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Set up budget control

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Important

This content is archived and is not being updated. For the latest documentation, see Microsoft Dynamics 365 product documentation. For the latest release plans, see Dynamics 365 and Microsoft Power Platform release plans.

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012

Budget control is available for source documents and accounting journals. Source documents include purchase requisitions, purchase orders, vendor invoices, travel requisitions, and expense reports. Accounting journals include daily journals, allocation journals, project expense journals, and fixed asset journals. Depending on how you configure budget control, source documents and accounting journals can be prevented from additional processing when a budget check indicates that the budgeted amounts are not available.

Note

This topic has been updated to include information about features that were added or changed in the following hotfix for Microsoft Dynamics AX 2012 R3 Cumulative Update 8: KB3047235

Set up basic budgeting before you configure budget control. For more information, see About basic budgeting. If you plan to use Budgeting workflows, create the workflows and assign them to budget codes when you set up basic budgeting. For more information, see Set up Budgeting workflows. Set up the budget control configuration before you start submitting budget register entries.

Note

The budget control configuration provides an active version and a draft version. You can modify the draft version when the active version is turned on and budget control is in effect. You can click Restore from active at any time when you are working in a draft version. However, if you click Restore from active, all changes to the draft version are lost. If the budget control configuration is active, you must click Edit to modify the budget control configuration.

Define budget control parameters

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Select an account structure. If you have multiple active account structures in the chart of accounts, select the account structure that will be used for profit and loss or expense accounts. This account structure includes the main account range for expense accounts.

    After you select an account structure, all the financial dimensions in that account structure that were defined for budgeting are displayed in the Budget dimensions list.

  3. Select a financial dimension and move it to the Budget control dimensions list.

    You select the financial dimensions for budget control from the financial dimensions that you defined for budgeting. This lets you develop budgets at one level and configure budget control at another level. For example, you could select the main account, department, and cost center financial dimensions for budgeting, and then select only the department and cost center dimensions for budget control. You can also use budget control rules to specify financial dimension combinations for budget control. For more information, see the “Define budget control rules” section in this topic.

  4. Select a budget control interval, such as Fiscal year or Fiscal year to date.

    The budget control interval works with the budget cycle to determine how amounts are aggregated for budget checking. For example if you select Fiscal year, all the funds for the fiscal year are aggregated for budget checking. If you select Fiscal year to date or Budget to date, the ending date is determined from the fiscal period and the accounting date of the source document or accounting journal that is being checked.

  5. Select the budget cycle time span, which defines the length of the budget cycle. For more information, see Define budget cycles.

  6. Select a budget manager, which is a user who can approve budget workflows. Another budget manager can be defined by using a budget control rule.

  7. In the Budget threshold field, enter the percentage of the budget that can be spent.

    The threshold can be used to provide warning messages or to define budget permissions to prevent specific user groups from exceeding the budget threshold. This threshold can exceed 100 percent.

  8. Select the Display a message when exceeding budget threshold check box to display messages when the budget threshold is exceeded.

Define over-budget permissions for user groups

You can let specific user groups exceed the available budget or restrict user groups from exceeding the available budget or budget thresholds. The Prevent processing at over budget threshold setting is applied to all users who are not in a user group. The settings in this form can be overridden by a budget control rule or budget group.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Over budget permissions.

  3. Click Add and select a user group.

    Note

    If you do not have user groups defined, right-click in the Group field and select View details to open the User groups form, where you can create groups and add users.

  4. In the Over budget options field, select the appropriate option for this user group.

    • Prevent over budget processing – Users in this group cannot process a budget register entry if the available budget balance is insufficient to cover the entry.

    • Allow over budget processing – Users in this group can process a budget register entry if the available budget balance is insufficient to cover the entry.

    • Prevent processing at over budget threshold – Users in this group cannot process a budget register entry if the financial dimension or main account will exceed its specified threshold to cover the entry.

    Note

    If the budget threshold is greater than 100 percent, the Prevent processing at over budget threshold setting is less restrictive than Prevent over budget processing.

Define the calculation that determines the budget funds that are available

In the Budget funds available area, you can select check boxes to determine the amounts that are added to and subtracted from the budget funds that are available. Original budget and Actual expenditures are selected by default, so that the default calculation is Budget funds available = Original budget - Actual expenditures. The budget funds calculation is displayed under the check boxes, so that you can view how the calculation changes as you select and clear the check boxes.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Budget funds available.

  3. Select the Include carry-forward amounts check box to include amounts that are carried forward as part of a purchase order year-end process, and also to carry forward budget register entries that have a budget type of Carry-forward budget.

    As part of the purchase order year-end process, budget amounts from open purchase orders can be carried forward into the next fiscal year. Any budget reservations for encumbrances are also carried forward. When invoices are recorded against the purchase orders that were carried forward, budget control treats the actual expenditures as carry-forward amounts, also. Therefore, inquiries and reports can display those amounts separately from the amounts that were not carried forward.

  4. You can select the following check boxes to include amounts in the calculation.

    Option

    Amounts that will be included in the calculation

    Original budget

    Original budget register entries that have a document status of Completed. Also included are the Project, Fixed assets, Demand forecast, and Supply forecast budget types that have a document status of Completed, which are treated as original budget amounts after they are transferred from other modules.

    The sum of the amounts of budget register entries that have budget types of Original budget, Revision, Transfer, Carry-forward budget, Project, Fixed assets, Demand forecast, and Supply forecast.

    Preliminary budget

    Preliminary budget register entries that have a document status of Completed. These are used to create a preliminary budget when the actual budget is being reviewed and approved.

    Note

    This control is available only if the Public Sector configuration key is selected.

    Budget revisions

    Budget register entries that add changes to original budgets and that have a document status of Completed.

    Draft budget revisions

    Budget register entries that add changes to original budgets and that have a document status of Draft.

    Budget transfers

    Budget register entries that transfer budget amounts from one financial dimension value to another and that have a document status of Completed.

    Draft budget transfers in

    Transfer budget register entries that increase the budget and that have a document status of Draft.

    Draft budget transfers out

    Transfer budget register entries that decrease the budget and that have a document status of Draft.

    Budget apportionments

    Budget register entries that have a document status of Completed. Apportionments are used in the public sector to show the difference between budgeted amounts and the amounts that are approved for spending. For example, a public sector organization might have an original budget of 10,000.00 for an account and use an apportionment to approve 5000 for spending. Only the amount that is apportioned can be spent.

    Note

    This control is available only if the Public Sector configuration key is selected.

    Actual expenditures

    Actual expenditures that are recorded in the general ledger from expense reports, vendor invoices, and accounting journals. The amounts from the source documents or accounting journals are included in the budget check only when the source document or accounting journal is enabled for budget control.

    Unposted actual expenditures

    Actual expenditures that are not yet recorded in the general ledger from expense reports, vendor invoices, and accounting journals. The amounts from the source documents or accounting journals are included in the budget check only when the source document or accounting journal is enabled for budget control.

    Budget reservations for encumbrances

    Budget reservations that are created for confirmed purchase orders, general budget reservations, or travel requests, and budget register entries that have a document status of Completed and use the Encumbrance budget type.

    Budget reservations for unconfirmed encumbrances

    Budget reservations that are created for unconfirmed purchase orders, general budget reservations, or travel requests, and budget register entries that have a document status of Draft use the Encumbrance budget type. These are manual budget reservations that are not yet included in the overall budget balance.

    Note

    If you do not select this check box, budget checks can still be performed on draft source documents, such as purchase orders, general budget reservations, and travel requests. However, the amount of the budget reservation is not included in the budget check for subsequent source documents. You can do this to perform a budget check on draft documents without creating a committed reservation.

    Reduction to budget reservations for unconfirmed encumbrances

    Amounts that reduce the amounts that are reserved for unconfirmed obligations to pay. Since a correction to a purchase order can be reverted, this option is intended to prevent a reduction in a budget reservation amount because of a correction to a purchase order until the correction is confirmed.

    Budget reservations for pre-encumbrances

    Budget reservations that are created for approved and confirmed purchase requisitions, and budget register entries that have a status of Completed and use the Pre-encumbrance budget type.

    Budget reservations for unconfirmed pre-encumbrances

    Budget reservations that are created for unconfirmed and unapproved purchase requisitions, and budget register entries that have a status of Draft and use the Pre-encumbrance budget type. These manual budget reservations are created through budget register entries but are not included in the overall budget balance.

    Note

    If you do not select this check box, budget checks can still be performed on draft purchase requisitions. However, the amount of the budget reservation is not included in the budget check for subsequent source documents. You can do this to perform a budget check on draft documents without creating a committed reservation.

Select source documents for budget control

In the Select source documents area, you can select check boxes to determine the source documents that are subject to budget control. You can also select check boxes to enable budget checks as the lines for source documents are entered and saved.

You should match the source documents that you select with the check boxes that you selected for the budget funds available calculation in the Budget funds available area. For example, if you selected Budget reservations for encumbrances to be included in the budget funds available calculation, you might want to select the Purchase orders check box. When a budget check is performed for the amounts and accounts on a purchase line, the budget control category that is assigned to the reservation is Encumbrance.

Note

A budget check is performed when a source document is created but not when it is edited. A budget check is performed when a source document is submitted to workflow and when it is approved and confirmed.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Select source documents.

  3. Select the Purchase requisitions check box. The Purchase orders and Vendor invoices check boxes are automatically selected.

    If you do not select the Purchase requisitions check box and you instead select the Purchase orders check box, the Vendor invoices check box is automatically selected.

    You can select Vendor invoices, Travel requisitions, and Expense reports independently of the other source documents.

    Note

    When you select Vendor invoices, invoice journals, invoice approval journals, and invoice register journals are also enabled for budget control.

  4. Optional: If you are in the public sector and will be using general budget reservations, select the General budget reservations check box. For more information, see Set up general budget reservation rules and reservation types (Public sector).

    Note

    General budget reservations are available only if the Public Sector configuration key is selected and if Microsoft Dynamics AX 2012 R3 Cumulative Update 8 is installed with the following hotfix: KB3047235

  5. For each source document, you can select the Enable budget control for line item on entry check box to enable budget checking for each line as the line is entered and saved.

    Note

    When a purchase requisition is converted to a purchase order, a budget check is performed, even when line-level checking is not enabled. This relieves the pre-encumbrance and establishes the draft encumbrance. When an invoice is created from a purchase order, a budget check is performed, even when line-level checking is not enabled.

Select accounting journals for budget control

In the Select accounting journals area, you can select check boxes to determine the accounting journals that are subject to budget control. In addition, you can select check boxes to enable budget checks as the lines for accounting journals are entered and saved.

Note

A budget check is performed when an accounting journal is created but not when it is edited. A budget check is performed when an accounting journal is submitted to workflow and when it is approved and posted.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Select accounting journals.

  3. Select any of the following check boxes to enable budget control for accounting journals:

    • Daily journals

    • Allocation journals

    • Project expense journals

    • Fixed asset journals

  4. For each accounting journal, you select the Enable budget control for line item on entry check box enable budget checking for each line as the line is entered and saved.

Assign budget models to budget cycles

You can assign a budget model to a budget cycle to perform budget checking for the budget cycle. Only one budget model can be in use for a budget cycle. A budget check is performed when the accounting date for a source document or accounting journal that is enabled for budge control is in the budget cycle.

Note

The budget cycle must be defined before you associate the budget cycle with a budget model. In the Assign budget models area, you can click the Budget models link to open the Budget model form, and you can click the Budget cycle time spans link to open the Budget cycle time spans form.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Assign budget models.

  3. Click Add and select a budget cycle time span.

  4. Select a budget cycle.

  5. Select a budget model. Only budget models that do not contain submodels are available for budget control.

Note

The budget cycle that is being used for budget control can also be determined by the budget cycle time span that is selected for a budget control rule.

Define budget control rules

Budget control rules are required for budget control. They determine the financial dimension value combinations for budget control. If you selected the department and cost center financial dimensions for budget control, you can define rules for specific combinations of departments and cost centers that are subject to budget control. For example, you could specify Department = Sales and Cost Center = *, where * is a wildcard character that will include any cost center.

Note

Criteria in two or more rules that cover the same financial dimension values are not allowed. If all financial dimension value combinations will be enabled for budget control, you can define a budget control rule without criteria.

The budget control rules are validated against the ledger accounts that are being used on source document accounting distributions and accounting journals. If the financial dimensions in the ledger accounts match the financial dimensions in the budget control rules, a budget check occurs.

Example: Define budget control rules to establish a different budget threshold for one department

The default budget control parameter values that you entered in the Define parameters area are used unless you specify a different budget cycle time span, budget interval, budget threshold, or budget manager for individual rules. For example, to assign a different budget threshold to only one department, you could define two budget control rules: one rule for the specific department and its budget threshold, and another rule for all of the other departments for their threshold.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Define budget control rules.

  3. Define a rule where Department 010 has a budget threshold of 90.

    1. Click New to create a rule, and then enter a rule name and description.

    2. On the Criteria FastTab, click Add filter.

    3. In the Where list, select the Department financial dimension.

    4. In the Operator list, select is, and then enter 010 as the department number.

    5. In the Budget threshold field, enter 90.

  4. Define a second rule where all other departments have a budget threshold of 100.

    1. Click New to create another rule, and then enter a rule name and description.

    2. On the Criteria FastTab, click Add filter.

    3. In the Where list, select the Department financial dimension.

    4. In the Operator list, select is greater than and includes and enter 020, which will include all departments except Department 010.

    5. In the Budget threshold field, enter 100.

Example: Define user group permissions for one user group for a budget control rule

You can define a budget control rule to provide unique user group permissions to budget amounts for specific financial dimension combinations. If the default over budget option for all user groups is Prevent over budget processing, you can define a rule that has a different over budget option for one user group for specific financial dimension combinations. For example, if you define a budget control rule that has a budget threshold of 90 for Department 010, you could define user group permissions for one user group in Department 010 to allow over budget processing for that user group.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Define budget control rules.

  3. Define a rule where Department 010 has a budget threshold of 90.

  4. Click User group budget permissions.

  5. For one of the user groups in Department 010, select Allow over budget processing in the Over budget options field.

    Important

    If you define budget groups, you must select the over budget options to prevent or allow budget group checking when budget funds are not available. For more information, see “Define budget groups” in this topic.

  6. To override the current user group budget permissions for the budget control configuration, click Copy. Select a user group to copy and then edit the specific user group budget permissions.

Select main accounts

If the main account financial dimension is not defined for budget control, you can select the main accounts that the budget control rules will be enforced for. If the main account financial dimension is defined as a budget control dimension, the main account financial dimension is included in the budget control rules, and this setup step is not required.

Only main account types of Total, Profit and loss, and Expense can be selected, because these are the accounts that typically are used for actual expenditures. Accounts that have a Total type are included because you can enter budget amounts in main accounts that have a Total type.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Select main accounts.

  3. Select the check boxes to select the main accounts or click Select all to select all the main accounts.

  4. You can also click Select to define a query to filter the list of main accounts.

Optional: Define budget groups

In the Define budget groups area, you can define budget groups to form a budget pool, or a collection of financial dimension values whose budgets will be pooled for a secondary budget check. The financial dimension combinations that are found in the budget control rule are always checked for budget amounts. If a financial dimension combination is also found in a budget group, a second budget check is performed at the budget group level.

For example, if there was a budget control rule for all combinations of the department and cost center financial dimensions, you could also define a budget group for Department 010, which would include all the cost centers in that department. This budget group would pool the budget of all the cost centers for Department 010. If an initial budget check failed for a cost center in Department 010, a second budget check would be performed on the aggregate budget for all cost centers in Department 010.

Note

Multiple criteria can be specified for a budget group. All the criteria are used to determine the financial dimension combinations for the budget group. No overlapping criteria are allowed across budget groups and budget group members.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

    Click Define budget groups.

    The ledger name is displayed at the top of the hierarchy.

  2. Click Add to create a budget group member. Enter a budget group name and description.

    When you add a group member, you can add filter criteria, change user group permissions, and modify the default budget control properties.

  3. On the Criteria FastTab, click Add filter.

  4. For this example, in the Where list, you would select the Department financial dimension.

  5. In the Operator list, you would select is, and then enter 010 for the department number.

    Note

    To perform the secondary budget check, the Overbudget option for budget group check setting in the User group budget permissions form for budget control rules must be set to Perform budget group check when budget funds are not available.

Optional: Define message levels for user groups

In the Define message levels area, you can specify that budget control warning messages will not be displayed for selected user groups. Users in the selected user groups will continue to receive error messages based on their over budget permissions.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Define message levels.

  3. Click Select all or select the check boxes next to the user groups that will not receive budget control warning messages.

    Note

    If a user belongs to multiple user groups and you select one user group that includes the user, no warning messages will be displayed for that user.

Activate budget control

In the Activate budget control area, you can make a draft budget control configuration active by clicking Activate. When you turn on budget control, the active budget control configuration takes effect.

Important

If you turn off budget control, source documents and accounting journals that have a status of Draft are removed from the budget control tracking system. No additional budget checks are performed. If you turn on budget control again, you might have to manually adjust the budget to correct reserved budget amounts.

  1. Click Budgeting > Setup > Budget control > Budget control configuration.

  2. Click Activate budget control.

  3. Click Activate to make the draft version of the budget control configuration active.

    The Date when last activated field displays the current date, and the Activated by field displays your user ID.

  4. Click Turn on to start budget control by using the active configuration.

    The budget control status changes to Turned on, and the Turn on option is replaced with Turn off.