Budget Transfer Versus Budget Revision
A regional health network runs budget control in its legal entity. The FY operating budget of $12,000,000 is registered in budget model ORG, budget cycle FY25, and enforced with Prevent for main accounts 600000-649999 (clinical supplies) and Warn for everything else. In month 7 cardiology is $80,000 over on supplies after a price spike, and neurosurgery has $150,000 of unspent supplies budget. The CFO will not increase the total budget. Separately, a purchase requisition for $9,000 of supplies was rejected as over budget, although the department's available-balance report shows $22,000 free.
1. How do you fund cardiology's $80,000 overspend without increasing the total budget?
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Use a budget transfer budget register entry, not a revision.
- Same budget model ORG, same budget cycle FY25, same main account range. Decrease neurosurgery by 80,000 and increase cardiology by 80,000 using the Department dimension value.
- Entry type matters: a transfer moves budget and leaves the total unchanged; a revision increases it and would breach the CFO's constraint. The transfer entry is also the auditable record of who moved money and why.
- Hit identical dimension combinations on both sides. Budget control evaluates availability per dimension set, so a transfer that lands on a slightly different combination creates phantom availability in one place and a hole in another. If cardiology needs several supply accounts, split the entry across them.
- Route it through the budget register workflow - the point of Prevent is that money only moves with approval.
- Budget control balances update when the entry posts; pending requisitions will only pass after that.
Do not flip the clinical supplies accounts from Prevent to Warn. That 'solves' this month and lets every future overspend post silently.
2. A $9,000 requisition was rejected as over budget, but the report shows $22,000 available. Diagnose it.
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Open Budget control statistics for the exact main account and dimension combination the requisition hit - not the departmental report, which is probably summarised differently.
Probable causes, in order of frequency:
- Different dimension combination. The $22,000 sits on a combination without (or with a different) Department value. Budget control is per combination; the summarised report hides the split.
- The funds-available formula. Available budget = original + transfers + revisions - actual expenditure - encumbrances (open POs) - pre-encumbrances (unapproved requisitions, draft documents), plus or minus unposted items if configured. $22,000 of headroom can be consumed by other clerks' unapproved requisitions that are nowhere near the ledger.
- Budget control rule scope. A rule may include only certain dimensions or apply a budget group, so the check is not against the combination you think.
- Account range. Only 600000-649999 is on Prevent; if the line splits across accounts and one lands in the Prevent range while the report aggregates, the visible total and the enforced total differ.
- Cycle dates. If the requisition's accounting date falls outside FY25, it is checked against a cycle with no budget, and no amount of available balance helps.
Show the requester the statistics page, not the report - the difference is the answer.
3. The CFO asks whether clinical supplies should be switched to Warn to speed up procurement. Advise.
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No - Warn removes the control exactly where spend is hardest to stop. A warning can be clicked through by whoever is entering the requisition, and by the time the PO is confirmed the commitment exists. Prevent is what stops the commitment.
Better levers, in order of preference:
- Data completeness: make Department and any other budget-relevant dimensions required on procurement categories, so combined-with checks are meaningful and people stop hitting the wrong combination.
- Pre-encumbrance settings: decide deliberately whether unapproved requisitions consume budget. Consuming them is conservative but creates phantom shortages; not consuming them moves the check to the PO, which is later and more expensive to unwind.
- Over-budget permission for a small, named approver group with a documented approval path - an exception channel with a name on it, not a global downgrade.
- Planning: a price spike that blows a departmental budget in month 7 is a forecast failure. Feed it into the FY26 budget planning process so next cycle's clinical supplies baseline reflects it, rather than surviving on transfers every year.