Administrative Processing

Transcription

1 Administrative Processing 7 Reducing or Removing Encumbrances What Is an Encumbrance? When Should Encumbrances Be Monitored/Updated?. 212 Identifying PO Encumbrances Determining How to Remove an Encumbrance Closing POs to Release an Encumbrance Page 211

2 Chapter 7: Administrative Processing Reducing or Removing Encumbrances This section describes encumbrances, how to identify them, and how to reduce or remove them. What Is an Encumbrance? Encumbrance is an accounting term that is used at Princeton University to describe approved project expenditures that have not yet been paid and posted on the General Ledger. The project is committed to pay encumbrance amounts unless the commitment is transferred to another project before it is paid. When an encumbrance is fully paid on the GL, it is said to be liquidated, and the outstanding encumbrance amount goes to zero. At Princeton, there are currently two sources of encumbrances: Distributions to a project when a purchase order is approved and budget checked, and, Approved commitments applied to a project on Labor Accounting. Encumbrances serve as placeholder expense amounts between the time a purchase or salary disposition is approved, and the time it is actually paid. This provides a much more accurate calculation of the remaining available balance since the committed payments are accounted for. When a PO encumbrance is not fully paid on the GL, and the remainder will never be paid, you must take action to reduce or remove the unwanted remaining purchase order encumbrance. When Should Encumbrances Be Monitored/Updated? It is recommended that encumbrances be monitored and updated monthly. Each month you should reconcile your statement of account, and any remaining PO encumbrances should be reduced or removed before the start of the following month. Page 212 PeopleSoft Financials: Purchasing

3 Reducing or Removing Encumbrances If you are unable to adhere to a monthly schedule, encumbrances should be reconciled before the end of the fiscal year, June 30th. You don t want any encumbered funds to roll into the new fiscal year if payments are no longer expected. Important! Encumbrances should also be reconciled one or two months before a sponsored grant is scheduled to expire. Identifying PO Encumbrances The first step in reconciling encumbrances is to identify them. Encumbrances can be identified by Project/Grant or by Purchase Order. To identify PO encumbrances by project/grant: Generate the PO_Open Encumbrances report by selecting Purchasing > Purchase Orders > Reports > PO_Open Encumbrances Report from the Financials menu. See the chapter Reporting, on page 259, for details on how to run a report in PeopleSoft. Note: Encumbrances can also be identified from the Project/Grant Statement report in the DataMall and drilling to encumbrances. Refer to the University Financials Reporting User Manual for additional information. To identify PO encumbrances by purchase order: 1. Select Purchase Orders > Review PO Information > Activity Summary from the Financials menu. The PO Activity Summary, Find an Existing Value page is displayed. Department User Guide Version 2.0 Page 213

4 Chapter 7: Administrative Processing 2. Enter search criteria (such as the Project/Grant number) and click the Search button. If multiple search results are found, the matching records are displayed at the bottom of the screen. Click any link in the desired record to display the Activity Summary page for that PO. If only one record is found, the Activity Summary page for that PO is displayed. In either case, the first six lines of the PO are displayed. Page 214 PeopleSoft Financials: Purchasing

5 Reducing or Removing Encumbrances Amount Ordered Amt Invcd = Encumbrance Quantity Ordered Qty Invcd = Encumbrance 3. Advance through the line items of the PO by selecting ( ) the checkbox at the beginning of the line, and compare the Quantity Ordered to the Qty Invcd fields and the Amount Ordered to the Amt Invcd fields to determine the encumbrance. Tip! To see details (such as the receipt number or voucher ID) about a line s received, invoiced, or matched quantity or dollar amount, select the line by checking ( ) the checkbox at the beginning of the line, and click the Receipt, Invoice, or Matching links, respectively, at the bottom of the page. A details page is displayed. Click to return to the Activity Summary page. Department User Guide Version 2.0 Page 215

6 Chapter 7: Administrative Processing Determining How to Remove an Encumbrance Once you have determined the cause and amount of the encumbrance, use the appropriate method from the following to reduce or remove the encumbrance: Table 4: Action to Take to Remove an Encumbrance Scenario If a purchase order line has a quantity greater than the purchase order voucher quantity, you must create a change order to reduce the remaining PO line quantity. Action Line(s) quantity reduction via Change Order For example, if you have a PO line item for $1.00 each ($10.00 encumbrance) and you were vouchered for a quantity of $1.00 each (remaining encumbrance of $5.00), you need to reduce (via a change order) the PO line item quantity from 10 to 5. Once you reduce the PO line item quantity to equal the vouchered quantity and the reduction (change order) is budget checked, the remaining emcumbrance will be removed. See Changing a Line in a PO, on page 185, for more information. If a purchase order line (or lines) has never been invoiced (vouchered in PeopleSoft) by the vendor and won t be invoiced, you must create a change order to cancel the open PO line(s). Line(s) cancellation via Change Order For example, assume that you have a PO with three lines and only one of the lines has been invoiced in full. Since a voucher liquidates a PO encumbrance but two of the three lines were never vouchered, the way to remove the PO encumbrance is to cancel the PO line(s) that haven t been invoiced. Once the canceled lines (change order) are budget checked, the PO encumbrance will be removed. See Canceling Lines in a PO, on page 195, for more information. If a purchase order line (or lines) has never been invoiced (vouchered in PeopleSoft), but payment is still expected to be made, a voucher must be entered. Once a voucher is entered and budget checked, the encumbrance will be reduced by the amount of the payment. If a purchase order encumbrance is a result of a PO line dollar amount being greater than the voucher dollar amount processed against it, you must use the PO Reconciliation Workbench process to mark the PO(s) for closure. Acknowledge receipt and get vendor s invoice sent to Treasurer s Office Close PO via Reconciliation Workbench After marking the PO as closed, the encumbrance remaining for this PO will be released following the next run of the PO reconciliation process. See Closing POs to Release an Encumbrance, on page 217, for more information. Page 216 PeopleSoft Financials: Purchasing

7 Reducing or Removing Encumbrances Closing POs to Release an Encumbrance The Reconciliation Workbench is used to mark one or more POs for closure, so that a remaining encumbrance will be released. The Reconciliation Workbench uses Workbench IDs to schedule the processing, in much the same way as reports are generated by a Run Control ID. Like Run Control IDs, Workbench IDs may also be re-used. To mark one or more POs for closure: 1. Select Purchasing > Purchase Orders > Reconcile POs > Reconciliation Workbench from the Financials menu. The Reconciliation Workbench, Find an Existing Value page is displayed. To create a new Workbench ID, or, if you have not created a Workbench ID for closing POs before, click the Add a New Value tab. Enter a name that is meaningful to you in the Workbench ID field and click the Add button. Department User Guide Version 2.0 Page 217

8 Chapter 7: Administrative Processing To reuse an existing Workbench ID, click the Search button. To limit the search, enter criteria in the Workbench ID or Description fields. The search results are displayed at the bottom of the page. 2. Click on any link in the desired line to select the Workbench ID. Page 218 PeopleSoft Financials: Purchasing

9 Reducing or Removing Encumbrances The Reconciliation Workbench Filter Option page is displayed. If you reused an existing Workbench ID, the page shows the data from the previous search. 3. Enter search criteria for the PO or POs you want to close: If you know the number of the PO that you want to close, enter it in the Purchase Order field. Tip! You can enter a range of PO numbers by entering the beginning number in the Purchase Order field and the ending number in the To field to the right of the Purchase Order field. If you are reconciling a project/grant that is about to expire, scroll to the bottom of the page and enter the Project/Grant number in the Chartfields portion of the page to see only the POs against the expiring Project/Grant. Department User Guide Version 2.0 Page 219

10 Chapter 7: Administrative Processing You may also enter other search criteria, such as Buyer or a PO Date range, to limit the search. When you have entered your search criteria, click the Search button. The Reconciliation Workbench page is displayed with one or more Purchase Orders. 4. If you added a new Workbench ID, enter a meaningful description in the Description field. If this is a new Workbench ID, enter a description. Click here to select a PO for action. Click here to close the selected POs. 5. To close a PO, select ( ) the checkbox of the desired PO or POs, and click the Close button. 6. If one or more of your selected purchase orders do not meet the qualifications for purchase order reconciliation (closure), the Processing Results page is displayed. Page 220 PeopleSoft Financials: Purchasing

11 Reducing or Removing Encumbrances Select the POs that you are positively sure should be deleted. Click here to move the selected POs to the Qualified window. You have the ability to force the closure by selecting the PO(s) and clicking the arrow (between the Not Qualified and Qualified columns) for each PO. All selected PO IDs are moved into the qualified column. Important! You should not move a PO into the qualified column unless you are 100% sure that the PO should be closed. Once a PO is closed, no further activity can be done on it. 7. After the PO(s) are in the Qualified window (either automatically or forced) click the Yes button in the Proceed section at the bottom of the page. 8. When you receive the confirming message Continue to close POs, click the Yes button. When you are brought back to the Reconciliation Workbench page, processing is complete. Department User Guide Version 2.0 Page 221

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