The Budget Forecasting process is divided into three parts:
- Budget Forecasting Overview
- Budget Setup Worksheet
- Data Entry Tasks
In the User Guide, Budget Forecasting Overview explains the components of the module. The Budget Setup Worksheet helps you make preliminary decisions about the Budget Forecasting implementation. Information from the budget setup worksheet is entered in the computer via two tasks, BUDGET PARAMETER and DISTRIBUTION TABLES in Classic Budget Forecasting, Inquiry Tasks. After you have read and completed all three parts of this chapter, you can begin your budget preparation using the tasks on the Processing menu. Use the chapter titled, Processing, as a guide for those tasks. In most cases, Budget Forecasting can be set up in only a few hours. We encourage you to carefully follow the manual. Setting up Budget Forecasting without understanding the module may result in having to redo the setup.
Budget Forecasting is a work-area for creating budgets. This work-area is not unlike a spreadsheet where amounts can be changed individually or as a group, and increased or decreased by percentages or flat amounts. When the budgeting process is begun, actual balances from a FundWare Financial Reporting System (FRS) such as General Ledger or Project/Grant are pulled into Budget Forecasting. The budget amounts are then manipulated, changed, and updated until your organization reaches agreement on what the final budget should be. The final budget is posted to the Financial Reporting System via a Budget Journal.
The Budget Forecasting work-area is initiated with the PULL ACTUAL AMOUNTS task and concluded with the POST DISTRIBUTED BUDGET task. This is referred to as a budget cycle. All budget processing and reporting occurs between these two tasks. There are no time constraints for completing your budget and, if necessary, you can re-pull from your FRS to keep actual balances in Budget Forecasting up to date.
Accounts in Budget Forecasting are separate from accounts in the Financial Reporting System. Deleting an account in Budget Forecasting does not affect the account in the Financial Reporting System. Adding accounts to Budget Forecasting which do not exist in the Financial Reporting System is allowed and often required. When the budget is posted, the accounts are created in the Financial Reporting System. Most budgets are prepared for a fiscal year consisting of 12 months. However, Budget Forecasting can prepare budgets for a quarter, 6 months, 18 months, or anything up to 60 fiscal periods.
There are two fiscal date ranges which you need to understand:
- From date
- To date
The date range called From date is the date range of actual account balances you are pulling from the Financial Reporting System. The determining factor in what to enter in From date is deciding what actual amounts you want to look at on Budget Forecasting reports. The date range called To date is the range of dates for which you are preparing a budget. Both date ranges are entered in the PULL ACTUAL AMOUNTS task but they influence almost every task. Note: The To date defines the periods where your budget will post to (it is not controlled by the business date).
When the PULL ACTUAL AMOUNTS task is executed the account numbers, descriptions, and actual amounts for the accounts selected are pulled into Budget Forecasting. A budget account has one actual amount, one projected amount, one estimated amount, up to 60 revision amounts, and up to 60 distribution amounts. All amounts print on Budget Forecasting reports.
- Actual - An account's balance extracted from the Financial Reporting System for the date range entered in the From date.
- Projected Actual - An account's user-definable amount. Can be zero, actual, or estimated actual. However, it is usually a prior budget amount, such as last year's total budget so that reports show comparative budget figures for fiscal years.
- Estimated Actual - An account's calculated balance for the To date range as figured using the actual amount. Estimated actual is computed using the following formula: Actual amount divided by the number of periods in the From date range and multiplied by the number of periods in the To date range.
- Revision Amounts - An account's total budget amount for the To date range.
- Distribution Amounts - An account's final revision amount dispersed to one or more fiscal periods in the To date range
DISTRIBUTE BUDGET is the process of dispersing total budget amounts to multiple fiscal periods in the budget's To date. The number of distribution periods is determined by the To date. Assuming that monthly fiscal periods are used, a To date range of 1/31 - 12/31 creates 12 distribution periods, 1/31 - 3/31 creates 3 distribution periods, and so forth. Distribution is a required step in the budget cycle since a budget cannot be posted until it has been distributed. There are several methods of distributing a total budget amount:
- Even - Evenly divided between all fiscal periods in the To date.
- Period - 100% to a selected distribution period in the To date.
- Relative year's actual - Prorated against a relative year's distribution of actual amounts.
- Relative year's budget - Prorated against a relative year's distribution of budget amounts.
- Distribution table - When one of the methods above does not meet your needs, a distribution table must be defined.
Any combination of these methods can be used. It is not uncommon to distribute revenues using a relative year's actual amounts, some expenses using a distribution table, other expenses using a relative year's budget amounts, and assets annually.
POSTING the distributed amounts is the final step in the budgeting process. This task creates a journal entry in the FRS using the budget journal defined in the budget parameter and automatically files the trace report. A separate journal entry is created for each period holding distribution amounts. New accounts defined in Budget Forecasting may be automatically added to the FRS.
The POST function posts the distribution amounts to the FRS using the dates created by the distribution periods. If an account already has a budget balance in the FRS for a distribution periods fiscal period, the distribution amount is added to the existing FRS amount. The POST NET function posts the difference between the distribution amounts and the actual budget amounts that exist in the FRS for each distribution period. In most cases, this is the preferred option to use. The Budget Forecasting module automatically calculates the net amount to be posted.