Budgets and PSB

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OAUG Fall 2002Conference

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 year-

end maintenance and is directed to all interested in budget processes. It will alsodemonstrate 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 andtools to upload and maintain a budget. It is not necessarily how to discuss how to preparea 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 budgetusing Public Sector Budgeting.

Though the Oracle General Ledger is a great tool for budget reporting, I dont suggestusing 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?


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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 expendituresagainst 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 proceduresuch 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 thatcreates 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.


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Should you create multiple budgets? Avoid creating multiple budgets unless they spandifferent 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 afteryear. 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 beadjusted 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 andquery 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 thebudget. This only works if the last period originally used was indeed the last period of

the calendar. If you have Adjustment Periods in your calendar and if they are defined asshown below, then be sure you enter ADJ-01 as the Budgets last period.

Dec-01 01-Dec-2002 30-Dec-2002Adj-01 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 andcontrols of journal entry for entering and updating budget data. Most commercial

organizations dont need that kind of control to maintain their budget. Public sectororganizations need the controls found in budget journals because the budget is aregulatory tool. Budget transfers are frequent but budget additions usually require

amendments with board level 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, themain 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 abudget, 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 anyother organizational means.

You want to freeze pieces of a budget but not all of it. You can freeze a budgetorganization effectively restricting budget updates to accounts that are within the

range of accounts of the frozen organization.


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You use budgetary controls such as funds checking at the detail account codecombination level and different levels of control are needed for different rangesof accounts.

Most public sector institutions create a budget organization to match their variousfunds (balancing segments) to establish some control in the budget transfer

process. Budget journals limit the use of accounts to those within a given budgetorganization so inadvertent transfers from one fund to another cant occur. It isnot 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.


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Budget Organization Account Ranges

You cannot create budget organizations with overlapping account ranges. Every accountthat 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 theaccount 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 freezeit 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.


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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 ineffect freezes any updates to the accounts assigned to that budget organization.


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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 BudgetOrganization 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 willhave 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


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Note that if you define a new budget with each year, you have to adjust these features toaccommodate 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 organizationeven 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 foreach budget organization. This process finds and assigns all account code combinations

that belong to the budget organization. Alternatively, you can navigate to the budgetorganization form and click on the Maintain button. How often you do this depends onthe 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 whetherthat 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 thedata 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. TheGL_Budget_Interface is ideal for uploading data from a spreadsheet and was developedwith 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 ajournal entry. There will be one transaction for each account for each period. Afterloading 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 havethe 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 haveapplications dedicated to the budget preparation process. Oracle General Ledger can

upload final budgets from any of these tools using the GL_Interface table or theGL_Budget_Interface table.


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Some recent OAUG conference papers discussing these third party budgeting options are;

Paper Title Author Conference

Using Business Intelligence with Oracle's E-Business

Suite

David Fuston Fall 2001

Streamlining the Budgeting Process A Case Study Lynda Dunn Asia Pacific2000

Installing the OFA Single Sign-On Functionality Chad Nester Fall 2001

Oracle Financial Analyzer 11i plus (6.3.2) new features

and Oracle Financial Analyzer futures

Neville Swan Europe 2001

21st Century Planning and Budgeting on Oracle Brian Rogers Asia Pacific2000

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 quiteeasily. You can upload journals or download reports. One of the more useful features ofADI 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 ADI2. Click on the General Ledger Icon3. Select


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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.


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If you want to upload the budget data to the General Ledger, finalize the entries in theworksheet, then;

1. Use the General Ledger icon.2. Select Upload to Interface


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Public Sector Budgeting

Public Sector Budgeting (PSB) is a budget preparation tool originally designed to assistpublic 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 forthe 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 thesesame applications when the budget is finished.

It allows budget managers to prepare their worksheets either on- line or throughoff-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 budgetworksheets. 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 setupsII. Manage worksheetsIII. Upload the budget to the general ledger.


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I. Review Line Item SetupsThese setups were probably completed during the initial setup but should be reviewedevery 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 bereviewed and modified, if necessary every budget cycle are;

Setup Steps Complete PSB Line Item Budgeting Setups

26 Define Budget Year Types Required

27 Define Budget Calendar Required

28 Define Standard Budget Items Optional

29 Setup General Ledger Interfaces Required

30 Setup General Ledger Budget Sets Required

31 Define Global Account Sets Optional32 Define Budget Group Categories Optional

33 Define Budget Stages Required

34 Setup Budget Groups And Security Required

35 Define Budget Review Groups And Budget ReviewGroup Rules For Account Sets

Optional

36 Set Line-item Budgeting Profile Options Optional


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Budget Year Types

Setup > Options > Year Types

Budget Year Types

Budget Year Types create the structure for the budget calendar. Prior Year and CurrentYear types can capture historical budget, actual, and encumbrance data. The Proposed

Year identifies a year for which a budget will be developed.


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Budget Calendar

Setup > Options > Calendars

Budget Calendar

Create one calendar for a budget cycle. Define multiple years (prior, current, andproposed) 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.


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General Ledger Interfaces

Setup > Account > General Ledger Interfaces

General Ledger Interfaces

Use the General Ledger Interface to identify summary account templates you want PSBto 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 thebudget journal will be balanced.


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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 obtainhistorical 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 EndPeriods 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 isno overlap of account numbers in the budget.

The posting type allows you to indicate whether all changes or only permanent changesshould be posted to the general ledger.

You also need to assign at least one global or local account set to a GL Budget Set.


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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 thatuse 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 becomesan account set. You apply budget parameters and constraints against account sets. Andyou use account sets to when you define how you will allocate your budget to the various

periods.


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Budget Group Categories

Setup > Budget Hierarchy > Budget Group Categories

The Budget Categories represent the various levels of authority in your organization. Usethem to distribute and approve worksheets. For example the director of Public Safety hasbudget authority over the fire and police departments. Assign the Public Safety budgetgroup 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 theirbudgets 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 consolidatingthe budget.


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Budget Stages

Setup > Options > Stages

Budget Stages

How many versions of a budget do you need? Do you need to track budget numbers atvarious 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 modifyworksheets 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.


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Budget Hierarchy

Setup > Budget Hierarchy > Budget Groups

Budget Hierarchy

Create a budget group and hierarchy for each individual organization responsible forediting, 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 foreach 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, budgetgroup category set, and business group.

Budget worksheets are prepared and distributed to budget groups within the budgethierarchy.


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II. Worksheet ManagementThe process of managing worksheets can be divided into the Create, Distribute andModify procedures,

A. Create Worksheet Procedures

1. Create Projection Parameters2. Define Constraints3. Define Period Allocation Rules4. Define Worksheets

B. Distribute Worksheet Procedures

1. Define Worksheet Distribution Rules2. Distribute Worksheet

C. Modify Worksheets

1. Define the Data Selection2. Worksheet Operations

a. Validate Budget Constraintsb. Freezec. Unfreezed. Move to the Next Stagee. Copyf. Mergeg. Submit


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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 ofthe 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 ParametersTravel Expenses (55530 55560) Decrease PY Actuals by 10%Office Supplies (56100 56400) Increase CY Budget by 2%

Other Expenses (53000 54000) Increase CY Budget by 3%


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Parameter Formula

After clicking on the formula button, the parameter form will open allowing you to enterthe 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 thecurrent years budget.

As you can see there is a lot of flexibility in defining your formulas. They can be simpleor very complex.

At least one projection parameter is required to create a worksheet.


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2. Create Constraint Rules

Worksheet > Constraints

Constraint Rule Set

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

page.


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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 theAdmin department to exceed $250,000.


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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 anyperiod 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 willhave no need to create any period allocation rules.


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Period Allocations

Period Percentage Allocations

The number of periods to be allocated are defined by the number of periods created in thebudget calendar. You must separately enter the percentages for each period type.

Note: All the Allocation Percentages must add up to 100.


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4. Define Worksheet

Worksheet > Define

Define this worksheet, the master worksheet and enter the Budget Calendar, ParameterSet, Constraint Set, and Allocation Rule Set. You will also need to define if theDistribution 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 theBudget Set Name. When finished, click on the Create Worksheet button. This will

launch a concurrent request that will spawn numerous requests and prepare the worksheetfor the next step Distribution.

Note: Use the Update GL Balances button to update the existing worksheets with thechanges of actual and budget amounts in the general ledger. This will not recalculate

new estimates.


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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 whatworksheets 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. Theseare optional but will be seen by the budget managers when they open the worksheet.


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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 worksheetand 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 yourworksheet.

Update GL Balances: Updates the balances but does not recalculate proposed amounts.To recalculate estimates re-enter the data selection criteria


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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


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2. Worksheet Operations

Validate Budget ConstraintsYou 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 themerge process to place the data in this worksheet into the original worksheet.

Submit the WorksheetWhen 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 worksheetunless 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 actionhas taken place. If the Public Safety Budget Manager wants to update the FireDepartment 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 dataselection reflects the choice of the new budget stage and creates the second version of thebudget worksheet.

Unfreeze the Worksheet

No changes can be made to any worksheets unless all of the parent worksheets areunfrozen. 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.


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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 LedgerWhen you are ready to post the budget to the general ledger, use the following PSBprocedures;

1. Run the Create GL Budget Journals process. Run in the Trial mode first andreview the Budget Journal Edit Report. When you are satisfied with the results,run it in the Final mode.

2. Run the Transfer Budget Journals processThe 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.

Budgets and PSB

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