Purchasing Life Cycle Reconciliation in PeopleSoft Finance

 The purchasing "life cycle" begins with a requisition, and ends with payment to a vendor and the recording of the corresponding expense in the Ledger.

Discussion

You can compare the on-line purchasing flow to a manual paper flow depending on the process that is being run in PeopleSoft.  When a requisition is created, but before it is budget checked (the process by which the encumbrance is posted to the KK_DTL_PRE Ledger), it is the same as a paper requisition sitting on your desk.  As soon as the requisition is approved, budget checked and has a “valid” budget status, it is available for processing into a purchase order by a buyer in the Purchasing Department.  In effect, approving and budget checking the on-line requisition are like signing and mailing a paper requisition.  A Req ID number is automatically assigned to the requisition, and it is the key for following your order from start to finish.

After the buyer has processed your requisition into a purchase order, the order is budget checked (the process that encumbers the expense on the KK_DTL_ENC Ledger) and dispatched (the process that makes the purchase order available for printing and inquiry by endusers).   When a purchase order is either saved or budget checked, it is automatically assigned a purchase order (PO) number.  This PO number may also be used to look up other documents associated with the purchase order.

Each time a change is made to the purchase order, if it affects any part of the accounting and/or budgetary activity, it will need to be re-budget checked and dispatched.  Other changes to the purchase order may only require that it be saved.

An original copy of the purchase order is sent to the vendor, and a copy remains on file in the Purchasing Department.  PeopleSoft has the functionalities available for emailing and faxing orders directly from a desktop, but we are not using them at this time.

When items are received through the Shipping and Receiving Department, they are logged into PeopleSoft and a receipt ID is created for the purchase order.  This number may be used to find and review any other documents associated with the receipt, including the requisition and purchase order.

Upon receipt of an invoice, Accounts Payable copies the corresponding purchase order into a voucher and runs a “match” process to ensure the order has been completely received and/or that the monetary amounts are correct, prior to payment.  There are 2-way matches, usually blanket and service orders, that match purchase order and voucher monetary amounts; and 3-way matches which match the purchase order, receipt, and voucher line quantities.  Variations are reviewed, accepted or corrected, and a check is issued.

The final step is to close the purchase order.  The close process completes the PO life cycle and makes the purchase order unavailable for any further action.  It also disencumbers any amounts remaining on the purchase order that were not paid to the vendor.  Access to a closed purchase order is limited to the inquiry pages.

Available Reports

The following reports are campus-created reports for reviewing the activity of purchase orders.

·          The HUMPO002 is a simple report that outlines the Life Cycle of a Purchase Order.  The run control requires that you know which purchase order you want to report on and the business unit HMCMP. The report lists all details of a purchase order including the requisition, receipt, voucher, and payment history.  This is a great tool for reviewing the life cycle of a single purchase order.

·          The HUMPO004 is a report that shows Open Purchase Order Activity.  It offers a myriad of search criteria fields for reviewing purchase orders with any open encumbrance.  The report shows the activity for each line of the purchase order, the monetary amount, the status, the remaining balance, the chartfield information and the vendor name.  If a purchase order has more than one line, but only one line has a remaining  balance, each line of the purchase order will show a total (even if it is zero), and the total open balance for the entire purchase order will be calculated.  With so much criteria to choose from, you can control the amount of information you wish to look at.  This is a great report for reviewing which purchase orders need to be followed up on and which ones should be closed to disencumber unused remaining amounts. 

NOTE:  If you know an order is complete, but it has a remaining balance that you want disencumbered, please call the buyer assigned to the purchase order and request that the purchase order be closed.  The funds will return to the chartfield string they were originally encumbered from. 

It is the responsibility of each department to advise the appropriate buyer when an item has not been received and to request a follow up be made with the vendor.  It is also the responsibility of each department to advise the buyer when a purchase order or purchase order line should be cancelled or closed to disencumber funds.  There is no standard formula that the Purchasing Department uses to determine when a purchase order should be closed if it has not been fully matched.

·         The HUMPO005 is a report that shows all Purchase Order Activity, open or not.  It has the same criteria search fields as the HUMPO004 and may be run at same time using the same run control.  The difference between the reports is that the HUMPO005 shows activity for all purchase orders and the HUMPO004 only shows the activity of purchase orders with at least one line with an open encumbrance.

      Additionally, there are two PeopleSoft reports of interest:

·         The POS8001 Procurement Budgetary Activity Report is a list of your department's purchase orders by PO ID and line number, showing the original purchase order amount less the liquidated amount. Any remaining amounts are noted, as well as the total dollar amount that has been vouchered (i.e., AP has received an invoice from the vendor and entered into PeopleSoft).  If the vouchered amount is greater than or equal to the purchase order amount, and/or the remaining amount is equal to zero, the purchase order is fully liquidated.  If the purchase is complete and the vouchered amount is less than the purchase order amount, the remaining amount will be disencumbered when the department submits a change order to decrease the amount, or requests that Purchasing close the purchase order.  After the purchase order is closed the remaining funds are disencumbered.  This should result in a lower amount showing in the Encumbrance column and a higher amount showing in the Available column on your HUMGL005.

·         The POS8002 Requisition Budgetary Activity Report is similarly a list of your department's requisitions by Requisition ID and line number. The purchase order amount is often greater than or equal to the requisition amount due to final costing values and additional sales tax.  Requisitions are closed after the corresponding purchase order has been closed, and any remaining balance will be disencumbered.

These reports can serve as a guide to understanding your requisition and purchasing activity as it moves through the accounting cycle. The data on these reports should follow closely the accounting transaction activity noted on the HUMGL015 and the overall change in YTD account balances noted on your HUMGL005 report.

See About Reports for a list of additional reports.