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PO With Negative Encumbrance Amount Increasing Budget Available (Doc ID 2479550.1)

Last updated on SEPTEMBER 04, 2020

Applies to:

PeopleSoft Enterprise SCM Purchasing - Version 9.2 and later
Information in this document applies to any platform.


PO with negative encumbrance amount increasing Budget Available.

Purchase Orders are having negative encumbrance calculated on creating a change order.
This is inflating the available budget balance and allowing business to incur more expense.Also, it affects the budget planning of the business.

The issue can be reproduced at will with the following steps:
1. Create a PO for Qty:1000 and Price 10
2. Ensure Project ID and Activity ID are provided in the PO Line distribution.
3. Ensure Sales/ Use Tax is not applicable
4. PO open encumbrance is calculated as USD 10,000 on PO Budget check
5. Budget Balance after PO Budget check. Available budget reduced by 10,0000
6. Dispatch Purchase Order
7. Create a Receipt for Qty 950 by copying the purchase order (partially receive PO Qty)
8. Create a Voucher # 1 by copying the PO Receipt. Qty: 950, Price: 10. Sales Tax: Applicable
  Total Amount of Voucher 10,650 is greater than total PO encumbrance amount 10,000
9. Budget check the voucher
10. Now create a change order on PO to make it match to the Voucher Quantity i.e.950
  Reduce Quantity from 1000 to 950
11. Run the budget check. Notice that Open encumbrance has changed from USD 0 to USD (-) 500
12. Available budget has increased by USD 500.
  This is incorrect as there is no reduction in the actual expenditure.
  This inflates the available budget by USD 500 while the available budget should be still as per below-
  Budget: 2,000,500
  Expense: 1,010,665
  Encumbrance: 0
  Because of the incorrect reduction of encumbrance by USD 500, system allows business to incur additional expense of USD 500
13. Execute Voucher Matching and Voucher Posting
14. Now create a Voucher # 2 with amount equivalent to available budget.
  Project ID: 000000000000164
  Amount: USD 990,335.00
15. Run the Voucher Budget check.
  voucher passes budget check
16. Available budget is USD 0.
17. Now, dispatch and then close the Purchase order created in Step # 3
18. PO status after completion. Encumbrance shows USD (-) 500
19. Validate PO Budget Check.
20. Budget Available is negative




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