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ENCUMBRANCE:
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ENCUMBRANCE SETUP:
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1. In General Ledger
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1.1. Enable budgetary control in your Set of Books:
This control group has to be attached at the Site level or User level
Profile Option (Budgetary Control Group) and this will control the
behavior regarding the tolerance of budgetary control.
In Budget, basically you set period boundary for your budget i.e. time
frame. Remember to open the periods for the budget by pressing the Open
Next Year button.
Navigation: Budget->Define->Organization
In this step you choose the accounts for which you want to have control
and link it to your Budget defined in step 1.3. Complete Header of form
and navigate to Ranges and define your ranges for your organization.
2. In Purchasing OR Payables
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Enable encumbrance: Encumbrance has to be enabled in Financial Options
form in Payables or Purchasing modules.
ENCUMBRANCE TRANSACTIONS:
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1) Enter requisition
Navigation: AutoCreate
When approved you can do a funds check and this should be in obligation
phase, assuming obligation is the type you attached at PO level.
Find your PO. Mark as receipt and save. Depending on the routing you
may have to deliver it. Once the Goods are received Journal entries
will be generated for Receiving by the system. At this point PO
encumbrance is relieved otherwise it gets relieved when you post the
invoice from payables to GL, this is in case in Accrual basis of
Accounting while in case of Cash basis of accounting PO encumbrance
gets relieved when you post payment information from Payables.
NOTE: Important reports which can be used to track the things are:
4) Enter invoice with the type PO Default (This will ask you for a PO
Number)
5) Transfer to GL
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Navigation: Other -> Request -> Run
Find your journal and select Review Journal. The entries at this point
is a single sided credit entry to your expense account. The debit entry
to your encumbrance account will be created at posting. You can now
post these entries as well.
NOTE: It is clear with these entries that the entries from Purchasing
and Payables where the encumbrance was created is still outstanding.
This is normally the big concern. Very little reference in the
Purchasing, Payables and General Ledger Reference Manuals describes the
process of creating these entries. The result at this point is that
your encumbrance accounts and funds available does not represent
correct balances in GL.
To complete the process you have to Run the concurrent program: Create
Journal Entries in General Ledger. This will create the journal entries
out of transactions that pass funds reservation from Purchasing and
Payables. Note that you can no longer view these details online or
through reports.