Sarah now talks about upward and downward adjustments. Select the video below to learn more!
Definition
| Definition | |
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| Upward Adjustment | A situation where - in an expired budget period - the total of all actuals referring an individual commitment line surpasses the amount that has been earmarked with that commitment line. The surpassing delta needs to be posted to the next non-expired budget period. Example: An invoice in fiscal year 2022 exceeds the amount of a purchase order from 2021. The invoice has inherited the budget period 2021 from the purchase order. The invoice requires an additional budget from budget period 2021 in fiscal year 2022. |
| Downward Adjustment | A situation where - in an expired budget period - the total of all actuals referring an individual commitment line are lower than the amount that has been earmarked with that commitment line. The release of the budget in this case must be tagged for reporting and should in general not be available for new budget consumption. Example: A goods receipt in fiscal year 2022 sets the completion indicator of a purchase order from 2021, because no further delivery is expected. The good receipt has inherited the budget period 2021 from the purchase order. The process releases budgets from budget period 2021 in fiscal year 2022. |
Usage of Upward/Downward Adjustments
The usage of upward / downward adjustments is optional. It is only used when you select restricted expired budget period handling.
Upward / downward adjustments are recorded in ACDOA using separate amount types. Therefore, it is possible to report them separately.
The idea of expired budget period handling (and upward/downward adjustments) is a model where the business in expired budget periods only winds down open commitments, but does not allow new budget and budget consumption documents.
This is depicted in the following figure.
(*) Technically the residual budget processing can still carry forward the budget into the new fiscal year/budget period in the restricted mode. Only carrying forward to the next fiscal year means that the budget will never be consumed.
Example of Upward Adjustment
The following image shows the budget situation against old and new budget periods where an upward adjustment is being posted. An encumbrance of $750 is being posted against the budget period 2018. Now an invoice is posted in fiscal year 2019 with reference against the encumbrance. Here, the budget period is being inherited from the encumbrance to the invoice. If the invoice is also $750, then no additional budget is being requested from budget period 2018. However, in this example the invoice is being posted with $800. As the budget for 2018 is fully lapsed, this would lead to an AVC error. Instead, an upward adjustment against budget period 2019 is being posted with the price difference of $50. This is achieved with two document ledger line items. One line is posting $50 out of budget period 2018 and the other one into the budget period 2019.
Example of Downward Adjustment
The following image shows the budget situation against old and new budget periods where a downward adjustment is being posted. An encumbrance of $750 is posted against the budget period 2018. Now an invoice is posted in fiscal year 2019 with reference against the encumbrance. Here, the budget period is being inherited from the encumbrance to the invoice. If the invoice is also $750, then no additional budget is being requested from budget period 2018. However, in this example the invoice is being posted with $700. As a result the budget for 2018, which is fully lapsed, has an additional $50 available. This is being posted as a downward adjustment. This is achieved by populating the budget consumption amount type with downward adjustment.
Used Cases for Up / Downward Adjustments
| Upward Adjustments in expired adjustments (new budget required for expired budget period) | Downward Adjustments (budget consumption reduced for expired budget period) |
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