General Ledger Advisory User Group Meeting

1
University of Florida

• General Ledger Advisory User Group Meeting
• August 26th, 2003

2
Agenda

• Introduction to Payroll Commitment Accounting
• Payroll Prototype Assumptions
• Review High Level Business Process
• Control Budget Definition
• Employee Setup
• Payroll Accounting (Encumbrance and Actual)
• Payroll Cost Transfers
• Discuss Frequently Asked Questions
• Questions and Answers

3
Payroll Assumptions

• Payroll earnings, deductions and taxes will be
  encumbered.
• Accurate (not estimated) encumbrance of
  deductions and taxes is required.
• When an employees benefits change, the
  encumbrance balances should reflect the current
  benefit plan selection charges.
• Encumbrance and actuals distributions will be
  recorded at the employee level.
• Employer paid deductions and taxes should follow
  the earnings distributions.

4
University of Florida

• Payroll Business Process

5
Process Overview
6
Process Overview
7
Control Budget Definition
8
Process Overview
9
Employee Definition
10
Process Overview
11
Employee Distribution
12
Control vs Payroll Budget

• Control (Financials) Budget
• Top Down Budget (Legislature -gt Provost -gt
  College -gt Dept)
• Entered into Commitment Control by Budgeting Area
• Approved/Reviewed by Provost
• Controlled at Summary Account Level
• Payroll Automatically Posted to General Ledger
  when Balance Check Fails
• Payroll (HRMS) Budget
• Bottom Up Budget (Position Appointment -gt Dept
  )
• Entered into Payroll (Not Interfaced to KK)
• Drives Actuals Encumbrance Payroll Earnings
  Distribution Lines
• Distributed as a Percentage of Employee Base or
  Fixed Amount
• Accounting Lines at Detail Level (Including
  Employee ID)
• 3 Components Earnings, ER Paid Deductions and ER
  Paid Taxes

13
Payroll Guiding Principles

• Available Spending Authority (ASA) Formula
• Pre-encumbrances and Encumbrances include
  employer paid deductions and taxes

Control Budget (from Financials) Less
Pre-encumbrances (Open Positions) Less
Encumbrances (Appointments) Less
Distributions Available to Spend
14
Process Overview
15
Record Time
16
Process Overview
17
Record Payroll
Note Encumbrance is relieved by creating an
inverse of the actuals
18
Process Overview
19
Payroll Cost Transfer
20
University of Florida
21
University of Florida

• Sample Business Scenario

22
Payroll Scenario

• Faculty Member
• Base Salary 120,000
• Start Date 10/25/02 (Day 116 of the fiscal
  year)
• 50 of Time Charged to Grant
• Fund 201 Project 00000127 Department 66100200
• 50 of Time Charged to General Revenue Fund
• Fund 101 Department 66100200
• 124.43 Employer Share of PPO Plan / payroll
• 66.62 Employer Share of Medicare
• 284.86 Employer Share of Social Security

23
Payroll Scenario

• Test Scenario Script
• Setup Employee
• Setup Budget (Payroll and Control)
• Encumber Employee
• Pay Employee for Two Paycycles
• Interface Encumbrances and Actuals to Financials
• Record Financial Transactions
• Redistribute Costs
• Re-encumber Employee
• Run Payroll
• Review Sample Cognos Reports

24
Encumbrance Calculation

• Earnings Encumbrance Calculation
• Salary 120,000 Deductions 3,247.62 Taxes
  9,180
• Total Year Encumbrance 132,427.62
• Partial Year Factor 06/30/2004 10/25/2003
  249 Days Remaining
• 249 / 365 68.2192 / Partial Year Encumbrance
  90,337.03
• Encumbrance Earnings Balance 120,000 68.2192
  81,863.01
• Distribution to Funding Source 1 40,931.51
  (50)
• Distribution to Funding Source 2 40,931.50
  (50)
• Encumbrance Deductions Balance 3,247.62
  68.2192 2,215.50
• Distribution to Funding Source 1 1,107.75 (50)
• Distribution to Funding Source 2 1,107.75 (50)
• Encumbrance Taxes Balance 120,000 7.65
  68.2192 6,258.52
• Distribution to Funding Source 1 3131.35
  (3.83)
• Distribution to Funding Source 2 3127.17 (3.82)

25
University of Florida

• Frequently Asked Questions

26
Question and Answer

• Will encumbrance and actuals distributions be by
  person and account (object code)?
• Yes, encumbrances and actuals will be distributed
  at the detail account level based on the salary
  plan, benefit plan elected and type of tax
  (Account Mapping)
• Employee ID will be captured on the accounting
  lines interfaced to the General Ledger (FSR).
• Employee ID will not be interfaced into Posted
  Balances however, they will be available in
  drill down
• Encumbrances deductions and taxes will be created
  using actual amounts (FSR).
• On actuals lines, the paycheck number will be
  included as a journal line reference

27
Question and Answer

• Will departments be able to project how much an
  individual will cost?
• Yes, encumbrances will capture the amount an
  employee is anticipated to cost for the entire
  fiscal year based on current information.
• Encumbrances will include the employer paid
  deductions and taxes.
• Encumbrances will be reduced when actuals
  transactions are interfaced from Payroll
• Encumbrances will be reversed upon termination of
  an employee.
• Open positions will be budgeted as
  pre-encumbrances.
• Pre-encumbrance (Open Position) deductions and
  taxes will be calculated based on user specified
  amount.
• Pre-encumbrances will be reversed with
  encumbrances when the position is filled.
• Unfilled position pre-encumbrances will be
  reduced after each payroll to free budget (FSR).

28
Question and Answer

• Will departments be able to encumber costs to the
  end of a grant?
• No, Projects (Grants) will budget the anticipated
  salary costs for the life of the grant.
• Encumbrances are calculated to the end of the
  fiscal year.
• The fund ending date on the department budget
  earnings panel will prevent a payroll
  distribution from charging a grant that has
  ended. If this occurs, the payroll charges will
  go to the department default account code.
• There is no functionality to encumber payroll
  costs beyond the current fiscal year unless all
  control budgets span multiple years.

29
Question and Answer

• Can you see the impact of future dated
  distributions?
• Yes, future effective dated row changes will be
  picked up and booked via the nightly encumbrance
  process. Thus, reflecting an accurate accounting
  picture for the whole fiscal year.
• Future dated distributions will be created by
  inserting future effective dated rows in the
  appointment budget definition.

30
Question and Answer

• Will the departments flex code and source of
  funds be present on encumbrance and actuals
  distribution lines?
• If the account code includes a value in the flex
  code or source of fund field, it will be included
  on the encumbrance and actuals distribution
  lines.
• Distributions are driven by accounts codes in
  Payroll. Account Codes represent a combination of
  chartfield values.
• Note PeopleSoft delivers functionality to build
  account codes through the combination edit build
  process (Financials). The Commitment Accounting
  Prototype Team is recommending that account codes
  be loaded manually (spreadsheet upload) instead
  of trying to pre-determine all of the chartfield
  combinations (FSR). The initial population of the
  account codes will be based on the FLAIR payroll
  distributions (cross walked to PeopleSoft)

31
Question and Answer

• Will the UF-ID be present on encumbrance and
  actuals distribution lines?
• Yes, when accounting lines are created, the
  distribution module will be modified to populate
  the chartfield2 (UF-ID) chartfield.
• Note In order to minimize the account codes, the
  Commitment Accounting Prototype Team recommends
  the Accounting Line Creation (distribution)
  processes be modified to insert the employee id
  from the payroll and encumbrance distribution
  lines instead of having to include them in the
  account codes (FSR).

32
Question and Answer

• Will payroll cost transfers generate accounting
  entries in Financials?
• Yes, the nightly encumbrance process and retro
  distribution process will create accounting lines
  that will be booked in Financials.
• Retro cost distributions (payroll cost transfers)
  are created by changing the budget definition
  effective dates, distribution percentages,
  account codes and/or amounts.
• The encumbrance redistributions will be generated
  nightly.
• The actuals redistribution will occur in
  conjunction with each payroll run.

33
Question and Answer

• What is the plan for reporting on payroll
  information? Will the information be presented in
  a consistent manner?
• Financials and payroll reports will use a
  common financial language. Users will not have
  to know two sets of codes in order to interpret
  the data.
• The financials and payroll databases are kept in
  sync automatically by PeopleSoft. If a financial
  report is compared to a payroll report, they will
  reconcile at the journal source level.
• The current reporting plan is for a Cognos cube
  to be generated on the payroll accounting lines
  on a nightly basis.
• The payroll accounting line table is going to
  include all of the PeopleSoft chartfield values
  (including employee id flex code) as well as
  new fields to capture deductions, taxes and
  earnings codes (FSR).