What is Expenditure Checking?
A SunSystems budget consists of three parts:
- Budget amount the permitted budget for a budget check definition (account/analysis combination).
- Actual expenditure actual expenditure against the budget. This comes either directly from ledger transactions or from purchase invoice transactions within SunSystems Order Fulfilment.
- Committed expenditure the approved spend from purchase orders, reserved from the available budget.
Expenditure checking monitors the actual expenditure on an account/analysis combination against a budget that has been set. Expenditure checking is used in Financials, and can apply to selected accounts if a Budget Check Setup (BCS) record has been defined for each account/analysis combination. Expenditure checking can also be used in Order Fulfilment when purchase invoices are entered if it is requested in Purchase Business Setup (PBS).
Expenditure checking checks the ledger transactions entered into Financials for these accounts. This includes transactions entered using Ledger Entry (LEN) or Ledger Import (LIM), and those generated by other Financials functions. If you use the SunSystems Order Fulfilment Purchasing module, it can also be used to check the values on invoice lines as they are entered.
If a transaction is entered for an account that requires expenditure checking, the total actual expenditure for the account is compared against the allocated budget. A warning is displayed if the transaction takes the account over its budget. You can override this depending on their operator group or global tolerances.
Using expenditure checking, the available budget on an account is calculated as follows:
- available budget = budget - actual expenditure - committed expenditure
How are the Budget and Actual Amounts Calculated?
The actual expenditure amount is the sum of the transactions posted to the account for the period.
The budget amount calculation for the account is more complex. It is determined by the budget check definition set up for the account. The budget can be set at different levels for an account, and may be drawn from a combination of budget accounts. The budget amount is also determined by the Budget Navigation Method set for the budget check. This identifies the accounting periods used to calculate the budget amount.
Budget Update in Order Fulfilment Purchase Invoices
When entering a purchase invoice in Order Fulfilment and budget checking is being used, the expenditure amount of the budget is updated just as if it were a ledger transaction. This means that when an invoice is entered the actual expenditure amount is increased. The account to be used is the account entered on the purchase invoice line. The analysis to be used is the analysis on the purchase invoice line.
A purchase invoice line can have many values (for example, quantity, unit price, net, taxation, gross) and these are held as value labels. The exact value label to be used to update the expenditure amount must be specified on the Purchase Type Definitions Values Setup form using the Expenditure Budget Value option. All budget values must be held in the base currency.
A purchase invoice can have several stages, invoice entry, invoice matching (to a purchase order), and invoice confirmation. The stage at which the invoice updates the budget must be specified on the Purchase Business Setup (PBS) dialog using the flag Expenditure Stage. This applies to all invoices and can be overridden on Purchase Types (PTS) if required for a particular Purchase Type.
Over Expenditure Checking in Order Fulfilment Purchase Invoices
Over Expenditure Checking is additional functionality used when entering a purchase invoice. This functionality is activated in Purchase Business Setup (PBS) and is the same as over expenditure checking in Financials transactions. When entering an invoice the available budget is checked using the formula above. If there is available budget, the invoice is allowed to continue. If there is no available budget the invoice is held and prevented from further processing. A warning message is displayed.
When performing the over expenditure check, overrides can be used. In Purchase Business Setup (PBS), an exact value tolerance or a percentage tolerance can be set. These may be overridden by tolerances set up for Operator Group in Security, if required. If there is no available budget, the system applies the tolerances. If the transaction is inside the tolerance, you are warned but allowed to continue processing. If outside the tolerance, a warning is displayed and the invoice is held.
If you are using commitment checking, when you match a purchase invoice to a purchase order, the committed expenditure is reduced and the actual expenditure is increased by the same amount for the account and analysis code combination. Thus, the committed expenditure is converted to actual expenditure.