Salary and benefits are primarily accrued for bi-weekly employees to assist departments in the projection of monthly salary expense, and to record the expenses per Generally Accepted Accounting Principles (GAAP).
Oftentimes, the payroll period for bi-weekly employees ends just prior to the end of a month. To account for the workdays that a bi-weekly employee works between the end of the bi-weekly pay period (immediately preceding the end of a month) and the end of the month, we accrue those days wages and benefits to the month in which the work was performed.
We will then reverse these amounts in the next period (month) when the actual wages are paid and accounted (recorded) for. As a result, the salary and benefits that were reversed will offset the actual wages recorded in that month. Please note that the actual wages may be different than what was accrued. This is the result of using a calculated amount to estimate the accrual versus what the wages actually were (includes adjustments like overtime, non-compensated time off, etc.).
The salary accrual is calculated by taking the number of working days remaining after the last bi-weekly pay period of a month and dividing it by the number of workdays in a bi-weekly pay period (i.e. 10 workdays). This is then multiplied by the total earnings (including adjustments) that were paid on the last bi-weekly pay period of the month.
NOTE: The amount accrued can be different than actual earnings paid as reflected in the following extended example:
The Composite Benefit Rate (CBR) is the only benefit currently being accrued. Composite benefit rates are developed in order to cover the costs of fringe benefits offered by the university. The CBR benefit accrual is calculated by multiplying the salary accrued (above) by the appropriate CBR rate. CBR rates can be found on Blink.
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