FI104 Umoja Funds Management Overview. Umoja Funds Management Overview Version 23 1

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1 FI104 Umoja Funds Management Overview Umoja Funds Management Overview Version 23 Copyright Last Modified: United 01-Aug-13 Nations 1

2 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Funds Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Summary Course Assessment Course Survey 2

3 Course Overview The purpose of the Umoja Funds Management Overview course is to provide a basic understanding of the Funds Management (FM) module within Umoja. This course teaches users about the new business processes and procedures as a result of the Umoja Foundation implementation. Prerequisite Review You should have completed the following prerequisite courses: Umoja Overview Umoja Master Data & Coding Block Overview Course Duration: 2 hours 3

4 Course Objectives After completing this course, you will be able to: Define the concept of Funds Management (FM) Explain the high-level FM process Explain the key FM terminology and business concepts Explain the Umoja roles required to perform the FM process Explain the FM Master Data maintenance elements Describe how FM is integrated into other areas of finance List the types of Umoja ECC reports available for FM 4

5 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Funds Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Assessment Course Survey 5

6 Module 1 Objectives After completing this module, you will be able to: Define the FM module of Umoja Explain the benefits of incorporating an integrated FM structure at UN Recognize how the FM module interacts with other modules of Umoja 6

7 Roles & Responsibilities The following roles are involved in Umoja FM: Budget Office User Budget Office Approver Creates initial appropriations and allocations for subsequent allotment issuances Evaluates and processes redeployment allotment requests Creates, amends, reviews and closes Earmarked Fund documents (Funds Reservation, Funds Pre- Commitment Travel Funds Commitments and Funds Blocks) per UN financial regulations and rules Approves and reviews Budgeting Workbench postings via workflow Reviews and certifies inputs of Budget-Office on Earmarked Funds documents (Pre-commitments, Funds Reservations and Funds Blocks) via workflow Liquidates open commitments Assists in opening and closing the budget periods, re-evaluates the Purchase Orders (PO s) and performs budget period-end fund balance carry forwards 7

8 Roles & Responsibilities The following roles are involved in Umoja FM: Accounting Office User Carries out the system reconciliation and re-initialization activities Opens the budget years when requested at year-end by the Budget Office - Approver FM Support - User Creates and updates the FM derivation rules for ensuring postings to FM actual ledger (9F) and the Availability Control Ledger (AVC) (Z1 and Z2) Undertakes the system reconciliations and re-initialization of the AVC ledger Performs Umoja module reconciliation activities Analyses the FM tables postings 8

9 Roles & Responsibilities The following roles are involved in Umoja FM: FM Funds Commitment Approver Reviews and approves Earmarked Funds documents Liquidates Earmarked Fund documents when remaining balances are no longer required Serves as the Approving Officer" for Funds Commitment approvals FM Earmarked Funds Documents Certifier Certifies Earmarked Funds documents Certifies Earmarked Fund documents for liquidation Serves as a Certifying Officer Liaises with Finance Budget Officer and Funds Management Requisitioner 9

10 Roles & Responsibilities The following roles are involved in Umoja FM: FM Master Data Maintainer Maintains and updates the FM Master Data elements, including: Fund Groups Commitment items/groups Budget periods/groups Functional areas/groups Funds centers/groups Funded programs/groups Carries out all additions, modifications and expirations of the Master Data elements, including updating of FM derivation rule values Liaises with the FM Support User role to update the FM derivation rules, as required 10

11 What is Funds Management? Funds Management (FM) is a module within Umoja configured to monitor revenues and expenditures, as well as budget-related business transactions within the organization. The primary tasks of the UN staff involved in the FM business transactions include: Recording the budget appropriations approved by the UN General Assembly and revenue allocations approved by the Controller Recording the subsequent allotments that permit additional spending authority Tracking the expenditures for individual responsibility areas Monitoring the funds movements in light of the budget available Processing the budget entry documents to allow spending Certification processes of budgets and associated budget documents Supporting the International Public Sector Accounting Standards (IPSAS) 24 Presentation of Budget Information and Financial Statements Carrying out the performance reporting activities 11

12 Why do we Need Funds Management? The UN records transactions on a modified cash basis. The FM module of Umoja is an effective means of monitoring budget at all levels of the organization. FM provides the ability to: Clearly report back to member states regarding appropriated, allotted and voluntary funds Present detailed analyses of budget utilization that can be reviewed at several levels of the organization Enhance the transparency within UN programs as to where funds are actually being expended Present improved reporting features for budgetary purposes Support UN s recent capabilities to adopt and support the IPSAS reporting requirements 12

13 How Are Budgets Analyzed Within Umoja Foundation? There are six ways of classifying and analyzing budgets in Umoja Foundation: Fund (Source of budget) Funds Center (Area of responsibility) Commitment Item (Nature of expenditure) BUDGET Functional Area (Programmatic view) Funded Program (Activities/operations carried out for defined period of time) Budget Period (Budget cycle) 13

14 Example: Analyzing Budgets within Umoja Foundation You could view or analyze the UN budget using one, or a combination of, these six ways: PK Fund OLA - UNIFIL United Nations General Fund UNA PK Reserve Fund Fund (Source of budget) Funds Center (Area of responsibility) UNIFIL Supply Section UNAMID Transport Section MONUSCO Human Rights Office UNSCOL Public Information Office Post Local General Service Staff Gross Salary OE Transport Service Air Crew OE Medical Service Commitment Item (Nature of expenditure) BUDGET Functional Area (Programmatic view) UNAMID Peace Process PKM Finance UNSCOL Special Coordinator DDR Disarmament, Demobilization & Reintegration Capital Construction Projects Funded Program (Activities/operations carried out for defined period of time) Budget Period (Budget cycle) P13 P14 B13 B15 14

15 Postings to Funds Management Postings to FM may originate from any other Umoja module. Umoja PS * Project Systems MM/SRM Material Management SD Sales & Distributions RE Real Estate External ProGen Actual Postings External Galileo FI Financial Accounting Sales Orders Purchase Req. Lease Outs CO Controlling (Cost Accounting) FM Funds Management GM Grants Management Limited Project Management functionality available in Cluster 1 & 2 15

16 Terms used in FM Module Here is an example of the postings created in various modules when purchasing goods from a vendor: Procure to Pay Process FI FM CO GM Purchase Requisition No Posting Pre-commitment No Posting Precommitment PO from Requisition No Posting Commitment No Posting Commitment Goods/Services Receipt(GR) DR Expense CR GR/IR Clearing Expenditure with GR status Actual Expenditure with GR status Invoice Receipt (GR) DR GR/IR Clearing CR Vendor Expenditure with invoice status Update expense if required Expenditure with invoice status Payment DR Vendor CR Cash and Bank Expenditure with payment status No Postings Expenditure with payment status 16

17 Key Activity Cycles within FM The three core components of FM are: Budget Distribution Issuance of funds Budget Implementation Budget consumption Budget Closing Operations Close and report on budget(s) 17

18 Learning Checkpoint 1 When you create a purchase requisition, a posting is documented in which Umoja modules? Select all that apply. A. Funds Management B. Controlling C. Grants Management D. Treasury 18

19 Learning Checkpoint 1 When you create a purchase requisition, a posting is documented in which Umoja modules? Select all that apply. A. Funds Management B. Controlling C. Grants Management D. Treasury Option A and C are the correct answers. A Purchase Requisition is equivalent to a pre-commitment. If the Purchase Requisition is funded by a grant, then an equivalent posting occurs in the Grants Management module. 19

20 Learning Checkpoint 2 Which of the following are core components of FM? Select all that apply. A. Budget Distribution B. Treasury C. Budget Implementation D. Budget Closing Operations E. Accounts Receivable 20

21 Learning Checkpoint 2 Which of the following are core components of FM? Select all that apply. A. Budget Distribution B. Treasury C. Budget Implementation D. Budget Closing Operations E. Accounts Receivable Options A, C and D are correct answers. Budget Distribution, Budget Implementation and Budget Closing Operations are key components of FM. 21

22 Module 1 Summary The key points covered in this module are: FM is a module within Umoja configured to monitor revenues and expenditures, as well as budget-related business transactions within the organization FM consists of six means of analyzing budgets under Umoja: fund, commitment item, funds center, functional area, funded program and budget period The three core components of FM are: Budget Distribution, Budget Implementation and Budget Closing Operations 22

23 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Funds Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Assessment Course Survey 23

24 Module 2 Objectives After completing this module, you will be able to: Explain Master Data and its uses within Umoja Describe how Master Data fits into the overall FM process Name the elements that constitute the FM Master Data 24

25 Key Terminology Key Term Commitment Item Fund Funds Center Funded Program Functional Area Budget Period Description It represents individual revenue and expenditure line items within FM. In Umoja, it represents the foundation for tracking, controlling and reporting on available financial resources. It is an organizational unit within the FM module that controls a budget. It is time dependent and has the valid from and to dates. Every funds center corresponds to a cost center. It is a program for operational purpose with a defined timeframe. It can range from simple activities to complex projects and can cross fiscal years, funding sources and organizational units. It is a Master Data element that is maintained within the FM module. It is also used in FI and CO to classify revenues and expenditures of an organization by function. It is a term used within FM. It relates to the validity period of budgetary transactions. 25

26 Key Terminology Key Term Funds Management Budget Consuming (Real) Non-Budget Consuming (Statistical) Funded Program Not Relevant (FPNR) Description It refers to the programmatic management of the sources and applications of funds. It is the tracking and controlling of detailed budgets through the monitoring of funds-relevant business transactions (expenditures and revenues) of an organization. This is a financial transaction that consumes the available budget by a defined amount. This is a financial transaction that is only recorded for reporting purposes. It does not consume the available budget. It refers to any funded program not receiving funding from a grant. 26

27 Master Data Review The purpose of this section is to explain the various FM Master Data elements to the end users. There is a separate set of users who maintain and update the Master Data. Defines your system bounds Funds Management Area Currency (USD) Day-to-day data which depends on accurate master data Budget Entry Documents, Funds Reservations, Funds Pre- Commitments, Funds Commitments and Funds Block Key Reference Data Master Data Key data that serves as a basis for transactions Fund, Budget Period, Funds Center, Functional Area, Commitment Item, Funded Program and Grant Only as good as underlying information Operational/Statutory Transactional Data (Documents) 27

28 Funds Management - Master Data Elements The following FM Master Data elements are referenced within FM: Fund Source of Budget Budget Cycle Budget Period Funds Center Area of responsibility Master Data Elements Activities of operations carried out for defined period of time within a project Funded Program Functional Area Commitment Item Programmatic view Nature of expenditure 28

29 Master Data Comprehensive Example Consider a scenario where the UN General Assembly passes the resolution to establish a new mission in Mali. Within FM, it could be assigned the following Master Data elements: Budget Period (Budget cycle) P14 ( Peacekeeping July 2013 June 2014 ) Funds Center (Area of responsibility) MINUSMA Transport Section Fund (Source of budget) United Nations Mission in Mali (MINUSMA) Commitment Item (Nature of expenditure) OE Transport Service Rental Ground Vehicle Functional area* (Programmatic View) PKM Transport Logistics * Functional Area is a Master Data Element spanning across missions, due to is programmatic nature Funded Program (Activities or operations carried out for defined period of time - within a project) FPNR (Funded Program Not Relevant) 29

30 Master Data: Commitment Item Commitment item represents individual revenue and expenditure line items within FM. The features of a commitment item are as follows: Commitment items can be statistical (non-budget consuming) or real (budget consuming) postings, for example, depreciation (statistical) and salary (real) Commitment items get their postings from various Umoja modules, for example, Purchase Orders (SRM), expenditures (FI) and secondary cost allocations (CO) Commitment items are linked to G/L accounts (FI) and secondary cost elements (CO) Commitment items can also be created for FM use only. In such cases, they would be used to record allotments only and a group of commitment items will be tied to it for recording purposes. A group of commitment items is referred to as a commitment item group. A similar concept is used with object code groups (classes), such as class 220 or

31 Coding Block Elements Simultaneous Posting and Derivation: Integration Below are the coding block elements and the corresponding entries in FI, CO, FM and GM: Module FI Financial Acct CO Controlling FM Funds Mgmt GM Grants Mgmt * ENTERPRISE STRUCTURE CODE COMPANY CODE CO AREA FM AREA GL Acct related GL Account Cost Element Commitment Item Sponsored Class Funding Source Related Organizational & activity related Programmatic Financial Period Related Fund Fund Fund Fund Grant Grant Grant Grant Business Area Segment Cost Center (org structure: Department, Division, Unit) Internal Order Work Breakdown Structure Profit Center Funds Center Funded Program Funds Center Sponsored Program Functional Area Functional Area Functional Area Functional Area Fiscal Year Fiscal Year Fiscal Year Grant Budgeted Validity Period Budget Period Budget Period Budget Period Budget Period Legend: FI Entry Derived Derived or entered Underlined items are owned by corresponding module 31

32 Master Data: Fund UN is a fund-based organization. A fund in Umoja represents the foundation for tracking, controlling and reporting on available financial resources. Other Master Data elements are tied to a fund. Some features of funds are as follows: They can be grouped together for reporting and controlling purposes For example, a Fund Group can be created to report on overall Peacekeeping operations Select Types of Funds* Regular Peacekeeping Voluntary SPM UNSCOL 10UNA UNIFIL 20OLA TF AU-UN Joint Mediation Support Team Darfur- 32JMX and 33JMS * Fund types shown are only applicable for Umoja Pilot and Cluster 1 32

33 Master Data: Funds Center Funds center is an organizational unit within FM that controls a budget. The features of funds center are as follows: Each funds center is linked to a cost center (1-to-1 basis) Funds centers can be grouped for reporting and controlling purposes Budget is consumed as postings are made to funds centers with committed and actual values The life of a funds center can be defined using valid from and valid to dates 33

34 Master Data: Funds Center* Conceptually, a funds center is an organizational unit within the FM module (responsibility areas, departments) that controls a budget. It represents the structural grouping into departments or areas of responsibility within the organization. Funds Center AB Central Department A Central Department B Department A1 Department A2 Department B1 Department B2 * Illustrative 34

35 Example of UNIFIL Funds Centers* Business Area Force Commander Conduct & Political & Military Admin Humanitarian Legal Affairs Security Discipline Civil Allocations Only Allocations Only Allocations Only Director of Mission Support Chief Budget Officer Senior Admin Officer Funds Center Funds Center Aviation Logistics Funds Center Funds Center Supply Military Support Chief of Integrated Support Services Funds Center Mov Con Engineering Transport Property Funds Center Funds Center Funds Center Funds Center Chief Regional ICTS Funds Center Funds Center Funds Center Funds Center Procurement Finance HR Chief of Administration Services Funds Center General Services Intgt. Training Unit Medical * Illustrative Funds Center Funds Center Funds Center Note: Cost Center = Funds Center 35

36 Master Data: Functional Area A functional area is a Master Data element that is maintained within the FM module. It is also used in FI and CO to classify revenues and expenditures of an organization by function. Some features of functional area are as follows: It provides a programmatic view of UN from a budgetary perspective The life of a functional area can be defined using valid from and valid to dates It will be used to determine UN IPSAS segments (used for financial statement reporting) Some examples of functional areas include UNFICYP Political and Civil Affairs, PKM Transport Logistics, PKM Medical, SPM Safety and Security and UNSCOL Special Coordinator. 36

37 Master Data: Budget Period Budget period is a term used within FM. It relates to the validity period of budgetary transactions. A budget period in Umoja represents the validity for which the budget is approved Budget period provides a time dimension to all transactions in the context of tracking and controlling the budget It is independent of the fiscal year and can have freely definable time validity Biennial budget period * Peacekeeping period * Begins 1 January of an even year and ends on 31 December of an odd year Biennial budget periods begin with B and then denotes the last 2 numbers of the year Examples: B11, B13, B15 Begins 1 July of one calendar year and ends 30 June of the following year Examples: P11, P12, P13, P14 * For all Budgets in Umoja: Fund stays constant, only budget period changes 37

38 Budget Period: Examples Note: All examples given below are presented using the following format: Current System(s) Term = Umoja Budget Period + Fund = Validity of budget period (Start Date to End Date) Peacekeeping Examples (UNIFIL) OLA13 = P13+20OLA = July 2012 till June 2013 OLA14 = P14+20OLA = July 2013 to June 2014 Special Case Peacekeeping: Extended Addressed by Procurement Regular Budget Examples (HQ/UNOG/SPMs) UNA13 = B13+10UNA = January 2012 to December 2013 UNA15 = B15+10UNA = January 2014 to December

39 Learning Checkpoint 1 Which of the following is NOT a FM Master Data element? Select the correct option. A. G/L code B. Commitment item C. Functional area D. Funds center E. Budget period 39

40 Learning Checkpoint 1 Which of the following is NOT a FM Master Data element? Select the correct option. A. G/L code B. Commitment item C. Functional area D. Funds center E. Budget period Options A is the correct answer. G/L code is not a FM Master Data element. 40

41 Learning Checkpoint 2 A peacekeeping budget period beginning from 1 July 2014 will be denoted as. Fill in the blank with the correct option. A. P14 B. P15 C. B13 D. B15 41

42 Learning Checkpoint 2 A peacekeeping budget period beginning from 1 July 2014 will be denoted as. Fill in the blank with the correct option. A. P14 B. P15 C. B13 D. B15 Option B is the correct answer. The Peacekeeping budget periods begin on 1 July of one calendar year and end on 30 June of the following year. They are denoted with a P within Umoja. 42

43 Module 2 Summary The key points covered in this module are: Master Data is the business data applicable across business functions There are six elements of Master Data: fund, funds center, commitment item, functional area, funded program and budget period Fund represents the lowest level of funding used for tracking, controlling and reporting on available financial resources Funds center is an organizational unit that controls a budget Commitment item is the functional grouping of expenditures and revenues Functional area is a Master Data element used within FM and FI/CO to classify revenues and expenditures of an organization by function 43

44 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Assessment Course Survey 44

45 Module 3 Objectives After completing this module, you will be able to: Clarify the role Umoja plays in the UN Budgeting process Explain the FM Budgeting Distribution process within Umoja Describe how the Budget Control System (BCS) is used to manage budget within Umoja Describe the interactions between budgeting and other business process areas within Umoja 45

46 Key Terminology Appropriation Key Term Appropriation Resolution of the Budget Resolution Appropriation Line Budget Authority Description It is the highest level of funding approved by the General Assembly. The amounts voted by the legislative organ for specified purposes for a financial period, against which obligations may be incurred for those purposes up to the amounts, so voted. It is a resolution by the legislative organ of the organization approving the budget appropriations for a financial period and their financing. It is the largest subdivision of the an organization in which the executive head is given authorizations to make transfers without prior approval. It authorizes the consumption of budget through appropriation, apportionment, allotment, sub-allotment, allocation and sub-allocation. 46

47 Key Terminology Key Term Entry Transfer Supplement Return Description It refers to the recording of appropriations in Umoja. It is used to: Move budgets from non-consuming budget types (e.g. appropriations) to consuming budget types (e.g. allotments) Sub allot budgets within or between commitment item groups It refers to subsequent additions to the initial appropriation budget that might be made after the original budget has been approved. It is the process used to give back to member states the unused portion of the budget. 47

48 Key Terminology Key Term Allotment Budget Budget Control System (BCS) Description It makes available the current period amount for commitment or obligation. A financial authorization issued by/or on behalf of the executive head of an organization to an official or an unit to incur obligations for specific purposes and within specified limits, during a defined period. It is a plan in financial terms for carrying out a programme of activities in a specific period. A programme budget focuses upon the work to be undertaken and the objective sought through that work. It emphasizes the ends to be achieved and translates them into the costs required for their implementation, decisions relate both to resource levels and to the results to be achieved. It is a set of tools used within Umoja to establish and manage budget and compare budget with actuals for sufficiency checks. 48

49 Key Terminology Key Term Budgeting Workbench Umoja ECC Description It is the FMMB input screen used for creating budget entry documents and distributing budget within BCS. It is the main Umoja component comprising various modules. 49

50 Budget Distribution Budget distribution refers to the different processes that result in budgets being made available for spending by authorized persons. These processes include: 1. Enter: Different kinds of appropriations are recorded in Umoja using this process 2. Transfer: Appropriations are not budget consuming, hence no spending can be made against them. For spending to proceed, appropriations are transferred to allotments. In addition, allotments can be further transferred to other types of allotments (sub allotments and redeployments) 3. Supplement: If there is a need to increase an appropriation for whatever reason, the process used is supplement 4. Return: When budgets are unused at the end of a given period, they are returned to the General Fund 50

51 Budget Distribution Key Benefits Major benefits of the Budget Distribution process are: Multiple entries of allotments in Sun system and Mercury in different missions will be eliminated, as appropriations will be entered and allotted centrally Consistency in the allotment process across the missions will be enhanced Complete view of appropriations and allotments will be available for the entire organization on a real time basis 51

52 Umoja Budgeting Activities: Process The following process explains how the standard peacekeeping budgeting activities will occur in Umoja: After the budget is approved by the General Assembly, appropriations are made. The total appropriation level (summary level equivalent to the total amount of the appropriation) is entered in IMIS. The UN Controller may issue an advance allotment. Allotments are entered in Umoja only at the class level. Allotments for the following are still managed in IMIS: International Staff Salaries, Troop Costs, COE and Self-Sustainment. Actions must be subsequently taken within Umoja to distribute budget for use against pre-approved and approved expenditures. These activities will pertain to sub-allotments and redeployments. Note: Budgets exist in Umoja to enable budget control and to allow spending. Actual budget formulation continues to be carried out outside Umoja and uploaded into the system. For the budget period 2014, a control total will be entered in Umoja (at the appropriation level). Process step performed in Umoja 52

53 Entering the Budget within Umoja The budget can only be entered manually at the line item level. Budgeting transactions within Umoja will provide UN the capability to automatically inform identified counterparts of select budgeting activities, eliminating the need for manual activities related to such periodic communications. Note: Biggest change for Peacekeeping: You may now transfer funds across commitment group/class via workflow. 53

54 Budget Control System Description In Umoja, the tool used to enter a budget allotment, as well as monitor and report on its use is the Budget Control System (BCS). BCS provides the users with a budgeting workbench, a functionality used for managing budget entries and budget changes during the implementation, subsequent to the approval of budgets. This tool is used to capture all phases of budget data, from advance to initial allotment to all changes during a budget year. The BCS holds information related to budget entries, commitments, actual expenditure and real and statistical postings. For a transaction to be performed successfully in the budgeting workbench, three key elements of the system must be combined in a logical manner. These elements are: Budget Process Document Type Budget Type 54

55 Budgeting Workbench Processes As indicated earlier, the four processes are Enter, Transfer, Supplement and Return. Approval for any transaction raised using any of the processes is through workflow. Enter (Appropriations) Used to bring appropriations into Umoja Transfers (Allotments and Redeployments) Used to move appropriations to allotments or to redeploy funds within the same or across commitment item groups Supplement (Commitment Authority) Used when additional resources are needed in the same budget period Return (Savings) Unused budgets or savings must be given back to the General Fund to be returned to member states 55

56 Reports The reports used across the Budget Distribution and Budget Closing processes are: Budget Availability Control (AVC) Report Shows spending authority at various funds centers Is used to review budget availability and consumption at fund control level Budget View by Document Type Report Lists budget entry by budget type and document type Displays entry amount and detailed accounting elements associated with document type Funds Budget Overview Report Shows an overview of budget amounts and availability Is used to review budget availability and consumption by filtering at the fund, funds center, funded program or commitment item level 56

57 Learning Checkpoint 1 In Umoja, if a UN staff member needs to upload additional budget due to an increase in budgetary needs for select encumbrances/activities by redeploying funds from another, they would carry out a in BCS. Select the correct option. A. Enter B. Return C. Direct Deposit D. Transfer 57

58 Learning Checkpoint 1 In Umoja, if a UN staff member needs to upload additional budget due to an increase in budgetary needs for select encumbrances/activities by redeploying funds from another, they would carry out a in BCS. Select the correct option. A. Enter B. Return C. Direct Deposit D. Transfer Option D is the correct answer. A transfer is equivalent to a redeployment of budget. All budgetary activities will be carried out within the BCS s budgeting workbench. 58

59 Learning Checkpoint 2 BCS enables you to enter appropriated budgets for spending authority by which methods? Select the correct option. A. Telegraph B. Manually, using line item entries C. D. Fax 59

60 Learning Checkpoint 2 BCS enables you to enter appropriated budgets for spending authority by which methods? Select the correct option. A. Telegraph B. Manually, using line item entries C. D. Fax Options B is the correct answer. Using BCS, you may enter appropriated budgets for spending authority manually, using line item entries. 60

61 Module 3 Summary The key points covered in this module are listed below: Budgets exist in Umoja to enable budget control and to allow spending After the budget is entered, it becomes available for use against Earmarked Funds and other financial transactions A budget period is the period of available budget authority. It is assigned to every fund within Umoja The four primary activities carried out in the budgeting workbench are budget entry, return, supplement and transfer 61

62 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Summary Course Assessment Course Survey 62

63 Module 4 Objectives After completing this module, you will be able to: Describe the Earmarked Funds process Differentiate between the types of Earmarked Funds Identify the Master Data elements used within Earmarked Funds 63

64 Key Terminology Key Term Pre-encumbrance Earmarked Funds Funds Reservation Funds Block Description It is an informal reservation of allotted funds resulting from the approval of a requisition. They are reserved credits that support the settlement of business undertakings. These business transactions require setting aside budget resources for expected expenditures. It is a type of Earmarked Fund to reserve budget amounts for a future business event without the immediate creation of a Purchase Order or Purchase Requisition. Funds reservations can be liquidated against other Earmarked Funds documents, as well as against actual expenditures. It is a type of Earmarked Fund to block funds from use against any expenditure. A funds block cannot be liquidated against any other commitment or actual expenditure. 64

65 Key Terminology Key Term Pre-commitment Commitment Travel Commitment Description It is a type of Earmarked Fund to pre-encumber funds in current and future periods, if the budget is available. It is a reservation of an estimated amount of funds in anticipation of entering a binding agreement to spend these funds on a future date. It is a type of Earmarked Fund to encumber funds in current or future periods, if budget is available. Within Umoja, a precommitment is required in order to create certain funds commitments. It is a type of Earmarked Fund to encumber official travel funds in current and future periods, if the budget is available. This particular type of commitment does not require a precommitment. It is only used for upcoming travel costs. 65

66 Types of Earmarked Funds There are five distinct types of Earmarked Funds and they can take the following form: Earmarked Funds Funds Pre-commitments Funds Commitments Funds Reservations Funds Blocks Travel Commitments Note: Funds Reservations and Funds Blocks are typically created and managed at UNHQ. 66

67 How Are Earmarked Funds Utilized? Within Umoja FM, Earmarked Funds documents are used to record entry of reserved credits that support the settlement of business undertakings. Specific to Supplier Relationship Management (SRM), Umoja funds commitments are used for a similar purpose. These business transactions require setting aside budget resources for expected expenditures. Here are some examples: Funds Pre-commitment Example: Purchase Requisition, MOD/OBMO Requisition Funds Commitment Example: Purchase Order, MOD/OBMO Travel Funds Commitment Example: Official Travel for Training Note: MOD s will also require a Funds pre-commitment (not currently carried out in SUN). Funds Reservation Example: Elections, Evacuation of Mission Staff Budget Funds Block Example: DDR 67

68 Earmarked Funds Process The Earmarked Funds process has four main activities: Creation: All Earmarked Funds are created in Umoja Approval: The Earmarked Funds will go through appropriate approvals via workflow Utilization: All expenditures will be recorded against Earmarked Funds Liquidation: Upon Earmarked Funds being appropriately applied, a set to complete functionality in Umoja confirms its utilization 68

69 Earmarked Funds & Umoja Funds Commitments: Challenges & Benefits Challenge Benefits UN works with large budgets spread over extended periods, which are implemented using fragmented systems Manual tracking of funds obligating documents Currently, budgetary reporting is not uniformly carried out (example: travel costs) Multiple systems used for budgetary reporting purposes Automated tracking of Earmarked Funds documents and other funds commitments, which contribute to accurate reporting Improved visibility into budget implementation (consolidated reporting for expenditures) Consistency in budget implementation, since all funds holdings are being created in Umoja Control on budget overruns in real time at point of creating a hold on funds Facilitate compliance with IPSAS 24 for presentation of budget information in financial statements 69

70 Earmarked Funds Journal Report There are several reports available to assist the UN staff to review the items related to Earmarked Funds. One of the more commonly used Umoja ECC reports is the Earmarked Funds Journal Report. Earmarked Funds Journal Report Provides a complete list of all Earmarked Funds Is used to review all Earmarked Funds, or a specific subset Example: all funds reservations, funds blocks or precommitments FM Document Journal Report Provides a complete list of all Earmarked Funds, including funds commitments created within SRM (Procurement) Is used to review actual vs. budgeted expenditures, as related to Earmarked Funds 70

71 Learning Checkpoint 1 A cannot be liquidated against other Earmarked Funds documents and actual expenditure. Fill in the blank with the correct option. A. Funds reservation B. Funds block C. Funds pre-commitment D. Funds commitment 71

72 Learning Checkpoint 1 A cannot be liquidated against other Earmarked Funds documents and actual expenditure. Fill in the blank with the correct option. A. Funds reservation B. Funds block C. Funds pre-commitment D. Funds commitment Option B is the correct answer. A funds block is used to completely block off funds and cannot be liquidated against other Earmarked Funds documents and actual expenditure. 72

73 Learning Checkpoint 2 Which type of Earmarked Fund is used for education grants? Select the correct option. A. Pre-commitment B. Funds commitment C. Travel commitment D. Funds block 73

74 Learning Checkpoint 2 Which type of Earmarked Fund is used for education grants? Select the correct option. A. Pre-commitment B. Funds commitment C. Travel commitment D. Funds block Option B is the correct answer. Funds commitment is used to encumber funds in current and future periods. 74

75 Module 4 Summary The key points covered in this module are listed below: Earmarked Funds are business transactions that claim already allocated budget for expected expenditures Funds pre-commitments, funds commitments, funds reservations, funds blocks and travel commitments are grouped under Earmarked Funds Funds are earmarked in advance to ensure that they account for and reserve funds required for future transactions Funds block are used for blocking funds from use against expenditure. These cannot be liquidated against any other commitment or actual expense postings 75

76 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Summary Course Assessment Course Survey 76

77 Module 5 Objectives After completing this module, you will be able to: Explain the purpose of the Budget Closing Operations process Differentiate between month-end closing and budget period closing List the IPSAS requirements for budget closing 77

78 Budget Closing Process The FM Budget Closing process involves a number of activities that are carried out in sequence before closing the FM ledger, to ensure that the fund balance is accurate. After the Budgeting Closing process is complete: Only valid obligations are retained in FM ledgers, in compliance with the financial regulations and rules. Sequence of FM activities Accuracy of funds balance 78

79 IPSAS Requirements IPSAS requires closing budgets to accomplish the actions mentioned below. While IPSAS 24 (on budget reporting), does not require any change to the budget basis, there are still implications related to budgeted amounts in the UN system organizations: Dual recording will be required to prepare the Statement of Comparison of budget and actual amounts. Each transaction will be recorded on two bases (budget and financial reporting). Actual amounts on the budget basis will be reconciled to budget amounts The variance of actual amounts against appropriation amounts and variance of final budget against original budget Annual budget amounts will be required. Thus, multi-year budget amounts will have to be split into annual amounts. The formulation and presentation of approved budgets does not have to change Analysis and explanation of major variances of budgeted to actual amounts must be issued in conjunction with the financial statements 79

80 Primary FM Activities within Budget Closing Process The primary FM activities related to budget closing consist of the following activities: Review all current and non-liquidated commitments and close out expiring ones (based on budget period) Liquidate appropriate pre-encumbrances and encumbrances Review pending requests for transfers (redeployments) that are within their delegated authority Revalue foreign currency transactions 80

81 Month and Budget Period End Closing The budget closing operations in FM has two parts: Month End Closing Periods can be closed for the entire organization or by individual FM account assignments Month-end closing includes the following steps: Open posting period Close posting period Revaluate open commitments Budget Period Closing Budget period end closing includes the following steps: Close open commitments Transfer residual budget to non-consumable budget type as balance must be returned to member states Review and maintain valid Earmarked Funds and liquidate the expired Earmarked Funds Note: Carry forward is not required while closing and transferring a budget period due to activation of MYBE. 81

82 Specific FM Closing Activities Activities carried out in Field (Mission) and those at Headquarters (Centrally) are as follows: Field Activities Review open commitments by budget period, fund, document value type Liquidate open commitments by budget period, fund, document value type Review parked budget transfer documents within delegated authority Headquarter Activities Create budget period for new fiscal year Review parked Earmarked Fund documents (obligations) Liquidate open commitments based on statuary expiration date Review and approve parked budget documents 82

83 Budget Closing Operations - Integration After budget closing activities are completed: A new budget and posting period is opened Open commitments (obligations) are liquidated (per UN statutory limits). Operational costs are completed after twelve months. Open commitments related to member states are completed after five years Budget balances are reconciled with other financial postings Budget variances are analyzed in accordance to closing instructions to prepare the budgetary performance report Analysis and explanation of major variances of budgeted to actual amounts issued in conjunction with the financial statements as per IPSAS 24 requirement 83

84 Learning Checkpoint 1 Within FM, budget closing operations can be summarized as being comprised of which of the following two over-arching activities? Select all that apply. A. Month-end closing B. Budget period end closing C. Posting period D. Liquidating Commitments 84

85 Learning Checkpoint 1 Within FM, budget closing operations can be summarized as being comprised of which of the following two over-arching activities? Select all that apply. A. Month-end closing B. Budget period end closing C. Posting period D. Liquidating Commitments Option A and B are the correct answers. Monthend closing and budget period end closing are the two core activities that the UN Staff will participate in, as related to budget closing operations within the FM module. 85

86 Module 5 Summary The key points covered in this module are: The FM Budget Closing process involves a number of activities that are carried out in sequence before closing the FM ledger, to ensure that the fund balance is accurate The primary FM activities related to budget closing are: Review all current and non-liquidated commitments, liquidate appropriate pre-encumbrances and encumbrances, review pending requests for transfers and revaluate foreign currency transactions The budget closing operations in FM have two parts: Month-end closing and budget period closing 86

87 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Funds Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Summary Course Assessment Course Survey 87

88 Course Summary The key points covered in this course are: FM is the ability to monitor revenues, expenditures and funds-relevant business transactions within the organization Master Data is the business data applicable across business functions. There are six elements of Master Data: fund, funds center, commitment item, functional area, funded program and budget period A budget period is the period of available budget authority. It is assigned to every fund within Umoja Budgetary information is entered or uploaded into Umoja to authorize the spending authority Earmarked Funds are business transactions that claim already allocated budget for expected expenditures 88

89 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Funds Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Summary Course Assessment Course Survey 89

90 Course Assessment Now that you have completed all the modules in this course, you can test your knowledge by completing the Course Assessment. To receive credit for completing this course, you must pass this assessment with a minimum score of 90%. To complete the assessment you must return to the Learning Management System: 1. Log into Inspira 2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning 3. Search for the name of the course under the My Learning Activities section 4. Click the Start link of the course assessment 5. Click the Submit button once you have completed the assessment 90

91 Agenda Course Introduction Module 1: Umoja Funds Management Introduction Module 2: Funds Management Master Data Module 3: Budget Distribution Module 4: Budget Implementation Module 5: Budget Closing Operations Course Summary Course Assessment Course Survey 91

92 Course Survey Your feedback is important to the continuous improvement of our training program. Please complete the evaluation for this course using the following steps: 1. Log into Inspira 2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning 3. Search for the name of the course under the My Learning Activities section 4. Click the Start link of the course survey 5. Click the Submit button once you have completed the course survey 92

93 Congratulations! You have successfully completed the Umoja Funds Management Overview course. 93