This appears to be a Fusion Application error for Oracle Fusion Budgetary Control.
Please consider logging an SR with Oracle Fusion Budgetary Control support group.
This is a community for Oracle EBS Procurement suite.
We had a similar issue in the past. The root cause was not entering the range in value set.
Reference : Check Fund Failed Without Explanation For Purchase Orders And Invoices - "The distribution failed funds check" (Doc ID 2032268.1)
Let me know the results.
Thanks for the responses. It appears that the user did not run 'Refresh Tree for Budgetary Control', and that is why Check Funds failed.
Thanks Again :-)