Treating Budgetary Accounts as Balance Sheet Accounts for Year-End Rollover

Posted on 23-Oct-08. Filed under: Funds Control, Year End | Tags: , |

In-case anyone might have missed it, Oracle has provided functionality to streamline the Federal year-end process a bit.  Oracle released patch 5200606 in June 2006 that allows for budgetary accounts to be automatically rolled over (just as asset & liability accounts have always been) as part of the year-end.  This mitigates the necessity of running the Carry Forward Budgetary Account Balances process or a Mass Allocation (what we had to use prior to the Carry Forward Budgetary Account Balances process existence), which essentially created a large journal of offsetting debits/credits in the first period (this is often has been setup as an adjusting period in the calendar definition) of each fiscal year (FY).  This new balance sheet treatment of budgetary accounts seems to save time and eliminates one of the year-end process steps.  I’m familiar with two agencies who have done this in production: National Endowment for Humanities (NEH) & Small Business Administration (SBA).  NEH seemed to be the first as they identified Bug 6620773 (fixed in patch 6753414).  I recently helped SBA just a bit with it for this latest year-end and it works well (there were a few other non-related issues that complicated things just a bit though!).  We are also planning to use this functionality for USAF DEAMS.  Documentation on the functionality/process is available in metalink notes: 373163.1 (http://tinyurl.com/5w3g6f), 373649.1 (http://tinyurl.com/5qnmlc), the above Bug/Patch & the R12 Fed Financials User Guide speaks a little bit to it.

The effort to update Fed Financials to utilize the new process is actually fairly simple.  Upon patch application and prior to opening the first period of the next FY, run the GL Concurrent request: ‘Program – Track Budgetary Debit/Credit Accounts as Balance Sheet Accounts’ for the set of books.  After this concurrent request is run, when opening the first period of the next FY, the budgetary account balances will be automatically established.  Furthermore, the old Carry Forward Budgetary Account Balances can never be run again.

Required Summary Template Changes

While the process to initialize this functionality is pretty straight forward, there is an impact to the summary account balances based on using this functionality when transitioning from the old method.  Traditionally, summary templates for budgetary funds control are often setup with an Amount Type of ‘Year to Date’.  This worked well because the carry forward journal would always re-establish any 4000 account balances (e.g. 4650) in the current year, thus the YTD accounts would always have enough funding.  By eliminating the carry forward posting, if summary accounts are still set to YTD, the accounts don’t include remaining availability from the prior FY.  The solution to this issue is to update the summary templates to use an Amount Type of ‘Project to Date’.  Project to Date (PJTD) essentially means Inception to Date.  This will allow cumulative remaining balances at the end of one FY to be available in the next FY.

Set amount type to: Project to Date

However, setting the summary templates to PJTD can also result in an issue that some funds available balances will be inflated.  This is the case for customers who have previously used the Carry Forward Budgetary Account Balances or Mass Allocation processes to re-establish the balances for each prior year.  This issue exists where the earliest period of the summary template definition is prior to the last carry forward period.  Since PJTD will include 1) the initial establishment of the funds balances as well as 2) the re-establishment of remaining funds available balances as part of each carry forward, the PJTD balances will be inflated by the sum of the amounts re-established.  For example, if the earliest period of a template is set to 2002 and remaining 2004 funding was carried over at each year-end  (2005, 2006,2007,2008), the funds available balances would be inflated due to the carry over in each of the 4 years after the initial appropriation year.  A solution to this issue is to update the earliest period of the template definition to the last time the Carry Forward Budgetary Account Balances ran/was posted.  This will update the summary account balances to just include activity since the earliest period defined. This is well defined in the GL User Guide: “Enter the Earliest Period for which you want General Ledger to maintain your actual, encumbrance and budget summary account balances. General Ledger maintains summary account balances for this accounting period and for subsequent periods.”    So if an agency is looking to implement the new functionality effective FY 2009, then prior to beginning 2009 activity, the summary templates’ earliest period should be updated to OCT-BEG-2008 (or whatever is the first period in 2008 (likely an adjusting period) where the 2007 carry forward journal was posted to.

Update Earliest Period to: The period corresponding to the last time the Carry Forward Budgetary Account Balances ran/was posted.

Another consideration in making this change is that if Funds Availability FSGs or custom reports are built to look at YTD summary account balances (such as using some of the YTD-Actual seeded FSG column sets), those would likely need to be updated to refer to Project-Actual.

Update 9 Nov 2008: Seems we’re still having issues with the excess balances even with the Earliest Period change suggestion above.  Need to figure out what’s going, but that may not be the total solution.

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