ERP Budget & Procurement End-Users,
Here’s important information regarding Purchase Order encumbrances that are
electronically converted from IFAS to Oracle.
Typically, when a purchase requisition (PR) is created, the dollar amount is pre-encumbered (reserved) as a commitment against a particular GL account string. Then, when the PR is converted to a purchase order (PO), the PR is liquidated (releases PR commitment), and the funds are encumbered (reserved) as an obligation. Finally, after the invoices for the PO are paid in full, the encumbrance is liquidated (releases of PO obligation), and the payment becomes an expenditure.
| An explanation of expected system results based on a $300 transaction. |
| Status of Transaction |
Commitments |
Obligations
|
Expenditures
|
| Purchase Requisition |
$300 |
$0
|
$0
|
Purchase Order
|
$0
|
$300
|
$0
|
AP Invoice
|
$0
|
$0
|
$300
|
It appears that for the electronically converted PO records, the liquidation process is not working correctly. The PR’s (referred to as "commitments" in Oracle) and PO's (referred to as "obligations" in Oracle) are not being liquidated properly resulting in total consumption of budget to appear doubled (commitments + obligations) or tripled (commitments + obligations + expenditures) depending on the status of the converted record. Below is an example of how this issue is showing up in Oracle using the Budget Account Groups (BAGs).
In this example, the commitment and obligation of $300 are related to the same purchase transaction. When the commitment was electronically converted to a PO, the $300 should have been liquidated and zeroed out.
This particular issue is resulting in this account appearing overspent by $300. Also, if an expenditure is eventually made against this PO for FY2020, it will result in the tripling, and the line looks overspent by $600.
The Finance Department is actively working with Oracle to develop a plan to correct the issue. In the meantime, please be aware that this issue may cause some accounts to appear over budget when they are not.
To assist in identifying these issues attached is a copy of all of the electronically converted PO's for your reference (See Excel workbook “
PoEncumbranceSummaryOutput” and tab IFAS). The green highlights in the “Oracle Requisition” column represent the converted encumbrances.
Please note that this workbook may not be 100% accurate, because there were encumbrance details corrected after the initial conversions were entered.
If you have any questions, please contact Shannon Wiest at
[email protected] or Ext. 5705.