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1. What are the setups required to have encumbrance accounting in 11i and R12 architecture?
For 11i:
a) Enable the check box for PO encumbrance, INVOICE encumbrance and REQ encumbrance (if required) with
unique encumbrance types for REQ,PO and INVOICE.
Navigation: Purchasing > Setup > Organization > Financial Options > Encumbrance tab
b) Enable the Budgetary Control flag and define the Reserve For Encumbrance (RFE) a/c for the Set of Books.
Navigation: General Ledger > Setup > Financials > Books > Define
c) It is preferred to enable the Reverse Encumbrance check box in Inventory > Setup > Organization >
Parameters > Costing tab and define the Encumbrance account in Other Accounts tab if requisitions/purchase
orders are created with inventory destination for inventory asset items in encumbered environment.
d) Purchasing period under which the GL date of purchasing document falls and AP period under which the GL
date of invoice falls should be in Open status.
For R12:
a) Enable the check box for PO encumbrance, INVOICE encumbrance and REQ encumbrance (if required).
Navigation: Purchasing > Setup > Organization > Financial Options > Encumbrance tab
In R12 architecture, the encumbrance types cannot be specified here as the system takes the following values by
default.
REQ Commitment
PO Obligation
INVOICE Invoice
b) Ensure that the seeded encumbrance types Commitment, Obligation and Invoice are enabled in General
Ledger > Setup > Journal > Encumbrances
c) Enable the Budgetary Control flag and define the Reserve For Encumbrance (RFE) a/c for the Ledger
Navigation: General Ledger > Setup > Financials > Accounting Setup Manager (ASM) > Accounting Setups
Perform the same setup for Secondary ledger if encumbrance needs to be used for secondary ledger
d) Ensure that the Sub-ledger Accounting Method (SLAM) defined in ASM has encumbrance related Application
Accounting Definition (AAD) for the application Purchasing, Payables and Cost Management
For eg: Purchasing Encumbrance Application Accounting Definition, Encumbrance Accrual and Cost
Management Encumbrance Application Accounting Definition
Navigation: Cost Management, SLA > SLA > Accounting Setup > Accounting Methods Builder > Methods and
Definition > Subledger Accounting Methods > Query the SLAM defined in ASM and verify the AAD for those
applications.
Perform the same setup for Secondary ledger if encumbrance needs to be used for secondary ledger
e) Enabling the Reverse Encumbrance check box is preferred in R12 also which is already explained under 11i
setups.
f) Purchasing period under which the GL date of purchasing document falls and AP period under which the GL
date of invoice falls should be in Open status.
2. What are the minimum setups required to have federal budgeting in R12 SLA architecture?
3. a) The profile option FV: Federal Enabled should be set to Yes
b) The Sub-ledger Accounting Method defined in Accounting Set up Manager should have Federal related
Application Accounting Definition for the application Purchasing, Payables, Cost Management and Federal
Financials.
For eg: Federal Purchasing Application Accounting Definition, Federal Payables AAD, Federal Costing
Application Accounting Definition
Navigation: Cost Management, SLA > SLA > Accounting Setup > Accounting Methods Builder > Methods and
Definition > Subledger Accounting Methods > Query the SLAM defined in ASM and verify the AAD for those
applications.
Perform the same setup for Secondary ledger if encumbrance needs to be used for secondary ledger.
4. Can I switch from a non-Encumbrance environment to an Encumbrance environment and vice versa?
The decision to enable Encumbrance is a onetime decision that must be made at time of implementation.
Because of enormous data corruption that arise when encumbrance is switched on or off after implementation,
Development strongly warns customers not to engage in this practice since they do so at their own risk .
It is clearly documented in Payables User Guide that before switching Encumbrance flags, Customer has to close
all the existing POs. Customers who do not abide by this provision and still move ahead with switching the
Encumbrance flags do so at their own risk.
Development knows the risks involved in moving ahead with workarounds and will not provide a data fix due to
the potential for severe and unrecoverable data corruption.
Development only advice is to final close/cancel all the existing PRs/POs through the Application to ensure the
best audit trail and best data integrity before switching off/on the encumbrance.
Following points need to be done before switching encumbrance
1. Final close all the open PRs/POs
2. If any PO is partially received/billed, either receive and invoice the entire ordered qty or cancel the PO
3. Perform the Create Accounting-Cost Management, Transfer to GL and Posting to create the accounting entries
in SLA and GL for the PO receipts already created
4. If any invoice is already matched to the PO/Receipt, validate it and account it and transfer the entries to GL
5. If any invoice is in validated status but not accounted, perform Create Accounting, Transfer to GL and Posting
to create the accounting entries in SLA and GL
Note: It is not possible to disable the encumbrance for PO and Invoice in Financial Options if Grants Accounting
is used
4. What points need to be taken care before switching from non-encumbrance to encumbrance
environment and vice versa for Requisitions?
All the open PRs need to be finally closed. There should not be any PR left for doing the Autocreate action while
switching the encumbrance for Requisitions.
5. What is the impact if encumbrance types for REQ/PO/INVOICE are changed in between when
transactions exist? (Applicable for 11i only)
Scenario: Assume that the PO and Invoice have the same encumbrance type defined as Obligation. Now you
may want to change the invoice encumbrance type from Obligation to Invoice
1. a) Active encumbrance may exist for the purchasing documents if the encumbrance type is changed in
between in-spite of PO being received/billed/cancelled/finally closed
b) GL reports and Accounts Inquiry form will show an encumbrance balance when encumbrance accounts are
verified based on encumbrance types
Following points need to be ensured before changing the encumbrance types
a) There should not be any Requisitions or Purchase Orders in open status. Either it should be received/billed or
accounted or it should be cancelled/finally closed
b) There should not be any validated invoices which are left unaccounted. It should be validated as well as
accounted and transferred to GL.
Note: It is not possible to have same encumbrance types for PO and Invoice when Grants Accounting is used
6. What needs to be done before changing the Sub-ledger Accounting Method (SLAM) from Standard
Accrual to Encumbrance Accrual or vice versa? (Applicable for R12 architecture only)
7. a) Cancel/Final close all the open PRs/POs
b) Perform the Receipt Accruals-Period end process and Create Accounting process and transfer the entries to
GL for the receipts already created
c) Validate and perform Create Accounting for all the invoices and transfer the entries to GL
Also refer to the points given under question 3 for more details.
8. How to prevent PR/PO getting into approval workflow process when there are insufficient funds/ How
to prevent PR/PO getting into pre-approved status because of insufficient funds?
Enable the Reserve check box before submitting the document for approval so that system will throw the
message Your budgetary control exception failed with exceptions and it will not go through the approval process
as it gets stuck in incomplete status.
8. How to make the RESERVE check box in Approval form enabled automatically?
As per the current functionality, Reserve checkbox cannot be automatically checked. Enhancement Request
3381444 exists for this suggestion. As a workaround, you can do form personalization to enable the Reserve
checkbox by default
9. What is the significance of Reserve at completion flag available under Purchasing > Setup >
Organization > Financial options > Encumbrance tab?
If Reserve at Completion is checked, the functionality allows the users/preparer to take Reserve action on the
Requisition before it is submitted for approval. In this case the Reserve checkbox is enabled in the approval
window for Requisition.
If Reserve at Completion is unchecked, the functionality prevents users/preparer from taking Reserve action on
the Requisition before it is submitted for approval. This keeps the system from reducing the Budget (by reserving
a Requisition) before it knows whether it is going to be approved or not.
In this case, the reservation does not occur until the required approver (or approvers) have approved the
requisition. This is implemented by disabling the Reserve checkbox in the approval window for Requisition
thus forcing the user to submit the requisition for approval without reserving and then letting the approval
workflow do the reservation after all approvers have given their approval for the requisition.
This flag can only be checked if Use Requisition Encumbrance is checked on the same screen.
If either Reserve at Completion is No, then the RESERVE checkbox in document approval form will be disabled.
1. How to reserve the funds for a purchasing document in a future period? / How to reserve the funds for
a purchasing document which has a GL date falling under closed GL period?
Scenario 1: PR/PO would have been created in Mar-10 with GL date falling under Mar-10 and submitted for
approval. But the approver approves the PR/PO in Apr-10 and Mar-10 GL period got closed at that time.
Scenario 2: PR/PO is created with multiple distributions each having GL date falling under current period and
next 2 future periods to block the funds in the future period.
As per the standard functionality, encumbrance entries will get created if the GL date of document on which the
reserve action is taken falls under open purchasing period and Open GL period. If the document has to be
reserved in Future/Closed GL period, then the profile option PO: Validate GL period needs to be set as NO so
that GL period will not be validated and system will reserve the document which has a GL date in distributions
falling in future or closed GL periods. But the PO period should be opened irrespective of this profile value to
reserve the funds and to create the encumbrance entries.
Note: If this profile option has a null value also, you would not be able to reserve funds in future/closed GL period.
1. How to reserve the purchasing documents using override limit when there are insufficient funds when
the approval is done through forms?
As per the standard functionality, purchasing documents will fail funds check when Absolute funds check level is
used if funds are insufficient. If you want to have override limit for one particular user so that he can reserve the
purchasing document, override amount has to be specified under Budgetary Control Group in GL > Budget >
Define > Controls. To reserve the document using this override amount, the profile option PO: Override funds
reservation should be set to Yes or the option Use GL Override available in document approval form should be
enabled manually. Otherwise this override authority will not take into effect.
2. How to reserve the purchasing documents using override limit when there are insufficient funds when
the approval is done through notification summary?
When override amount is specified under Budgetary Control Group, the purchasing document can be reserved
and approved from the notification summary by setting the profile option PO: Override funds reservation to yes
even though there are insufficient funds.
When the profile option PO: Override funds reservation is set to No, purchasing document will fail funds check
inspite of override amount specified under budgetary control group when the approval action is taken from
notification summary. In this case, the user has no option to check the Use GL Override check box as this option
would be available only in forms. Hence system will throw the Unable to Reserve notification letting the approver
know that funds reservation was unsuccessful and the document will go to Pre-approved status. Still the
document can be reserved and approved using the Try Override option when the approval action is taken from
the notification by the user who has the override limit.
3. What set up is required to have the option Use GL Override enabled while approving the purchasing
documents?
4. a) When the profile option PO: Override funds reservation is set to Yes, this option Use GL Override will get
enabled by default once the RESERVE check box is checked. This indicates that the purchasing document can
be reserved and approved using override limit when funds are insufficient. If this profile option is set to No, then
this option Use GL Override will not get enabled automatically. But you can manually enable the check box to
reserve the document using override limit.
b) If the Reserve at Completion flag is set to NO, this check box will be unchecked and will not be available for
change on the document approval form.
5. What is the different look up codes in gl_bc_packets and what is the significance of those codes?
Please refer to Note.399068.1 to know the different look up codes available in gl_bc_packets and to understand
the significance of those codes.
5. Purchasing documents get reserved successfully and encumbrance entries get recorded even though
the budget account used in the document is not defined in the budget organization and has no budget
allocated. Why does it happen?
This is the current functionality of the product. Reservations are made as long as funds checking does not fail. If
the budget account is not defined in the budget organization and no budget is allocated, then the funds checking
call will always pass and the detail result message will be P01- This account does not require funds check.
Although the accounting transactions are created and captured, they do not impact any budget and do not cause
any problems.
Additionally, this behaviour can be useful, as it allows money spent for a specific account to be tracked via the
Funds Available Inquiry for (GLXIQFUN.FMB) even though no budgetary control is assigned to the account.
6. What are the encumbrance accounting entries that get created from reserving the requisition till the
purchase order auto created from this requisition is approved?
Reserve Requisition:
Budget a/c DR @ (PR Ordered qty * Unit Price * Rate) + Non-Recoverable tax REQ encumbrance type
RFE a/c CR @ (PR Ordered qty * Unit Price * Rate) + Non-Recoverable tax
Auto creates Requisition into Purchase Order and approves the PO:
Budget a/c CR @ (PR Ordered qty * Unit Price * Rate) + Non-Recoverable tax REQ encumbrance type
RFE a/c DR @ (PR Ordered qty * Unit Price * Rate) + Non-Recoverable tax
Budget a/c DR @ (PO Ordered qty * Unit Price * Rate) + Non-Recoverable tax PO encumbrance type
RFE a/c CR @ (PO Ordered qty * Unit Price * Rate) + Non-Recoverable tax
7. What are the encumbrance accounting entries that get created from approving the purchase order till it
is received and billed?
Please refer to Note.386807.1 to understand the encumbrance accounting flow that gets created from approving
the purchase order till it is received and billed.
8. How to unreserve the purchasing document in the same period in which the document originally got
reserved? / How to get the encumbrance reversal for a purchasing document in the same period in which
the encumbrance got created originally?
As per the standard functionality, when an unreserve action is taken for a purchasing document, encumbrance
reversal will happen in current GL period considering the system date. If you want the reversal to happen in the
same period in which the document originally got reserved, you can use the check box Use Document GL to
Unreserve so that the reversal will happen based on GL date entered in PR/PO distributions.
This check box would be available only when doing Unreserve/Cancel/Final close where you can manually
enable it and get the encumbrance reversal in the same period in which it got created. But if you perform a Reject
action on the PO or Return the PR or delete the lines which are in Incomplete, Reserved status, this check box
would not be available. In such cases, you may need to set the profile option PO: Use Document GL to
Unreserve to Yes so that the encumbrance reversal will happen automatically in the same period in which it got
created.
Note: This unreserve action or the encumbrance reversal will happen based on the GL date of purchasing
documents only when that past PO period and past GL period are in Open status. If that PO/GL period is already
closed, then the reversal would happen only in the current period based on system date inspite of this profile
option being set to Yes. But if the profile option PO: Validate GL period is set to No, then the reversal would
happen in that past period even if the GL period is closed provided the PO period is opened.
9. What is the impact if the purchasing document is unreserved/cancelled/finally closed/rejected in a
different period from the one in which it got reserved?
If the purchasing document is unreserved in a different period from the one in which it got reserved,
encumbrance reversal would get created in the current period resulting in negative encumbrance leading to
sudden increase in funds availability. If Encumbrance Carry forward activity is done to move the encumbrance
balance of previous year to current year, then there is no impact because of unreserving the document in a
different period. But this carry forward feature is applicable for users having YTD as the amount type in budget
organization. If PTD or QTD is used, then you may need to unreserve the documents in the same period to avoid
negative encumbrance.
1. Is there any report to see the open encumbrance or active encumbrance for the purchasing
documents?
Encumbrance Detailed Report can be used to see the active encumbrance existing on all purchasing documents
created and reserved during a particular period or for a specific document type. This report has the following
parameters.
a) Accounts from and to You can specify the encumbrance/budget account for which you want to see the active
encumbrance
b) Encumbrance dates from and to You can specify the GL dates in which the purchasing documents are
created and reserved
c) Document type Requisitions and Purchase orders which can list the active encumbrance for all commitments
created from Requisitions and all Obligations created from Purchase orders respectively
d) Vendors from and to You can specify the vendor to see the active encumbrance existing for purchasing
documents created against those vendors
This report will not show the POs that are cancelled or finally closed but having active encumbrance (due to code
bug or data corruption) or POs having negative active encumbrance caused by any bugs/data corruption.
1. Why does the encumbered amount in Purchase Order distributions not showing 0 value even when the
purchase order is cancelled or finally closed?
Encumbered amount in Purchase Order distributions will not become 0 on cancelling or final closing the
purchase order under the following scenarios
a) When the PO is set to accrue at receipt and it is received and delivered before taking the cancel or final close
action
b) When the PO is set to accrue at period end and it is billed before taking the cancel or final close action
When the PO is received or billed, the encumbered amount gets consumed and gets converted to Actuals. Since
the funds reserved for this PO is used already, encumbered amount will not become 0. But the active
encumbrance for this PO should be 0. For more details on Encumbered amount and Active encumbrance, please
refer to Note.742621.1.
2. Under what situation encumbrance created on the Purchase Order goes back to the budget or funds
availability?
3. a) When the purchase order is cancelled/finally closed/unreserved/rejected without performing any receipt or
invoice
b) When the purchase order is set to accrue at receipt and partially received and then cancelled/finally
closed/unreserved, encumbrance goes back to the budget to the extent of unreceived amount
c) When the purchase order is set to accrue at period end and partially billed and then cancelled/finally
closed/unreserved, encumbrance goes back to the budget to the extent of unbilled amount
4. Does Alternate account work with encumbrance accounting?
Let us say, XXXX account is used as a budget account in PR/PO and the purchasing document is reserved and
approved. Then this XXXX account is end dated and alternate account YYYY is defined in GL. Now perform a
PO receipt and transfer the accounting entries to GL or match the invoice to the PO and validate the invoice. Or
take some unreserve action on the purchasing document. System will throw error and alternate account cannot
be used in any of the transactions performed after end dating the budget account as alternate account does not
work with encumbrance accounting.
24.What reference columns in GL_JE_LINES are populated for encumbrance entries created from
Purchasing in 11i?
Budgetary (encumbrance) actions in the purchasing module generate records that will be imported into
General Ledger (GL_JE_LINES) as encumbrance entries.
The following reference fields are used to capture and keep PO information in the GL_JE_LINES table.
These reference fields are populated when the Journal source (JE_SOURCE in GL_JE_HEADERS) is
Purchasing.
Budgetary Records from PO (These include reservations, reversals and cancellations):
REFERENCE_1- Source (PO or REQ)
REFERENCE_2- PO Header ID or Requisition Header ID (from po_headers_all.po_header_id or
po_requisition_headers_all.requisition_header_id)
REFERENCE_3- Distribution ID (from po_distributions_all.po_distribution_id or
po_req_distributions_all.distribution_id)
P05 Force passed funds check This transaction passes funds check in force pass mode
P10 Passed funds check This transaction passes funds check
P15 Passed funds check (budgetary) This budgetary transaction passes funds check
P20 Advisory warning This transaction fails funds check; advisory checking is in force
P21 Passed due to override This transaction fails funds check; you overrode the failure
P22 Advisory warning (->summary) This detail transaction causes a summary account to fail funds check
(advisory)
P23 Passed due to override (sum) This summary account fails funds check; you overrode the detail(s)
P25 Advisory warning (budgetary) This budgetary transaction fails funds check; advisory checking is in force
P26 Passed due to override (gen) This transaction or its associates fail funds check; you overrode the original
P27 Advisory warning (->sum bud) This budgetary transaction causes a summary account to fail check (advisory)
F29 The transaction account and budget account are different
F30 The transaction failed funds check at the resource level
F31 The transaction failed funds check at resource group level
F32 The transaction failed funds check at the task level
F33 The transaction failed funds check at the top task level
F34 The transaction failed funds check at the project level
F35 The transaction failed funds check at project account level
F36 Funds check failed because of unexpected error
F37 Failed because yearend rollover process is in progress
F38 Funds check failed because of invalid budget versions
F39 No budget account on raw line
F40 The resource list is invalid or null
F41 The amount type or boundary code is invalid
F42 The amount type or boundary code is invalid for no time phase
F43 Invalid boundary code for amount type Project to date
F44 Invalid boundary code for amount type Year to date
F45 Invalid boundary code for amount type Period to date
F46 Funds check failed because of invalid resource list member
F47 Start date or end date is null for the specified date range
F48 Not able to derive PA date
F49 Invalid budget entry method or missing baseline version
F50 Could not map to a budget line while deriving budget account
F51 Not able to derive GL date
F52 The encumbrance type is null or invalid
F53 Funds check failed because budget baselining is in progress
F54 No matching requisition was found for this purchase order
F55 No matching purchase order was found for this invoice
F56 Could not acquire lock: funds checks are running concurrently
F57 Transaction failed because of CBC funds check
F58 Transaction failed because of GL funds check
F59 No budget exists at the resource level
F60 No budget exists at the resource group level
F61 No budget exists at the task level
F62 No budget exists at the top task level
F63 No budget exists at the project level
F64 No budget exists at the project account level
P28 Funds check passed at the project account level
P29 Funds check passed at project account level in advisory mode
P30 Funds check passed at the project level