Drag and Drop Question A company uses Dynamics 365 Finance for expense management. The company has multiple legal entities and multiple departments. Each department may have a different expense…

The correct answer is Create an organization hierarchy for the departments.; Add a department organization hierarchy to the Expenditure internal control organization hierarchy purpose.; Set the order of precedence in Policy parameter. D365 Finance: Expense Policy Prioritization - Explained Core Concept In Dynamics 365 Finance, expense policies are evaluated through the organization hierarchy system. The system needs to know what hierarchy to use for expense decisions and how to rank conflicts. These three…

Implement and manage accounts payable and expenses

Question

Drag and Drop Question A company uses Dynamics 365 Finance for expense management. The company has multiple legal entities and multiple departments. Each department may have a different expense policy that may conflict with the legal entity expense policy. You need to configure prioritization of department expense policy over legal entity expense policy. Which three actions should you perform in sequence? To answer, move the appropriate actions from the list of actions to the answer area and arrange them in the correct order. Answer:

Exhibit

Answer Area

Drag items

Set the order of precedence in Policy parameter.Create an organization hierarchy for the legal entities.Create an organization hierarchy for the departments.Add a department organization hierarchy into the Procurement internal control organization hierarchy purpose.Add a department organization hierarchy to the Expenditure internal control organization hierarchy purpose.Add a department hierarchy to the Security organization hierarchy purpose.

Correct arrangement

Create an organization hierarchy for the departments.
Add a department organization hierarchy to the Expenditure internal control organization hierarchy purpose.
Set the order of precedence in Policy parameter.

Explanation

D365 Finance: Expense Policy Prioritization - Explained

Core Concept

In Dynamics 365 Finance, expense policies are evaluated through the organization hierarchy system. The system needs to know what hierarchy to use for expense decisions and how to rank conflicts. These three steps build that chain in logical dependency order.

Step-by-Step Breakdown

Step 1: Create an organization hierarchy for the departments

This is the mandatory foundation. Before the system can evaluate department-level policies, a hierarchy representing those departments must exist. You cannot assign something to a purpose or set precedence for something that doesn't exist yet. This step has no prerequisites - it goes first.

Step 2: Add a department organization hierarchy to the Expenditure internal control organization hierarchy purpose

Organization hierarchy purposes tell D365 Finance which hierarchy to consult for a specific domain. The Expenditure internal control purpose is what drives the Expense management module's policy evaluations. By assigning your new department hierarchy to this purpose, you're registering it as a valid source for expense policy decisions. Without this step, the department hierarchy is invisible to expense management - it exists but does nothing.

Step 3: Set the order of precedence in Policy parameter

With the hierarchy built and registered, you can now configure which level wins in a conflict. In Expense management parameters, the policy precedence order determines whether a department-level policy overrides a legal entity-level policy. This step only makes sense after the hierarchy is in place and assigned.

Why the Other Items Are Wrong

Item	Reason Excluded
Create an organization hierarchy for legal entities	Legal entities are natively represented in D365 - no separate hierarchy needed for them in this scenario.
Add to Procurement internal control purpose	That purpose governs purchasing policies, not expense management. Common trap due to similar naming.
Add to Security organization hierarchy purpose	Security purposes control data access/role assignments, not policy precedence.

Common Mistakes

Picking "Procurement internal control" instead of "Expenditure internal control" - this is the most common error. They sound alike but control entirely different modules.
Skipping Step 2 and jumping to precedence - the system won't offer meaningful precedence options if the department hierarchy isn't registered to the right purpose.
Creating a legal entity hierarchy - unnecessary; legal entities are first-class objects in D365 Finance already.

Topics

#expense policy#organization hierarchy#policy precedence#expenditure internal control

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