Use this tab to specify the following parameters.
This general ledger account records the destination of the contra entry of all general ledger updates performed by the payroll period-end process. The anticipated balance of this account is zero. There should never be any requirement to post any transaction values.
This is the general ledger code to which all invalid entries are posted to maintain the validity of the updates to the general ledger. This is used when invalid codes are found or to self-balance a batch of updates in the event of a one-sided journal being created.
Default To Be AS
One popular method of defining the rules of general ledger integration is to build rules associated with the combination of both an employee and a payroll code or of a cost centre and a payroll code. In this instance, many payroll codes often post to the same account code, so to require that the user defines the combinations described above for every possible permutation would incur an unnecessary maintenance overhead on the system. This parameter enables you to nominate a payroll code, which already has the rules defined, so if the system fails to locate a rule for a specific payroll code it will use rules defined for the selected payroll code recorded in this parameter.
One issue to be considered when deciding to use this feature is that it might not be possible to nominate a single payroll code that can be defined against each employee or cost centre. Different types of payroll codes pay different types of employee. For example, some employees will be paid through an annual salary and others will be paid by hours worked (timesheets) only.
It might be worth considering creating a dummy payroll code (GEN, for example) that is never used to record a payment or deduction against an employee, but is used only to record the rules of general ledger integration and as such can be nominated as a consistent default. No rules will effectively be defined for a legitimate payroll code and all will use this central definition. An exception can still be defined against the particular combination of employee and payroll code or cost centre and payroll code
NI/Pensions Follow Analysis
Typically, the employer’s national insurance and pension contributions associated with a single payment are coded to the same account as the payment itself. If you set this parameter on, the system ensures that the general ledger code used for the main transactions is also used for both of these overhead costs, so that the account receives the full organization’s cost.
Further rules can be defined against the system payroll codes ERNIP (Employer’s NI Payments) and ERPP (Employer’s Pension Payments) to invoke secondary rules that may result in slight modifications to each general ledger code after it has been copied from the payment analysis.
In the event of the employer’s national insurance and pension contributions being cut up for the purposes of costing the overheads to the more detailed analysis accounts, the system might find itself with a 1 or 2 pence rounding residue following a number of pro rata distributions of the costs. If this parameter is set to a nominated acceptance value of, for example 3p, then any residue between minus 3p and plus 3p will automatically be posted to the last used analysis heading for the transaction for an employee, because this is recognized as a tolerable acceptance limit of computerised rounding. Any values outside this range are unlikely to be due to the pro rata calculations described and are more likely to be system definition issues to be resolved. These should be included in general ledger distribution reports, such as the Suspense Account List, so that they can be highlighted to the users for correction.
Default ENTERED Code When Possible
There are a number of mechanisms available to describe how each type of payroll code determines the necessary general ledger account code to analyze the transaction to. One such mechanism is to demand that the general ledger code is “Entered” onto each transaction for the payroll code that is presented to the system. This usually accommodates transactions such as expenses or overtime incurred for a different cost centre, where the required code cannot necessarily be predefined. In such an occurrence, some organizations might prefer this code to be defaulted to the employee’s ‘home’ analysis code, that is, where the more substantive and known costs are incurred. This infers that the majority of ‘Entered’ transactions are analyzed to their home area.
Display NON ENTERED Code
The alternative methods to “Entered” codes described above use existing information in the system to determine the general ledger analysis codes to use. In these circumstances, the user is not usually presented with the coding which is to be applied at a later date, that is, when the Period End is requested. This control allows the analysis codes to be displayed to the user, even if they are not required to enter or amend it.
There are two alternative mechanisms of posting transactions to the general ledger when the Period End is processed: summary or detail. If detail is requested, then every transaction is posted individually and this option determines which of the available employee references is displayed on each general ledger transaction.
For information about the details you enter on the Defaults tab, click here.