Overview of the Salary Budgeting System {HRM-3}


The Salary Budgeting System is designed to utilize the information that is available in other ITS systems for management and planning purposes.  It is aimed, in the first instance, at providing the relevant information in a useful format rather than at providing any final figures.


    The Human Resource System consists of the following systems:

The purpose of the Salary Budgeting System is to assist in projecting salary expense figures for a specified period by simulating the "normal" salary calculations that will take place during the period.

The user may define different parameters on which the calculation of projected figures is to be based, and various scenarios may be evaluated.


 Linking to other ITS Systems
 

This system is fully dependent on other ITS systems for its functioning, and the completeness and accuracy of the data in those systems are therefore of prime importance.
In the case of salary budgeting, the main requirement is a correct implementation of the ITS Payroll System, with the relevant Personnel detail and service records.  If vacant posts are budgeted for, the correctness of the Post Structure {PACS-4} is crucial. 
Budgeted values may be Posted to the ITS General Ledger {FRM-28} from where it will be included in the "normal" Financial Reporting on Budgets.

 

Overview of the Salary Budgeting Module


This module can only be used after the Payroll System has been fully implemented.
Salary budgeting consists of two functions, namely the process of budgeting and budget control.


    Budgeting


This module deals with this important process, essentially consisting of four activities, which can be summarized as follows:
  1. Calculation of the budget amount, taking into account details of posts, salary and salary-related details of personnel, and other parameters (rules) set by the user.  Since the calculation of a budget is complex and places a heavy load on computing resources, the results of every calculation are stored for future reference.  Provision is made for “What-if” analysis by allowing the user to create and experiment with several parameter sets for a given budget.  Budgets can be produced for any future year.
  2. For cases where the costs of an appointment are shared between two or more posts, facilities to distribute the costs to the relevant posts exist. Refer to "Split Salary Costs" {MSBOP-26} for more detail.
  3. Revision of the budget can be done during the course of the year.  The system will accumulate the actual year-to-date expenditures, and performs budgeting for the remaining cycles using the given parameter set.  The revised budget thus includes the expenditure to date plus the calculated figure for the remaining cycles.  Both these figures are stored for future reference.
  4. Posting of the calculated budget amounts to the Posts {MSBOP-3}, “Post Budget Values to Posts”, where the existing values will be overwritten by the newest calculated values.  The figures “posted to posts” serve as the “original” budget; in practice, one would post only the “approved revision” to posts.
  5. Posting of the calculated budget amounts to the relevant GLA's {MSBOP-4}, “Post Budget Values to General Ledger”, which is an “event” to which the user must link a transaction type.  Only the difference to the previously posted values will be written to the General Ledger.   Users should take special note of the procedure that applies when posting to the general ledger from multiple parameter sets.
  6. Corrections to the budget can be made in the General Ledger with Standard Journals {FGLO-1} or {FGLO-2} or in the Expense Budget Module via option {MEBO-7} or {MEBO-8}.

    Budget Control


Budget control can only be done to a limited extent by Higher Education Institutions, because
Thus it is usually not important to report on monthly expenditure as it compares to budgets.  Exceptions occur where more than one person is appointed to the same post, or where a person is appointed at a notch outside the approved scale.


Attention should be paid to the comparison of:


Monitoring of expenses can be done at post level by monthly reporting on “Over and Under Year-to-Date Spending”, {MSBOPR-21}.

Both the budgeted amounts from this module and the salary expenditures from the Payroll System are posted to the General Ledger.  Reports that are useful for budget control at Cost Centre level are available in the General Ledger Reports MENU {FGLO-80} under the following options:
 and in the Expense Budget Module as Approved Budget GLA List {MEBOR1-23}.


    Budgeting Procedure

In summary, the typical procedure through a budget year will be the following:
  1. During the present year around three months before the end of the financial year, the Personnel Committee will approve new posts/discontinue others for the next year.
  2. These will be maintained in the Personnel System (Refer to Posts {PACS-4}), and if possible applicable “future” appointments may also be maintained.
  3. The user may set up one ore more Parameter Sets {MSBOP-21} for calculating a budget for the next year.
  4. Before any Budget Calculation for a Parameter Set is done, the relevant Personnel Members or Posts to Budget for should be indicated using the 
  5. Budget Calculations {MSBOP-2} may be done repeatedly, until such time as the user is happy with the results.  Reports from the Budgeting System may be produced for the applicable Committee(s) to use to approve the budget.
  6. The user may then 
  7. As soon as the next year is active and salary calculations have been done, the user may revise the budget as required.  This may be done using the same parameter set, or additional parameter sets may be created and used. 
    The “revised budget” will extract expenditure to-date from the payroll transactions file and calculate the amount to be budgeted for, for the rest of the year.
  8. The user can also create a more “conservative” parameter set.  In this set, a lower percentage of scales are used, unfilled periods for a post are not budgeted for, proposed posts are not budgeted for, no budgets are calculated after expiry dates of posts, etc.  The assumption is made that this calculation should cater for at least the “contractual” obligation, and we refer to this calculation as the “Funds Committed” in the Over/Under Expenditures {MSBOPR-21}.
    If calculations are done for such parameter sets, and the     Over/Under Expenditures {MSBOPR-21} is requested.  The report will reflect:
    1. The “original” budget
    2. The “revised” budget
    3. The difference between (1) and (2)
    4. The “funds committed” budget
    5. The “possible savings” = difference between (1) and (4).
  9. If a general increase is to be implemented during the year of budget, the user will then set the new parameters, do re-calculations and get approval for the budget.  If these values are posted to posts, they will overwrite the “original budget”.  If they are posted to the General Ledger, only the difference between the previous original and this one will be posted.

 


History Of Changes

Date System Version By Whom Job Description
08-Jan-2007
 v01.0.0.0 Frans t138771 Proofread and Correction of Integrator Manuals
14-Jan-2010 v02.0.0.0 Frans t162641 Splitting of costs