Oracle Projects, refer to the Oracle Projects Implementation
Guide. For Purchasing refer to the Oracle Purchasing User's Guide (zipped) and for Payables refer to the Oracle Payables
Implementation Guide.

2. Required Setups in Other Applications

a. Ensure Budgetary Control is enabled in the ledger.

In General Ledger, navigate to: Setup > Financials > Accounting Setup Manager > Accounting Setups
Query for the ledger:
Click "Update Accounting Options"
Select the ledger (then "Update") or directly click the update icon for the option "Define and update the journal
processing options for your ledger."

Under "Advanced Options" verify that the budgetary control option is enabled:

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Note, you must also provide a value for the Reserve for Encumbrance Account.

b. Enable encumbrance accounting in Oracle Payables and Oracle Purchasing

In Payables navigate to: Setup > Options > Financial Options
Select the correct operating unit
In the "Encumbrance" tab - enable 'Use PO Encumbrance' to enable encumbrances for PO's and Supplier invoices.

Optionally enable "Use Requisition Encumbrance" to encumber requisitions also.

Note: In Purchasing the same form can be reached via Setup > Organizations > Financial Options. The setting
in either location applies to both applications.

c. Ensure that Purchasing (PO) and Payables (AP) SubLedger Accounting (SLA) setups allow for encumbrance accounting.

In the Subledger Accounting Method (SLAM) definition, this requires that you have assigned Application Accounting
Definitions (AAD) to both the Purchasing and Payables applications which include the necessary burden cost event types,
and encumbrance journal line types.

For Purchasing you can assign the seeded "Purchasing Encumbrance Application Accounting Definition"
For Payables you can use "Encumbrance Accrual" or "Encumbrance Cash" depending on the accounting method.
Alternatively you can use these as models for your own custom application accounting definitions.
The seeded SLAM "Encumbrance Accrual" comes with these assignments:

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If these SLA setups are not correct, you will be unable to approve PO's or validate
invoices. In Purchasing you may get errors like the following:

There is no application accounting definition available for the application Purchasing and the subledger
accounting method Standard Accrual owned by Oracle. Either no application accounting definition is
assigned to the subledger accounting method, or the GL date of the accounting event does not correspond
to the effective date range of any application accounting definitions assigned to the subledger accounting
method. Please assign an application accounting definition to the subledger accounting method or update
the effective date range of any application accounting definitions contained in the subledger accounting
method.

In Payables when validating an invoice you may get an error similar to the following, even though the indicated AAD is in
fact validated:

An error occurred in create accounting and budgetary control could not be performed. The application
accounting definition Accrual Basis owned by Oracle is not validated. Please validate the application
accounting definition or update the application accounting definitions contained in the subledger accounting
method Standard Accrual.

The invoice may be placed on "Encumbrance Acctg Fail" hold as a result of failure to generate encumbrance accounting
entries, due to incorrect setup of the application accounting definition.

3. Profile Option Settings

There are a number of profile options that need to be set appropriately for using budgetary control features. Please refer to
Note 1315103.1 Setting Up Profile Options for Budgetary Control and Integration in Oracle Projects.

4. Define Project Budgetary Control and Integration Options

The screen shot below shows the budgetary control and integration settings for the project used in this case study. Note that the
"Balance Type" and "Non-Projects Budget" fields are not populated because in this example we are using a non-integrated
budget. These fields are required for Top-Down and Bottom-Up integration with GL budgets.

We have selected absolute control at the project level, advisory control at the task level, and rather than assigning a control level
for resource and resource groups, we have elected to default these controls from the resource list definition. We will see how
control levels are assigned to individual resources and resource groups below in step (6) Define or Select a Resource List.

We are also using the amount type "Project to Date" and boundary code "Project" which means that funds will be checked using
project totals for budget, actual, and commitment amounts, not period specific balances.

Navigation: Projects: Budgetary Control

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Please refer to Note 1315336.1 for additional details on these concepts and setting your budgetary control and integration
options.

5. Define or Select a Budget Entry Method

Your budget entry method controls how your enter your budgets. It controls at what kind of budget amounts you can enter, the
level of your work breakdown structure at which you enter budget amounts, whether those amounts are time-phased, and
whether they are broken down by resource. These choices interact with the budgetary control and integration features in a
variety of ways. See Note 1315850.1 for additional details on how these settings impact your usage of budgetary control and
integration functionality.

Navigation: Setup > Budgets > Entry Methods

In our case we have decided to enter amounts only at the project level, and we will be entering budgeting amounts for the life of
the project, not individual periods. Amounts will be categorized and assigned to specific resources and resource groups.
Because budgetary control is only applicable for cost budgets, we have enabled entry of the cost budget fields, but not revenue
fields.

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Note: Even if your project does not allow burdening, you must enable entry of burdened amounts if you are using budgetary
controls.

6. Define or Select a Resource List

If your budget entry method has enabled the "Categorize by Resources" option (as ours has), you will be required to assign a
resource list to your budget.

Resource lists allow you to categorize amounts by resources and resource groups. Our resource list categorizes our budget
amounts by expenditure types, and groups these expenditure types by expenditure category. Because our project's budgetary
control options specify that control level should default from the resource list for the resource and resource group levels, the
settings we select here are meaningful. If we had selected some other value at these levels on our project, these settings would
be ignored.

Navigation: Setup > Budgets > Resource Lists

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Please see Note 1316123.1 for additional details on setting up and using resource lists with budgetary control and integration.

7. Create the Control Budget

Because budgetary controls are only enforced on expense commitment transactions (such as Purchase Orders or Supplier
Invoices), it is often suggested that the control budget be created specifically to budget for such transactions, and a second
budget be created for the overall project expenditures. This is the option we have chosen.

Alternatively, you could create only one budget, but have specific separate budget lines which correspond to the expense
commitment transactions and assign the appropriate funds control levels for those lines, while assigning a level of 'None' to the
others.

Navigation: Budgets

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The information we enter is dependent on our budget entry method and resource list as described in the steps above. In our
case, amounts are entered at the project level and are not time-phased, but are categorized by resources.

We have entered amounts for the individual resources "Material" and "Chemicals" (both in the resource group Material), and we
have entered an amount for the resource group "Supplies" at the group level.

The control levels for these resources were defined on the resource list as "Absolute' for the resource "Material" and the resource
group "Supplies" and "Advisory" for the resource "Chemicals".

Note: Our budget entry method allows entry of both raw and burdened costs. The burdened cost amount we enter are the
ones that will be used in our funds available calculations.

8. Submit and Baseline the Budget

When entry of budget amounts is complete, you click the "Submit" button to submit your budget.

If your budget type has the "Use Workflow for Budget Status changes" option enabled, then when you submit your budget, the
PA Budget Workflow will be kicked off. When the budget submission is approved via the workflow, baselining of the budget will
continue automatically.

In our case, our budget type does not use workflow for budget status changes, so when we click "Submit" the budget status is
changed immediately to "Submitted". From this point we can either "Baseline" the budget, or click "Rework" if we wish to
continue updating the budget.

Navigation: Budgets

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After our budget is submitted, we must baseline the budget. For integrated/controlled budgets the baselining process will kick
off the "PA Budget Integration Workflow". Until this workflow completes the draft budget status will remain "In Progress".

The PA Budget Integration Workflow is a deferred workflow, so you will need to run the "Workflow Background Process"
concurrent process in order for it to complete. Be sure to run this process with parameters:

Process Deferred = Yes

Process Timeout = Yes

Once this process completes, the budget version should be baselined. In the budgets form the "History" button should now be
enabled for you to view the baselined budget version

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Important: The baseline process also creates y our initial default budgetary controls, based on y our project and resource list setups, and establishes y our initial budgetary control
balances.

9. Adjust Individual Control Levels as Needed.

When you initially baseline your original budget, the default budgetary controls are established based on your settings in the
project's budgetary control options and optionally your resource list level settings.

Once the baseline is complete; however, you have the ability to adjust the individual control levels as required within the budgets
form.

Navigation: Budgets: Tools > Budgetary Controls

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The initial screen displays your project and task level control settings. In our case, because we are not budgeting at the task
level, there are no controls displayed at that level. Our project level control is absolute.

To view the resource and resource group level controls, click the "Resources" button:

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Here we see the default controls that we established on our resource list. In both this and the previous screen, we can adjust
the control levels for any of these elements by simply selecting the appropriate level from the drop down list and saving our
changes.

After making any changes, you will need to re-baseline your budget. Re-baselining the budget will will copy your existing budget
balances to the new baselined version, and perform a funds check to insure that your new settings do not result in any funds
check violations.

As with the original baseline, you will have to submit the "Workflow Background Process" concurrent process for item type "PA
Budget Integration Workflow" to complete the process.

In our test case we are not updating our control levels from their default values.

Note: Once you have created your initial baselined budget, the budgetary control level settings on your project and resource
list are no longer taken into account. Even if you change the level settings for your resources on your resource list, when you
re-baseline your budget, these changes will not be reflected. Only changes you make in the screens above will be taken into
account. The exception to this is if you change the budget entry method on your budget. In this case, all control settings
will be restored to the defaults when you subsequently baseline the budget. Otherwise, if you wish to reset the controls to
their defaults based on your current project and resource list settings, you can click the "Reset to Defaults" as shown above,
save the changes, and re-baseline your budget.

10. Enter Expense Commitment Transactions (Purchasing: PO)

Although the purpose of this study does not include setup and implementation of purchasing, there are a few basic setups you
may want to be familiar with if you are not a regular user of the Purchasing application:

a. In order to enter purchase orders, the employee associated with your applications user should be set up as a buyer
(Navigation in PO: Setup > Personnel > Buyers)
b. There are a number of considerations which impact how your documents are approved.
Are you using approval hierarchies?
You can determine this in the Financials Options screen in the Human Resources tab (Navigation in PO: Setup >
Organizations > Financial Options > Human Resources) This will determine if your document is routed based on
position hierarchy (checked) or employee/supervisor relationships (unchecked). If you are using positions, you will
likely want to assign a position to your employee in Human Resources.
Can users approve their own purchase orders?
If you want to approve your own purchase order, you would need to enable the option "Owner Can Approve" on
the document type (Navigation in PO: Setup > Purchasing > Document Types) If not, the document will be routed
using the method and workflow indicated in this screen for the document type.

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Who has the authority to approve a given document?

This is controlled by the setup of approval groups and approval assignments (Navigation in PO: Setup > Approvals
> Approval Groups / Approval Assignments) Approval groups define a specific set of rights to approve documents
based on amount and account. These are assigned either to positions or jobs (depending on whether you use
position hierarchy or employee/supervisor for routing) for specific document types. You will want to make sure
that either you or your designated approver have the appropriate approval groups assigned to their job or position
for the document type you are trying to approve.

For our case study we will enter a purchase order which we expect to pass funds check and we will examine the results and the
effects in Projects. Our purchase order will have two lines:

1. Line 1 for $100 will use expenditure type Material. This expenditure type has been assigned absolute control at resource
level, and we have budgeted $1250 to this resource
2. Line 2 for $200 will use expenditure type Equipment which has a control level of "None" at the resource and resource
group level, and has no budget amount.

Note: Our project's burden structure and schedule are defined such that the expenditure type "Material" used on line
1 will be burdened at 10%, while the expenditure type "Equipment" on line 2 will not be burdened. Remember that it
is the full burdened amount that us used in funds check calculations. So the funding amount required for line 1 will be
$110, and for line 2 it will be $200.

Navigation: Purchasing: Purchase Orders > Purchase Orders

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Once the purchase order is created, you can manually check the funds for the order, or for a particular line or distribution by
clicking in a particular line, distribution or in the PO Header and selecting "Check Funds" from the "Tools" menu. This will not
affect the balances in Projects but will only verify if sufficient funds exist for the purchase order or line. If the check succeeds, as
we expect it to, you should see the following message:

If you click the "View Results" button, you will be presented with a report showing the results of the funds check like the
following:

When you approve the PO funds will be checked again, and if successful, records will be created in Projects which will update the
balances available. When you run the PRC: Maintain Budgetary Control Balances process these records will be reflected in the
"Budget Funds Check Results" screen of the budgets form as seen below. Here you can view balances at the various budget
levels.

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Navigation: Budgets: History > (Select Baseline Version) > Tools > View Funds Check Results

To view the resource level balances click on the Resource tab:

Note: Line 1 of the PO has resulted in a funds reduction of $110 rather than $100 because the burden cost applied to that
line is $10. The second line of the PO has not had any burden cost added because the expenditure type of line 2 is not
included in the burden structure and so will not be burdened.

11. Enter Expense Commitment Transactions (Payables: Supplier Invoice)

In Payables we are going to attempt to enter a supplier invoice that we expect to exceed our available funds and fail funds

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check.

We will enter an invoice with a single line and distribution for expenditure type "Lab Supplies".
We do not have any control specified for this specific resource; however, this expenditure type rolls up to the resource group
"Supplies" which we have assigned a funds control level of "Absolute".

We have budgeted $3750 at the resource group level for supplies, so we will enter our supplier invoice for $3800. The
expenditure type "Lab Supplies" is not part of the burden structure for our project, so there should be no additional burden
amount and the actual amount used in the funds check should be $3800.

Navigation: Payables: Invoices > Entry > Invoices

As in purchasing, you can manually check funds for the invoice or a particular distribution, by navigating either to the invoice
header or the distribution and selecting "Check Funds" from the Action menu. This will verify available funds, and report the
results, but this will not affect funds balances in Projects. Funds balances will only be affected when the invoice is validated.
When we perform this action, as expected we receive a notification of failure:

Clicking the "View Results" button opens the following report with the details of the funds check operation:

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The invoice validation process also performs a funds check. If successful, the invoice will proceed with validation, and the funds
available balances in Projects will be updated. If not as in this case, the validation will fail and a hold will be placed on the
invoice as seen below:

In order to release this hold and successfully validate the invoice, we would need to either:

a. Increase the budget amount for the "Supplies" resource group to some value greater than $3,800 and rebaseline our
budget or
b. Reduce the invoice and distribution amount to something below $3750.

In our case, we will go with option (a) assuming that the invoice amount cannot be changed and we need to adjust our budget
to accept this cost. In Projects we modify the budget amount for resource group "Supplies" to $4,000 raw cost and $5,000
burdened cost. We submit and baseline the budget as before and run the Workflow Background Process to complete the
baseline.

The baselined budget amount is as shown below.

Navigation: Budgets: History > Details

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Now when we attempt to re-validate the invoice in Payables we are successful and the hold that was placed on the invoice is
automatically released.

Since the invoice is now validated, we should expect to see the impact on our available funds in projects.

Navigation: Budgets: History > (Select Baseline Version) > Tools > View Funds Check Results

12. Troubleshooting Tips

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See Note 1317340.1 for some technical detail on the data created in PA_BC_PACKETS, PA_BC_BALANCES and other related
tables when we perform the various budgetary control processes outlined in this case study. This can also assist in interpretation
of the outputs from the diagnostic scripts mentioned below.

The following notes contain details on commonly asked questions and various troubleshooting tips:

Note 842624.1, FAQ: Budgetary Control / Funds Check / GbL Integration

Note 848274.1, Troubleshooting Fund Check/Budgetary Control Guide

Oracle provides a Diagnostic framework that includes Diagnostics that can help you review and identify your funds check and
budgetary control issues. Please review the R12 Diagnostics Catalog, identify your point release and locate the diagnostics under
Oracle Projects: Funds Check

For Release 12.0.6 and above,

Note 732309.1 Funds Check Data Collection: this collects information budgetary control options, budgets, and funds check
data for a specific project and transaction.
Note 732310.1 Funds Check Diagnostics: collects setup and file version information, and checks for some common data
inconsistencies.

To access diagnostics in the application in Release 12.0.6 or above, the access path is as follows:

Please note that each diagnostic test note includes this information in the Usage section.

Responsibility: Application Diagnostics

Navigation: Application Diagnostics > Diagnose

Click button Select Application and select Application "Projects"

Scroll down to group "Funds Check"
Select Test: Funds Check Data Collection or Funds Check Diagnostics.

13. Still Have Questions?

To discuss this information further with Oracle experts and industry peers, we encourage you to review, join or start a discussion
in the My Oracle Support Projects Community.

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