The following step-by-step narrative outlines the necessary procedures for using Costpoint's leave processing function.
Before setting up any leave parameters, set up the expense and accrual accounts for your leave types in the General Ledger Chart of Accounts (G/L COA) on the Manage Accounts screen.
First set up the Configure Leave Settings screen. The Configure Leave Settings screen controls the handling of leave-related functions, such as the default leave cycle, months of service calculation, and leave statement line numbers.
If you want to set up multiple employees by leave cycle and your company has multiple leave cycles, you can set up a default leave cycle and then enter the employees to be assigned the leave cycle. This prevents you from inadvertently assigning the incorrect leave cycle to an employee. After entering all employees and leave cycles, be sure to clear the field in the Default Leave Cycle group box on this screen.
Before entering employee leave information, define and set up the controls for handling different types of leave on the Configure Leave Types screen. The leave type is a major classification, such as vacation, for tracking leave. The leave type controls the method for leave ceilings and the method for tracking leave (by hours or dollars). The leave type also specifies the G/L COA accrual and expense accounts and describes the leave type code.
Any of the leave types accrue in Costpoint in one of two ways: By Hours or By Amount. Specify this option on the Configure Leave Types screen. The essential difference between these two methods lies in the value of the accrued leave. When you track by hours, the value of accrued leave increases when a salary increase occurs. When you track by amount, the value of accrued leave does not increase when a raise occurs. Rather, the employee's hours accrued decrease when a raise occurs. Although we do not specifically recommend this method, tracking by amount can resolve some of the issues related to leave limits that are raised by government auditors. For instance, one government auditor complaint relating to large accrued leave balances is that the leave accrues at a particular rate and, if it is not taken within a reasonable amount of time, is paid to the employee at a higher rate.
When tracking by hours, you enter an employee balance in hours when you initialize the Manage Leave Beginning Balances screen. The Leave Journal posts hours accrued, lost, and deferred each leave period. The Leave History table is updated with leave used amounts after you post timesheets for the leave period to Labor Distribution. When you print the Accrued Leave Report, Costpoint subtracts the Year-to-Date (YTD) used hours from the sum of the beginning balance hours plus the YTD Accrued hours, to arrive at the current balance in hours. Costpoint multiplies this current balance by the current hourly rate to arrive at the leave liability amount. A reversing timing entry may also be required, depending on your Leave Journal posting procedures. An accrual entry is required to record the additional liability that exists when pay raises are given.
When you track by monetary amount, this value increase entry is not required. Enter the employee's beginning balance in monetary amount on the Manage Leave Beginning Balances screen. The Leave Edit Table stores the hours accrued, lost, and deferred. When you post the Leave Journal, the hours accrued and taken are multiplied by the current hourly rate, and then stored on the View Leave History screen in monetary amount. Costpoint derives the current balance by subtracting the YTD taken in monetary amount from the sum of the beginning balance plus the YTD accrued in monetary amount. Costpoint derives the current balance hours by dividing the current balance in monetary amount by the employee's current hourly rate. When an employee receives a merit increase, the value of the accrued leave is not increased, but rather, the number of hours available to the employee is decreased. However, if leave is taken within a reasonable amount of time from the period in which it was accrued, this does not have a significant affect.
It is the policy of most contractors to accrue vacation leave in the General Ledger and to expense sick leave as taken because unused vacation leave is generally paid to employees who terminate, whereas unused sick leave generally is not. However, even though sick leave is not accrued in the General Ledger, it is often accrued for internal tracking purposes. To automatically accrue either vacation or sick leave, you can enter the appropriate leave accrual rates for each employee on the Manage Employee Leave screen.
If this is the policy of your company, you are charging vacation from the timesheet to the accrued vacation account and from sick leave to the sick leave expense account.
The accrual method can be different for each leave type. A typical setup is:
Accrue vacation in the General Ledger (charge vacation taken to an accrual account).
Track accruals for sick leave, but do not post to the General Ledger (charge sick leave taken to an expense account).
Enter a beginning balance at the beginning of the year on the Manage Employee Leave screen for each employee for holiday and personal leave, but no accrual rate (charge holiday or personal leave taken to expense account).
Because the policy on accruing types of leave is not universal, you define your leave policies in the system. You can do this by entering or not entering leave accrual and leave expense accounts on the Configure Leave Types screen. The table indicates how Costpoint handles the various options:
|
Accrual Account |
Expense Account |
Account to |
Leave Journal Accrual |
Earnings Record Accrual |
|
06010 |
05021 |
Accrual |
Y |
Y |
|
00000 |
05025 |
Expense |
N |
Y |
|
00000 |
00000 |
N/A |
N/A |
N/A |
Use the Manage Leave Periods screen to identify the period of time used for controlling leave accruals before you can establish your employee Leave tables. The leave period that is open on this screen is the basis for leave accrual calculations.
Use the Configure Leave Codes screen to establish the leave codes that can be used for accruing specific leave types (vacation, sick, and any other leave). This table associates each leave type with a leave code, with each leave code representing a method or predetermined schedule of accruing leave. You must establish leave codes before assigning employee leave information and before computing leave accruals.
Use the Manage Leave Beginning Balances screen to enter employee leave balances that were accrued before you initialized Costpoint.
Use the Manage Employee Leave screen to assign leave codes and related leave hire dates to individual employees previously established on the Manage Employee Salary Information screen. Computing leave accruals updates the employee leave status.
Once you have entered the employee leave information, print and review the Employee Leave Report (the Print Employee Leave Report screen).
Use the Manage Employee Leave screen to assign leave codes and related leave hire dates to individual employees previously established on the Manage Employee Salary Information screen. Computing leave accruals updates the employee leave status. Enter new employees that have started work since your last leave processing.
If you entered new employee leave information in the previous step, print and review the Employee Leave Report (on the Print Employee Leave Report screen).
After verifying that all employee leave information is correct, compute leave for the desired leave cycles.
After computing leave for the desired leave cycles, review and, if necessary, edit the leave accruals, leave lost, and leave deferrals on the Manage Leave Edit Table screen.
After reviewing and editing the Manage Leave Edit Table screen, print the Leave Edit Report for the desired leave cycles. The report contains the contents of the Employee Leave Journal.
Post timesheets for this leave period to labor distribution. This updates the employee's leave history with leave used information.
After you review and make changes to the Leave Edit Report and post timesheets for this leave period to labor distribution, print Employee Leave Statements, one cycle at a time, for each employee. This is an optional step.
After computing each leave cycles and printing the Employee Leave Statements, you must post leave accruals and deferrals to the General Ledger before you can compute the next leave period (you can have only one posting per leave cycle). The posting process moves the leave amounts from a temporary table to a permanent leave table and posts the accrual and deferral amounts to the General Ledger.
After posting the leave accruals and deferrals to the General Ledger, print the Accrued Leave Report. This report prints the leave balances for each employee.
After posting the leave accruals and deferrals to the General Ledger, close the leave period. Only one leave period can be open at any time, so you must close one leave period before any activity for the next leave period can take place.
You can view an employee's leave history detail (leave accruals, leave lost, leave deferrals, and leave used) on the View History Inquiry screen. This is an optional step.