Set Up Payroll Encumbrance and Liquidation

Here’s how to set up the configuration.

Configure Financials for Encumbrance Accounting

Follow these steps to complete the one-time Financials setup.

Enable Encumbrance Accounting:

1. Go to Setup and Maintenance > Tasks panel > Search > Manage Encumbrance Accounting.
2. Search for and select the primary ledger.
3. Select the Enable encumbrance accounting checkbox.
4. Specify the Reserve for Encumbrance Account value.
5. Save your changes.

Define Accounting Attributes for Accrual Reversal:

Set up accrual reversal to clear encumbrances and liquidate estimated payroll costs. Align the accrual reversal date with the payroll accounting date so that the estimates are reversed when payroll is processed.

1. Go to General Accounting > Period Close.
2. Verify the ledger and open the General Ledger.
3. Ensure that Latest Open Encumbrance Year reflects the correct year.
4. Go to Setup and Maintenance > Tasks panel > Search > Manage Accounting Attributes.
5. From the Event Class list, select Encumbrance Costs.
6. Select the Accrual Reversal Accounting Date Source attribute with the appropriate source value.
7. Save your changes.

Define Journal Entry Rule Sets:

1. Go to Setup and Maintenance > Tasks panel > Implementation Projects.
2. Search for and select your implementation project.
3. Drill down the tasks list and select Manage Subledger Journal Entry Rule Sets.
4. Create a subledger journal entry rule set to use the encumbrance costs.
5. Specify Encumbrance Costs as the Event Class and Event Type.
6. Define the debit and credit line types.
7. Select the Accrual Reversal Accounting Date Source value.
8. Save your changes.

Add the Journal Entry Rule Sets to the Payment Method:

1. On your implementation project page, drill down the tasks list and select Manage Accounting Methods.
2. Search for and select your accounting method.
3. Add a new row for the encumbrance rule set.
4. Save your changes.

Submit the Accounting Configuration:

1. Go to Setup and Maintenance > Financials > General Ledger > Review and Submit Accounting Configuration.
2. Select the ledger.
3. Submit the process to compile and deploy accounting rules.

Calculate Payroll Encumbrances

Run the Calculate Payroll Encumbrances process to estimate payroll costs and create encumbrance records.

1. Identify the payroll elements to be encumbered and create an element group containing those elements.

   This defines the salary components included in the encumbrance.

2. Go to My Client Groups > Payroll > Submit a Flow.
3. Select the Legislative Data Group.
4. Search for and select the Calculate Payroll Encumbrances flow.
5. Enter the Payroll Flow name.

6. Select the Payroll and Payroll Period values.

7. Select the Element Group created in step 1.
8. Submit the flow.

Transfer Encumbrance Transactions to Subledger Accounting

Run the Transfer to Subledger Accounting process to transfer the entries to the subledger in the general ledger.

1. Go to My Client Groups > Payroll > Submit a Flow.
2. Select the Legislative Data Group.
3. Search for and select the Transfer to Subledger Accounting flow.
4. Enter the Payroll Flow name.

5. Select the Payroll and Payroll Period values.

6. Submit the flow.

Create Accounting Entries

Run the Create Accounting process to transfer subledger transactions to the general ledger and generate the corresponding journal entries.

1. Go to Tools > Scheduled Processes > Schedule New Process.
2. Search for and select the Create Accounting process.
3. Select the following values:

   • Subledger Application: Payroll
   • Ledger: Your ledger
   • Process Category: Encumbrance Costs, to run this process only for encumbrance costs.
4. Submit the process.

Verify Encumbrance Journals

1. Go to General Accounting > Journals > Tasks pane > Manage Journals.
2. Search for and select the Accounting Period value.
3. Search for and select Payroll in the Source list.
4. Select Search to search for journals created from payroll encumbrance transactions.

5. Drill down and review the generated journals to verify details such as the encumbrance amounts, accounting segments, and journal status.