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R12: AP/PO: How to Troubleshoot Active Encumbrance on Finally Closed/Canceled POs in Payables (Doc ID 1588957.1)

Last updated on OCTOBER 20, 2021

Applies to:

Oracle Payables - Version 12.0.0 and later
Oracle Purchasing - Version 12.0.0 and later
Information in this document applies to any platform.

Purpose

Active Encumbrance on Finally Closed/Canceled Purchase Orders (POs) issue is a grey area in Payables and this note is intended to clarify the issue and provide troubleshooting steps to help and analyze the issue.

OVERVIEW: There can be many cases/patterns for Active Encumbrance issue on Finally Closed/Canceled POs.

 

Pattern 1: Minor Rounding Active Encumbrance amounts

This is clarified by DEV in Bug 16235882 as the expected behavior and the following note explains the workaround that can be used in Purchasing:

R12: Rounding Issue On Accrual Account Between PO and AP (Doc ID 1518669.1)

 

Pattern 2: Active Encumbrance incorrect calculation

Some initial clarifications: What is the difference between Encumbered amount and Active Encumbrance amount?

'Encumbered amount' is a column in PR and PO distributions table available to view on form .
'Active Encumbrance' is a calculated value on PR and PO distribution form, not stored on any database table.

Encumbered amount is different from the Active encumbrance in a way that, active encumbrance is the amount of encumbrance which is not yet converted to actuals,

ie. Budget which is still in reserved status on a distribution for a PR or PO. Whereas encumbered amount is the total encumbrance / budget on the distribution.

Encumbered amount is calculated as follows:

Encumbered amount = (PO quantity * PO unit price * Currency rate) + (Non Recoverable Tax * Currency rate)

 

Incorrect active encumbrance for Purchase Order can be caused by:

Incorrect value of Active Encumbrance can be due to incorrect values in any of the components used in its calculation.

  1. Encumbered amount value on Purchase distributions.
  2. Incorrect encumbrance reversal / actual creation at Receipt Deliver(for online accruals)
  3. Incorrect encumbrance reversal / actual creation at Payables (for period end accruals )

Active encumbrance is calculated differently for Online and Period end accruals as the actual creation and encumbrance relieve happen at different points in each of these accrual methods.

For online accrual, active encumbrance on the document is relieved when the receipt is delivered and accounting transactions are passed to General Ledger (GL).

The active encumbrance field on the PO distributions form uses a Costing API, to calculate the Encumbrance reversal passed to GL to calculate the active encumbrance on a distribution.

For Period end accruals, active encumbrance on the document is relieved when the invoice is validated or paid and accounting transactions are passed to GL.

The active encumbrance field on the PO distributions form uses a Payables API to calculate the Encumbrance reversal passed to GL to calculate the active encumbrance on a distribution.

 

Active encumbrance is calculated as follows:

Active Encumbrance = Encumbered amounts - Reversals

Troubleshooting Steps

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In this Document
Purpose
Troubleshooting Steps
References

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