Commitments are expected costs associated with future transactions. The types of commitment data included in Oracle Financials reports are salary, student aid, purchasing and their associated burdens (refer to Topic Overview: Burdens for more details.).
Salary Commitments Defined
Salary commitments represent future payments to salaried employees and graduate student employees, and are created for planning and forecasting purposes. Salary (SAL) commitments are only created for salary earnings. Commitment lines are not generated in the system for employees paid hourly, including Bargaining Unit employees, nor for supplemental earnings such as housing allowance (HAS and HAP) and supplemental pay (SUP).
For salaried employees, salary commitments are entered in the PeopleSoft HR module and then allocated via Oracle labor distribution schedules. For graduate student employees, salary commitments are entered in the PeopleSoft Graduate Financial Support (GFS) module and are posted to Oracle twice a month. For additional information on student salary and financial aid commitments, refer to Student Commitments on this page.
Commitment transactions for salaried employees area updated on a daily basis in Oracle Financials. The following changes entered in PeopleSoft HR and Oracle Financials by the transaction deadline will be reflected on Oracle Business Intelligence (OBI) Financial reports run the following day.
Noon Transaction Deadline
|Oracle Labor Schedule
4:00 p.m. Transaction Deadline
|Oracle PTA Setup
4:00 p.m. Transaction Deadline
||PTA changes including:
How Salary Commitments Are Determined and Validated
Salary commitment calculations for staff are based on 24 pay periods in a year. Salary commitment calculations for faculty vary depending upon how they choose to spread their salary over nine, 10, or 12 monthly periods.
Salary Commitments for Employees and Faculty Paid Over 12 months
- The amount of the commitment is calculated by dividing the employee's annual salary by the number of annual pay periods (24), and multiplying that amount by the PTAE percentage allocations reflected on the employee's labor schedule in Oracle.
Example: For employees who have an annual salary of $48,000 and their labor schedule allocates 50 percent of their salary to PTA1 from March 1, 2008 through August 31, 2008, the amount of the commitment generated for PTA1 would equal $12,000. $48,000 (annual salary) / 24 (pay periods) = $2,000 X 50% X 12 pay periods = $12,000.
- For faculty who are paid over 12 months for a nine-month appointment, it is important that their labor schedule lines reflect the correct PTAs to be charged during the term, as well as during the summer months to ensure commitments will be accurately reflected on the appropriate PTAs.
Salary Commitments for Faculty Paid Over Nine or 10 months
- The amount of the commitment for faculty paid over nine or 10 months is calculated by dividing the faculty's annual salary by either 18 (for those paid over nine months) or 20 (for those paid over 10 months) and multiplying that amount by the PTAE percentage allocations on the faculty's labor schedule.
- Commitments will only be generated for months in which the faculty will actually be paid (October through June for those paid over nine months, and September through June for those paid over 10 months).
Example: If a faculty member has an annual salary of $54,000 paid over a nine-month period and their labor schedule allocates 100 percent to PTA1 from March 1, 2008 through August 31, 2008, the commitment generated for PTA1 would equal $24,000. $54,000 (annual salary) / 18 (pay periods) = $3,000 X 100% X 8 pay periods - $24,000 [July 1 through Sept. 30 will not include commitments for faculty paid over nine months (October through June).]
Salary Commitment Validation Rules
All salary commitment transactions are validated using PeopleSoft HR, Oracle Labor Schedule and Grants Accounting data. Employee assignments must have a status of "Active" or "Leave with Pay."
If the total percent allocation on a labor schedule is less than 100 percent and/or the PTAs are invalid, commitments, similar to actual payroll transactions, are posted to the Organization Suspense Account (OSA).
- Commitment transactions will post to the employee's OSA determined by the employee's work assignment org. For additional information related to managing Organization Suspense Accounts, refer to Topic Overview: Organization Suspense Accounts.
- Unlike actual payroll transactions, departments are not required to clear commitment transactions from OSAs.
Commitment transactions on an OSA indicate there is an issue with the commitment not being reflected on the appropriate PTAs, and may indicate that an actual expenditure is destined to be posted to the OSA in the future if no action is taken.
- Salary commitments posted to OSAs are included in reporting from OBI Payroll and Labor Management Dashboard.
Salary Commitment Start and End Dates
The start date of a salary commitment is the first day of the current pay period (the day after the last payroll run). End dates vary for sponsored or non-sponsored projects, capital projects and OSAs as outlined in the table below:
|Sponsored or Capital Projects (PTAs)||Non-Sponsored Projects (PTAs)|
|Start Date: The first day of the current pay period (the day after the last payroll run)|
|End Date: The earliest of one of the following end dates:
||End Date: The earliest of one of the following end dates:
|End Dates and OSA:
How Salary Commitments Are Relieved
- When payroll is posted, the actual amount is recorded as an expense. The salary commitment balance is reduced by the actual payroll amount for that payroll period.
- If the PTA on the employee's labor schedule is changed, the original transactions will be removed and new transactions will be generated and posted to the new PTA reflected on the labor schedule.
Student Commitments Defined
Student commitments represent a future obligation for the university to provide students an amount of money for a specific purpose over a period of time. This obligation may be based on work that the student will perform or an amount of money that the student will receive as financial aid.
Specifically, student commitments arise from the following transactions:
- Financial aid for undergraduate and graduate Students.
- Assistantships for graduate students is a form of employment where students earn a compensation package that includes salary and tuition allowance (TAL) in exchange for research or teaching services.
- Graduate student fellowships (including stipends) is a form of financial aid where no service is expected in return.
Student financial support originates and is approved in various modules of the PeopleSoft system:
- Undergraduate and graduate financial aid is processed through the Financial Aid module of PeopleSoft and is disbursed to the Student Financials module of PeopleSoft, where it is posted to the student's account. Various financial aid offices process this type of aid.
- Graduate student support is entered and approved in the PeopleSoft GFS module, and based on the type of support, is disbursed through the PeopleSoft Student Financials module or the PeopleSoft Payroll module.
The table below summarizes the different types of student support and the flow of data to and from the relevant PeopleSoft modules.
|Student Recipient||Type of Support||PeopleSoft Modules and Data Flow|
|Undergraduate and Graduate||
||Financial Aid > Student Financials|
||GFS > Student Financials|
||GFS > Payroll|
||GFS > Payroll|
Timing of Updates to Student Commitments on Reports
Most student commitments are updated once a month, at the end of the month. This timing is consistent with the recording of actual student transactions during the normal month-end process. Assistantship salary commitments are updated twice a month, which is consistent with the actual payroll dates (the 15th and the last day of each month).
Updated student commitment information replaces prior commitment data. Only the latest commitment data will display on expenditure reports. However, if aid had been fully approved and entered in PeopleSoft for prior terms, but never paid out, it will appear on expenditure reports. If this occurs, corrections must be initiated in PeopleSoft to remove the fully approved but not disbursed aid.
How Student Commitments Are Determined
Student commitments for the current academic year will be reflected starting in September. In general, these commitments begin when the financial aid is accepted by the student or fully approved in GFS. The transaction is no longer a commitment when the payment is posted to the student's account in Student Financials, or the salary or stipend is paid through Payroll, and the transactions are updated in Oracle. At this point, the support becomes an actual expenditure.
The following is an outline of how and when student commitments are processed:
- Student aid (including financial aid, TAL, fellowship tuition and stipends) is typically entered in August for the next academic year. The commitment reflects the fully approved student aid that remains to be posted to the student's account for the next academic year. Student commitments entered in August for the next academic year will not be posted to Oracle Financials in August. They will be posted and appear on reports beginning each September.
- Students who are on assistantships (research assistants or teaching assistants) receive six paychecks per term that they are working. These payments are the basis for assistantship commitments. For example, for September month-end, students with assistantships for the full academic year 2007-2008, will show a salary commitment equivalent to six paychecks for each of the terms: fall, winter, spring and summer. Once the October 15th payroll is posted, the salary commitment amount will be reduced to five paychecks for fall and six paychecks for winter, spring and summer. In addition, one paycheck will show as an actual expense.
- Student commitments are only reflected for one academic year, so aid on sponsored projects may be understated.
- Student commitments are reflected for the entire academic year, so outstanding commitments related to aid for the summer quarter may appear on fiscal year-end reports. The summer quarter includes the month of September.
To fully understand student commitments, it helps to know how the actual transactions are generated. For an overview of the Graduate Financial Support (GFS) system, including integrations with other Stanford systems, take GFS-1000: Introduction to Managing Financial Support in GFS web-based training. For questions regarding undergraduate and graduate financial aid, please contact the appropriate financial aid office.
Purchasing Commitments Defined
A purchasing commitment represents an obligation to pay a vendor for future delivery of goods or services as recorded on an approved requisition or PO. The commitment amount is equal to the dollar amount for each distribution line (PTAE) of remaining balances on approved requisitions or POs that have not been suppressed or closed.
How Purchasing Commitments Are Determined
This section explains how purchasing commitments are determined throughout the purchasing process from initial requisition through actual expenditure as shown in the diagram below.
Purchasing Commitment Process
An approved purchase requisition creates a commitment by distribution line (plus tax). Requisition commitments are referenced by transaction source code "E_REQ" on expenditure reports.
When a requisition becomes an approved PO, the requisition commitment becomes a PO commitment and the transaction source code changes to "E_PO." The PO commitment is calculated by line, plus sales tax. The commitment only includes valid lines where no invoice has been processed. A valid line is one that is approved and not cancelled, unreserved or finally closed.
When an invoice is processed, an "Accounts Payable" commitment will be reflected with transaction source code "E_AP." When the invoice is fully posted, it becomes an actual expenditure. A PO that is partially invoiced will be reflected as both a remaining PO commitment and either an E_AP commitment or an actual expenditure.
Remaining balances for purchasing commitments will appear on a report regardless of whether it is for a project-to-date (PTD) or fiscal-to-date (FTD) type of account. The system does not know when future invoices might be received; therefore, the entire remaining balance is displayed, even if the actual costs will not be recorded until the next fiscal year.
How Purchasing Commitments Are Relieved
Purchasing commitments are relieved by line item under the following circumstances:
- An invoice is matched to the line item for payment. A fully matched invoice relieves the commitment completely. A partial invoice will create a remaining partial commitment.
- A line item is canceled.
- A line item or PO has a status of "Requires Reapproval" or "Unreserved."
- A line item is manually suppressed using the requisition and Purchase Orders Inquiry tool. This may be needed when a purchase order was created for a higher amount than was actually needed, or if circumstances have changed. Note: Suppressing a PO merely removes it from appearing as a commitment on reports. If an invoice related to the PO is received, it will be processed and paid. Refer to How to: View and Suppress Commitments on an approved PO for more information.
- A PO is finally closed. Refer to Topic Overview: Life Cycle of a Purchase Order for more information.
- A periodic process is run to automatically suppress old, small dollar PO line items. For more information, refer to the Automated Commitment Clean-up Process section below.
A purchasing commitment may be relieved for POs based on quantity or dollar amount:
An amount-based order, such as a blanket PO, is relieved when an invoice is matched to the line by dollar amount.
A quantity-based order, such as for goods, is relieved when an invoice is matched to the line by quantity, regardless of the price.
Automated Commitment Clean-up Process
An automated process runs on a weekly basis to suppress commitment data determined to be inaccurate or no longer relevant. For requisitions and POs that meet the clean up criteria, commitments will not show in the Requisition and Purchase Orders Inquiry tool or on Oracle Financials expenditure reports.
Weekly Clean-Up Criteria
Approved PO meets one of the following criteria:
- Line that is < or = to $1.00
- Invoice total greater than the value of the PO
Burden charges (i.e., fringe benefits, indirect costs, etc.) are applied to all commitment transactions. Refer to Topic Overview: About Burdening for more details. On detailed PTA reports, burdening commitments are displayed at the same level of detail as actual burdens.
Commitment Data Not Included on Oracle Financials Reports
Certain types of commitment data are not readily available, and therefore are not included on Oracle Financials reports. Users should consider these when forecasting future expenses.
|Hourly wage payments||Future payments for hourly and bargaining unit employees|
|Additional recurring pay||Supplemental pay (including supplemental pay, housing or vehicle allowance, honorarium)|
|Vacation||Credits for future vacation|
|Expense request transactions
(Advances, reimbursements, non-PO payments or petty cash)
|In-process expense request transactions (not yet recorded as actual expenditures)|
|PCard||Unverified or unapproved PCard transactions|
|TCard||Until TCard charges are placed on an expense request and it is posted to a PTA, the credit card charges are shown in Net Investments of the card guarantee PTA.|
|iJournals||iJournals transactions not yet posted|
(i.e., service center charges)
|Batch journals are typically received once a month to record transactions from service centers or other units that allocate costs|
|Burdens on the above||Burdens (such as fringe benefits and indirect costs) that will be applied to the above types of actual costs|
|Suppressed purchasing commitments||Users are able to suppress lingering purchasing commitments when they do not expect them to result in an actual cost
Refer to How to: View and Suppress Commitments on an approved PO for details
Automatic suppression based on business rules will also be periodically performed
|Closed POs||Once a PO is closed, all remaining commitments are cleared|
How to View Commitments
Purchasing commitments can be viewed using the Requisition and Purchase Orders Inquiry tool. Commitments are updated immediately in this tool, based on Oracle transactions like payments while the reporting tools only update nightly.
The Commitment Management System (CMS) is a tool that allows entering what-if scenarios, called soft commitments, for budget and expenditures. CMS also provides a reporting environment that can produce, not only information about posted transactions and commitments, but also future projections of monthly balances using either the existing hard commitments or the user-entered soft commitments. This can help in determining if funding will last through the project period for sponsored research or fiscal year for non-sponsored funding.
OBI Consolidated Expenditure Reporting Dashboard reports include summary and detailed commitment data in a single interface to help monitor hard commitments for comparison with available funding.
For information about OBI, refer to OBI Financial Reporting.
In OBI, transaction source codes for all types of commitments (salary, student and purchasing) begin with "E." The following table provides an explanation of the reference data fields for each Expenditure Transaction Source Code.
|Expenditure Transaction Source Code||Description||Expenditure Item Account Reference Text||Expenditure Item Department Reference Text|
|E_LD||Oracle Labor Distribution Commitment for SAL only, not hourly||Earnings Code||Assignment Number|
|EGFSM||GFS Monthly Stipend Commitment||Term code||Student ID Number|
|EGFSS||GFS Salary Commitment||Term code||Student ID Number|
|EFAO||Financial Aid Commitment||Term code||Student ID Number|
|EGFSN||GFS Non-Salary Commitment||Term code||Student ID Number|
|ESFS||Student Financial Services Commitment||Term code||Student ID Number|
|E_AP||Payables Commitments||1st 10 characters of the invoice #||PO Number|
|E_PO||Purchasing Commitments based on purchase order||[#]||PO Number|
|E_REQ||Purchasing Commitments based on requisition||[#]||Requisition Number|
|E_BRDN||Burdening for transactions streams that have commitments||FY fiscal year||Multiplier (percentage rate)|
For student commitments the Term Code is defined as follows:
For example, 1082 is the term code for academic year 2008, autumn term where:
- 1=Century (21st)
- 0=Decade (2000's)
- 8=Academic Year ('08)
- 2=Term (Autumn), 4=Winter, 6=Spring, 8=Summer
For additional details about these and other source codes (expenditures and commitments), refer to Resource: Oracle Reference Code Table.
Timing of Commitment Data on Reports
- OBI reports allow you to view commitments as of the last closed General Ledger (GL) period or current open GL period (i.e., yesterday) by entering one of those two GL periods in the selection criteria.
- CMS reports allow you to view commitments as yesterday.
- Student commitments are updated in Oracle at the end of each month (or on the last day of each pay period for GFS salary commitments).
- Non-student salary and purchasing commitments are updated each night.
- An exception to the nightly commitment update occurs during the six-day month-end close period. During month-end close, similar to "actual" expenses, commitments will not be updated until processing is complete and the month is closed. Therefore, reports run during the six-day month-end close period may not be complete commitment data.
- Student aid commitments are entered by academic year (October-September) but since the fiscal year is September-August a summer term (July-September) commitment will include one month (September) in the current fiscal year, commitments that will not become actual costs until the first month of the next fiscal year. This would cause the commitment to be overstated for the current fiscal year.