Using the balanced method to process hours

OBJECTIVE

This procedure explains how maestro* processes hours using the balanced method and how salary costs affect projects.

When hours are processed using method 2 - Balanced:

• A temporary labour cost for projects is calculated until the payroll process and payroll reconciliation are completed.
• Actual fringe benefit costs are allocated to the project after costs are calculated and posted to the payroll (labour costs will vary during the year).
• The system ensures that payroll costs are identical to the labour costs entered in projects.
• Salary expenses are managed from the time section on projects rather than from the payroll module.
• Accrued salary expenses and fringe benefits are automatically managed at month end.

Using this method, the user can expect:

• Rigour and expertise in configuring and running the payroll procedure.
• That the payroll module will become a control tool.

 

PREREQUISITE

• Chart of Accounts

 

Summary

Processing hours using the balanced method means that bonuses and vacation days must be entered from the Entry Hours option. Salary expenses are managed by the projects, which means that temporary costs are calculated in accrued expense accounts (accrued salary accounts, accrued fringe benefits, etc.).

Here is the configuration required to process hours using the balanced method. To access any of these headings quickly, click the following link:

• Step 1: Activating the method for processing hours
• Step 2: Configuration required in the Time Management module
  1. Defining the general ledger accounts related to fringe benefits
  2. Defining an estimated fringe benefit rate (mandatory for service calls)
  3. Separating the salary expenses from fringe benefit expenses in the general ledger (optional)
• Step 3: Configuration required in the payroll module
  1. Defining the general ledger accounts to be affected according to the work category during payroll calculation
  2. Defining the Earning/Deduction Codes
• Step 4: Processing fringe benefits
  1. Performing the payroll reconciliation
  2. Checking and printing the Payroll Reconciliation Report

 

Step 1: Activating the method for processing hours

This step is required to tell maestro* that employees costs (Social and fringe benefits) entered in projects must match the payroll.

Please contact Maestro to schedule a meeting with our professional services group before changing the method for processing hours.

 

maestro* > Time Management > Maintenance > Time Management > Configuration

1. Click on General in the menu on the left. The General section is displayed on the right.
2. In the Time Entry section, under the field Hours transfer, select 2-Balanced.
3. Click Save and then Quit.

 

Step 2: Configuration required in the Time Management module

In projects, salary costs include hours worked and compensation or bonuses of all types, including fringe benefits.

When the balanced processing method is used, no costs should be defined in the following options: Employee Management Define Trades Work Category Management Note that using the balanced method also has an impact on processing vacation days and managing W/C CSST. Consult the documents below for the configurations required for each of these options: Configuring the Worker Compensation benefits options for Canadian payroll (refer to the section named Manage Worker Compensation (W/C CSST) from the project time module) Payment of vacation days

 

A. Defining the general ledger accounts related to fringe benefits

This information will be used during the Payroll Reconciliation phase described in step 4.

To define the general ledger account for fringe benefits:

maestro* > Time Management > Maintenance > Time Management > Configuration

1. In the menu on the left, click W/C CSST/Fringe Benefit. The section on the right named Time Management - W/C CSST/Fringe Benefit is displayed.
2. In the Fringe Benefits section, complete the following fields:

Field	Enter
Accrued Labour Account	The general ledger account for accrued salaries
Accrued Fringe Benefits	The general ledger account for accrued fringe benefits
Fringe Benefits on Vacation Pay	Do not enter anything in this field.

3. Click Save and then Quit.

 

B. Defining an estimated fringe benefit rate (mandatory for service calls)

When you allocate salaries to a project, you should of course include all fringe benefits per employee. Given that the payroll will be executed afterwards, a percentage to represent the estimated fringe benefits can be defined.

If a fringe benefit percentage is specified, the project costs will be more accurate. When the hours are transferred, the cost of fringe benefits on labour will not be estimated until step 4 (payroll reconciliation) is performed.

The fringe benefit percentage must be defined in both following options:

• Define Trades
• Work Category Management

If no fringe benefit rates are is defined in Define Trades, maestro* uses the rate entered in Work Category Management in Time Management to calculate an amount for estimated fringe benefits. Otherwise, no temporary fringe benefits will be added to the projects.

Define Trades

maestro* > Time Management > Maintenance > Time Management > Define Trades

1. For each trade code, complete the following field:

Field	Enter
Fringe Benefits	A percentage of fringe benefits for regular, overtime or double time. For example, enter a value of 0.20 to calculate 20% fringe benefits. When the hours are transferred, these estimated values will affect project costs. During the Payroll Reconciliation stage, the estimated costs will be replaced with the actual payroll values.

Work Category Management

maestro* > Time Management > Maintenance > Time Management > Work Category Management

1. For each work category, complete the following field:

Field	Enter
Fringe Benefits	A percentage of fringe benefits for regular, overtime or double time. For example, enter a value of 0.20 to calculate 20% fringe benefits. When the hours are transferred, these estimated values will affect project costs. During the Payroll Reconciliation stage, the estimated costs will be replaced with the actual payroll values.

 

C. Separating the salary expenses from fringe benefit expenses in the general ledger (optional)

By default, during payroll reconciliation, maestro* reverses the accrued salaries accounts and accrued fringe benefits calculated by the payroll module and affects the expense account defined in the group, activity or project specified in time entry.

By default, the cost of salaries and fringe benefits are saved to the same general ledger account. If you want to use a different account, you must set up an account for the department.

The Accounts by Department option uses the salary account defined in the group or expense activity (labour) or project when hours are entered into projects.

This option not only allows you to divide the fringe benefits between different accounts, but also to divide the salaries for the same activity between different accounts, using either the work category or bonus code from the Define Earning/Deduction Codes options.

To set up an account by department

maestro* > Time Management > Maintenance > Time Management > Accounts by Department

1. Select the salary account (called the Reference Account) for which you want to separate the salary expense from the fringe benefits. The reference account is the one linked to the group, activity or project specified in time entry.
2. Complete the following information:

Field	Enter
Reference Account	The salary expense account linked to the group, activity or project entered in time entry.
Category	A work category to separate the fringe benefit expenses by work category. Otherwise, leave it blank.
Salary Account	The salary expense account.
Fringe Benefits Account	The expense account linked to fringe benefits.
Accrued Labour Account	Leave blank unless you want to make a distinction. If empty, maestro* uses the accrued labour account defined in configuration (see Figure 2 – Configuration – Time Management – W/C – CSST/Fringe Benefits).
Accrued Fringe Benefits Account	Leave blank unless you want to make a distinction. If empty, maestro* uses the accrued Fringe Benefits account defined in configuration.
W/C - CSST Expense Account	Leave blank unless you want to make a distinction. If empty, maestro* uses the accrued Fringe Benefits account defined in configuration.

Maestro* applies the following reading priority to determine which account to use when there is an account defined by department according to the following combinations:

• Reference account, category and bonus.
• Reference account and category.
• Reference account and bonus.
• Reference account only.

 

Step 3: Configuration required in the payroll module

In the payroll module, only salary or accrued fringe benefit accounts should be used.

 

A. Defining the general ledger accounts to be affected according to the work category during payroll calculation

This step is required to specify the accounts to be affected by work category when an employee's payroll is calculated. All expenses (salaries and fringe benefits) calculated during payroll calculation are posted to accrued accounts.

To define the general ledger accounts to be used during payroll calculation:

maestro* > Time Management > Maintenance > Payroll > Define Work Categories

1. Select a work category, then click on the Category Accounts tab.
2. Complete the following information:

Field	Enter
Statutory Holiday Pay	An account for accrued labour.
Bank	Nothing. NOTE: When this field is left blank, maestro* uses the general ledger account defined in the Bank field available from the Configuration - Payroll option.
Gross Pay	An account for accrued labour.
Fringe Benefits	An account for accrued fringe benefits.
WC/CSST	An account for accrued fringe benefits.
Vacation Pay Expense	An account for accrued fringe benefits.
Vacation Pay Payable	Nothing. NOTE: By leaving this field blank, maestro* uses the general ledger account defined in the Vacation Pay Account and Debit fields in payroll configuration option.
Registered Pension Plan (RPP) Expense	An account for accrued fringe benefits. NOTE: If empty, maestro* uses the account specified in the Fringe Benefits field.

 

B. Defining the Earning/Deduction Codes

The Define Earning/Deduction Codes option is used to define various types of earnings and deductions that affect the labour costs of the project, like those in payroll, in different ways.

Before configuring a bonus for an employee, you need to ask yourself where it should be entered in maestro* because the general ledger accounts should be selected based on this choice.

To configure a bonus:

maestro* > Time Management > Maintenance > Time Management > Define Earning/Deduction Codes

1. Create the bonus by completing the information in the table below depending on where it will be entered:

If the bonus is entered in time entry, it will be transferred to the payroll module automatically.

Bonus entered in project time entry

Bonus Type	Select a general ledger account
Revenue Bonus Annual Bonus Commission	Accrued Salaries
Expense Reimbursement	Accrued expenses NOTE: When payroll reconciliation is run, the accrued expense will be reversed on the date of the pay cheque rather than on the last day of the pay period.
Taxable Vacation Non Taxable Vacation	Accrued vacation days
Bonus	Accrued Salaries NOTE: When payroll reconciliation is run, the accrued labour will be reversed on the last day of the pay period.

 

If taxes are to be recovered, please enter the applicable tax codes in the Project Tax fields.

Bonus entered in the payroll module

Bonus Type	Select a general ledger account
% Deduction from net Deduction	Liability account (i.e. deductions payable)
Fed. Taxable Benefits Others Fed. Health Taxable Benefits Prov. Other Taxable Benefits Prov. Health Taxable Benefits	Taxable Benefits Payable
Alimony	Alimony Payable
Bonus	Accrued Fringe Benefits

 

If taxes are to be recovered for bonuses entered in the payroll module, please enter the applicable tax codes in the Tax Code fields.

For more information on this option, refer to Define Earning/Deduction Codes help topic.

 

Step 4: Processing fringe benefits

When processing hours using the balanced method, users perform the following steps:

• Enter hours in the projects and transfer the hours partially to projects to have estimated costs in the projects.
• Compile and Load Project Hours
• Payroll Calculation
• Print Cheques / Bank Deposits
• Prepare the Bank deposit file if applicable.
• Transfer to Accounting
• Payroll Reconciliation
• Print and check the Payroll Reconciliation Report.

When the hours are partially transferred, the transactions are identified as -2 and no accounting entries are created.

 

A. Performing the Payroll Reconciliation

This is required after cheques are printed/bank deposits are made, and consists of checking the data entered in project costs by comparing them with the payroll, using the Payroll Reconciliation report.

For more information on this option, refer to Payroll Reconciliation help topic.

To run Payroll Reconciliation

maestro* > Time Management > Project Time > Accounting > Payroll Reconciliation

1. Select the print settings and click the Accept icon.
   In this report, maestro* compares the hours, salaries, vacation days and expenses entered in the project module to the corresponding values from the payroll module.
2. If no error messages are displayed in the report, click Yes to reconcile the amounts.
3. If error messages are displayed, it means that values entered in the project (Enter Hours) are different from the values entered in the payroll (Hours Management). You must then go and modify the values in the payroll or in the project hours so that the two are identical.

Once the report is accepted, maestro* performs the following operations:

• Adjusts the fringe benefits in the projects based on actual costs calculated in the payroll module.
• Performs the final transfer of time transactions from time entry to the projects.
• Reverses accrued expense and assigns the expense accounts for salaries to the projects based on one of the accounting entries below.

If no account is defined by department, the transaction below will be created:

Description	Debit	Credit
Salary expenses (X) and fringe benefits (Y), according to the account defined for the group, activity or project.	X+Y
Accrued labour in the account defined in Configuration - Time Management.		X
Accrued fringe benefits defined in Configuration - Time Management. NOTE: If no account is specified, Y will also be sent to the accrued labour account.		Y

 

If accounts have been created for the department in step 2c - Separating the salary expenses from fringe benefit expenses in the general ledger (optional), maestro* creates the following accounting entry:

Description	Debit	Credit
Salary expenses (X) according to the account defined in the group, activity or project.	X
Fringe benefits (Y) according to the account defined in the group, activity or project.	Y
Accrued labour in the account defined in Configuration - Time Management		X
Accrued fringe benefits defined in Configuration - Time Management. NOTE: If no account is specified, Y will also be sent to the accrued labour account.		Y

 

B. Checking and printing the Payroll Reconciliation Report

After running payroll reconciliation and approving the posting report, you must print the Payroll Reconciliation Report by pay period.

This report includes the entries from the GL account for the payroll, as well as costs assigned to projects, and displays the data side-by-side for each account. You must check that the Salaries, Fringe Benefits, Vacation Days and Accrued Expenses accounts are reversed. If any of the accounts are not reversed, there are configuration errors in your data.

For more information on this option, refer to Payroll Reconciliation Report help topic.

 

See also

• Define Trades
• Work Category Management
• Accounts by Department
• Configuration - Payroll
• Configuration - Time Management
• Define Earning/Deduction Codes

 

Formerly, How-to no. 20

Last modification: September 20, 2024