Set Up Budget Checking

Budget Checking gives organizations a method to verify that unposted purchase transactions do not exceed the approved budget. If the budget is exceeded, organizations need methods to properly handle the situation that best fits their business needs.

In some cases, depending on how Sparkrock 365 is configured, you cannot release transactions or submit transactions for approval that are over budget. In other cases, you are warned about the budget overrun, but are still able to release or submit the transactions for approval. In either case, you can view the analysis that explains the overrun.

To allow minor budget overruns to be ignored, you can specify budget checking tolerances using an amount or a percentage. As an example, a requisition can have a budget overrun of 5%, but not exceed $100.00.

Add dimensions to the general ledger

One component of setting up budget checking is to set up the General Ledger Setup page.

Note

Note:
Typically, this setup is performed as part of your initial Sparkrock 365 configuration.

To set up the General Ledger Setup page

1. Choose , enter general ledger setup, and then choose the related link.

   The General Ledger Setup page opens.

2. On the Dimensions FastTab, specify the dimensions that you want to use throughout Sparkrock 365.

Set up budget categories

Budget categories are used to group accounts together for budget checking purposes. For example, if your organization uses several accounts for office supplies, cleaning supplies, and project supplies, but you want to group these supplies together for budget checking, you can assign a single budget category to all accounts. As a result, budget, encumbrances, and actuals for all accounts are aggregated together during the budget checking process.

After you set up a list of budget categories, you can then assign the categories to items or general ledger accounts.

To create budget categories

1. Choose , enter budget categories, and then choose the related link.

   The Budget Categories page opens.

2. On the action bar, choose New.

   A new row appears.

3. In Code, specify a code to represent the budget category.

4. In Description, specify a description for the budget category.

Assign budget categories to general ledger accounts

You must specify the budget category for each general ledger account that you plan to use on a purchase document.

To set up a budget category on the chart of accounts

1. Choose , enter chart of accounts, and then choose the related link.

   The Chart of Accounts page opens.

2. Select the account for which you want to set up a budget category, and then on the action bar choose Edit.

   The G/L Account Card page opens for the selected account.

3. In Budget Category Code, specify the code that represents the applicable budget category that you want to set up.

Assign budget categories to items

For items to be verified or checked against the defined budget categories, budget categories must be assigned to items.

To assign budget categories to items

1. Choose , enter items, and then choose the related link.

   The Items page opens.

2. Select the item to which you want to assign a budget category, and then on the action bar, choose Manage > Edit.

   The Item Card page opens for the selected item.

3. On the Inventory FastTab, in Encumbrance G/L Account, specify the general ledger account.

   This general ledger account is used for the verification and can be linked to a budget category code.

   Typically, the Encumbrance G/L Account and the Budget Category Code are set to match the purchase account. If this is not the case, budget checking may not be performed on the correct accounts and an over budget situation may occur.

Set up the Budget Checking Setup page

On the Budget Checking Setup page, set up general settings and exempt certain values from the budget checking process.

The dimensions and dimension values that are used in the budget checking process are configured through the Dimensions field.

To set up the Budget Checking Setup page

1. Choose , enter budget checking setup, and then choose the related link.

   The Budget Checking Setup page opens.

2. In Tolerance Percent, specify the percentage that a unique combination of general ledger accounts and dimensions are allowed to go over budget.

3. In Tolerance Amount, specify the dollar amount that a unique combination of general ledger accounts and dimensions are allowed to go over budget.

4. In Dimensions, specify one of the following options for handling dimensions for budget checking:

   • All: All dimensions and their values are included in the budget checking.
   • None: Dimensions and their values are not included in the budget checking.
   • Some: Specify which dimensions are to be included in the budget checking.

5. If you selected the value of Some for Dimensions, to specify which dimensions to disable from budget checking, perform the following steps:

   1. Choose .
      The Budget Checking Dimensions page opens.
   2. Clear the corresponding Enable Budget Checking checkbox.
   3. If Dimension Values has a value of Some, to specify which dimension values to disable from budget checking, perform the following steps:
      1. Choose .
         The Budget Checking Dimension Values page opens.
         
      2. Clear the corresponding Enable Budget Checking checkbox.
      3. To return to the Budget Checking Dimensions page, choose Close.
   4. To return to the Budget Checking Setup page, choose Close.

6. In G/L Account Filter, specify which general ledger Accounts to include in the budget checking process or to include all general ledger accounts in the budget checking process, leave the field blank.

7. In the Documents part, to set up how budget checking behaves for each document type, perform the following steps:

   1. To turn on budget checking for a specific document type, select the Enable Budget Checking checkbox.
   2. In Action If Budget Exceeded, specify the action that is to occur when a budget is exceeded.

8. To set up budget checking periods, in the Periods part, perform the following steps:

   1. On the action bar, choose Manage > New Line.
      A new row appears.
   2. In Starting Date, specify the date at which the budget that is specified in Budget Name is to take effect.
      The Start Date determines which budget name Sparkrock 365 refers to during budget checking. The determination is based on the transaction posting date, for example, a purchase order made on 08/01/20 falls under the General Ledger Budget Name 2020, which has a start date of 01/01/20.
   3. In Budget Name, specify the appropriate budget.
   4. In Calculation Starting Date, specify the starting date for the entries that are to be included in the calculation.
   5. In Calculation Ending Date, specify the ending date for the entries that are to be included in the calculation.

Budget checking setup considerations

The following list includes budget checking setup considerations that depend on your budget checking requirements:

• If you perform budget checking against an annual budget, you will have one line per budget and the calculation start and end dates will correspond to your fiscal year start and end dates.

• If you perform budget checking on a monthly basis, you will have 12 lines for the same budget and the calculation start and end dates will correspond to the month start and end dates. The start date will be the month start date.

• If you are planning monthly and you require budget checking on a year to date basis, you will have 12 lines per budget with the calculation start date reflecting the beginning of each month. The calculation start date will reflect the beginning of the fiscal year and the calculation month date will reflect the respective month end date.

Budget checking results

When you perform budget checking, the following results are calculated:

Field	Description / Calculation Details
Budget Name	This is determined using the respective transaction date, as specified for each column and on the Periods FastTab of the Budget Checking Setup page.
Description	The G/L Account No. and Name or the Budget Category Code and Name when the general ledger account is part of a category. Accounts outside of general ledger filter are excluded.
Dimension Value String	The dimensions participating in the validation separated with: |
Budget Amount	The total budget for the general ledger account or budget category and dimensions that are included in the budget checking. The Budget Name and date periods are specified on the Budget Checking Setup page, on the Periods FastTab. From this field you can drill down to general ledger budget entries.
Tolerance Amount	Calculated as the Budget Amount x Tolerance Percentage or the Budget Amount + Tolerance Amount. Tolerance is allowed based on the specified percentage, but cannot be more than the amount that is specified in Tolerance Amount, when the Tolerance Amount is greater than zero.
Total Budget	Calculated as the Budget Amount + Tolerance Amount.
Actual Amount	The total of the general ledger entries for the budget year as per the period that is specified on the Budget Checking Setup page, on the Periods FastTab, for the combination of general ledger account or budget category and dimensions. From here you can drill down to view the filtered general ledger entry.
Encumbrances	The total of the Remaining Amount, (Incl. Tax Expense) from the purchase orders, purchase invoices, and purchase credit memo lines as per the period that is specified on the Budget Checking Setup page, on the Periods FastTab, for the combination of general ledger account and dimensions. The amount is in local currency. The purchase order lines are calculated based on the Commitment Date on each line. The purchase invoice and purchase credit memo lines are calculated based on the Posting Date on each document. It is possible that a purchase order has commitment dates in different budget years for multi-year purchase orders. From here you can drill down to view the purchase order, purchase invoice, and purchase credit memo lines that total to the amount on the line. The current document is excluded from the calculation when the document being checked is a purchase order or purchase invoice.
Commitments	The total of purchase requisitions, payment requests, and expense claim lines where the document has a Status of Pending Approval or Approved and the Posting Date as per the period that is specified on the Budget Checking Setup page, on the Periods FastTab, for the combination of general ledger account and dimensions. The total is calculated in local currency, including tax expense. From here you can drill down to view the purchase requisitions, payment requests, and expense claim lines that total to the amount on the line. The current document is excluded from the calculation when the document that is being checked is a purchase requisition, payment request, or expense claim.
Available Amount before Request	Total Budget - Actual Amount – Commitments - Encumbrances When the value is negative, the value is displayed in red.
Requested Amount	The total per combination of general ledger account and dimensions for this document. From here you can drill down to the detailed lines.
Available after Request	Available Amount before Request - Requested Amount When the value is negative, the value is displayed in red.
Open Finance Requests	Purchase Request Lines with a Status of Open, where the date is within the applicable budget year. The amount is calculated as follows: When the Currency Code is not equal to blank: Line Amount (LCY) + (GST/HST Expense + PST Expense) x Relational Exch. Rate / Exchange Rate When the Currency Code is blank: Line Amount (LCY) + (GST/HST Expense + PST Expense) You can drill down to filtered purchase request lines and view the document, subject to security settings.

How budget checking works with purchase orders

The following section describes how budget checking setup for purchase orders behaves in Sparkrock 365.

To perform budget checking for purchase orders

1. Choose , enter purchase orders, and then choose the related link.

   The Purchase Orders page opens.

2. Select a purchase order for which you want to view how budget checking behaves, and then on the action bar, choose Manage > Edit.

   The Purchase Order page opens.

3. On the action bar, choose Release > Budget Check.

   If there are no issues with the budget, a dialog box appears that displays the following text:

   The document passes the budget check. Do you want to review the budget checking details?
   

4. To proceed, choose Yes.

   The Budget Checking Line List page opens.

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