Human Resource budgets enable you to manage personnel costs efficiently. Using Oracle HRMS, you can create and approve budgets that help you:
Manage expenditures on HRMS entities
Adjust forecasts
Plan for future costs
You can estimate expenditures for the following HRMS entities:
Job
Position
Grade
Organization
Open
Note: The Open budget entity allows you to create a budget for any combination of job, position, grade, or organization. You cannot use control budget features with the Open entity.
You set up your budget based on your organizational culture and business requirements. For commercial enterprises, the fiscal budget is typically based on company revenues, and can change during the fiscal year. For public sector enterprises, such as city governments and educational institutions, budgets must comply with legislation-mandated funding requirements. See the following section, Control Budgeting.
You can correct your budget as funding or expenditures change. You can create a new version of a budget based on an existing version at any time. You can enter budgets directly into the database, or route budget worksheets for approval online. You can monitor money, FTE, headcount, and hours (up to three in a single budget). You can enter fixed amounts for each line item, or calculate the value of each entry as a percentage of the total allocation.
You can specify any date range you want for your budget's fiscal period, and use currency values of any length, with variable decimal point placement. If you budget by position or organization, you can use an organization hierarchy to delegate your budget among organization managers.
Oracle products installed in your organization determine how you can use costing information.
See: Labor Costs in Oracle HRMS
Entries you make in cost allocation flexfield segments enable you to map costing data to general ledger account codes and distribute costs across your enterprise.
See: The Cost Allocation Key Flexfield
HRMS allows you to override default cost allocations on five levels, to account for exceptions and temporary costing arrangements:
Payroll
Element link
Organization
Assignment
Element entry
Cost data at the payroll level when you always charge your costs to the same company or the same ledger.
See: Data Costed at the Payroll Level
Cost data at the element link level when you define costed, fixed costed, or distributed costing types for earnings and deductions.
See: Data Costed at the Element Link Level
Cost data at the organization and assignment levels when costs are typically allocated to the same cost center.
See: Data Costed at the Organization and Assignment Levels
Cost data at the element entry level when you want costs for an individual element entry, such as a timecard entry, to override costs entered at any other level.
See: Data Costed at the Element Entry Level
RetroCosting ensures that costing information you processed in payroll runs is correct, identifying discrepancies attributable to processing errors or changes to your implementation structure.
Once you have completed the costing process, you can run the Cost Breakdown report to see the distribution of payroll calculation results, with corresponding General Ledger and labor cost details. You can run two versions of this report:
Cost Breakdown Report for Costing Run: shows summarized costing totals for a specified costing process
Cost Breakdown Report for Date Range: shows summarized costing totals for a particular consolidation set, payroll set, or payroll over a specified interval
See: Run the Cost Breakdown Report
If you mark your budget as a control budget, you can:
Integrate your budgeting process with accounting by posting your budget to Oracle General Ledger and/or Grants Management
Run reports to compare budget estimates with actual expenditures or get a snapshot of under budgeted line items, at any stage of the budget cycle
Enforce business rules that reflect the policies of your enterprise, such as ensuring that funding is available before entering assignments or approving budget reallocations
A successful HRMS Control Budgeting implementation typically requires consultation and coordination with professionals working in other modules:
General Ledger (for chart of accounts code combinations)
Payroll (for costing structures that generate actuals)
Grants Accounting and Labor Distribution (optionally, if your enterprise performs grants accounting)
You can distribute estimated costs to Oracle General Ledger by linking budget elements to their corresponding chart of accounts codes. Using budget sets, you can parse a budget element and link it with multiple codes, enabling you to account for all funding sources that pay for a given cost. You post your budget to GL by mapping HRMS costing flexfield segments to general ledger account code segments.
See: Defining Budget Characteristics
Budget Sets: In the real world, employee packages consist of many elements, for example, earnings, supplemental earnings, taxable benefits, direct payments, and employer liabilities. You can create as many budget sets as you need to reflect this structure and represent your employee packages, then attach them to the positions in your budget to provide data links to elements and the accounts that pay for them.
See: Defining Budget Sets
Budgeting FTE and Headcount: You can create budgets that monitor or control FTE or Headcount. Use business rules in combination with position FTE or budgeted FTE to ensure that position control issues a warning or halts processing if hiring or promoting a person would put you over allotted FTE. You can also configure the application to recalculate and update Assignment Budget Values for FTE automatically when determining factors change, such as working hours or frequency.
See: Budget and Control Positions Using FTE in Position Control
See: Recalculating Assignment Budget Values
Budgeting Positions: Once you post a position control budget, you can add a position to it and enter budget allocations to the level of the budget period when you define or update the position. Using a default budget set you link to budget characteristics, you can also provide default element and funding source information.
See: Entering Budget Values by Calendar Period in Completing a Budget Worksheet
HRMS costing and budgeting features work together to enable you to compare budgeted amounts with actuals. When you run Oracle Payroll, HRMS costing processes allocate personnel expenditures to cost centers, general ledger codes, and/or labor distribution codes. HRMS accumulates the balances using pay elements you can also specify in your budget for tracking actuals. You track budget commitments in a similar way, earmarking budget elements for commitment tracking. You can then compare your actual costs to budgeted amounts, commitments, and projections. See the following section, Reporting on Control Budgets.
Your implementation team is responsible for planning the required correspondence between budgeted and costed elements. Organizations frequently account for the cost of positions by placing people in multiple assignments, especially organizations that must meet the stringent requirements of grants accounting. Multiple assignments enable you to specify costing percentages in a different way for each assignment.
Here are some of the questions your implementation must address:
Which General Ledger Chart of Accounts code combinations are available for your use?
Which accounts fund the positions, jobs, organizations, or grades in your enterprise?
How do you plan to distribute costs so that actuals generated by payroll runs correspond to budgeted amounts?
Does your enterprise use Grants Accounting?
Do you need to create multiple assignments and specify costing proportions at the assignment level, in order to meet regulations or reporting requirements?
Are you using HRMS costing or Labor Distribution?
Is Labor Distribution processing commitments, or is HRMS?
Which combination of Payroll-, Link-, Organization-, Assignment-, and Element Entry-level costing best fits the way your enterprise tracks costs?
Oracle HRMS provides reports to enable you to monitor the status of active control budgets. Control budget reports are especially useful during the analysis and adjustment stages of the budget cycle. Run Report Under Budgeted Entities to flag line items whose projected costs exceed budgeted amounts. You can then reallocate resources from over budgeted entities.
Status reports display information about the primary entity (typically positions) for specified time periods, enabling you to analyze budgeted, actual, committed, projected, and balance amounts. You can also view differences between budgeted and actual amounts expressed as a percentage.
For a high level budget summary, run the Position Summary report to display the status of all positions within an organization. If you need to focus on a specific pay element, run the Entity Element Summary report. To view specific positions within an organization, broken out by pay element, run the Position Element Detail report. If you work in a position control organization, run the Organizational Position Summary report based on an organization hierarchy.
Note: You can restrict the scope of most reports to specific types (over budgeted, under budgeted, or both).
To broaden your understanding of HRMS Budgeting and Costing, see:
Migrating a Budget to Oracle HRMS
Routing Budget Worksheets and Position Transactions