Budget at Summary Account Level/Budget at parent Account/Budget for Asset Clearing Account with Absolute level ontrol

Budget for Asset Clearing Account With Absolute BudgetaryControl

In Oracle General Ledger, Budgeting is Possible only for Expense Accounts.

It’s not possible for Asset accounts and Inventory accounts.

General Convention:

In General Ledger, the common convention for asset accounts is that, funds or budgets are uploaded against the Asset Clearing Account. When RFQ’s or PO’s are made funds check will happen against the Asset clearing account and actual are recognized when items are received.

Budgeted amount moves to encumbrance and then actual, by reducing the budget.

Error:

But this will not happen exactly, when the asset is created in the assets module through mass additions, the clearing account credits and cost account debits. At this stage, the actual recognized against the clearing account in the funds inquiry will get reversed after the addition’s journals is posted.

So the funds will remain forever and will not get reduced, though it appears at the time of receiving the goods.

Solution:

·         No standard process, the work around proposed for this issue is as follows

·         In the item definition window, on purchasing tab for asset items, give asset clearing account in the expense account field.

·         In the encumbrance field give either encumbrance or the same account as clearing.

·         Create Parent Account-A with account type as asset, budgeting and posting not allowed.

·         Add the asset cost account-B and clearing-C account as child to the parent account A.

·         This should be a single parent account i.e not assigned to any other parent accounts or the child accounts should not have grandparent accounts.

·         Define Roll up group and assign to the Parent account-A.

·         Define Summary Template and give budgetary control as absolute.

·         Run Program Maintain Summary Template.

·         Now assign the code combinations of asset cost and asset clearing accounts in the budget Organization with advisory or none budgetary control.

·         Save the ranges and run maintain budget organization.

Note(not Sure-but worked): In Budgetary controls window define advisory for Additions category and Source-Assets

·         Now Upload Budget for clearing account but not for Cost Account.

·         Funds can be seen on ‘Funds Inquiry’ screen for both the Parent account and Clearing Account

·         While creating PO, funds checking happen on clearing account and parent Account.

·         Funds gets reduced i.e can be seen as encumbrance in the ‘Funds Inquiry’ Screen.

·         Now receive the goods and transfer accounting entries to GL and post them from Cost Management.

·         Encumbrance turns to actual and same can be seen on parent and clearing account in the funds inquiry screen.

·         Create invoice in payables and match it to the Receipt or PO, validate, account it and approve it if required and post the entries in the GL.

·         Now Run Create Mass Addition’s program in payables which will create asset lines in assets module.

·         Go to Assets, prepare mass additions and post the mass additions.

·         Asset is created, create accounting entries for addition and post them in general ledger.

·         Here accounting entry will be cost ac dr and clearing account cr.

·         In Funds Inquiry screen, Actual on for clearing account gets reversed and full funds will be available.

·         In Funds Inquiry screen On Cost account actual will appear and funds available will be in negative figure.

·         On Parent account Actuals will appear and funds get reduced.

·         Here in true sense, both cost and clearing account uses funds budgeted on clearing account and effect can be seen on the parent account i.eis the funds reduction.

·         Budget control is happening at parent account level which actually uses the funds budgeted on the child accounts.

·         Parent account does not have funds.

·         At the time of PO, if funds exceed budget, checking will happen at parent account and hence budget checking failure will happen. Can see the funds failure in the result.

·         This process will give absolute control while doing PO and  variance report.

·         Above screen shots, 910064 is clearing account, 910065 cost account and 910066 being the parent account.

Summary:

Asset cost-B and Assets clearing Accounts - C were made as child's to a single parent account-A 
Roll up group created and assigned to the Parent Account - A 
Summary Account Template is created with Absolute Budget control 
Both Cost Account -B and Clearing Account-C are included in Budget Organisation with advisory budget control 
Created a PO and Received it, at this stage funds inquiry shows Encumbrance as Obligation for summary and clearing 
Once Accounting entries are created and posted for Receipt from Cost Management Funds Inquiry shows Actual for both summary and Clearing Account 
Matched the Invoice to Receipt, Validated, Accounted and Approved it and ran Mass Additions create 
Assets is created in Assets after Running Post Mass Additions 
Now after running Create Accounting for Additions in Assets and posted the JV's, funds get reversed and sows no actual's but as same funds at the begining of the transaction. 
This will not allow to have budget variance report 
Note: Funds are budgeted against Asset Clearing Account.