Please note!
Budgetary control is closely connected to the way in which invoices are registered (or not registered). We therefore recommend that you read this section in conjunction with the section on ‘Invoice registration' in the introduction to this module and the section on AFO 231 (‘Register invoices').
The base funds control is an essential part of the acquisitions module. An unlimited number of base funds can be freely defined. It is also possible, however, to use the acquisitions module without base funds control or with base funds control for just some of the purchase orders.
The base funds control has a flexible, twofold structure:
· budgetary control
The budgetary control can be general or detailed as you want, depending on the wishes and requirements of your agency. The number of base funds is variable and you have complete freedom of choice on their structure and level of detail.
For every transaction in the acquisitions module with financial implications (e.g. inputting a purchase order, closing an invoice etc,) the system immediately adjusts several financial balances. Hence these balances are always up to date and can be checked online at any time. In addition the budgetary control monitors the limits of each base fund, locking a fund if necessary (to prevent more money being spent than is available) and with the possibility of warning you that certain limits have been reached (e.g. that only 10% of the initial amount is left).
Budgetary control is determined globally by order type. If the second letter of the order type is an S (standard) there is budgetary control; if the second letter of the order type is an E (external) there is no budgetary control. However, budgetary control can be implemented for this last order type if you wish. These base funds are not controlled by the system and may not be defined in the base funds control (AFO 243) but can be viewed via AFO 213 (‘Overview of purchase orders').
As mentioned above, the structure of the base funds can be determined according to your needs. The number of base funds is unlimited. Each base fund has its own code. The structure of the codes is extremely important and is explained in detail below.
· base funds control
The budgetary control forms part of the wider concept of ‘base funds control' which is more than just financial control. It is possible to produce all kinds of overviews, such as:
- lists of items on order;
- financial overviews per department, types of material etc.
The differentiation between base funds control and budgetary control means that it is possible to have a very general budgetary control on the one hand whilst being able to produce extremely detailed overviews on the other.
Please note!
If the bookkeeping model used in your system is the ‘prices' model, you register the actual price paid per purchase order. If you receive invoices with more than one purchase order on the same invoice you will have to divide the general amounts (discounts, VAT etc.) between the different items on the purchase orders yourself.
Example:
(In this example one copy has been ordered per purchase order.)
number of purchase orders on invoice: 5
price per item (excl. VAT) on invoice: EUR 25
invoice subtotal: EUR 125 (5 * EUR 25)
general discount (10 %): EUR 12.50
VAT (17.5 %): EUR 19.69
total amount (incl. VAT) on invoice: EUR 132.19 (EUR 125 - EUR 12.50 + EUR 9.69)
actual price to be input for the purchase orders: EUR 26.44 (EUR 132.19 / 5)
If you do not divide the total amount of the invoice between all the items in the way described above, the base fund balances in AFO 243 will never be 100% correct.
Please note!
The bookkeeping balance and the commitment balance can be recalculated for a particular year for all the base funds subject to base funds control. The result of this recalculation is noted in a ‘check-file'. Moreover, all the amounts pertaining to these recalculated balances are also registered in this check-file. These amounts may originate from an invoice, a purchase order or a transaction in the base funds control.
Read the section AFO 273 (‘Generate control file for budgets') and AFO 274 (‘Budget control').
Several amounts per base fund play a role in maintaining a careful check on the financial situation. Some of these amounts are continually amended in the course of the order process. The base funds are, moreover, linked to a year which means that it is possible to have a set of widely or slightly differing base funds per year and that the various financial balances are totally different per year.
The system has the following financial balances:
· Transfers, these are the amounts that are transferred from the previous bookkeeping year at the beginning of the new bookkeeping year.
· Allocations, these are amounts which have been ‘allocated' to the base fund in the course of the bookkeeping year. They can be either positive or negative amounts.
· Special transactions, these are amounts which have been adjusted in the base fund during the course of the bookkeeping year and do not fit into the category of ‘allocations'. They can be either positive or negative amounts.
Special transactions are used to register amendments to the base fund which strictly speaking cannot be dealt with by the invoicing model used. They are transactions which do not actually have anything to do with the real function of the base fund (e.g. the money from the ‘books' base fund is used to pay for something totally different).
· Paid invoices / purchase orders, this is the total of all paid invoices and/or purchase orders. Depending on the bookkeeping model used, the system determines whether these are paid invoices (in the case of the ‘invoice' model) or paid purchase orders (in the case of the ‘prices' model).
· The bookkeeping balance, i.e. the amount still in the theoretical bank account. The bookkeeping balance is calculated as follows:
Transfer bookkeeping balance 0.00
+ Allocations 20000.00
+ Special transactions -50.00
+ Paid invoices / purchase orders -9355.00
========
= Bookkeeping balance 10595.00
The bookkeeping balance of a base fund is amended when:
- so-called bookkeeping transactions are input;
- ‘normal' purchase orders are processed.
Exactly when this happens depends on the bookkeeping model used in your system (i.e. the ‘prices' model or the ‘invoice' model).
· The fund commitment amount, i.e. the amount that has not yet been paid but, given the purchase orders that have currently been made, will have to be paid. In other words it is an amount that is reserved, a commitment.
The commitment balance is amended at four different times:
- on the basis of the price (or estimated price) when a purchase order is input;
- depending on the bookkeeping model used, when a purchase order is received or when the invoice for the purchase order is paid, or when the prices of the items on order are input;
- via the so-called commitment transactions in the base funds control (see the relevant section);
- via the so-called bookkeeping transactions in the base funds control (see the relevant section).
· The total balance, i.e. the bookkeeping balance minus the fund commitment amounts or, in other words, the amount which can still be spent. The total balance is amended every time the bookkeeping balance and/or the commitment balance is/are amended.
· The trigger amount, i.e. the amount when the system warns you that a certain limit has been reached. For example, the system can warn you when only 20%, 10% or 5% of the initial amount in the base fund is left. You can change the trigger amount at any time.
· The locking amount, i.e. the amount when no more purchase orders will be accepted. When the balance goes below the locking amount it is not possible to order. You can change the locking amount at any time. You should bear in mind that the locking amount can be a negative amount. (You may expect, for example, that part of an order will not be supplied.) This means that you can order for a higher amount of money than is actually available. We recommend that you determine the locking amount on the basis of previous experience.
Please note!
If the locking amount has been exceeded when you input a new purchase order, a message will be displayed (=purchase order refused) and the purchase order will be deleted. However, if you amend a purchase order (e.g. change the price or the number of copies ordered), a message will be displayed but the order will not be deleted and the amendments to the order will be accepted.
An example of the relationship between the different amounts in a base fund:
Transfer bookkeeping balance 0.00
+ Allocations 20000.00
+ Special transactions -50.00
+ Paid invoices / purchase orders -9355.00
==========
= Bookkeeping balance 10595.00
‑ Total current fund commitment amounts 1595.00
==========
= Total balance 9000.00
Trigger amount 2500.00
Locking amount -5000.00
This means that (example in EUR):
No transfers have been made (the transfer bookkeeping balance is EUR 0). EUR 20000 has been allocated to the base fund. In addition, special transactions to the value of EUR 50 have been made. Invoices to the value of EUR 9355 have also been paid, resulting in a bookkeeping balance of EUR 10595 (0 + 20000 + -50 + -9355).
There are also items on order to the value of EUR 1595 but these purchase orders have not yet been paid – they are fund commitment amounts. Consequently the total balance is EUR 9000 (i.e. the bookkeeping balance minus the fund commitment amounts) or, in other words there is still EUR 9000 to spend.
The trigger amount is EUR 2500, hence the system will display a warning as soon as the total balance drops below this amount. The locking amount is EUR -500, so purchase orders will not be accepted if the total balance goes under this amount.
The base funds are linked to a year, i.e. a set of base funds operate per year. Three different years play a role in this, namely:
· The accounting year
This is the year for which payments are registered. It is specific to each base fund but can be amended for all base funds in one go.
· The commitment year
This is the year for which fund commitment amounts are noted for purchase orders. It is specific to each base fund but can be amended for all base funds in one go.
Note
When your fiscal year changes (i.e. during year end processing), you will usually set the Commitment year to the next year (e.g. 2009) so that new orders are committed out of the next year's budgets. You will also usually set the Accounting year to the next year (e.g. 2009) so that new invoices will be spent out of the next year's budgets, but you may choose to leave the Accounting year set to the previous fiscal year (e.g. 2008) for a limited time so that new invoices will still be paid out of the 2008 budgets.
· The display year
When you select AFO 243, the system displays the situation regarding the base funds for this year. This year is the same for all base funds but can be changed at any time.
The first two of these are extremely important in the operation of base funds control, the third is merely used for display purposes.
Example
At the beginning of 2009 the counter for purchase orders was set at 200000000 and the commitment year for all base funds was set as 2009. From that moment on all purchase orders that were input resulted in a fund commitment amount for 2009. The invoices received by the library at the beginning of the year were for purchase orders from 2008 so the accounting balance was left as 2008 for the time being. This will be amended during the course of the year for the various base funds.
Remember, the display year, the accounting year and the commitment year do not necessarily coincide with the calendar year.
Please note!
This means that all the balances for the various base funds are linked to a year. The ‘status' for each base fund is also linked to a year.
The amendments to the commitment balance and the bookkeeping balance play a crucial role in budgetary control. Both of these financial balances can be amended in different ways. This is explained below for both of them. The different types of invoice registration are discussed in the context of amending the bookkeeping balance for the purposes of budgetary control.
It is important to realise that the system enables a link to be made between purchase orders on the one hand and invoices on the other. As a result you can check at any time on which invoice a purchase order is noted and, conversely, which purchase orders are noted on an invoice. See also the section in the introduction on ‘Invoice registration' and AFO 231 (‘Invoice control').
The system amends the commitment balance at the following times:
· when a new purchase order is made (input), so at any time;
· when a purchase order has been dealt with completely (which depends on the bookkeeping model used in your system).
- If your system uses the ‘receipt' model this is on receipt of one or more items which, when ordered, were reserved as a fund commitment amount. This amount is now deducted from the commitment balance and the balance will be higher.
- If your system uses the ‘prices' model this is when the price for one or more items is input which, when ordered, were reserved as a fund commitment amount. This amount is now deducted from the commitment balance and the balance will be higher.
- If your system uses the ‘invoice' model this is when an invoice is ‘closed'. This means that the link between the purchase order (with its own invoice number) and the invoice is relevant to the budgetary control. The commitment balance is not amended when the receipt of item(s) is registered but when the invoice on which the purchase order (the order number) is noted is closed. ‘Closed' refers here to the moment when the invoice is paid, can be paid or considered to be paid (depending on the structure of your organisation).
· via transactions in the base funds control (either bookkeeping transactions or commitment transactions). The commitment balance is also amended as a result of bookkeeping transactions if they are negative transactions, i.e. amounts to be paid and amounts that were previously entered as a fund commitment amount via a commitment transaction.
Please note!
It is possible to input purchase orders without a fund commitment amount being noted (i.e. without a price being entered). This can mean that zero is entered as the price or that a V is entered. The latter indicates that the purchase order in question has already been entered as a fund commitment amount (via a so-called commitment transaction in the base funds control).
The bookkeeping balance can be amended in several different ways:
· via the ‘bookkeeping transactions' procedure in the base funds control;
· by inputting the prices of items (in the so-called prices model);
· when payment is made (i.e. ‘closing' the invoice):
- via the so-called ‘global' registration of invoices without a link being made to individual purchase orders (AFO 231, ‘Register invoices');
- via the so-called ‘global' registration of invoices with a link being made to individual purchase orders (AFO 231);
- via detailed registration of invoices, i.e. with a link being made to individual purchase orders (AFO 231).
It is also possible to exclude the bookkeeping balance from the budgetary control and only take the commitment balance into account. This option can be used, for example, in a situation where the library is dependent on an external organisation (an external bookkeeping department) for payments and which also carries out a general base funds control. In this model the commitment balance is of course amended on the basis of items received (see above).
Example
The library has a budget of EUR 100,000. Payments are made by an external bookkeeping department which regularly informs the library how much money is still available (e.g. the balance of a bank account). Internally the library has divided the EUR 100,000 budget into ten base funds. They can check the current commitment balance for each fund as well as having budgetary control of each fund.
The model above is dependent on the library being frequently informed about the bookkeeping balance. This model is only viable if communication between the library and the external bookkeeping department is optimal, as the library is completely dependent on the information they receive from the external department. If a library only has the current commitment balance and does not have access to up-to-date information on the bookkeeping balance, it does not have sufficient information on the total balance and hence how much can still be spent.
This means that invoices are registered via AFO 231 (‘Register invoices') and that a link is made between the individual purchase orders on the invoices either via AFO 211 or AFO 231. A global amount is registered.
Owing to the link with individual purchase orders, orders that have not been invoiced can be traced and it is impossible to invoice the same purchase order twice.
As only the total amount of the invoice is registered, the system cannot automatically split the total amount between the relevant base funds correctly if the purchase orders on the invoice pertain to more than one base fund. You are expected to do this by hand. This is of course not necessary if all the purchase orders on an invoice are charged to the same base fund. See the section on the ‘GA' field in AFO 231 for information on the procedure for inputting the amounts.
This option is based on the link between invoice and purchase orders whereby the unit price and the individual discount etc. are input per order number. General amounts (VAT, global discounts, other costs etc.) are also registered. Invoices and purchase orders are linked in AFO 231. In contrast to the previous option, detailed information is entered per purchase order rather than a global amount per invoice and the system calculates the totals. This means that the correct price is registered item for item (or book for book).
This method is the most labour intensive but it does have the advantage that the system calculates the amount per base fund and hence the bookkeeping balance can be automatically updated. (Thus the total amount does not have to be split manually between the base funds.)
The amount of work involved is closely related to how accurately the prices are input when the purchase order is made as the system uses the committed price as the default unit price on the invoice. (In the case of approvals and purchase orders based on vendors' lists quoting correct prices, it is highly likely that the committed price eventually becomes the unit price on the invoice.)
This option means that all payments (or planned payments) are made in the form of bookkeeping transactions, hence each invoice from a vendor is a separate transaction. (Several invoices may be dealt with together in one transaction.)
This method is not so labour intensive but it does have the following disadvantages:
· there is no link between the purchase order and the invoice;
· the invoice numbers cannot be looked up;
· the transaction option of the vendors control is inappropriately used and there are few options for managing a large number of transactions flexibly.
Please note!
Given these disadvantages, this alternative is not to be recommended.
Each base fund has its own code. The structure of these codes is hierarchical and plays a big role in viewing sub overviews and/or totals. Depending on your own preferences and requirements you can link the structure of the base funds to:
· locations / departments of the library
· requesters
· vendors
· material types.
The base fund code can have a maximum of 20 characters. There are two ways of structuring the code:
· the structure is determined by the position;
Example
1. AV01CD = base fund for the AV department of location 01 and material type CDs
AV04LP = base fund for the AV department of location 04 and material type LPs
2. B = base fund for books
C = base fund for CDs
R = base fund for records
S = base fund for serials
· the structure is determined by one delimiter (e.g. point (.), dash (-) or slash (/));
Example
3 AV-CD = base fund for the AV department for material type CDs
AV-CA = base fund for the AV department for material type cassettes
AD-B-V01 = base fund for the adult department for material sort books from vendor 1
AD-B-V12 = base fund for the adult department for material sort books from vendor 12
AD-S = base fund for the adult department for material sort serials
4. P/040 = base fund for location P for teacher with number 040
P/781 = base fund for location P for teacher with number 781
A/001 = base fund for location A for teacher with number 001
The structure of the code determines which sub overviews and subtotals are possible.
· In example 1 the sub overviews possible include:
- all base funds beginning with AV
- all base funds ending with LP
- all base funds with 01 in positions 3 and 4.
· In example 3 the sub overviews possible include:
- all base funds beginning with AV
- all base funds ending with AD
- all base funds ending with V01
- all base funds beginning with AD-B
- etc.
The sub overviews (sub base funds) and/or subtotals which can be viewed are determined in the first example on the basis of the position and in the second example on the basis of the delimiter.
Please note!
We advise you not to make the base fund structure too specific. A very detailed structure makes inputting purchase orders more troublesome and complicates the base funds control (e.g. inputting allocations for a large number of base funds).
After choosing this option, the overview screen with budget information is displayed:
: Click on this button to create a new budget. See section 243.2.1.
:Click on this button to view all the details of the chosen budget.
:Click on this button to remove the chosen budget from the list of operational budgets.
: Use this option to print budget information. See section 243.2.2.
: Click on this button to show additional information for all budgets.
: This options toggles the display between budgets in use at this moment (operational budgets) and all budgets.
: Use this button for “year end processing” at the end of the fiscal year. See section 243.4.