Disencumbrance Hierarchy

When an invoice which references an encumbered PO/PR is paid, the system attempts to relieve (partially or fully pay) the associated encumbrance for the account entered.

Processing with NO Hierarchy Defined

In Accounts Payable, the system will not allow transactions to be entered that are not encumbered for the given Purchase Order reference. However, the Encumbrance Set process (ENBTUB and ENBTBP) will allow any transaction to be entered. When the Set is distributed (ENBTDS), the processing will follow the steps outlined below.

Processing is done in the following order, for each separate Purchase Order reference. If no encumbrance hierarchy exists (if the common code for this item does not exist), the account that is given by the user is the account that is disencumbered:

1. The entered Org. Key-Object Code combination.
2. The entered Org. Key and any Object Code encumbered.
3. Any encumbrance with type EN and associated with the same Purchase Order reference.

Processing with a Disencumbrance Hierarchy

Depending on budget complexity, reporting requirements, and transaction volume, the above processing might not meet an organization's needs. A Disencumbrance Hierarchy can be set up to direct how encumbrances will be relieved. When a hierarchy is defined, the system directs the relief of that encumbrance first to the entered account, second …, etc. (as defined) in the hierarchy, and lastly to the first encumbrance found for the given Purchase Order reference.

Processing for each Purchase Order reference using a Disencumbrance Hierarchy:

1. The entered Org. Key-Object Code combination placed in the AP Set file.
2. The entered Org. Key and the first defined Object Group Code.
3. The entered Org. Key and the subsequent Object Group Codes as defined.
4. The entered Org. Key and any encumbered Object Code(s).
5. The Org. Key Part Code and the entered Object Code.
6. The Org. Key Part Code and the first Object Group Code.
7. The Org. Key Part Code and the subsequent Object Group Codes as defined.
8. The Org. Key Part Code and any encumbered Object Code(s).

The system processes steps five through eight for each Org. Key / Org. Part Code / Object Code / Object Group Code in the hierarchy. If no Object Code / Object Group Codes exist in the hierarchy, the system attempts to relieve only the entered Org. Key code.

If after attempting to relieve encumbrances using the hierarchy there are any payments remaining, the system will disencumber the first available encumbrance with type EN associated with the given Purchase Order reference.

When a Disencumbrance Hierarchy exists, it is possible to expense, using the Accounts Payable system, a different account than the one encumbered in the Encumbrance system. The Accounts Payable system will issue an error/exception message if the transaction entered is not the encumbered account or within the hierarchy. The Encumbrance system allows any transaction to be entered utilizing the Encumbrance Set process (ENBTUB and ENBTBP); when the Set is distributed (ENBTDS), the hierarchy will be followed.

Defining the Hierarchy

The hierarchy is defined using common codes. An entry must be made for each ledger for which a Disencumbrance Hierarchy is to be applied. For every transaction that involves a JL side, there must be a GL side. This could impact the number of EN transactions created when encumbrances are relieved. Because the system only relieves encumbered transactions, it will relieve as much as it can at every level of the hierarchy. If, for instance, this results in two GL transactions due to the GL hierarchy and 15 JL transactions due to the JL hierarchy, the system will create 15 transactions for the GL/JL combinations.

If the short description of common code ENxx/APPLYPAY is "USEHIER," and the entered Org. Key-Object Code combination is found, but the amount encumbered is less than the amount to be relieved, then the extra amount to be relieved will be relieved using the hierarchy. If the short description is not "USEHIER" and the above case is true, the entire amount to be relieved will be relieved for the entered Org. Key-Object Code combination.

The common code ENAP/xxAPPLY (where xx corresponds to the ledger code for the hierarchy) is checked before ENxx /APPLYPAY. If ENAP/xxAPPLY exists, its values will override those of ENxx/APPLYPAY. ENAP/xxAPPLY can be set up in the same way as described for ENxx/APPLYPAY.