This article discusses how Accounting Segments are built in Oracle Payroll.
Payroll costing in Oracle
This article discusses how Accounting Segments are build in Oracle Payroll.
For this article, assume that you do not have Labor Distributions implemented. Also assume that you do not have OTL [Oracle Time and Labour].
I will explain the significance of those two modules in future articles. But for the purpose of simplicity, lets make that assumption inn this article.
You must also read Metalink Note 69475.1
Why is costing needed in payroll?
Because each employee that gets paid, their costs must be reflected in Oracle General Ledger. If IT department employs Anil Passi, then IT Departments Cost Centre will bear my cost. Effectively IT Department will pay for my salary from their budget.
Every employee assignment record in Oracle HRMS is attached to an Organization.
Organizations are usually mapped to cost centres. Is that true?
Yes, in most cases this will hold true.
If cost centre can be derived from person's HRMS assignment, then why the need of this article on payroll costing?
For the following reasons:-
1. Cost Centre is not the only accounting segment. For example, in this article, I assume we have Company Segment, Cost Centre Segment, Project Segment and Expenditure Type Segment.
Payroll Costing must be able to work out values for each of these segments for each Payroll run result.
2. IT department may not always be the only department that bears my cost. For example, if I am asked to do some enhancements or customizations to Oracle iProcurement, then Purchasing department may agree to cover my costs for say 2 weeks. Please note my assignment will remain attached to IT Organization/Department.
Note:- With this example, its obvious that default Cost Centre from Organization Level must be overridden.
How about the project segment?
Lets assume, I work in parallel on "Oracle Apps Support Project" and also in "Oracle Apps Development Project". In this case, my costs must be split between multiple project codes.
What are the various levels where you can Set up Payroll Costing Accounts? Which levels take the highest precedence?
Element Entry => Highest
Assignment => Second Highest
Organization => Third Highest
Element Link => Fourth Highest
Payroll => Fifth Highest
It is obvious that if you attach a IT Cost Centre to persons assignment, that will override the Cost Centre setup at payroll level.
This is confusing, why will someone ever default a cost centre from payroll level?
This is why Cost Allocation Flexfield in Oracle Payroll has qualifiers.
Note :- Payroll can be a monthly payroll, or weekly payroll etc. Frequency of running payroll has nothing to do with cost centre.
What is qualifier in payroll cost allocation Flexfield?
By means of qualifier, you instruct Oracle which segment must be visible at which costing level. Well let me explain further...its important...
You do not want to be displaying Cost Centre Segment at Payroll level. Hence you will make just the company segment qualify at payroll level. See below pictures.
Similarly, you do not want to default company segment from element entry level or element link or assignment level. Hence you do not qualify company segment at element entry or assignment level or element link.
See the screenshots above...
Fine, how will payroll costing work out these details?
After you have run Payroll Process, you will then run Payroll Costing concurrent program. For each Run Result in Oracle Payroll, Costing program will check if that was created for Monthly Payroll or Weekly Payroll or Other Payroll. The company segment will be defaulted from that specific Payroll. Next, it will check the Element Link related to Run-Result record. In our example cost centre and project code and also expenditure type codes will be defaulted from Element Link definition. Next, Oracle Payroll Costing engine will check Costing Segments are assigned a value at Assignment Level or at Element Entry level, if so then Assignment/Element entry will overrule the values fetched from Element Link