Budget Planning in AX 2012 R2

K3 BLOGAX 15 JAN 2013 3:30 AM 

0

Background

Prior to Microsoft Dynamics AX 2012, budgeting was an unsophisticated

process with basic setup, intended mainly for use in financial statements.

The ability to define budgets in a hierarchical structure was restricted to the

creation of budget models and sub-models against which ledger budgets

could be entered, while integration to other areas was limited to the

generation of ledger budgets from budget data entered against fixed assets

and projects. There was also no process to review and sign off a new budget,

or to approve changes to an existing budget.

In Microsoft Dynamics AX 2012, major changes and improvements to

budgeting were introduced, which included the introduction of a Budgeting

module in its own right, separate from the General Ledger. As part of the

release of Microsoft Dynamics AX 2012 for Public Sector, Microsoft

recognised the demand from public and larger private sector organisations

for more sophisticated budgeting solutions, including budget control, so

ledger budgets were replaced by budget registers and workflows were

introduced to allow budget register entries to be routed around the

organisation for review and approval.

Budget control is prevalent in the public sector and is used by organisations

to calculate available funds when goods and services are procured, by

checking the requirement against a budget, taking into account actual

expenditure, together with current and future commitments. Depending on

how budget control has been configured in Microsoft Dynamics AX 2012 in

line with the organisation’s policies, the user will either be warned of the

potential overspend or can be prevented from progressing the transaction.

Budget Planning

With the release of Microsoft Dynamics AX 2012 R2, budget planning has

now been added to the Budgeting module. This will appeal particularly to

organisations that have formal and structured budgeting processes, where

responsibility for the preparation and submission of budgets is delegated

down to budget holders throughout the organisation and where budgets

have to be rolled up, possibly to multiple levels, with a review and approval

at each level.

Budget planning represents the processes which take place prior to a budget

being entered into the Budgeting module and indeed there is an option to

create budget register entries from the lines on an approved plan.

A budget plan consists of a budget plan header, budget plan lines, and

budget plan line details.

Multiple processes can be defined which reflect the organisation’s preferred

budgeting approach, for example a top-down approach is supported by

developing a single high-level budget plan and then allocating the budget to

lower levels within the organisation, while a bottom-up approach allows

multiple plans prepared at a low-level to be consolidated into a high-level

parent plan. Each planning process can be linked to a different budget cycle,

so that the scope of a budget plan can be flexible and not restricted to a

single fiscal year, and to a different ledger, allowing multiple plans for

multiple legal entities to be administered from a single AX company.

As well as using features introduced in Microsoft Dynamics AX 2012, such as

role-based security, account structures, and account rules, new budget

planning advanced rules have been added which allow budget plans to

include financial dimensions which are not part of the General Ledger

account structures.

Scenarios

Budget plan lines are entered against a scenario. A single budget plan can

contain multiple scenarios, each of which represents a different version of

the budget plan. Examples of scenarios could include:

Previous year’s actuals

Worst-case

Best-case

Scenarios can be defined as monetary or as quantity-based (with a unit of

measure) if the scenario includes non-financial data, e.g. number of jobs,

number of employees.

When a budget plan is being reviewed for approval, the reviewer can choose

to allocate lines from one scenario to another, depending on how the read-

write access levels have been configured for the scenarios at that stage in

the budget plan process.

Organisation hierarchies

When configuring each business planning process, you need to select the

organisation hierarchy which will be used to define the operating unit

structure for budget planning, as well as the person responsible for

preparing, submitting, reviewing and approving the plan at each level. The

organisation hierarchy can then also be used to provide a view of the budget

from every level in the organisation.

A new organisation hierarchy purpose for budget planning has been

introduced and should be assigned to any organisation hierarchy which is to

be used in a budget planning process.

Budget templates & justification documents

Budgets can be entered manually onto the lines of a budget plan but most

organisations will be used to preparing budgets in Excel and will want the

option to continue doing so. As part of the new budget planning features,

budget planning web services have been introduced specifically to support

the creation of budget plan templates in Excel and budget justification

documents in Microsoft Word, both using the Office Add-ins which were

introduced in Microsoft Dynamics AX 2012.

In a budget plan worksheet, budget plan data can be charted, analysed, and

modified in Excel, before being published back to the budget plan lines.

In a justification document, information is exported from the budget plan to

Word; standard Word features can be used to add text and comments, and

to track changes.

Worksheets and documents which are created from these templates are

automatically attached to the budget plan when it is submitted to workflow

and can be viewed directly from the budget plan.

 

Workflow

As part of the setup of a business planning purpose, workflows can be

configured for the review and approval of budget plans, reflecting the

policies and requirements of the organisation.

A new Budget plan workflow is available which includes a new Approve

budget plantask, as well as a number of automated tasks to automatically

generate child (operating unit) budget plans and to update the stage and

status of a budget plan.

The workflow queries the selected organisation hierarchy when assigning a

workflow task to a budget holder or manager.

Integration

As well as organisation hierarchies, budget planning is integrated with other

Microsoft Dynamics AX 2012 R2 modules, so that budget plans can be

populated with data from the following sources:

Budgeting – previous budget plans

General Ledger – actual transactions

Fixed assets – fixed asset budgets

Human Resources – forecast positions

Reporting

A new Budget Planning Analysis Data Cube is provided which allows budget

planning data to be analysed, such as:

Budgeted net income

Percentage of budget plans completed