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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.

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

Anil Passi


0 #1 Kiran 2007-05-12 00:00
Hi ,
Anil I got to see u r web site this week only.I got it from one of my friends thanks to him and Thanks to you for u r amazing work.
I have a question regarding costing (I got toknow much after reading u r article.)

Th is is my cost allocation keyflex structure.


Level s egments defined at diff levels


Se e here at element link level it has all the segments defined.So when i ran the payroll costing ,suppose if it gets all the segments values at element link level ,dose it gose to other levels also or if it stops there???
My another question I want to override the ld value obtained at link level to that at element entry level.But if it gets all the values at link level and if it stops searching there ,then there is no meaning of putting value at element entry level.

I hope I explained the question properly.

Th anks
0 #2 Kiran 2007-05-12 00:00
One more request from you Anil.
can u please post traiing docs for OAB also ..
I have no knowlegde on OAB.
IF u provide some thing like the HRMS AND PAYROLL training it will be great useful for people like me.

0 #3 Tariq 2007-06-27 00:00
Mr Anil.
How we define Pre Run Payroll and Post Run Payroll
Waitin g for your answer
0 #4 Siddharth 2007-06-28 00:00
Hi Anil,

I learned a lot about HRMS/Payroll module from your blog. It will help me in implementing this things in new project.
I had one question:
Can u tell me the path for accessing Keyflexfield segments?
I am using Vision Instance for getting the functional knowledge. How can I connect to backend of Vision instance???
me ans If I want to implement the kknowledge, then How can I access the backend?
0 #5 Anil Passi 2007-10-09 11:53
Hi Siddarth

Pleas e use the menu path /Application/Fl exfield/Key/Seg ment in System Administrator or in Application Developer responsibility.

Anil Passi
0 #6 RamV 2007-10-26 15:47

For some reason screen shots are not displaying....C an you please check?

0 #7 amruta 2007-11-15 08:03

Can we run the Payrolls consecutively for 12 pay periods first and then run Prepayments for 12 pay periods, then run check for 12 pay periods and at last run costing for all the pay periods.

Will this give wrong result? or is this possible?
0 #8 Arun Kumar 2007-12-01 09:34
Hi Amruta,
you are right. We can do that and there is no issue in that. But your payment check will be made as a single check payment for all the 12 months. Your prepayment and costing process parameter should cover all the 12 months period.

+1 #9 Suresh sane 2007-12-04 04:28
Hi Anil
Grate to see this wesite and i am very lucky to see this this is amazing and absolutly super.
After seeing this website i came to know u are the right person to help me in this issue.First let me explain this issue.Here we have employess working for diff org at a time meens seee an employee XX will work for Org1 for 20days a month and ORg2 10days a month now the problem comes is in costing....
Here the clint is very perticular about the multipul assignment and he dont want that...but employee has to work for 2 org simultamiously and costing in the above case for 20days costing should be done for Org1 cost center and 10days of billing should be done to Org2 cost center so please suggest me asolution with clear exp..please

th ank u and any suggestions from others also will be appritiated and my mail id is
0 #10 Mohammed 2007-12-10 18:51
Hi Anil,

In above section where the various level at which costing can be set is mentioned.

Ele ment Entry => Highest
Assignm ent => Second Highest
Organiz ation => Third Highest
Element Link => Fourth Highest
Payroll => Fifth Highest

Is the Elmenet Link Level not the Third highest rather than Organization. The organization would be fourth highest. Please correct me if I am wrong.

Ganes han Rajagopal
0 #11 Mohammed 2007-12-10 18:57
Hi Anil,
I just got to become a member as i was browsing the net for few Oracle Payroll costing related queries. Its really great to see this web site. Kudos to you for the good work.

I would like to be an active participant in this.

Ganeshan Rajagopal
0 #12 mehta_ankit 2008-02-13 06:19
can we do costing at job level.
0 #13 Raghavendra Shenoy 2008-06-22 21:58
Hi Anil,

Good Article.

Can u help me out with the requirement i have?

Partial Period Accrual Calculation(Pay roll to GL)

The 'Partial Period Accrual Calculation' process doesn't satisfy my requirements. The requirements are

1. Accrual cost should be based on Business days not on Calendar days.
2. When cost is transferred to GL, difficult to differentiate between the regular journal & the accrual other than effective date.
3. Need to select the certain accounts/elemen ts which need to be accrued.

Does any one have the similar requirements and implemented successfully?

Can anyone provide me the approach towards to accomplish the requirements?

0 #14 Madanmohan 2008-12-08 02:44
Hi Anil,

I would like to know the difference between the costing process and the costing of payments process? How far this can be extensively useful in the real scenarios and can be effectively implement>

Th anks and Regards,
Madanm ohan Reddy S
0 #15 Abdulrahman Ahmed 2010-03-14 06:40
0 #16 sekhar regintala 2013-07-23 01:28
What is the set up for internal employee candidate
0 #17 search for 2015-04-15 08:51
We are a group of volunteers and starting a new scheme in our community.
Your site offered us with valuable info to work on. You've done an impressive job and our whole
community will be thankful to you.

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