Slide 3 - Oracle Procurement Cloud Release 9
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Hello, my name is Rohit. Welcome to the Release 9 Training for Oracle Procurement Cloud Enhancements. In this session, we’ll cover the budgetary control and encumbrance accounting enhancements we have made in this release.
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Slide 4 - Agenda
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For the enhancements covered in this training, we’ll give an overview, followed by more detail to explain how you can use them, and what business value they bring.
Then we’ll walk you through a demonstration where you’ll also have the opportunity to see how to use these enhancements.
Next we’ll explain what you need to consider before enabling these features in your business.]
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Slide 5 - Enhancements Overview
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Budgetary control and encumbrance accounting are two powerful features introduced in Oracle Fusion Applications Release 9. They allow you to keep better track of your company’s spending by making sure sufficient funds are available before a requisition or purchase order can be approved. Users have the ability to check funds and view the results in real time before submitting their transactions for approval. Funds for procurement of the ordered good or services can be reserved upon document approval. Finally closed purchase orders can be reopened if necessary to process new receiving or payables transactions, with funds being consumed from a new period.
In addition to real time budgetary control, you have the option to automatically create encumbrance journal entries for your procurement transactions if required to meet legal requirements. Note that budgetary control is not tied to encumbrance accounting, hence you may implement budgetary control without having to implement encumbrance accounting.
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Slide 6 - Check Funds During Transaction Entry
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Users have the ability to check funds and view results as well as the impact on budget balances in real time. Based on the control level of the budget, insufficient funds can result in a failure, warning, or pass. If funds check fails, users have the option to revise and correct the transaction information and then resubmit the funds check. Alternatively, they may contact the budget manager(s) using Oracle Social Network tools to find other ways to secure the funds such as increasing the available funds or the tolerance level for the control budget.
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Slide 7 - Transaction Entry
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Information required to perform budgetary control is derived from the transaction information. The main elements that drive budgetary control are:
Charge Account
Budget Date
Projects information (optional)
Users have the option to update the default values to consume funds from another control budget, account, or budget period if necessary. Additionally, finally closed purchase orders can be reopened to allow processing of new receiving or payables transactions, with the funds being consumed from a new period.
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Slide 8 - Funds Check upon Submit
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Funds check is automatically invoked when a requisition or purchase order is submitted for approval. In case of warning, users have the option to decide if they want to proceed with the submission or not. Approvers can drilldown to the document from the approval notification to check funds and/or view results before approving the document. Approval rules for requisitions can be setup so that requisitions with funds check warning are routed to a specific approver.
A document cannot be submitted for approval if funds check fails , so that users can correct the transaction or contact the budget manager before resubmitting the transaction for approval.
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Slide 9 - Funds Reservation
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Funds reservation is attempted upon requisition and purchase order approval and the document is only approved if funds reservation succeeds for all the document distributions.
Funds reservation status is displayed at the header, line, and distribution level, and from it users can drilldown to view detailed results.
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Slide 10 - Budgetary Control throughout the P2P Flow
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Reserved funds are tracked in separate buckets throughout the P2P flow:
Requisition: Commitment
Purchase Order: Obligation
Supplier Invoice: Expenditure
Funds are moved from one bucket to another throughout the lifecycle of the transaction. For example, when a purchase order with backing requisition is created and approved, funds originally reserved for the requisition from the commitment bucket are released ,and new funds from the obligation bucket are reserved for the purchase order. When a transaction is reversed (for example in the case of cancellations, withdrawals or returns) funds are released and returned to the bucket from which they were originally reserved.
In the case of change orders, only the delta amount between the previous order and the change order is reserved or released. This ensures that funds originally reserved for the transaction are retained.
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Slide 11 - Budgetary Control on Imported Transactions
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The open interface, cloud import template and web service for requisitions and purchase orders support the ability to pass a budget date for the document’s distributions. Transactions imported in approved status or approved upon import are subject to budgetary control. If funds cannot be reserved, the transaction is rejected.
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Slide 12 - Encumbrance Accounting
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Oracle Fusion Procurement customers can enable encumbrance accounting if required to meet legal requirements. If so, encumbrance journal entries are created and automatically liquidated throughout the P2P flow. Customers can define new encumbrance types, and customize the encumbrance journal entries to meet specific requirements. For example, customers can include transaction-specific information on the journal entry descriptions, or change the level at which encumbrance journal entry lines are summarized.
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Slide 13 - Budgetary Control and Encumbrance Accounting
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Companies usually need to operate within budget constraints. This is especially important for public sector organizations, which are generally required to secure the necessary funds before a purchase can be authorized. Given that unused funds are usually forfeited, it’s very important for public sector organizations to optimize the use of funds by having the ability to consume funds from other budget periods , and to reopen finally closed purchase orders and consume funds from a new period. Depending on the business requirements, a company needs the ability to decide if funds will be reserved at the time a purchase requisition is approved, or wait until a purchase order is issued. In either case, it’s very important that funds failures be caught as early as possible and users be given detailed results, so that they have the opportunity to make any necessary changes before submitting the transaction for approval. Once the transaction is approved, funds are reserved so they are no longer available for other transactions. If enough funds are not available, the transaction is rejected to prevent overspending. Additionally, public sector organizations are usually required to keep track and report open commitments and obligations in the form of encumbrance accounting entries. It is important that these encumbrance entries be automatically booked and liquidated throughout the P2P flow, so that encumbrance balances accurately reflect the open commitments and obligations.
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Slide 14 - Summary of Enhancement Capabilities
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Here is the summary of the features I have talked about today. The budgetary control and encumbrance accounting enhancements for requisitions and purchase orders enable you to:
Check funds at any time during transaction entry and view results in real time
Consume funds from a different period by selecting a budget date
Reopen finally closed purchase orders and consume funds from a new period
Automatically check funds before a document is submitted for approval and prevent submission if funds check fails
Reserve funds upon document approval
Apply budgetary control on imported transactions
Automatic book and reverse encumbrances journal entries throughout the P2P flow
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Slide 19 - Slide 19
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We will now provide implementation advice for the enhancements we have discussed.
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Slide 20 - Feature Impact Guidelines
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The features we discussed are not automatically available and need to be enabled. These features are included with the shipped job roles and setup is required to use these features
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Slide 21 - Setup Summary
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Setup for this solution is performed via the functional setup manager.
Setup is performed within the Budgetary control and encumbrance accounting functional area of the financials offering. The task associated with the setup is Manage Budgetary Control.
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Slide 22 - Job Roles & Associated Duty Roles
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Please review this slide for the shipped job role for which the features discussed are automatically available.
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Slide 23 - Business Process Model Information
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The features covered in this training session are part of the Manage Requisitions and Manage Purchase Orders detailed business processes.
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Slide 24 - Related Reports & BI Analytic Information
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Enhancements have been made to the BI subject areas to enable reporting. Both the requisitions real time and purchasing real time subject area have been enhanced to include the budget date and funds status in the distributions folder.
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Slide 25 - Associated Release Training
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Please review the associated release training on the following topics:
Budgetary Control setup
Budgetary Control for Transactions
Encumbrance Accounting
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