Set up budget control parameters
Based on the financial dimensions that are available for the budget, you can use all financial dimensions for budget control or a subset of them.
Additionally, you can specify the default time interval (such as Fiscal year, Fiscal year to date, Fiscal period, or Quarterly) to perform budget control for during the related budget cycle time span. You can also specify a default budget manager and the threshold to use to notify users when they reach the threshold. The system uses the values in these fields as default values in any new budget control rule or budget group that you create. However, you can change the default values for individual groups or rules.
The ways that you create and record budgets in the budget register help determine the time span that managers select when they're evaluating available budget funds. If your organization develops and uses an annualized amount for a dimension value combination, a fiscal-year or fiscal-year-to-date approach might make sense. However, if your organization creates budgets by fiscal period or allocates to fiscal periods and it wants more detailed control, it might consider fiscal-period-to-date or quarterly time spans.
Additionally, an organization's culture, as it's related to budgeting and budgetary control, also helps define the configuration.
Over-budget permissions
On the Over budget permissions tab, you can specify user groups. You can also specify whether users who are members of a group have permission to exceed the budget. You can prevent users from exceeding the budget past the budget threshold that's set on the Budget parameters page, or you can prevent them from exceeding the budget by any amount, regardless of the threshold. Depending on how proactive an organization is in managing its spending, these permissions can help manage its financial resources.
Scenario
A purchasing representative creates a purchase order that has multiple lines. They enter the first three lines successfully. However, when the purchasing representative enters the fourth line, a message displays stating that the financial dimension value is over budget.
The purchasing representative isn't in a user group that's authorized to exceed the budget. The purchasing representative can complete the fourth line, enter extra lines, and save the purchase order in a Draft state.
Next, the purchasing representative notifies a manager of the over-budget situation. The budget manager has the authority to exceed the available budget funds. The budget manager can open the purchase order and continue with the purchase order confirmation without changing amounts or accounts.
Subsequently, the budget manager performs a budget transfer to increase the available budget for the financial dimension value that's over budget.
Select main accounts
If Main account isn't selected as a budget control dimension on the Define parameters page, but you're managing specific expenditures, you can select those expenditures on the Select main accounts tab. If Main account is selected as a budget control dimension, no entries are required.
Assign budget models
On the Assign budget models tab, you can assign budget models to the budget cycle time spans that you want to include in budget control.
Define budget control rules
On the Define budget control rules tab, you create specific rules based on the financial dimensions that are enabled for budget control.
Budget control rules are required for budget control. They determine the financial dimension value combinations for budget control. If you select the department and cost center financial dimensions for budget control, you can define rules for specific combinations of departments and cost centers that are subject to budget control.
For example, you could specify Department = Sales and Cost Center = *, where the asterisk (*) is a wildcard character that includes any cost center.
For instance, if focus is on the expenditure or range of expenditures for a department, you can use the settings on this tab to define and evaluate those expenditures. You can define different thresholds for each budget control rule.
Criteria in two or more rules that cover the same financial dimension values aren't allowed. If all financial dimension value combinations are available for budget control, you can define a budget control rule without criteria.
The system validates budget control rules against the ledger accounts that you're using on source document accounting distributions and accounting journals. If the financial dimensions in the ledger accounts match the financial dimensions in the budget control rules, the system performs a budget check.
Budget control is available for any main account of the Profit and Loss, Expense, Balance sheet, Liability, Equity, or Asset type. If this tab contains a rule that has empty criteria, budget control is available for all financial dimension combinations that include main accounts of those types. Therefore, make sure that you create budget control rules that define only the ranges of financial dimension combinations where it's important for budget control to be turned on.
The following video demonstrates how to set up budget cycles, budget control parameters, and budget control rules.