Month end accural and Year end accural processings.

Question

Hi Experts,
Can you please give me an idea about month end accural and year end accural proecess in payroll?? What are the responsibilities of functional consultants in accural processing??
Thanks,
Kanna.

Answer 1

Hi,
The purpose of the accrual process is to recognize payroll costs in the month in which they were incurred, i.e. when the employee actually performs the work.
This accrual process will result in a more accurate presentation of monthly and year-end payroll expenses and liabilities.
The accrual is calculated in HRMS and posts an entry in FI (debit department payroll expense and credit accrued liability) to account for the portion of earnings owed but not paid at month end.
The accrual is calculated as follows:
The system determines the fraction of the payrolls that were earned but not physically paid in the current month. This amount is calculated based on the number of days in each payroll that were earned in the month, as a fraction of the total number of days in each payroll (10 days for all biweekly payrolls). If an entire payroll was earned and not paid, then the fraction would be 1 (ie.100% accrual). Some months may have to accrue a fraction of one payroll, other months we may accrue more than one payroll.
~BiSu