Fund management

Fund management in budget control

system
Budget overview
• Fund Management Budget Control System (BCS) Overview
• Business Benefits
• Organizational Structure in FM
• Funds Management Master Data
• FM-BCS Functionality
• Activate Business Function EA-PS
• Funds Management-BCS Component View
• Challenges in Funds Management Module
What is Budget

• An important instrument of the financial management used a said in

planning, programming and control
• A budget may be defined as a financial and quantitative statement,
prepared and approved prior to defined period of time, of the policy
to be pursued during that period for the purpose of achieving the
given objective.
Types of budgets
• Operating revenue budget- related to volume of work anticipated
• Operating expenditure budget: recurring expenditures for operation
and maintenance of services e.g. salaries and wages, supplies,
support utilities, maintenance
• Capital budget (non-recurrent): meant for growth (new facilities),
replacement of obsolete. Needs are many prioritize
• Cash budget: provision for anticipated cash expenditures, for
planning the cash flow
• e.g. salaries, bills etc.
fund management

• The functions in this component support you in creating and

executing budgets. The purpose of Funds Management is to budget
all expenditures for individual areas of responsibility, to control future
funds transactions in accordance with the distributed budget, and to
stop the budget being exceeded. You can adapt the budget to changes
in conditions by entering releases, supplements, returns, and
transfers.
• Funds Management is fully integrated with other components of the
SAP System, especially with the budget control system (BCS). A basic
requirement for the use of Funds Management is integration with the
General Ledger Accounting (FI-GL) component
fund management business
benefits.
• Budgeting all expenditures for individual responsibility areas.

• Monitoring funds movements in the light of budget available.

• Preventing budget over-runs.

• Online activation availability control

• warning and/or mail for insufficient funds, error in case of over consumption etc.

• A well-defined and transparent Budget utilization and monitoring.

• Integration with all other SAP Modules

.
Organization structure for fund
management
client

Fund area

Company code controlling area

sales area
plant purchasing area
Fund management master data
• SAP Funds Management has following six master data to be used
as account assignment,

• Commitment Item
• Funds Center
• Fund
• Functional Area
• Funded Program
• Grants
• Derivative rules
Basic Use
• You can also create hierarchies and groups (such as fund groups).
• Commitment item: revenues and expenditures
• Funds canters set up the organizational units hierarchically
• Funded Program: project and organizational related activities
• Functional area: program- and subprogram-oriented
• Fund canter and Commitment Item are always active
• If the fund / functional area / funded program or grant are used in
Funds management,
• they must be activated in customizing of Public-sector Management.

• If the account assignment elements should also be used in Asset

Accounting, the account

• assignment elements must also be activated in Asset Accounting.

FM BCS functionality’s

• Basic functionality of fund management is,

• Budget Planning

• Budget Entry

• Budget Control

• Integration with other Modules

• Year End Closing

Budget planning
• FM BCS provide very flexible and robust tool for planning.

• Budget planning can be done with various level, it may follow

“bottom up” to “top-down” approach.

• Planning can be done for capital items and revenue items.

• Planning can be done for balance sheet GL as well as P and L GL.

• Planning value can be entered by various users within system with the help of authorization.

• It will help to follow bottom–up approach of budget planning.

• Planning data can be stored in the various version as per business requirements
• Planning data can loaded from MS Excel

• Planning data can be copied from CO actual or plan data.

• BCS planning can be integrated with another external tool like

BW and SEM.

• External interface can be integrated with planning

• Workflow can be made from plan entry to plan released.

Budget entry

• In SAP funds management budget control system budget entry as one

of the very easy tasks. This functionality can be used for various
business requirements. Budget entry screen is very flexible and user
friendly. It is just a copy paste from excel you do not need any upload
program to enter budget in FM BCS. Budget can be prepared or
tracked at following process like
• Enter
• Return
• Supplements
• Transfer
• Budget can be entered for capital budget and revenue items.
• Budget can be entered for balance sheet GL and as well as P&L GL
too.
• Budget entry documents can follow the workflow.
• Budget entry can have functionality to release budget. Once budgets
released then only available for consumption. This depends on
configuration.
• Budget can be entry periodically (i.e. monthly). Monthly budget entry
can be entered in the system for reporting purpose.
• No monthly budget check is available.
• Budget reports can be prepared on monthly budget.
• Budget data can be stored in the system with different version.
• Entire budgeting cycle can be controlled through authorization
management and version status management.
• Budget documents can be hold, pre-post and post functionality.
• Entered budget documents can be reversed.
Budget execution

• The Budget Execution component helps prevent budget overruns. We

can set a warning, error message or a mail to the Fund Manager
depending on the percentage of the budget utilized. This is the most
important feature in the Funds Management Module
Standard process
• Every year starting, business must upload budget / planned figures in SAP against
their fund centre and commitment item.
• Manually enter the supplement budget, if required after proper approval.
• System automatically controls actual figures do not exceed the budget /planned
figures.
• System also gives warning message if budget consumed is more than the set
standard.
• SAP facilitates several standard reports for getting actual values / budgeted values.
• System also facilitates the carry forward of balance budget to the new fiscal year.
SAP provides
• budget transfer between different combination of the fund canter and
commitment item.
Integration with other modules
• Funds Management Module is fully integrated with all other module
in SAP ERP and BW/BI/BPC, to prepare, execution and control the
funds movements. Integrating the components Materials
Management and Funds Management means that you can reproduce
and monitor a procurement transaction from the purchase requisition
to the invoice for example. Integration also ensures that all the data
you need for budget execution is available in Funds Management
without additional data entry.
• Integrated with FI/CO

• Integrated with MM

• Integrated with HCM

• Integrated with PM

• Integrated with PS

• Integrated with FI-CA

• Integrated with ISU

• Integrated with BW/BI/BPC

Year end closing
• Year end in Funds Management means, the transfer of open
commitments (commitment carry forward) and a different transfer of
non-consumed budget (budget carry forward of residual budgets)
from old fiscal years to the new.
Basic Activity in Funds management year end

• 1. prepare for Year end

• 2. Commitment carry forward
• 3. Budget carry forward
Activate Business Function EA-PS
On easy access
On configuration IMG
Funds management -
component view
• Preparations
• Basic settings
• Budget control system
• Actual commitment update integration
• Closing operations
• Master data
Challenges in fund management
module
• All SAP modules will get affected when we activate
• funds management module. The more affected are Material Management,
Plant Maintenance, Project Systems, Finance and controlling, Human
resource etc.
• System load and extra transactions will take place.
• Extra cost to maintain and support the System.
• Not necessary for companies who have single Business area/ profit center/
Plant and very a smaller number of the employees.
• At each and every stage the system will check the budget availability and
if there is no sufficient budget then the system will stop the business
transaction until the necessary approved supplementary budget is uploaded
in the proper time frame