1. Implementing Project Financial Management and Grants Management
  2. Accounting Objects Specific to Labor Distribution

Accounting Objects Specific to Labor Distribution

Labor Distribution leverages many seeded accounting objects, such as Business Unit, Award, Project, Task, and so on.

In addition to seeded accounting objects, Labor Distribution also uses a Non-Project Labor Costs event class to identify and track labor costs that are not directly associated with specific projects. To incorporate this event class into the Project Costing subledger, run the Setup and Maintenance > Update Subledger Application Options task. For more information about this process, see the Oracle Financials Cloud Implementing Subledger Accounting guide. Specifically, see Subledger Accounting Options.

Use the Non-Project Labor Cost seeded subledger journal entry rule set to account for the two types of non-project costs generated from the labor distribution Import Payroll Costs process:

  1. Non-project labor costs specified on the labor schedule:
    1. GL Account specified labor schedule distribution rule
    2. Journal Line Rule = Imported Non-Project Labor Cost
  2. Non-project labor costs generated to complete the differential between the labor schedule distributions total and 100%, ensuring full distribution of the payroll cost:
    1. If an Active Version has Distribution Rules that do not total 100%, the Import Payroll Costs process will create a cost distribution to equal the differential.
    2. Journal Line Rules = Non-Project Labor Cost, Non-Project Labor Cost Clearing, Non-Project Labor Cost Reversal, and Non-Project Labor Cost Clearing Reversal.

To review details associated with the Non-Project Labor Cost subledger journal entry rule set, navigate to Setup and Maintenance > Setup: Fusion Accounting Hub > Accounting Transformation.

Initial Setup Option

This section provides a description of the accounting setup needed for this feature, along with an explanation of all seeded accounting objects for deciding on other implementations to meet business needs.

To add the new event class of Non-Project Labor Costs to your subledger accounting method using the seeded Non-Project Labor Cost rule set, you will need to:

  1. Manage mapping sets to set the account values for the credit and debit of the journal rules.
  2. Add this rule set (or make a copy of it and add) to your subledger accounting method for Project Costing using the Setup and Maintenance > Manage Accounting Methods task.
Note: A best practice is to make a copy of the seeded journal entry rule set to maintain the standard seeded rule set for reference.

An overview of the seeded objects and an example for payroll clearing are provided below.

Accounting Objects Seeded for Use with Labor Distribution

To understand accounting objects that are seeded for use with Labor Distribution, you must review the following, described in dedicated sections, below:

  • Journal line rules
  • Mapping sets
  • Accounting rules
  • The associated journal entry rule set
  • The Manage Accounting Methods task

Journal Line Rules

There are five journal line rules for the Non-Project Labor Cost event class.

The labor distribution feature uses the existing Labor Cost rule for project labor costs that get passed thought the Import Payroll Costs job.

Here's a table offering a brief description of the journal line rule names associated with labor distribution:

Journal Line Rule Names Associated with Labor Distribution

Journal Line Rule Name Description
Imported Non-Project Labor Cost (debit) Journal line for non-project related labor costs when an account is specified in the labor schedule distribution rule.
Non-Project Labor Cost (debit)

Journal line for non-project related labor cost when an account is not specified in the labor schedule distribution rule.

These are the differential distributions that are generated if the total of labor schedule distribution rules is less than 100%. This will fully distribute the imported payroll cost.
Non-Project Labor Cost Clearing (credit) This rule is used to create the credit side of the accounting for both the Imported Non-Project Labor Cost and the Non-Project Labor Cost debits.
Non-Project Labor Cost Clearing Reversal (credit) Reversal Journal line used for non-project related labor cost clearing.
Non-Project Labor Cost Reversal (debit) Reversal Journal line used for non-project related labor cost.

Why are there five journal line rules instead of six?

The business flow of these labor distribution costs (Imported Non-Project Labor Cost and Non-Project Labor Cost) to the general ledger is expected to use the same payroll clearing account.

Mapping Sets

There are two mapping sets associated with non-project labor costs:

  • Non-Project Labor Cost Account: Specifies the account combination used for non-project labor cost accounting events.
  • Non-Project Labor Cost Clearing Account: Specifies the account combination used for non-project labor cost clearing accounting events.

The Imported Non-Project Labor Cost Journal Line Rule does NOT need a mapping set, because it's an account combination passed directly from the labor schedule version distribution.

To define an account for mapping sets, you must map each account to the chart of accounts, and then to a specific account code combination.

Account Rules

There are three account rules associated with non-project labor costs.

  • Imported Non-Project Labor Cost Account: Account combination rules for the Imported Non-Project Labor Cost Account combination.
  • Non-Project Labor Cost Account: Account combination rules for the Non-Project Labor Cost Account combination.
  • Non-Project Labor Cost Clearing Account: Account combination rules for the Non-Project Labor Cost Clearing Account combination.

The Imported Non-Project Labor Cost Account uses the Cost Account source to capture the account.

The other two rules are setup to use corresponding mapping sets defined earlier.

Journal Entry Rule Set

The seeded Non-Project Labor Cost journal entry rule set specifies how to process debit and credit line types specific to all five journal entry rules described above.

Manage Accounting Methods

The Manage Accounting Methods task is documented here for reference and is an accounting setup step that is required to be performed by customers. The step is to add a journal entry rule set to an appropriate subledger accounting method. In this instance, you associate the Vision City Accrual with Encumbrance Accounting accounting method to the Non-Project Labor Cost journal entry rule set.

To do so:

  1. You navigate to the Manage Accounting Methods: Project Costing page and search for the Vision City Accrual with Encumbrance Accounting accounting method.
  2. You click the accounting method to edit it and add the Non-Project Labor Cost journal entry rule set in the Journal Entry Rule Set Assignments section.
  3. You click Save and Close to exit the page.
Note: After adding the Journal Entry Rule Set to the subledger accounting method, be sure to run the Activate Subledger Journal Entry Rule Set Assignments process.

Example of Accounting Setup for Payroll Clearing

A common accounting flow is to send the payroll transactions that are sent to Projects for Labor Distribution, to a clearing account. These transactions will then be credited after they flow through the Import Payroll Costs process. Managing this clearing account ensures the payroll costs are processed successfully through to the general ledger and are properly accounted.

Summary Flow

In this example, payroll is run and costed for two employees. These payroll costs are imported and distributed to projects/awards and to the General Ledger via the subledger accounting processes.

Step 1

Two employees are on the monthly payroll at Oracle University. They are John Smith, with a monthly salary of $2,500, and Mary Marshall, with a monthly salary of $3,600. The one element is Regular Salary. Total payroll costs are $6,100 for the current month. These costs are processed and costed from Payroll to General Ledger, as shown in the table below.

Regular Salary Costs Processing Details

Account Total Payroll Costs Debit/Credit
Payroll Clearing (00.000.1500) $6,100 Debit
Payroll Liability (00.000.2100) $6,100 Credit

Step 2

Labor schedules are established at the employee assignment level for each employee.

Labor Schedule Distribution Rules for John Smith

John Smith – Labor Schedule Distribution Rule Distribution Rule Percent
GL Account 10.200.6010 20%
DOD Project 80%

Labor Schedule Distribution Rules for Mary Marshall

Mary Marshall – Labor Schedule Distribution Rule Distribution Rule Percent
GL Account 10.300.6010 40%
NSF Project 60%

Step 3

The Import Payroll Costs process in Projects is run and creates the project and non-project costs, which can be reviewed in the Manage Labor Costs pages.

Distribution Amounts Identified Using Labor Schedule Distribution Rules

Employee Distribution Rule Distribution Amount
John Smith GL 10.200.6010 $500
John Smith DOD Project $2,000
Mary Marshall GL 10.300.6010 $1,440
Mary Marshall NSF Project $2,160

Step 4

The Create Accounting for Projects process generates appropriate journal entries based on subledger accounting rules.

Non-Project Journal Entries Created for Appropriate Distribution Amounts

Non-Project Journal Entries Amount Debit/Credit
GL 10.200.6010 $500 Debit
GL 10.300.6010 $1,440 Debit
Payroll Clearing $1,940 Credit

Project Journal Entries Created for Appropriate Distribution Amounts

Project Journal Entries Amount Debit/Credit
GL 20.000.6000 * $4,160 Debit
Payroll Clearing $4,160 Credit

* This is assumed to be the account assigned to the debit for all project-related labor costs in the accounting rules. The total amount associated with project journal entries comprises $2,000 for the DOD Project, and $2,160 for the NSF Project, resulting in a combined amount of $4,160.

The table below illustrates the consolidated view of the general ledger entries after the labor distribution and accounting processes are complete. The payroll clearing has a zero balance, and appropriate general ledger accounts show debit balances for labor expenditures. The payroll clearing will NOT net to zero if any of the project costs error out when the Import Payroll Costs process runs in Projects.

General Ledger Entries Consolidated View

Account Example Step Debit Credit
00.000.1500, Payroll Clearing Step 1 $6,100
Step 4 $1,940
Step 4 $4,160
00.000.2100, Payroll Liability Step 1 $6,100
10.200.6010, General Fund.Engineering.Salary Step 4 $500
10.300.6010, General Fund.Cardiology.Salary Step 4 $1,440
20.000.0600, Restricted Fund.General.Salary Step 4 $4,160

Example of Using the Pay Element Source in Subledger Accounting

The scenario used in this example is that a specific pay element should generate a specific account using a segment override. This allows for the costs to distribute to projects via the labor schedule distributions and the subledger accounting will route them according to the detail mapping sets.

The pay element of Car Allowance needs to be routed to a different account segment than the other pay elements. To accomplish this, the accountant will:

  1. Create a mapping set with the Output Type = Segment.
  2. Specify the account in the Mappings section on the lower part of the page.
  3. The journal entry rule set in use has an existing segment rule for the associated labor cost journal lines.
  4. The account rule being used for this segment is modified to leverage the new mapping set and apply it specifically for the condition of labor distribution.
  5. After accounting processes are run, these costs are accounted to the specified segment based on the pay element, while other pay elements use the other segment rules.