IFS/Periodical Cost Allocation (PCA) is used to perform periodical operations on balances in the general ledger/ internal ledgers. The most typical operation is cost distribution, e.g., allocation of indirect costs to cost centers.
2. Basic Data Requirements (BDR)
3. Description of the Process Model
5. A PCA Procedure: Example with Step Type "Prepare Distribution" and Distribution Type "Automatic"
6. A PCA Procedure: Example with Step Type "Prepare Factor" and Factor Type "Automatic"
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The periodical operations are performed by procedures. A procedure consists of a number of steps. The cost allocation can be made by using distribution keys and factors, included in the steps. The distribution keys and factors either can be entered manually or calculated automatically from period balances.
The procedure is run once per accounting period. This normally occurs when all work with the accounting in the company is finished and the period is about to be closed.
If the results of the procedure are not satisfactory, there are possibilities to rollback the procedure. At the rollback, a correction voucher is created. It is also possible to rollback to the status the general ledger had before execution, i.e., the system removes information on vouchers from the general ledger. This provides the user with a good simulation tool to test different scenarios.
Since the steps in a procedure are usually almost the same for the various accounting periods, there are functions for copying procedures, steps, distribution keys, and factors from an existing period to a new one. The copied data can then be changed manually. Procedures, steps, distribution keys, and factors can also be copied to another company in the same database.
IFS/Periodical Cost Allocation is integrated with IFS/Enterprise, IFS/Accounting Rules, IFS/General Ledger, and IFS/Internal Ledger.
2. Basic Data Requirements (BDR)
Before you start using IFS/Periodical Cost Allocation, you should be able to access an existing company in IFS Financials and also to enter the required basic data.
The Company page contains a number of sub menus, depending on the components installed.
Rollback Mode. Rollback mode determines how the rollback of vouchers will take place. There are two modes of rollback: Correction and Rollback. In Correction mode, the system creates correction vouchers for executed steps and performs the updating routine. In Rollback mode, the system returns to the status that the general ledger had before execution, i.e., the system removes information on vouchers from general ledger. See also the Rollback of Steps section below. Note that if Rollback is selected, it will not be possible to update periodical cost allocation vouchers (function group Z vouchers) from the ordinary General Ledger/Internal ledger updating functions. If Correction is selected, it will be possible to do so, but is not recommended, as periodical cost allocation vouchers should normally be updated from the periodical cost allocation step type Update Ledger.
Execution Mode. Execution mode determines how many steps can be executed per each operation. There are two modes: Single and Batch. In Single mode it is only possible to execute the next step in the sequence. The steps are executed one by one. In Batch mode it is possible to select a step up to which all the steps are to be executed. The execution stops after the last step in the interval or earlier if an error occurs during the execution.
Period Sequence Validation. The period sequence validation determines whether the system should limit the state of validation of previous periodical cost allocation procedures to the given year when activating a new procedure. If the period sequence validation is Over Years, then it would not be possible to activate a periodical cost allocation procedure without completing the procedures for the previous periods. If the period sequence validation is Within a Year, it would be possible to activate a periodical cost allocation procedure for a new year without completing the procedures for previous years. However the system will not allow the user to continue with a new procedure if it has not been completed for the previous periods of the same year.
User Group. Use List of Values and enter the identity for the user group that can use the PCA component. The user group must be entered via Accounting Rules/User Data. The user group should exclusively be used for running the PCA routine only.
Allow PCA for External Projects. This option determines whether periodical cost allocation should be allowed for external project. The option will be desabled by default. If enabled, it will be possible to use periodical cost allocation for external projects, but the periodical cost allocation transactions against external projects will only affect the GL Project Accounting. It will not be possible to follow up/view these transactions from the IFS/Project.
3. Description of the Process Model
Working in the IFS/Periodical Cost Allocation starts with the definition of a PCA Procedure. The procedure is defined and performed for a certain accounting period. This normally occurs when all the company's accounting work is nearly finished and the period is about to be closed. Only one user group in the company is allowed to use PCA.
A procedure consists of a number of Steps. There are five step types to be used. Each step type can be used several times in the procedure. The IFS/Periodical Cost Allocation contains the following step types:
If a distribution or a factor is used in a step, they must be defined before they can be used in the step. A distribution (the distribution key) is a list of code strings, each with an assigned percentage. It is used when voucher rows for the allocation are created. A factor is a value used to multiply all posting values for a step. Distributions and factors either can be entered manually or they can be calculated automatically on period balances.
When all the steps are defined, the procedure is activated. This means that the steps can be executed. All steps in the procedure are executed according to the step number.
After execution of steps, there are possibilities to analyze modified balances via analysis pages in IFS/General Ledger, e.g., via GL Balance Analysis. If the balance modifications are not satisfactory, it is possible to rollback execution of several steps, modify the step definitions, and then execute them again. The result of the allocation can also be checked via reports.
When the results of the entire procedure are satisfactory, the procedure is closed. In the following period, a new procedure is defined. Since the steps in a procedure are usually almost the same for the various accounting periods, there are functions for copying procedures, steps, distribution keys, and factors from an existing period to a new one. The copied data can then be changed manually.
After execution of steps, when the balance modifications are not satisfactory, there are possibilities to rollback execution of a step or several steps. It is important to be aware that several steps can be rolled back only when the Execution Mode field in the Periodical Cost Allocation record sub menu in the Company page has value Batch. When the Execution Mode field has the value Single, only the last executed step in order can be rolled back.
Rollback of a step or several steps is done via the Rollback command in PCA Step Definition. When the Rollback command is used for a step in Batch mode, this step and all succeeding executed steps are rolled back in reversed order. It is presumed that, in Single mode, the step to be rolled back is the last one executed and the next step either does not exist or is not executed.
There are two modes of rollback. This mode is specified in the Periodical Cost Allocation record sub menu in the Company page. The Rollback Mode field can be Correction or Rollback. This mode determines if rollback is carried out by:
Note that, for each step creating a voucher, a reference to this voucher is kept and can be seen by using the View Vouchers command. Additionally, such information about a voucher can be seen for rollback of step Update GL.
After rollback, the step is marked as not executed (status Defined).
A. Rollback Mode: Correction
The actual rollback is performed via correction vouchers created on the basis of the original vouchers created during step execution. The correction voucher is a copy of the original voucher but with reversed amounts (and a correction flag set on each row).
The following description starts with a detailed description of the rollback of each step type. When all steps are described, full process is specified.
Rollback of Step: Update General Ledger
This is performed by creating one correction voucher. For all steps of the type Generate Voucher or Manual Voucher, between the previous step of type Update GL (or the first step) and the one to be rolled back, correction postings are created to correct balances affected by execution of the Update GL step. Next, the updating routine is executed with this correction voucher.
For each step that was used to create Generate Voucher or Manual Voucher, a voucher is created based on the original one with the original voucher being restored.
Rollback of Step: Generate Voucher, Manual Voucher
This applies to steps of type Generate Voucher and Manual Voucher. It is presumed that the next step is not executed and the one to be rolled back has voucher in hold table. From the same presumption, this voucher is the last one created during PCA procedure execution. The voucher is then removed from the hold table and the voucher counter is decreased (the last number in voucher series definition in IFS/Accounting Rules component). If factor or distribution was used in the step and there are no previous steps using this factor or distribution, its status is changed to Prepared.
Rollback of Step: Prepare Factor
In all step definition rows, the Amount field is cleared. Then, the value of factor is cleared and status is changed to Defined.
Rollback of Step: Prepare Distribution
In all step definition rows, the Amount field is cleared. Then, distribution items are removed and status is changed to Defined.
Full Process of Rollback - General Case
The general case is specified. Rollback of any given step includes rollback of all succeeding steps. This is done by executing rollback of each individual step in reverse order.
If there are one or more succeeding steps of type Update GL, then first create a correction voucher with correction postings based on all steps starting from the previous step of type Update GL (or the first step in the procedure). Next, run the updating routine with this one voucher. Then, the system creates (restores) one voucher for each step of type Generate Voucher or Manual Voucher between the one to be rolled back and the previous step of type Update GL (or the first step in the procedure).
Note that each restored voucher belongs to one step. Next, rollback all steps succeeding the one (it changes status of factors and distributions).
B. Rollback Mode: Rollback
The main difference, compared to Rollback Mode: Correction is the principle of performing rollback of vouchers that already have been updated to the general ledger. Those vouchers are moved back to the hold table (with information from general ledger removed), i.e., amounts from voucher rows are subtracted from balances and project accounting.
Note that, if vouchers were processed by the updating routine with some other vouchers that were not created during PCA execution, rollback fails. If the vouchers were processed separately but not under control of the PCA component, it should not create any problems. Since rollback is supposed to put the system to status before execution, the information about updating routine (such as the update journal) is also cleared. This is not possible if other vouchers, i.e., vouchers not created by PCA, were included in the updating routine.
5. A PCA Procedure: Example with Step Type "Prepare Distribution" and Distribution Type "Automatic"
The example shows how costs are distributed from account 607X, excluding cost centers, to the same account including cost centers, i.e., costs are distributed over cost centers. The distribution is done according to the proportions of revenues on account 301X. Code part B is used for cost center.
The period balance table contains the following revenues:
Account Cost Center Balance
301X 820 -300
301X 830 -400
301X 840 -600
The period balance table contains the following costs:
Account Cost Center Balance
607X -- 10000
Before starting to work on this example, see the sections above. Replace 301X and 607X with real account numbers.
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Specify Procedure
Specify Distribution
Enter Step 1 - Step Type: Prepare Distribution
Definition of Step Details (Step 1)
Enter Step 2 - Step Type: Generate Voucher
Definition of Step Details (Step 2)
Enter Step 3 - Step Type: Update General Ledger
Set Active
Note the conditions for activating a procedure.
Execute Step 1
Execute Step 2
Execute Step 3
Execute step 3. A dialog is displayed showing that there is one voucher waiting for update to the general ledger. Check the Balance in the General Ledger. Open the GL Balance Analysis. Check the balance.
Close the Procedure
6. A PCA Procedure: Example with Step Type "Prepare Factor" and Factor Type "Automatic"
The example shows how price differences for purchase of raw material are allocated to the account for material burden. A factor, calculated by the PCA, is used for the allocation. To simplify the example, only one code part (the account) is used in the code strings.
The period balance table contains the following balances:
Account Balance
14XX Inventory, Raw Material 300
40XX Material Burden 200
42XX Price Diff., Raw Material 6
The procedure contains the following three steps:
Step 1: Calculate the factor used for allocation of the price differences. The factor is calculated as a division of material burden and raw material in the inventory, multiplied with 100.
Material Burden/Inventory, Raw Material * 100 = Factor X%
Step 2: Create the voucher and place it in the hold table. The following two postings are created:
Debit on account 40XX: Price Diff. * Factor X%
Credit on account 42XX: Price Diff. * Factor X%
Step 3: Update the voucher to the general ledger.
Before starting to work on this example, see the sections above. Also replace 14XX, 40XX, and 42XX with real account numbers.
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Specify Procedure
Specify Factor
Enter Step 1 - Step type: Prepare Factor
Definition of Step Details (Step 1)
Definition of Step Details (Step 1, continue)
Enter Step 2 - Step Type: Generate Voucher
Definition of Step Details (Step 2)
Enter Step 3 - Step Type: Update General Ledger
Activate the Procedure
Note the conditions for activating a procedure, e.g. that all the preceding procedures must have the Closed status before the current procedure can be activated.
Execute Step 1
Execute Step 2
Execute Step 3
Execute step 3. A dialog is displayed showing that there is a voucher in the hold table. Confirm the information. The voucher is then updated to the general ledger. Open GL Balance Analysis and check the balance.
Close the Procedure