How Can I Handle Fringe Costs?

Fringe costs are employer-paid payroll expenses such as payroll taxes, health insurance, pension plans, and worker's compensation expenses. Fringe costs are best charged to grants one of two ways: You can automatically generate transactions for fringe costs when you post labor to grants (based on the current contractual fringe rate), or post actual employer-paid payroll expenses from payroll.

Charging Fringe Costs to Grants Using a Fringe Rate

You can use Project Accounting's burdens to generate fringe costs on eligible labor transactions. When labor transactions are posted to a grant, burdens automatically calculate fringe costs and create and post fringe transactions. With this approach, actual employer-paid payroll expenses are posted from the Lawson or non-Lawson payroll system to General Ledger.

However, to avoid overstating fringe costs in grants, the payroll expenses should not be updated to Project Accounting. If you use Lawson Payroll, you can avoid overstating fringe costs in grants by setting the Post Employer Paid Ded to AC field to No on Company (HR00.1), Payroll tab. If you use a non-Lawson payroll system, you can avoid overstating employer-paid expenses in grants by importing employer-paid expense transaction in summary and not by employee.

You can also set up an offset General Ledger account for the burden code used for fringe. An offset activity is optional. When fringe burdens are created, they are charged to the appropriate grant activities and general ledger accounts (departments), and credited to the offset general ledger account. The offset general ledger account ensures that fringe costs are not overstated in the General Ledger and provides visibility of actual employer-paid fringe costs (from payroll) for comparison with fringe calculated at the contractual grant rate from burdens.