Period Based Encumbrance Tracking in PSM-FM
Hello SAP Folks,
With around 13 end-to-end Funds Management (PSM-FM) implementation experience across different industries, i have come across with many budgetary requirements from clients to establish an environment of effective budget control system with transparent reporting.
Imagine as a PSM-FM consultant deployed on a project, one fine day you get a requirement from the client “I do not want my closed period reported budget figures to change, once budget reports are issued the figures are locked and shared with authorities.”
How will you cater to the above requirement from client. The answer to the above requirement comes with the use of PBET (Period Based Encumbrance Tracking).
The mainstay of PSM-FM reporting is transparent tracking of updates to the commitments. In the public sector companies one of the reporting controls that is required is to prevent changes of numbers to already reported periods. Once the budget report has been issued and sent to Authorities, its values cannot be changed. The reports have to present unchanged amounts whenever they are generated for the prior periods. Most of the PSM consultants miss out on this key functionality during implementation.
There are two ways in which commitment updates to FM document happen during its lifecycle.
- Annual-Based Encumbrance Tracking (ABET)
- Period-Based Encumbrance Tracking (PBET)
The above two approaches can be configured via IMG Path,
Public Sector Management>>>Funds Management Government>>>Actual and Commitment Update/Integration>>>General Settings>>>Override Update Profile
This is shown below in OF39 (Override Update profile settings).
Annual/Fiscal Year Based Encumbrance Tracking:
In the first approach which is Annual Based encumbrance, changes to commitment amount or update to FM Account assignment like funds center/commitment items are recorded by updating the original FM Commitment document, this approach will overwrite original FM Commitment in FM ledger and table FMIOI. The FM posting date FMIOI-ZHLDT of originally recorded commitment will always be retained.
I will exemplify the above scenario by giving an example below.
I have an update profile 000102 assigned to the FM Area 1301 & Co. Code 1301, a PR 4200000024 was created for 10,000 USD and accordingly it updated commitments in FMIOI with FM Posting date as 23.07.2023. Update profile 000102 for value type 50 has setting as annual based encumbrance.
If we change the PR 4200000024 value from 10,000 USD to 15,000 USD , then you will see original amount of the commitment will be overwritten and will be replaced by 15,000 USD, increase of 5000 USD will be shown by overwriting the original amount of 10,000 USD , no additional line has been generated in FM Commitment table FMIOI to show the changes to the commitment value.
Below screenshot shows the reduction in the value of PR 4200000024 by 2000 USD on 24.07.2023 but FM posting date FMIOI-ZHLDT remained same.
Hence in Fiscal Year based encumbrance, any changes to the commitments are recorded by overwriting the original value and retaining original FM posting date, no change log is available. Your budget reports issues for the prior period will change if the value of commitments like PR/PO/travel requests/Parked documents changes in the subsequent months.
Period Based Encumbrance Tracking
In the second approach (PBET), changes to the commitments are always logged and the history of FM commitment document is retained. As per SAP help, it is recommended to use update profile 000101 & 000102 which supports posting date for commitment value types, for update profile 000200 which I have used for my co.code 1300 and FM Area 1300, I have overridden update profile settings of commitment value types and switched to PBET as shown below.
In PBET approach, SAP uses system date as FM posting date to log updates to the commitments hence the changes to FM commitments are saved with the system date, but these settings can be overridden by setting and an update manually using T Code FMOD.
For the PR shown below which was created on 22.07.2023 with value of 1000 USD, FM posting date ZHLDT= 22.07.2023 was updated in FMIOI.
On the same day 22 July 2023, the amount of PR was increased by 100 USD more and unlike the case which we saw in Annual based encumbrance approach, we have an additional line with amount type change 0150 was recorded with FM posting date ZHLDT=22.07.2023.
On 23rd July 2023, PR value was reduced by 50 USD which resulted in the creation of an additional line with amount type 0150.
If an account assignment change happens in the PR via reassignment tool FMCN, FMCB etc. then new lines will be added with the reassigned fund center/commitment and old FM Account assignments line will receive debit making them Zero.
It is evident from above example of PBET that period-based encumbrance tracking is the more transparent way of budget reporting and tracking the changes that have happened to the commitment during the course of its completion but there are things which we need to be mindful of when activating PBET as there can be consequences of activating it.
- You cannot revert to Annual-based encumbrance tracking once PBET is activated.
- In case of reconstruction of commitment records using FMN3N (PR Reconstruction),FMN4N (PO Reconstruction) followed by FMAVCREINIT,, wherein you are generally required to delete the records and then reconstruct them again, when PBET is active , system will not delete the incorrect data but it will write the adjustment records to the current period.
- The number of commitment records in DB table will increase manifold with PBET approach depending on the number of changes to the document, hence decision to activate PBET should be taken carefully.
- For changes to FM commitments caused by the value, if you have version management activated in PR/PO then FM posting date update can be controlled by setting the posting date as optional/mandatory in the version management field status settings, meaning if you set posting date as a required/optional attribute in version management setting for the purchasing document type then you can affect the FM posting date by changing it to a later date.
- If you have PR/PO for which commitments were not carried forward to the new FY and commitment update logic is based on PBET and you are already in new FY and trying to edit it or marking the PR/PO as closed , system will through error FMCF10 or FI228, to overcome this error you need to make posting date ready for the input in version management settings and set the posting date of Previous FY under version management tab of ME52N or ME22N
You have various reports available in standard to check commitments/actual periodic update, reports like FMRP_RFFMEP2AX – Line Items & FMB_PL01 – Line Items are very helpful.
The decision whether to use Period Based Encumbrance Tracking or Annual Based Encumbrance Tracking is a key decision especially in the government organizations where PSM-FM is implemented. The pros & cons of both approaches should be thoroughly evaluated.
Please do let me know if there is anything that I forgot to add in this article or any correction :).