Payroll accruals

Payroll allows you to create general ledger payroll accruals for all company expenses when a payroll period spans two accounting periods. Entries created by the accrual form are identified as auto-reversing entries in the GLTRANS (UNIX/Windows) DBGLGTR (IBMi) file.

When you use the General Ledger application, the auto-reversing indicator allows posting to the general ledger to occur in the current period with a reversal in the next accounting period when you post the actual entries for the payroll cycle. The application creates entries for wages as well as company-paid payroll taxes.

The application assumes eight-hour working days when calculating the accrual. The accrual for salaried employees is based on the employee's job code or the annual hours entered on Employee. To perform an accrual for salaried employees, determine the hourly rate by dividing the annual salary by the annual hours, multiplied by the FTE (Full Time Equivalent) factor. For employees not associated with a job code, the report uses the annual hours defined for the company in the calculation.

Accrual Program and Payroll Close are exclusive of each other, but either or both can be used to create accruals. If an accrual is required for the last few days of the month, use the accrual form. If you use the accrual form, do not use the Previous Period Tab on the Payroll Close in that cycle or the next cycle that follows when the reversal of the accrual occurs. When you follow this process, the reversal of the accrual in the next month happens automatically.

Comparison of accrual functions

Use Payroll Close to create accruals when the current payroll close is near the close date of the previous period and to create entries from the current period for posting to a previous period, or to split expenses by Percent or Time Record dates.

The amount you enter determines the amount posted to the previous period using the date entered in the General Ledger Date field.

Use the accrual form when the current payroll close is not near the close date of the previous period, and to create auto reversing entries to accrue an estimated amount of all company expenses.


	PAYROLL CLOSE		PAYROLL ACCRUAL
METHOD	%	TIME RECORD	DAYS	%	TIME RECORD
Requires PR140	X	X	X	X	X
Requires PR160	X	X
Allows different % or days by EE criteria			X	X
Accrues salary	X	X	X	X	X
Accrues taxes	X	X	X	X	X
Accrues benefits	X	X
Can be run multiple times			X	X
Allows prior period posting	X	X	X	X	X
Reflects actual expenses		X
Reflects estimated expenses	X		X	X	X
Requires time entry dates corresponding with cutoff		X			X

Accrual exceptions

The application creates wage expense distributions for overtime time records by work period from FLSA Overtime Calculation. Because the application creates only one time record with the work week end date, the wage expense distributions split by percent of wages.

Wage expense distributions for retroactive pay time records are created by the application through Retroactive Pay Calculation, and split by percent of wages. The split occurs because the application creates only one time record with the retroactive pay amount.

Wage expense distributions for voids are based on the void date.

Wage expense distributions for manual payments, created on Manual Check with no time record date defined, are based on the payment date.

Wage expense distributions for manual payments, created on Manual Check with time record dates defined, are based on the time record dates.

Wage distributions for adjustments created on Adjustment, are based on the adjustment date.

Other expense distributions such as company-paid deductions are based on a percent of wages.