SmartFusion FYE: Payroll Accruals

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1 INTRODUCTION Disclaimer: This handout assumes that Fund Ledger and Payroll modules have completely been closed out for the fiscal year. If you have not closed any modules yet but need to do payroll accruals, please contact CSI Support for the correct procedures for doing this. Before doing payroll accruals, please check our website ( for the latest updates and any revised copies of Payroll Accrual instructions. If you plan to print your July/August checks in June before closing ledger fiscal year and date them with a June date, these are not considered payroll accruals. This will be handled just like a normal payroll run. Payroll accruals are considered checks that will be issued in July/August (or dated with a July/August date) but the salaries should be accrued/expensed to the prior year's ledger. The cash account will be credited in the new fiscal year. These checks will also be reflected in the 3rd quarter for reporting purposes. If you need to accrue a portion of a payroll, there is a feature in the fund ledger module to create an accrued journal entry for payroll. We recommend completing one entire payroll accrual process before starting another accrual run. You should accrue, update the accrued portion, and post the accruals for the salaries, then do the employer contributions and fringe processes for that accrued payroll before starting on the next accrued payroll. You don't have to actually print the checks before doing another payroll accrual. An update number will allow you to print those at a later time. There cannot be a mixture of accruals and normal payrolls on a single payroll register. Accrued payrolls must be run separately from normal payrolls. GETTING STARTED: Make sure Page 1 of the Payroll System File has a valid Payroll Accrual account for accrued salaries: 1

2 1. Turn on the Track Accruals flag in Payroll System File page 2. Verify the fiscal year dates are current year dates. 2. Go to Payroll - Parameters - Pay Groups and turn on the "Post salaries to relieve a payroll accrual account" flag on Pay Groups you need to accrue. 3. You will need to set the "Allow Editing/Saving in PRIOR years" in the user's security file for any user who will be posting payroll accruals. 2

3 RUNNING PAYROLL REGISTER FOR PAYROLL ACCRUALS: 1. From the 'Print Payroll Registers/Prelist' option, place a check mark by the Accrual Payroll option. 2. Enter the Accounting Period Ending Date for the period being accrued. This will be a date such as 06/30/2012. This is the date you want the salaries to be accrued to. 3. Make your normal selections for what you want to show on your payroll register reports. 4. On page 2 of data selections page of the payroll register, use the appropriate July/August date for the actual checks. In the Pay Group selection box, you will find only those pay groups that are flagged for accruals in the pay group parameter file. Select whatever pay groups you wish to accrue checks for. 3

4 5. Verify the payroll register is correct, and then proceed to Updating the accrued payroll. For accruals, on the first page of the register, you should notice an accrual date. Also, at the top of each page there will be an accrual date for the prior fiscal year, and the current pay date should be in the current fiscal year. UPDATING THE ACCRUED PAYROLL 1. Choose the 'Print/Update Payroll Checks' option. 2. The Accrual Selection box will appear. Make sure the "Update accrued payroll" option is selected. This step updates the accrued payroll information (before you print checks or notifications). 3. A message will appear showing the Payroll account period date. Verify that it is a prior year date. After you answer this prompt, the update process will begin. 4. A message will appear to let you know it is complete and an update number will be provided. Please write this update number down for future reference. It will be used later when you actually PRINT the checks and notifications for the accrued payroll. 4

5 5. During this process the following files are updated: Payroll Check File - records are written to the payroll check file with temporary check numbers, and a flag is set to show that this is an accrued check. A Payroll Check Register can be run with the current pay dates to verify this. When checks are printed, the actual check numbers will be written in the temporary check numbers place. Labor History File - records are written to the labor history file with an accrual flag. The Accounting Period Ending Date that was used when the payroll register was run is recorded on the labor history files. Payroll Posting File - a credit to the payroll accrual account (account number that is stored in the 'Payroll System' file) and debits to the salary accounts are written to this file at this time. These entries will need to be posted in the prior year using the 'Post Payroll to Fund Ledger' option in payroll and using a date of 06/30/???? (i.e., 06/30/2012). 5

6 POSTING ACCRUED PAYROLL TO LEDGER At this point, you can go ahead and post the accrued payroll to ledger in prior year. Access the Tools menu and Change System Date Offset to prior year. The payroll date will be whatever date you used as the accrual date (a prior year date). You will need to use a prior year date as the posting date. After posting from prior year, ledger balances will need to be brought forward. The posting will credit accrued salaries and debit the salary expense accounts. REMINDER: After posting in prior year, ledger balance will need to be brought forward. 6

7 EMPLOYER CONTRIBUTIONS 1. Run the Employer Contributions Report in the Current year using the actual check dates and by selecting the checkbox to "Include Accruals". 2. Create Employer Contributions Posting File in the Current year using the check dates. 3. Post the Employer Contributions to Fund Ledger in PRIOR year using the Accounting Period End date. 7

8 REMINDER: After posting in prior year, the ledger balance will need to be brought forward. 8

9 RECORDING EMPLOYER FRINGE As long as the "track accruals" flag is turned on in the payroll system file, the system will not warn you that fringe has already been created. Therefore, it will allow you to create a fringe file multiple times. If you accidentally get the file created multiple times, it can be rolled back. Please contact support if you need assistance with this. We do not suggest turning the "track accruals" flag off or the flag in the pay group file for accruals until you are completely finished with payroll accruals. After you turn the "track accruals" flag off, if you try to create a fringe file, it does give a warning that fringe has already been created. The following instructions assume Fund Ledger and Payroll modules have been closed for the year. 1. Print the Employer Fringe report in the Current year using current year dates. Be sure to select the checkbox to "Include Accruals". 2. Create the Employer Fringe Posting File in Current year using current year dates. When creating the posting file, you will want to select the pay groups that you have flagged as accruals if you only want to accrue fringe for employees that are set to accruals. When you create fringe for the "regular" pay groups in the months of July/Aug, you will want to select for these pay groups at that time as well. NOTE: If you create fringe for accruals and do not select pay groups and then create fringe for regular pay groups in July and do not select pay groups, you will create the fringe for accruals again. 9

10 3. Post Fringe to Fund Ledger using the 'Post Contributions & Fringe to Ledger' option located under the Fringe menu in Payroll in PRIOR year using the correct prior year dates. (i.e., 06/30/2012) REMINDER: After posting in prior year, ledger balance will need to be brought forward. 10

11 YOU MUST COMPLETE ALL OF THESE STEPS BEFORE STARTING ANOTHER PAYROLL ACCRUAL RUN. 1. Run "accrued" PR register to calculate pay for the accrued pay periods 2. Update the accrued payroll. Don't forget to write this update number down, as you will need it when you get ready to print the checks. 3. Print Employer Contributions report, create posting file in current year and post in prior year. 4. Print Fringe Report for the accrued pay periods, create posting file in current year and post in prior year. At this point you can begin another payroll accrual run REMINDER! The accrued payroll checks can be printed at a later time by using the update number from this step. PRINTING ACCRUED PAYROLL CHECKS You can print accrued payroll checks whenever you choose. 1. In the current year, you can now print your accrual payroll checks. To do this, select the 'Process' menu and choose the 'Print/Update Payroll Checks' option. NOTE: if you have a normal payroll and some accrued payrolls that you have not printed checks for, you will get a selection screen as shown below. If you want to print the accrued checks, make sure the Print/Update Accrued Checks is selected 2. Make sure 'Print accrued payroll checks' is selected. 11

12 3. Once you click on 'OK', the print/update screen with selections will appear. At the top of the screen you are prompted for the update number of the payroll accrual run that was just updated. This is very important that you use the correct update number. After the update number for the accrued payroll checks is entered, the system will default in the pay period ending date and check date. Verify these are the dates you want to use and select the process for print and update checks. Also, make sure you enter the appropriate leave balance ending date for this payroll, and change the file creation date and file effective date for creating direct deposit file. 4. You will print and update your payroll accrual checks just like a normal run at this point. If you are doing direct deposit, you will also create your direct deposit file as normal. Once the checks/notifications have printed, you will update the checks/notifications as normal and a second update number will be assigned. NOTE: If you need to recreate the direct deposit file, you will use the accrual update number (the update number you got when you updated the accrued payroll). 12 During this Print/Update process, the following files will be updated: Payroll Check File - the temporary check numbers will now be replaced with the actual check or notification number. The accrual flag behind the scenes will now be set to false. Payroll Posting File - In the current directory, a debit to the payroll accrual account (stored in the 'Payroll System' file) and credits the cash and liability accounts. These entries will need to be posted in the current directory with normal dates. Quarterly Tax File - a record will be written in this file so the accrual payrolls will reflect in the correct quarter. Check Rec - checks and notifications are written to check reconciliation file at this time.

13 5. Post payroll to ledger in the current year. This posting will affect cash and payroll liability accounts and the payroll accrual account. The posting will credit cash and withholding accounts and debit the accrual account. 13

14 LABOR HISTORY REPORT When running report for prior year, if you want to see accrual checks, don't forget to select the include accruals option. The Labor History by Employee Report will show the actual date of the check. The accrual will be identified with an "A". 14

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16 VOIDING AN ACCRUED PAYROLL CHECK 1. Void the accrued payroll check the same as you would a normal payroll check. Go to Payroll - Process - Void Payroll check. You can use a current year date to do the void. 2. After the void process is completed, you will need to post the void to ledger in both current and prior year. REMINDER: After posting in prior year, ledger balance will need to be brought forward. ACCRUING FOR A PORTION OF PAYROLL DAYS If you only want to accrue for a portion of the payroll days, use the Fund Ledger - Journal Entry option for JE Accrual for Payroll. This will create an accrued journal entry from a previously posted payroll. You will be required to enter the total number of days in the payroll period, number of days you wish to accrue, the system number for the original payroll posting to ledger, and the accrued date you wish to use. For example, if a payroll fell on the 11th of the month and 3 days needed to be accrued to the prior month, the following would be entered on this option: Number of days in payroll period - 14 Number of days to accrue - 3 Original payroll system number - (use the system number from the payroll post to ledger) Accrued payroll date (06/30/2012) You may then post the accrued entry in prior year and then reverse it in a future period. REMINDER: After posting in prior year, ledger balance will need to be brought forward. 16

17 Reversing a Journal Entry Accrual When it is time to reverse the accrued journal entry, enter the JE number assigned to the accrual entry to bring it up in the view. With the accrued entry displayed in the view, press <F10> to automatically create a reversing entry. After pressing <F10> you will be given an opportunity to enter a posting date for the reversing entry. After the reversing entry has been created in this manner, it can be posted to the ledger through the Post JE to Ledger option. ***Note: If a journal entry accrual crosses fiscal years, the following steps will need to be done in order to reverse the accrual in the correct fiscal year. This example is based on July-June fiscal year. 1. Bring up the June journal entry in prior year. It should be flagged with JE type "A". 2. Edit the date to be a July date. 3. When you click on save, the system will remind you that it is not in the correct fiscal year but it will save the new date. 4. To reverse the JE (this reverses the signs of the JE) go into current year and bring up the accrued journal entry and click on the reversal button. 5. Post the journal entry in current fiscal year. 17