Biweekly Payroll Accrual Month-End Process
Because many bi-weekly payrolls are processed after the month ends, an accrual (estimation) of the costs for each month's unpaid days will be made and recorded automatically for most areas of the campus. Faculty and administrative employee payrolls do not need an accrual since they are processed at the end of each month for that month's payments. The accrual process will not affect the timing or actual amount of salaries and wages paid for any employee groups.
Computation of Payroll Accruals
Accruals only occur each month for cost recovery type accounts. In December of each year, all accounts are charged with accruals based on the following:
The accrual for the salary of full time employees is determined at the end of the month/year based upon the number of weekdays unpaid at month-end multiplied by their pay rate X an 8 hour day.
The accrual for students paid on a contract basis is determined from the ratio of weekdays remaining unpaid at the end of each month divided by the number of week days in the contract period, multiplied by the contract amount.
The accrual for student employees and part time non-student employees paid on an hourly basis is determined by multiplying their hours worked, based on recorded hours in the Y-Time timekeeping system. These hours must be entered by Dec 31, by their hourly wage rate. Some campus areas record time for these employees via time cards.
Payroll accrual journals will be dated the last day of the month and have a Journal ID with the prefix "PYA", and a Journal Source of "264". An automatic reversal of the payroll accrual entry will be made on the first day of the following month (Journal Source "265").
Payroll benefit costs associated with both paid and accrued wages for the entire month will be automatically calculated and recorded by the accounting system as part of the month-end close process. The payroll benefit journal will be dated the last day of the month, have a 10 digit numeric Journal ID with leading zeros, a Journal Source of "ALO", and a Journal Header Ref of "BEN+ benefit rate? (e.g BEN 7.9%). The reversal of the benefit accrual will be netted into the next month-end payroll benefit journal.
Computed expenses will post to the regular payroll and benefit account codes. A payroll accrual will also be recorded to the liability section of the balance sheet in account code 2210.
Questions? Please contact the Financial Services accountant responsible for your area.