The following step-by-step narrative sets forth the necessary procedures for using the system'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).
First set up the Leave Settings screen. The 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 wish 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 will prevent 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 in this screen.
Before entering employee leave information, define and set up the controls for handling different types of leave in the 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 Dollars. Specify this parameter in the 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 dollars, the value of accrued leave will 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 dollars 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.
Leave by Hours
When tracking by hours, you enter an employee balance in hours when you initialize the Maintain Leave Beginning Balances screen in Costpoint Employee. 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, the system 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. The system 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.
Leave by Dollars
When you track by dollars, this value increase entry is not required. Enter the employee's beginning balance in dollars in the Maintain Leave Beginning Balances screen in Costpoint Employee. 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 in the Leave History Inquiry in dollars. The system derives the current balance in dollars by subtracting the YTD taken in dollars from the sum of the beginning balance plus the YTD accrued in dollars. The system derives the current balance hours by dividing the current balance in dollars 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 should not have a significant affect.
Accruing Leave
It is the policy of most contractors to accrue vacation leave in the G/L 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 G/L, it is often accrued for internal tracking purposes. To automatically accrue either vacation or sick leave, you can enter the appropriate leave accrual rate(s) for each employee in the Employee Leave screen in Costpoint Employee.
If this is the policy of your company, you should be 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 G/L (charge vacation taken to an accrual account).
Track accruals for sick leave, but do not post to the G/L (charge sick leave taken to an expense account).
Enter a beginning balance at the beginning of the year in the Employee Leave screen in Costpoint Employee for each employee for holiday and personal leave, but no accrual rate (charge holiday/personal leave taken to expense account).
Accrual vs. Expense Accounts
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 in the Leave Types screen in Costpoint Leave. The table indicates how the system 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 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 in the Leave Periods screen is the basis for leave accrual calculations.
Use the Leave Tables 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 Maintain Leave Beginning Balances screen in Costpoint Employee to enter employee leave balances that were accrued before you initialized Costpoint.
Use the Employee Leave screen in Costpoint Employee to assign leave codes and related leave hire dates to individual employees previously established in the Salary Info and History screen in Costpoint Employee. 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 Employee Leave screen in Costpoint Employee to assign leave codes and related leave hire dates to individual employees previously established in the Salary Info and History screen. Computing leave accruals updates the employee leave status. Enter new employees that have started work since your last leave processing.
If you have entered new employee leave information in the previous step, print and review the Employee Leave Report (the Print Employee Leave Report screen).
After verifying that all employee leave information is correct, compute leave for the desired leave cycle(s).
After computing leave for the desired leave cycle(s), review and, if necessary, edit the leave accruals, leave lost, and leave deferrals in the Maintain Leave Edit Table screen.
After reviewing and editing the Maintain Leave Edit Table screen, print the Leave Edit Report for the desired leave cycle(s). 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.
Once you have reviewed and made changes to the Leave Edit Report and have posted 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 cycle(s) and printing the Employee Leave Statements, you must post leave accruals and deferrals to the G/L 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 G/L.
After posting the leave accruals and deferrals to the G/L, print the Accrued Leave Report. This report prints the leave balances for each employee.
After posting the leave accruals and deferrals to the G/L, 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) in the Leave History Inquiry screen. This is an optional step.