OAUG Fall 2002 Conference

Don Driggs BOSS Corporation Training Session: All Those Budget Entry and Maintenance Options Abstract: There are many ways to prepare, enter, and update budget data. The first half of this session will present tips and techniques regarding budget organizations and yearend maintenance and is directed to all interested in budget processes. It will also demo nstrate how to use ADI to download, maintain and upload budget data. The second half of this paper will demonstrate the use of the Public Sector Budgeting module to prepare a budget.

Budgets
The focus of the first half of this presentation is to discuss and demonstrate features and tools to upload and maintain a budget. It is not necessarily how to discuss how to prepare a budget although several Oracle and non-Oracle budget preparation tools will be mentioned. In the second half of this session I will demonstrate the creation of a budget using Public Sector Budgeting. Though the Oracle General Ledger is a great tool for budget reporting, I dont suggest using the general ledger as a tool to preparing the budget. There are, however, a number of issues involving the general ledger and budgets. How does the Oracle GL define a Budget? Can I have more than one budget per set of books? What are Budget Journals and do I need to use them? What is the purpose of a Master Budget? What is the purpose of a Budget Organization? How do Budget Organizations fit in with Budgets? How do I freeze my budget? Can I freeze just a portion of my budget? Can I password protect the budget? What general ledger features use the budget amounts? Whats the difference between the GL_Interface and the GL_Budget_Interface? Are there other tools available to prepare a budget?

How does the Oracle GL define a Budget? A budget is an estimate of projected financial and operating results. Oracle GL enables you to compare actual results with the projected results and to control expenditures against the estimates. Oracle gives you a variety of tools to create, upload, and maintain your budgets. When you enter or update financial data in a budget you will identify a budget organization. If you are referencing budget data as in the case of a report or a procedure such as MassAllocations, you do not refer to a budget organization. To create a budget in Oracle use a GL responsibility and navigate to Budgets > Define > Budget

Budget and click on the Open Next Year button. This will launch a concurrent request that creates the budget. Can I have more than one budget per set of books? Yes, you may want to create several budgets. You may want to use different versions of a years budget for reporting purposes.

Should you create multiple budgets? Avoid creating multiple budgets unless they span different time periods or have very distinct reporting requirements. Use Budget Organizations to segregate budgets that are naturally divided by groups of accounts. Should you define a new budget every year? No, I cant think of any good reason to define a new budget every year. I recommend using the same budget definition year after year. There are some distinct advantages to using the same budget every year. Features such as FSGs, allocations, and others that use or refer to the budget do not need to be adjusted every year to capture the values in the new budget. To open periods for the new year in a budget, navigate to the Define Budget form and query up the budget. Change the Last Period to the last period of the new year. Save the record and the system will launch a concurrent request to validate the new periods for the budget. This only works if the last period originally used was indeed the last period of the calendar. If you have Adjustment Periods in yo ur calendar and if they are defined as shown below, then be sure you enter ADJ-01 as the Budgets last period. Dec-01 Adj-01 01-Dec-2002 30-Dec-2002 31-Dec-2002 31-Dec-2002

What are Budget Journals and do I need to use them? This is a feature used mainly by public sector organizations. Enabling this feature says that you will only update your budget using budget journals and will use the features and controls of journal entry for entering and updating budget data. Most commercial organizations dont need that kind of control to maintain their budget. Public sector organizations need the controls found in budget journals because the budget is a regulatory tool. Budget transfers are frequent but budget additions usually require amendments with board le vel approval. What is the purpose of a Master Budget? Use a Master Budget if you want to track your budget amounts against a control budget. You can choose any budget in your set of books as the master budget but it must have the same period range. What is the purpose of a Budget Organization? Budget Organizations group and validate accounts for budget processes. In practice, the main purpose for using Budget Organizations is to define budget security. If access to budget data is not important then you only need one budget organization. To use a budget, you must create at least one budget organization. You should create multiple budget organizations if; Access to budget data needs to be restricted by divisions, departments, or any other organizational means. You want to freeze pieces of a budget but not all of it. You can freeze a budget organization effectively restricting budget updates to accounts that are within the range of accounts of the frozen organization.

You use budgetary controls such as funds checking at the detail account code combination level and different levels of control are needed for different ranges of accounts. Most public sector institutions create a budget organization to match their various funds (balancing segments) to establish some control in the budget transfer process. Budget journals limit the use of accounts to those within a given budget organization so inadvertent transfers from one fund to another cant occur. It is not common to transfer money from one fund to another.

To create a budget organization navigate to Budgets > Define > Organization.

Budget Organization Click on the Ranges button to enter or view the account ranges for a budget organization.

Budget Organization Account Ranges You cannot create budget organizations with overlapping account ranges. Every account that will have budget amounts must be assigned to a budget organization. How do Budget Organizations fit in with Budgets? Budget Organizations are independent of Budgets. Any and all budgets you create will work with the same set of budget organizations. To enter or update amounts in a budget you will first identify the budget organization. Any accounts you use must be within the account range assigned to that budget organization. How do I freeze my budget? Once you have finished loading your budget and you consider it final, you should freeze it to prevent unauthorized changes to the budget. Some functions that allow you to change budget amount do not leave audit trails so it is a good idea to freeze it. You can freeze the budget by navigating to Budget > Freeze, query the budget and change the Status.

Freeze Budgets

Can I freeze just a portion of my budget? Yes. If you want the budget to remain open you can freeze a budget organization that in effect freezes any updates to the accounts assigned to that budget organization.

Freeze Budget Organization Note the difference in this screen shot above, the Status in the second screen shot is Open and the Budget Organization is marked Frozen. Can I password protect my budget? Yes. If you wish, you can password protect a budget organization. In the Budget Organization form, just click on the Set Password button and enter a password. Anytime anyone inquires or changes budget data pertaining to that organization, he or she will have to enter the password to gain access to that data. What General Ledger features use the budget amounts? Some of the General Ledger features that take advantage of budget data or at least have the ability to refer to it are; Financial Statement Generator MassAllocations Recurring Journals Account Inquiries Summary Accounts Consolidations Foreign Currencies Budgetary Control

Note that if you define a new budget with each year, you have to adjust these features to accommodate the new budget. What is the purpose Maintain Budget Organization concurrent request? When you create new account code combinations or when dynamic insertion creates new account code combinations, they are not automatically assigned to a budget organization even if they fall into the range of an organizations accounts. Periodically you must run the Program - Maintain Budget Organization concurrent process. You must do this for each budget organization. This process finds and assigns all account code combinations that belong to the budget organization. Alternatively, you can navigate to the budget organization form and click on the Maintain button. How often you do this depends on the frequency with which accounts are created and how they are used in the budget. Whats the difference between the GL_Interface and the GL_Budget_Interface and which should I use? Use either of these tables to upload data from an outside budget preparation tool whether that tool is an Oracle tool or from a third party. The decision to use the GL_Interface table or the GL_Budget_Interface table to upload transactions depends on the state of the data to be uploaded. If your data is formatted to have one row for each account with an amount of every period then you should use the GL_Budget_Interface table. The GL_Budget_Interface is ideal for uploading data from a spreadsheet and was developed with that function in mind. Once loaded, run the Budget Upload program to enter the budget to your accounts. Navigate to Budgets > Enter > Upload to submit this program. The budget upload checks to make sure that the following conditions are true; The account is assigned to a budget organization. The budget entry type for the account is entered. The budget is not frozen. The budget organization is not frozen. The budget year is open. You should use the GL_Interface table if you want to handle your budget upload like a journal entry. There will be one transaction for each account for each period. After loading the transactions into the GL_Interface table, submit the Journal Import program to create a journal entry that you can then post to update your accounts. You will have the features, edits, and controls of the Journal Import process to validate your data. Are there other tools available to prepare a budget? There are several Oracle tools available such as Application Desktop Integrator Oracle Financial Analyzer Public Sector Budgeting There are many third party tools such as Hyperion, Comshare, and others that have applications dedicated to the budget preparation process. Oracle General Ledger can upload final budgets from any of these tools using the GL_Interface table or the GL_Budget_Interface table.

Some recent OAUG conference papers discussing these third party budgeting options are; Paper Title Using Business Intelligence with Oracle's E-Business Suite Streamlining the Budgeting Process A Case Study Installing the OFA Single Sign-On Functionality Oracle Financial Analyzer 11i plus (6.3.2) new features and Oracle Financial Analyzer futures 21st Century Planning and Budgeting on Oracle Author David Fuston Lynda Dunn Chad Nester Neville Swan Brian Rogers Conference Fall 2001 Asia Pacific 2000 Fall 2001 Europe 2001 Asia Pacific 2000

Application Desktop Integrator The Application Desktop Integrator (ADI) is an interface between Oracle General Ledger and Microsoft Excel. With it you can move data between the two applications quite easily. You can upload journals or download reports. One of the more useful features of ADI is to upload new or revised budget data from Excel and to download existing budget data from the GL to Excel. These features are managed by the Budget Wizard. Use the Budget Wizard of ADI to; Create a budget worksheet from which you can; Review and Analyze Budget and Actual Data Enter Budget Data Upload Budget Transactions The steps to create a budget worksheet are; 1. Launch ADI 2. Click on the General Ledger Icon 3. Select

Use the Create Budget Worksheet to focus the budget worksheet to specific time periods, accounts and to include actuals or to only present budget data.

If you want to upload the budget data to the General Ledger, finalize the entries in the worksheet, then; 1. Use the General Ledger icon. 2. Select Upload to Interface

Public Sector Budgeting

Public Sector Budgeting (PSB) is a budget preparation tool originally designed to assist public sector organizations in their budget preparation and management cycle. In addition to preparing budgets in terms of dollars it has the unique feature of preparing a position budget and of using the position budget to calculate employee related costs for the budget. Some of the features of PSB are; It creates line- item budgets and can create position worksheets. It easily integrates data from the General Ledger, the Human Resources, and Labor Distribution applications to prepare a baseline budget and can update these same applications when the budget is finished. It allows budget managers to prepare their worksheets either on- line or through off- line Excel worksheets. It takes advantage of workflow to notify budget managers of worksheet actions. It secures access to the worksheets to authorized users. Its top- level and parent budget worksheets constantly reflect the latest changes in all the worksheets. It allows for Bottom-Up budgeting. It works with Oracle Financial Analyzer and Discoverer to produce budget reports. You do not need to use the position budgeting features of PSB in order to prepare a budget. The line item features are sufficient to produce, distribute and update budget worksheets. Commercial enterprises theoretically can use Public Sector Budgeting to prepare their budgets. The steps to prepare a line- item budget using PSB are; I. Review line item setups II. Manage worksheets III. Upload the budget to the general ledger.

I.

Review Line Item Setups

These setups were probably completed during the initial setup but should be reviewed every budget year and modified as necessary. You will at least need to create a new budget year calendar. Previous setup steps are actions performed in Human Resources and other applications. These actions generally are one-time in nature. The PSB setup steps that should be reviewed and modified, if necessary every budget cycle are; Setup Steps 26 27 28 29 30 31 32 33 34 35 36 Complete PSB Line Item Budgeting Setups Define Budget Year Types Define Budget Calendar Define Standard Budget Items Setup General Ledger Interfaces Setup General Ledger Budget Sets Define Global Account Sets Define Budget Group Categories Define Budget Stages Setup Budget Groups And Security Define Budget Review Groups And Budget Review Group Rules For Account Sets Set Line- item Budgeting Profile Options

Required Required Optional Required Required Optional Optional Required Required Optional Optional

Budget Year Types Setup > Options > Year Types

Budget Year Types

Budget Year Types create the structure for the budget calendar. Prior Year and Current Year types can capture historical budget, actual, and encumbrance data. The Proposed Year identifies a year for which a budget will be developed.

Budget Calendar Setup > Options > Calendars

Budget Calendar

Create one calendar for a budget cycle. Define multiple years (prior, current, and proposed) to the calendar. The prior and current years must have a Period Distribution of Month. The proposed years can have a period distribution of Month, Quarter, Semi- Annual, or Year. Note: If you prepare an annual budget and dont distribute it to any periods, then set the Period Distribution to Year.

General Ledger Interfaces Setup > Account > General Ledger Interfaces

General Ledger Interfaces

Use the General Ledger Interface to identify summary account templates you want PSB to recognize. Also use it to identify the fund balance account. Use this account to automatically offset any differences between revenue and expense accounts so that the budget journal will be balanced.

General Ledger Budget Sets Setup > Account > GL Budget Sets

General Ledger Budget Sets

The GL Budget Set identifies the general ledger budget this worksheet will use to obtain historical and current budget data. If you have multiple budgets in the general ledger, you can assign one or all or any of them to a given PSB worksheet. The Start and End Periods identify the time period from which budget data will be extracted from that budget. If you use multiple budgets, the system validates that for a given period there is no overlap of account numbers in the budget. The posting type allows you to indicate whether all changes or only permanent changes should be posted to the general ledger. You also need to assign at least one global or local account set to a GL Budget Set.

Global and Local Account Sets Setup > Options > Account/Position Sets

Account and Position Sets

Group accounts with similar characteristics into account sets. Some of the features that use accounts sets are; Budget Groups Budget Review Group Rules Parameters Constraints Period Allocation Rules When you create a budget group you will assign a range of accounts for which that budget group manager will have budget responsibility. That range of accounts becomes an account set. You apply budget parameters and constraints against account sets. And you use account sets to when you define how you will allocate your budget to the various periods.

Budget Group Categories Setup > Budget Hierarchy > Budget Group Categories

The Budget Categories represent the various levels of authority in your organization. Use them to distribute and approve worksheets. For example the director of Public Safety has budget authority over the fire and police departments. Assign the Public Safety budget group to the Organization level and the fire and police budget groups to the Department level. This will allow the fire and police department to review, modify and approve their budgets while giving the Public Safety director the same access. All modifications done at the lower levels must be approved by someone in a higher level before consolidating the budget.

Budget Stages Setup > Options > Stages

Budget Stages

How many versions of a budget do you need? Do you need to track budget numbers at various stages of development? When you create a budget stage, you will be creating a snapshot or a separate version of the budget when it reaches that stage. You can modify worksheets at any stage including worksheets of previous stages. If you only need to work with the latest version of a budget, then you only need one budget stage.

Budget Hierarchy Setup > Budget Hierarchy > Budget Groups

Budget Hierarchy

Create a budget group and hierarchy for each individual organization responsible for editing, reviewing and approving a budget. Assign each organization its appropriate place in a hierarchical order. You will need to define the following information for each group; account set, responsibility, notifiers, and categories. You can optionally include a long description for each budget group. In addition, you will need to enter the following information for the Top Level group; GL Set of Books, position account set, non-position account set, budget group category set, and business group. Budget worksheets are prepared and distributed to budget groups within the budget hierarchy.

II.

Worksheet Management

The process of managing worksheets can be divided into the Create, Distribute and Modify procedures, A. Create Worksheet Procedures 1. 2. 3. 4. Create Projection Parameters Define Constraints Define Period Allocation Rules Define Worksheets

B. Distribute Worksheet Procedures 1. Define Worksheet Distribution Rules 2. Distribute Worksheet C. Modify Worksheets 1. Define the Data Selection 2. Worksheet Operations a. Validate Budget Constraints b. Freeze c. Unfreeze d. Move to the Next Stage e. Copy f. Merge g. Submit

A. Create Worksheet Procedures 1. Create Projection Parameters Worksheet > Parameters

Projection Parameters You Parameter Rules with global or local account sets to apply parameters to existing budget or actual data and create projected or estimated budget amounts. The details of the parameters can be defined by clicking on the formulas button. See the following page for an example. Note: You can define all the various parameters to be used in your worksheets in one parameter set by defining multiple parameters as shown here. Progress S&L Parameters Travel Expenses (55530 55560) Office Supplies (56100 56400) Other Expenses (53000 54000)

Decrease PY Actuals by 10% Increase CY Budget by 2% Increase CY Budget by 3%

Parameter Formula After clicking on the formula button, the parameter form will open allowing you to enter the details of the formula.

Parameter Formula This formula is to project office supplies expense. Note the object codes in the account set used. The intent of this formula is to increase the proposed budget by 2% over the current years budget. As you can see there is a lot of flexibility in defining your formulas. They can be simple or very complex. At least one projection parameter is required to create a worksheet.

2. Create Constraint Rules Worksheet > Constraints

Constraint Rule Set Use Constraint Rule Sets to notify users of violations of specific conditions. You can apply constraint rules to account sets or position sets. Define the constraint rule and then create the details after clicking on the Formulas button. See the example on the following page.

Constraint Formula

Constraint Formula This constraint rule will notify the individuals identified in the Notifiers tab of the budget group to which this constraint rule is applied. This rule will not allow the budget of the Admin department to exceed $250,000.

3. Create Period Allocation Rule Sets Worksheet > Period Allocation

Period Allocation Rule Set Use Period Allocation Rules to distribute an annual budget to its various periods. Though not required, this step allows you to assign greater proportions of a budget to any period or periods and lesser portions to other periods. If you dont define a period allocation rule, then PSB will distribute the amounts evenly across all the periods. Note: If in your calendar you defined Year as the Period Distribution value, you will have no need to create any period allocation rules.

Period Allocations

Period Percentage Allocations The number of periods to be allocated are defined by the number of periods created in the budget calendar. You must separately enter the percentages for each period type. Note: All the Allocation Percentages must add up to 100.

4. Define Worksheet Worksheet > Define

Define this worksheet, the master worksheet and enter the Budget Calendar, Parameter Set, Constraint Set, and Allocation Rule Set. You will also need to define if the Distribution Type: Distributed or Non-Distributed, the Stage Set and the Budget Group Be sure and go to the General Ledger tab and enter the GL Extract Cutoff date and the Budget Set Name. When finished, click on the Create Worksheet button. This will launch a concurrent request that will spawn numerous requests and prepare the worksheet for the next step Distribution. Note: Use the Update GL Balances button to update the existing worksheets with the changes of actual and budget amounts in the gene ral ledger. This will not recalculate new estimates.

B. Distribute Worksheet First, define the rules for distributing the worksheet and then distribute it. Worksheet > Distribute

Distribute Worksheet Use this form to create the sub worksheets and distribute them to the various budget managers. Create a new distribution rule or use an existing rule determine what worksheets were created and distributed. Note the Move Down and Move Up buttons. When you click on the Distribute button you will be asked to include instructions. These are optional but will be seen by the budget managers when they open the worksheet.

C. Modify Worksheets 1. Define the data to be selected for the worksheet. The budget manager of the Fire Department logs in and will see a notification of the new worksheet on his homepage. Navigating to Worksheet > Modify he opens his worksheet and he needs to identify the data selection as shown below.

Data Selection Close the form and click on Line Items and you will see and be able to modify your worksheet. Update GL Balances: Updates the balances but does not recalculate proposed amounts. To recalculate estimates re-enter the data selection criteria

Worksheet The worksheet is now ready for review and update. Below is the worksheet for the Fire Department. Review the amounts, verify the parameter calculations and change the 2003-2004 Estimate amounts as necessary.

Worksheet for Fire Department

2. Worksheet Operations Validate Budget Constraints You can manually validate worksheets with this process. PSB automatically validates worksheet constraints when you freeze or unfreeze a worksheet, move a worksheet to the next stage or submit a worksheet for approval. Copy and Merge the Worksheet The system allows you to make a copy of a worksheet to manipulate data and test various scenarios. These changes are not reflected in any of the parent worksheets. Use the merge process to place the data in this worksheet into the original worksheet. Submit the Worksheet When finished modifying the worksheet submit it for review. A notification will be sent to the person designated in the budget group in the next step up the budget hierarchy. The worksheet is frozen and the system prevents any more updates to the worksheet unless it is first unfrozen. When the Fire Department Budget Manager submits the worksheet, PSB freezes the worksheet and sends a notification to the Public Safety Budget Manager that this action has taken place. If the Public Safety Budget Manager wants to update the Fire Department worksheet, he must first unfreeze the worksheet, make the changes and then submit it to the Progress Budget Manager. Move the Worksheet to the Next Stage This will allow worksheets to be managed at the next stage as well as the previous stages. Previous stages can be frozen if no changes should be allowed. Distribute the worksheets again to unfreeze all of them. When the Progress Budget Manager moves the worksheets to the next stage, the data selection reflects the choice of the new budget stage and creates the second version of the budget worksheet. Unfreeze the Worksheet No changes can be made to any worksheets unless all of the parent worksheets are unfrozen. The Distribute process will unfreeze the child worksheets in one process. Make any necessary modifications to the budget.

To use these operations, navigate to Worksheet > Operations.

Worksheet Operations Use the Worksheet Operations form to submit worksheets for approval by reviewers, to validate constraints, freeze and unfreeze worksheets, to copy and merge worksheets, to move them to the next budget stage and to submit the worksheet for approval.

III.

Create Budget Entries for the General Ledger

When you are ready to post the budget to the general ledger, use the fo llowing PSB procedures; 1. Run the Create GL Budget Journals process. Run in the Trial mode first and review the Budget Journal Edit Report. When you are satisfied with the results, run it in the Final mode. 2. Run the Transfer Budget Journals process The following prerequisites must be met in order to create budget journals; 1. The periods for the budget must be defined and opened. 2. The funding budget year in the general ledger must be open. 3. You cannot post to adjusting periods. 4. If you elect to balance the budget journal, you must define a fund balance account in the GL Interfaces form and mark the Template box.