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Managing Payroll Encumbrances Product-Suite: IVEE - Payroll MANAGING PAYROLL ENCUMBRANCES

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Managing Payroll Encumbrances Product-Suite: IVEE - Payroll MANAGING PAYROLL ENCUMBRANCES IV-EX-4-A Managing Payroll Encumbrances Product-Suite: IVEE - Payroll MANAGING PAYROLL ENCUMBRANCES This class will explain the differences of Salary Encumbrances vs. Benefit Encumbrances and Actual Encumbrances vs. Pre-Encumbrances. We will go over how the system handles these calculations and how the accuracy of these figures can help with budgeting your largest expense. Salary Encumbrances vs Benefit Encumbrances There is a big difference from how the system computes Salary Encumbrances compared to Benefit Encumbrances. Salary Encumbrances are generated from Positions and Payroll Journals. Benefit Encumbrances are generated from Employee benefits calculated from computing the employee pay journals through the Compute process. Salary Encumbrances come from Employee Positions and Supplementals that have been generated with unposted pay journals. The unposted pay journals are what compute in the payroll encumbrance totals by account code. Salary Encumbrances are created automatically every time you create/modify an employee position. Salary Encumbrances do not need to be computed to be included in Payroll Encumbrance Totals. Human Resources/Payroll > Employees > Employee Positions & Pay – the “unposted” Pay Journals are considered the Salary Encumbrances Benefit Encumbrances come from the computed employee deduction journals. TIP The benefit encumbrances can and should be computed as often as possible to get accurate totals through the Employee Payroll Journal and/or the Compute Selected Periods action in Process Payroll. The following can contribute to Benefit Encumbrance totals changing: Employee Salary Change Employer deduction amounts or percentages changing New Employees and/or Terminated Employees Employee Position Funding Changes Payroll > Employees > Employee Journal – the “unposted” Deduction journals on the Match side are considered the Benefit Encumbrances. NOTE When Computing Selected Periods at the beginning of the new fiscal year can take some time. It is recommended that you run this action at the end of the work day. 2 Validating Salary & Benefit Encumbrance Totals When there are questions about incorrect Salary and/or Benefit Encumbrance Totals, it is recommended that you do the following: SALARY ENCUMBRANCE VERIFICATION Go to Payroll > Employees > Employee Positions & Pay and select the View “Funding Detail” and the Vacancy Status “Filled” and click Apply Selection. Finding the employee position information first can be helpful. Then go to General Ledger > Transaction Inquiry > Journal Detail and enter the Account Code, select Payroll Encumbrances and click Apply Selection to validate the transactions listed in the Payroll Encumbrance tab. 3 BENEFIT ENCUMBRANCE VERIFICATION Go to Payroll > Employees > Employee Journal and make appropriate selections for pay period or date range. You can also use the Account Code Filter to isolate a specific benefit expense code by selecting in the Deduction Journal tab – Show Deduction Account Detail. Enter your Account Code Filter and select Expense and Apply Selection. The unposted deduction journals can be exported to excel to get a total to verify in General Ledger Transaction Inquiry > Journal Detail. Use the same filter criteria used in Employee Journal and Select Payroll Encumbrance and click on that tab to verify detail. Journal Detail Screen 4 Pre Encumbrance vs Actual Encumbrance Actual Encumbrance is the Salary and Benefits encumbered in the employee’s payroll and deduction journals explained above. However, Pre-Encumbrance encompasses any VACANT positions and supplementals and the benefits that go along with them. Pre-Encumbrance is optional, it is something you plan to pay. We have a special utility in the system to include these amounts in your reports and totals. Benefits require special attention and set up for accurate calculations. Once the setup is done, the Pre Encumbrances will be calculated automatically when a payroll is posted to the General Ledger, or you can manually perform the calculation in the Position Pre Encumbrance screen. SETTING UP PRE ENCUMBRANCE CALCULATIONS General Ledger > Configuration > General Ledger Default Settings > Budget Information > select the Track Payroll Pre Encumbrance option. 5 Salary Pre Encumbrance – Vacant Positions & Supplementals that have a Position Amount in place will be calculated based on an Encumbrance Ratio. The # of Days Left on the Position divided by the total # of Days on the Work Calendar = Encumbrance Ratio . Encumbrance Ratio * Position Amount = Position Pre Encumbrance. For example: A Position for $39,000.00 on a 180-day work calendar has a start date of 8/23/2014 and an end date of 6/6/2015. At the point this calculation is made, the system is half way through the year. The number of days remaining are 91. The Ratio is 91/180 = 50.55%. So, the Position Pre Encumbrances calculates at 50.55% * $39,000.00 = $19,716.65. Pre Encumbrances can also be computed on Positions/Supplemental that have a $0.00 Position Amount. When the Hours per Day field is $0.00 on Hourly/Timecard Positions, the Position Amount is $0.00. The Pre Encumbrance field is available for editing under this condition. The Pre Encumbrance Amount less the FTD Amount = Pre Encumbrance. 6 Benefit Pre Encumbrances are set up on the Budgeting side. While the Position/Supplemental Pre Encumbrance is set up on the payroll side, the Benefit Pre Encumbrances are set up on the Budgeting side. The reality of the Pre Encumbrance is it is based on a close estimate of predicted payroll expenses that are not Actual. 1. Navigate to General Ledger > Budgeting > Position Budget Modeling > Position Budget Template. 2. Create a Position Budget Template for each best-guess combination of employer paid benefits. These templates will be assigned to the Pre Encumbrances Positions/Supplementals. 3. Add a Position Budget Template, and then Add any Employer Paid Benefits you wish to Pre- Encumber, such as the mandatory benefits (FICA-Social Security, FICA-Medicare, Retirement, Health Insurance, Workers Compensation, etc). 4. Once the templates are created, they must be assigned in Positions & Supplementals in the Position Budget Template field in the Information tab. 7 5. Go to General Ledger > Budgeting > Position Pre Encumbrances > Position Pre Encumbrances > Actions > Calculate Pre Encumbrance for Payroll. 6. The Final Step is to Calculate the Salary & Benefit Pre Encumbrances in Position Pre Encumbrances. 8 7. After Calculating the Pre Encumbrances, you can view the Total that is showing up in the Account Detail Screen. Go to General Ledger > Transaction Inquiry > Account Detail, enter the account filter and open the record to view Year to Date Totals for Pre Encumbrances. NOTE The detail does NOT show up in Payroll Encumbrance tab, you will need to go back to Position Budgeting to see the computed detail. The Payroll Encumbrance tab only shows Actual Payroll Encumbrances. 9 Troubleshooting Tips when Payroll Encumbrances are not Accurate General Ledger Reports show Encumbrance Totals. Here are some reasons why those totals may not be accurate and how to correct them: Benefit Encumbrances have not been computed on a timely basis in Payroll Processing. Compute Selected Periods after completing a payroll and before printing reports. The payroll encumbrances will be up to date based on current set up in payroll. The Report dates used may be beyond a recent payroll that has already been run and you expect the totals to reflect as expended. Depending on pay dates, the reports should be run with a date range that includes the pay date. Employee positions/supplementals have not been properly ended for terminated employees. Make sure to edit the End Dates of termed positions/supplementals to match last day of work. Vacant positions/supplementals do not have correct start and end dates for Pre Encumbrance calculations. Verify Start/End dates for all pre encumbrance positions/supplementals. Pre Encumbrance calculations need to be recalculated. When pre encumbrance calculations do not appear to be accurate, go to Position Budgeting and then Actions > Calculate Vacant Positions are not assigned Position Budget Templates needed for benefit calculations. In Payroll > Employees > Employee Positions & Pay – filter for Vacant records and assign the appropriate Position Budget Template. 10 Questions & Notes: 11 .
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