Payroll Accrual Setup

This document reviews the following:

Financial Category & Exceptions

Legal Entity/ Location Code & Exceptions

Payroll Journal Entry

Accrual Journal Entry

Exception - Accrual for Direct Labor

Workers Compensation Accrual

Automatic PTO Accrual

Group Insurance Accrual

When items are recorded to the financial statement, there are three determining factors:

Financial Category
Legal Entity
Location

Financial Category

When a pay run is finalized Earnings are posted to the Financial Category designated to the Job Code unless there is a Pay Code override. This means, if a financial category is not selected in the Pay Code screen (Figure A), it will automatically default to the one selected in the Job Code screen, but if a Fincat is assigned (Figure B), this will override the Job Code Fincat.

Exceptions

PTO

PTO is either posted to the Financial Category defined in the Job Codes screen or to somewhere else defined in the PYFinCatSettings table. PTO is either posted to Wages-PTO or Accrued PTO.

Direct Labor is posted to Accrued PTO
Overhead is posted to Salary/Wage (Job)

* NEXSYIS staff should set up PTO accrual

Underlying Code

If PTO charged to a Different FinCat (PYJob.PTOSetp = 1 ) then use FinCatIDDrPTO and FinCatIDDrHOL

Update PYEnt set FinCatID = case when PYCode.CodeGroup = ‘PTO’ and PYJob.DL = 1 then (select FinCatIDDrDL from PYFinCat Settings where Code = ‘PTO’

PYFinCatSettings Table

Custom Technician Plan (Incentive)

Use inventory FinCat and set preference setting to 0. If it is set to 1 then labor is posted to inventory and the Financial Category is overridden.

Underlying Code

Update PYEnt set FinCatID = (select FinCatID from GLFinCatSettings where Code = ‘INLA’) from PYCode…

...and isnull ((select PostDLtoInventory from Preferences),0) = 1

GL FincatSettings Table

Deductions/Taxes

All deductions/taxes must have a PYCode Financial Category from the PYCode table.

Legal Entity/ Location Code

In Nexsyis, the Legal Entity is determined by the location (LocCode).

Legal Entity = Location Legal Entity

Where the posting is allocated to is first determined by PYCode and then by JobCode (Rates screen). If a customer has multiple Legal Entities then the PYCode does not apply and the posting is allocated to the location on the JobCode.

Exceptions

If a manager posts a manual adjustment to earnings, it will post to the location that the manager keys in manually and overwrite the Job Code.
On balance sheet items the location is overwritten to the legal entity

Payroll Journal Entry

When a payrun is finalized, two simultaneous Journal Entries take place:

Debit and Credit of an amount posted to the legal entity, location, and financial category
1. Credit to Accrued Payroll on Period Ending Date
2. = Net Pay of Pay Run
Automatic Cash Payment
1. Debits Accrued Payroll
2. Credits Cash on Check Date

Accrual Journal Entry

When a pay period is split over two months, you must estimate the accrual allocated to each month. In the example below, the pay period extends from Monday, May 30- Sunday, June 5. This means that you must allocate two work days to May and three days to June.

When you are submitting the Accrual, NEX will prompt you asking how many days you would like accrued. Remember, an accrual is an estimate so the formula for this is simply:

# days / 5 (weekly pay run) or 10 (bi-weekly)

So if two days are in the prior month, NEX would calculate:

2/5

And 2/5 of the pay would be recorded in a Reversing Journal Entry.

Reversing Journal Entry

On the LAST day of the month (May 31), NEX will debit Expense and credit Accounts Payable for 2/5 the amount of the run. (So if the pay run is for $100,000: (2/5)100,000 =$40,000)
On the FIRST day of the next month (June 1), NEX will reverse the accrual for the same amount (-40,000).

Exception Accural for Direct Labor

Preference setting should be set to PYAccrualHRS = 1

Workers Compensation Accrual

For Workers Compensation Insurance, what is owed is a function of pay.

NEX will request your Workers Compensation Policy Information Page (example below) to set up the WorkersComp Table containing Code, Description, Rate, Net Rate, Accrual, and Effective Date.

Net Rate = Total Estimate Annual Premium x Rate

Total Subject Premium

NEX will debit Workers Compensation (Expense) and credit Workers Compensation (Insurance)

The accrual rate should equal the net rate, but if the company wants to over-allocate WC for leeway cash, then the policy allows for that.

Automatic PTO Accrual

On every run:

PTO earned x PTO rate
Debit Expense, credit Accrued PTO