oracle payroll student guide
TRANSCRIPT
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R12.x Oracle Payroll
Fundamentals: Configuration
(Global)
Student Guide
D60571GC10
Edition 1.0
March 2010
D65978
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Copyright © 2007, 2009 Oracle. All rights reserved.
Disclaimer
This document contains proprietary information and is protected by copyright and other intellectual property laws. You may copy andprint this document solely for your own use in an Oracle training course. The document may not be modified or altered in any way.Except where your use constitutes "fair use" under copyright law, you may not use, share, download, upload, copy, print, display,perform, reproduce, publish, license, post, transmit, or distribute this document in whole or in part without the express authorizationof Oracle.
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owners.
Author
Swathi Mathur
Technical Contributors and Reviewers
Bob Oganovic
This book was published using: Oracle Tutor
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsi
Table of Contents
R12.x Payroll Configuration - Introduction..................................................................................................1-1 Payroll Configuration - Introduction .............................................................................................................1-3 Objectives......................................................................................................................................................1-4
Topics ............................................................................................................................................................1-5 Payroll Configuration Fundamentals ............................................................................................................2-1
Payroll Configuration Fundamentals.............................................................................................................2-3 Overview .......................................................................................................................................................2-4 Paying Your Employees ................................................................................................................................2-5 Choosing QuickPay or Batch Processing ......................................................................................................2-6 Choosing Single or Multiple Payment Methods............................................................................................2-7 Quiz ...............................................................................................................................................................2-8 Choosing Single or Multiple Currencies .......................................................................................................2-9 Quiz ...............................................................................................................................................................2-10 Choosing Single or Multiple Payrolls............................................................................................................2-11 Question : What Is "a Payroll"?.....................................................................................................................2-12 Suggestions: What Is "a Payroll"?.................................................................................................................2-13
The Criteria that Define a Payroll..................................................................................................................2-14 Further Potential Uses of HRMS Payrolls.....................................................................................................2-15 Payroll Configuration and Processing ...........................................................................................................2-16 Quiz ...............................................................................................................................................................2-17 Summary........................................................................................................................................................2-18
Defining Payrolls for Your Organization .......... ........... ........... .......... ........... ........... ........... .......... .......... .......3-1 Defining Payrolls for Your Organization ......................................................................................................3-3 Overview .......................................................................................................................................................3-4 Payroll Configuration: Overview ..................................................................................................................3-5 Understanding Payment Method Types.........................................................................................................3-6 Payment Method Types: Required Information ............................................................................................3-7 Payrolls: How Many Payment Methods? ......................................................................................................3-8 Source Accounts: How Many Payment Methods? ........................................................................................3-9
Defining Payment Methods ...........................................................................................................................3-10 Quiz ...............................................................................................................................................................3-11 Consolidating Results for Several Payrolls ...................................................................................................3-12 Question: Essential Details for a Payroll? .....................................................................................................3-13 Defining a Payroll..........................................................................................................................................3-14 Understanding Pay Calendars........................................................................................................................3-15 Specifying Payroll Periods ............................................................................................................................3-17 Quiz ...............................................................................................................................................................3-18 Understanding the Pay Period Cycle .............................................................................................................3-19 Quiz ...............................................................................................................................................................3-21 Entering Further Information for a Payroll....................................................................................................3-22 Defining Exchange Rates and Currencies ....................................................................................................3-24 Establishing a Payroll Contact.......................................................................................................................3-25
Setting Up Payroll Contact Information........................................................................................................3-26 Allocating a Payroll Contact..........................................................................................................................3-27 Deleting a Payroll ..........................................................................................................................................3-28 Summary........................................................................................................................................................3-29
Maintaining PAYE and NI (UK only)............................................................................................................4-1 Maintaining PAYE and NI (U.K.).................................................................................................................4-3 Overview .......................................................................................................................................................4-4 PAYE and NI (U.K.) .....................................................................................................................................4-5 Essential Information: PAYE and NI ............................................................................................................4-6
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsii
Sources of Essential Information...................................................................................................................4-7 Quiz ...............................................................................................................................................................4-8 Entering PAYE and NI Details for an Employee ..........................................................................................4-9 Quiz ...............................................................................................................................................................4-11 Entering NI Details for a Director .................................................................................................................4-13 Quiz ...............................................................................................................................................................4-14 Summary: Setting Up PAYE and NI (U.K.)..................................................................................................4-15
Maintaining Other Deductions (UK.only) .......... ........... .......... ........... ........... .......... ........... .......... .......... .......5-1 Maintaining Other Deductions (U.K. Only) ..................................................................................................5-3 Overview .......................................................................................................................................................5-4 Maintaining Student Loans (U.K. Only) .......................................................................................................5-5 Maintaining Tax Credits (U.K. Only)............................................................................................................5-7 Quiz ...............................................................................................................................................................5-8 Summary........................................................................................................................................................5-11
Costing Overview.............................................................................................................................................6-1 Costing Overview..........................................................................................................................................6-3 Objectives......................................................................................................................................................6-4 The Oracle HRMS Costing Solution .............................................................................................................6-5 Costing Options .............................................................................................................................................6-6 Oracle HRMS Costing...................................................................................................................................6-8
Cost Distribution in HR.................................................................................................................................6-9 What Costing Rules Apply in Your Enterprise?............................................................................................6-10 Handling Rule-Based Costing .......................................................................................................................6-11 Quiz ...............................................................................................................................................................6-13 What Exceptions Occur in Your Enterprise?.................................................................................................6-14 Managing Exceptions to Costing Rules.........................................................................................................6-15 Processing Costs............................................................................................................................................6-16 Quiz ...............................................................................................................................................................6-17 Summary........................................................................................................................................................6-19
Processing Costs...............................................................................................................................................7-1 Processing Costs............................................................................................................................................7-3 Objectives......................................................................................................................................................7-4 Overview: Costing and the Payroll Process...................................................................................................7-5 Typical Costing Issues? .................................................................................................................................7-7 Typical Costing Issues...................................................................................................................................7-8 Costing Solutions...........................................................................................................................................7-9 Costing Processes in Oracle Payroll ..............................................................................................................7-10 View Costing Results ....................................................................................................................................7-12 Partial Period Accruals ..................................................................................................................................7-13 Previewing Cost Allocations .........................................................................................................................7-14 Subledger Accounting: Terminology.............................................................................................................7-15 Quiz ...............................................................................................................................................................7-16 Approving Assignment Costing Details ........................................................................................................7-17 Subledger Accounting ...................................................................................................................................7-19 The RetroCosting Process .............................................................................................................................7-20 Quiz ...............................................................................................................................................................7-21
Costing of Payments: Overview....................................................................................................................7-22 Costing of Payments: Two Approaches.........................................................................................................7-23 Quiz ...............................................................................................................................................................7-24 Costing of Payments: Viewing Results .........................................................................................................7-25 Summary........................................................................................................................................................7-26
Payroll Configuration Fundamentals - Summary .......... ........... ........... .......... ........... ........... .......... ........... ...8-1 Payroll Configuration - Summary .................................................................................................................8-3 Summary........................................................................................................................................................8-4
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsiii
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsv
Preface
Profile
Before You Begin This Course
• Working experience with Oracle Applications
• Working experience with earnings and deductions elements in Oracle HRMS
Prerequisites
• D48180GC10 R12 HRMS Total View
• D60573GC10 R12 Compensation Management Fundamentals: Earnings andDeductions
• D47341GC10 R12 Compensation Workbench and Salary Configuration
• D17308GC10 11i Compensation Management Fundamentals: Earnings and Deductions
How This Course Is Organized
This is an instructor-led course featuring lecture and hands-on exercises. Online demonstrations
and written practice sessions reinforce the concepts and skills introduced.
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsvi
Related Publications
Oracle Publications
Title Part Number
Oracle HRMS Payroll Processing Management Guide E13514-03
Additional Publications
• System release bulletins
• Installation and user’s guides
• Read-me files
• International Oracle User’s Group (IOUG) articles
• Oracle Magazine
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsvii
Typographic Conventions
Typographic Conventions in Text
Convention Element Example
Bold italic Glossary term (ifthere is a glossary)
The algorithm inserts the new key.
Caps and
lowercase
Buttons,
check boxes,
triggers,
windows
Click the Executable button.
Select the Can’t Delete Card check box.
Assign a When-Validate-Item trigger to the ORD block.
Open the Master Schedule window.
Courier new,
case sensitive
(default is
lowercase)
Code output,
directory names,
filenames,
passwords,
pathnames,
URLs,
user input,usernames
Code output: debug.set (‘I”, 300);
Directory: bin (DOS), $FMHOME (UNIX)
Filename: Locate the init.ora file.
Password: User tiger as your password.
Pathname: Open c:\my_docs\projects
URL: Go to http://www.oracle.com
User input: Enter 300
Username: Log on as scott
Initial cap Graphics labels
(unless the term is a
proper noun)
Customer address (but Oracle Payables)
Italic Emphasized words
and phrases,
titles of books and
courses,
variables
Do not save changes to the database.
For further information, see Oracle7 Server SQL Language
Reference Manual.
Enter [email protected], where user_id is the
name of the user.
Quotation
marks
Interface elements
with long namesthat have only
initial caps;
lesson and chapter
titles in cross-
references
Select “Include a reusable module component” and click Finish.
This subject is covered in Unit II, Lesson 3, “Working with
Objects.”
Uppercase SQL column
names, commands,
functions, schemas,
table names
Use the SELECT command to view information stored in the
LAST_NAME
column of the EMP table.
Arrow Menu paths Select File > Save.Brackets Key names Press [Enter].
Commas Key sequences Press and release keys one at a time:[Alternate], [F], [D]
Plus signs Key combinations Press and hold these keys simultaneously: [Ctrl]+[Alt]+[Del]
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsviii
Typographic Conventions in Code
Convention Element Example
Caps and
lowercase
Oracle Forms
triggers
When-Validate-Item
Lowercase Column names,
table names
SELECT last_nameFROM s_emp;
Passwords DROP USER scottIDENTIFIED BY tiger;
PL/SQL objects OG_ACTIVATE_LAYER(OG_GET_LAYER (‘prod_pie_layer’))
Lowercase
italic
Syntax variables CREATE ROLE role
Uppercase SQL commands and
functions
SELECT useridFROM emp;
Typographic Conventions in Oracle Application Navigation Paths
This course uses simplified navigation paths, such as the following example, to direct you
through Oracle Applications.
(N) Invoice > Entry > Invoice Batches Summary (M) Query > Find (B) Approve
This simplified path translates to the following:
1. (N) From the Navigator window, select Invoice then Entry then Invoice Batches
Summary.
2. (M) From the menu, select Query then Find.
3. (B) Click the Approve button.
Notations:
(N) = Navigator
(M) = Menu
(T) = Tab
(B) = Button
(I) = Icon
(H) = Hyperlink
(ST) = Sub Tab
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsix
Typographical Conventions in Oracle Application Help System Paths
This course uses a “navigation path” convention to represent actions you perform to find
pertinent information in the Oracle Applications Help System.
The following help navigation path, for example—
(Help) General Ledger > Journals > Enter Journals
—represents the following sequence of actions:
1. In the navigation frame of the help system window, expand the General Ledger entry.
2. Under the General Ledger entry, expand Journals.
3. Under Journals, select Enter Journals.
4. Review the Enter Journals topic that appears in the document frame of the help system
window.
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R12.x Oracle Payroll Fundamentals: Configuration (Global) Table of Contentsx
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R12.x Payroll Configuration - IntroductionChapter 1 - Page 1
R12.x Payroll Configuration -Introduction
Chapter 1
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R12.x Payroll Configuration - IntroductionChapter 1 - Page 2
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R12.x Payroll Configuration - IntroductionChapter 1 - Page 4
Objectives
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R12.x Payroll Configuration - IntroductionChapter 1 - Page 5
Topics
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Payroll Configuration FundamentalsChapter 2 - Page 1
Payroll ConfigurationFundamentals
Chapter 2
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Payroll Configuration FundamentalsChapter 2 - Page 3
Payroll Configuration Fundamentals
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Payroll Configuration FundamentalsChapter 2 - Page 4
Overview
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Payroll Configuration FundamentalsChapter 2 - Page 5
Paying Your Employees
Paying Your Employees
This is an overview of the activities involved in paying your employees. You capture the
details of earnings and deductions for each or your employees. You then run the payroll
process to calculate gross pay and derive the net amount of payment for each employee.
Finally, you ensure that each employee receives payment at the correct time in a valid paymentmethod. The criteria for successful completion are:
• Accurate and timely payment of your workforce
• Compliance with statutory reporting obligations in your localization
In most organizations, the bulk of payroll processing is concentrated into a short period of time just before employees receive payment. By configuring your payrolls correctly, you can ensure
that your payrolls run as efficiently as possible. This makes it easier for your organization tomeet the criteria for accuracy and timeliness. In the rest of this course we shall see how correct payroll configuration contributes to smooth running of the payroll process and accurate
payment of your employees.
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Payroll Configuration FundamentalsChapter 2 - Page 6
Choosing QuickPay or Batch Processing
Choosing QuickPay or Batch Processing
When calculating pay, you can choose whether to run:
• The QuickPay process which is always for one employee only
• A batch process that enables you to process all employees, or a subset of employees.
Typically you use batch processing to calculate pay for all employees in your organization, or
for an employee subset. However, QuickPay is useful when you are testing the creation of anew employee, or when you want to calculate pay for an employee who has recently started
employment or recently terminated a period of employment.
For batch processing, you can use assignment sets and consolidation sets to focus on subsets ofemployees rather than on all the employees in a full payroll.
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Payroll Configuration FundamentalsChapter 2 - Page 7
Choosing Single or Multiple Payment Methods
Choosing Single or Multiple Payment Methods
When your employees receive payment, you can arrange to pay them in any of the payment
method types that are valid for payrolls in your localization. You can also combine valid
payment method types, so that an employee could receive 50% of payment by check/cheque,
40% by direct deposit, and the remaining 10% in cash. Note, however that not all paymentmethod types are available across all localizations. For example, U.K. employees can receive
cash payments, but U.S. employees cannot.
You enable this flexibility of payment when you set up your payroll. First, you define anorganizational payment method, and then link the payment method to a payroll.
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Payroll Configuration FundamentalsChapter 2 - Page 8
Quiz
Answers: 1
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Payroll Configuration FundamentalsChapter 2 - Page 9
Choosing Single or Multiple Currencies
Choosing Single or Multiple Currencies
Your business group has a default currency and this is the usual currency in which you
calculate and disburse employee pay. However, you can work in an entirely different currency
or add an additional currency to your payroll calculations. For example, if you have employees
working in an overseas subsidiary you may want to pay them in an entirely different currency,or pay them in a combination of default currency and local currency. The payroll processes
(Payroll run and PrePayments) automatically manage any conversion between currencies that
you have enabled for your organization. The details of how to set up currencies in OracleHRMS are outside the scope of this course, but it is possible to work with additional currencies
provided that your System Administrator has enabled them.
For details on how to complete the payment method window please refer to Defining aPayment Method in the online help.
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Payroll Configuration FundamentalsChapter 2 - Page 11
Choosing Single or Multiple Payrolls
Choosing Single or Multiple Payrolls
If your organization has multiple sites each with a separate payroll supervisor, and with all
employees on the same pay frequency and pay date, you can choose one of these alternative
approaches to payroll definition: Define one payroll for your entire organization, and then
process each site using an assignment set or define each site as a separate payroll.Your choicedepends on the degree of administrative freedom or responsibility that each supervisor needs.
For example:
• If everything is kept separate before and after pay run, then separate payrolls are useful.You will find it easier to query and view results by payroll.
• If only processing is separate but results are combined for further processing then one
payroll may be better for configuration and maintenance of data.
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Payroll Configuration FundamentalsChapter 2 - Page 12
Question : What Is “a Payroll”?
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Payroll Configuration FundamentalsChapter 2 - Page 13
Suggestions: What Is “a Payroll”?
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Payroll Configuration FundamentalsChapter 2 - Page 14
The Criteria that Define a Payroll
The Criteria That Define a Payroll
A payroll defines a group of employees with a common frequency of payment and a common
pay date.
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Payroll Configuration FundamentalsChapter 2 - Page 15
Further Potential Uses of HRMS Payrolls
Further Potential Uses of HRMS Payrolls
You typically use an HRMS payroll to identify a group of employees with common payment
characteristics and then process all the individual payments for each pay period. However, you
can also use an HRMS payroll to do each of the following:
• Define a security profile to control secure access to HRMS
• Determine benefits eligibility by setting up an eligibility profile based on membership of
a payroll
• Specify eligibility for a particular element by linking the element to a payroll.
• Specify OTL timecard preferences based on the membership of a payroll.
• Run payroll reporting for specific groups of employees.
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Payroll Configuration FundamentalsChapter 2 - Page 16
Payroll Configuration and Processing
Payroll Configuration and Processing
Correct payroll configuration provides the basis of all the later payroll processes. For example,
as part of payroll configuration, you determine:
• What tax information can be captured for employees for inclusion in a payroll run
• How many payrolls you want to operate in your organization
• What payment methods are appropriate for your employees
You can change the initial configuration details to reflect changes in the business needs of your
organization. For example, you can:
• Extend the end date of a payroll.
• Delete a payroll provided that you delete it at an appropriate point in the payroll cycle.• Modify end date of a payroll period to avoid coinciding with a holiday or vacation.
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Payroll Configuration FundamentalsChapter 2 - Page 17
Quiz
Answers: 2, 4
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Payroll Configuration FundamentalsChapter 2 - Page 18
Summary
Summary
We have seen that payroll processing is a critical business process. It is subject to time and
accuracy constraints, and statutory requirements. Using Oracle Payroll, you can configure a
payroll or set of payrolls that best represents the business needs of your organization.
Remember that a payroll represents all those employees who share a common paymentfrequency and a common pay date.
You can use your payroll configuration activities to determine payment methods for your
employees, and the number of payrolls in your organization. Ultimately, the efficiency andaccuracy of your payroll processes depend on the accuracy of your payroll configuration.
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Defining Payrolls for Your OrganizationChapter 3 - Page 3
Defining Payrolls for Your Organization
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Defining Payrolls for Your OrganizationChapter 3 - Page 4
Overview
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Defining Payrolls for Your OrganizationChapter 3 - Page 6
Understanding Payment Method Types
Understanding Payment Method Types
Oracle Payroll supports three Payment Method Types:
• Check/cheque
• Direct deposit. Exists as a payment method type for all localizations, but differently
named in each localization. For example, direct deposits are processed by the NationalAutomated Clearing House Association (NACHA) in the U.S. and the Banks Automated
Clearing System (BACS) in the U.K.
• Cash (if valid for your localization). You can define a series of payment methods for each
payment method type that is available in your localization.
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Defining Payrolls for Your OrganizationChapter 3 - Page 7
Payment Method Types: Required Information
Payment Method Types: Required Information
You must supply different information for each payment method type:
• For check/cheque, supply source bank account name and number. Source account is the
account from which your organization makes this payment. The payee account details are
known only to the payee. You do not record them in Oracle Payroll.
• For direct deposit payments, supply both the source and destination account details. The
destination account is the payee account. Because this is a direct transfer to a named
account, Oracle Payroll can only process direct deposits if you supply source and
destination details.
• For cash, supply a coinage analysis. If your localization allows cash payment, you use the
coinage analysis to calculate and order the correct cash denominations.
You can also set up third party payments so that your employees can discharge payments to
third parties. Although, these are usually involuntary deductions, third party payments can also be voluntary deductions to charities and so on.
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Defining Payrolls for Your OrganizationChapter 3 - Page 8
Payrolls: How Many Payment Methods?
Payrolls: How Many Payment Methods?
Your payroll must have at least one payment method. But, you can define as many additional
payment methods as you need to represent the payroll requirements of your organization.
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Defining Payrolls for Your OrganizationChapter 3 - Page 10
Defining Payment Methods
Defining Payment Methods
This slide summarise the sequence of activities when you are defining a payment method for
an employee. You do each of the following:
• Define organizational payment methods.
• Link the organizational payment methods to your payroll to create valid paymentmethods for the payroll.
• Define personal payment methods for your employees and assign each employee to a
payroll.
For details on how to complete the payment method window please refer to Defining aPayment Method in the online help.
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Defining Payrolls for Your OrganizationChapter 3 - Page 11
Quiz
Answers: 1
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Defining Payrolls for Your OrganizationChapter 3 - Page 12
Consolidating Results for Several Payrolls
Consolidating Results for Several Payrolls
A consolidation set is a label identifying a group of payrolls that you process as a single
payroll. This set is useful to focus on a particular payroll process such a PrePayments, or to see
the results for a subgroup of employees.
You select a consolidation set when you define your payroll. Each business group always has adefault consolidation set. However, you can always change the default set, and the set that you
initially select to match changes in your processing requirements.
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Defining Payrolls for Your OrganizationChapter 3 - Page 13
Question: Essential Details for a Payroll?
Expected Answer: You define:
• A name for the payroll
• A start date and end date for the payroll
Some students may also mention:
• Costing information
• Further information specific to a legislation
• Assigning an employee to the payroll
• A consolidation set and an organizational payment method. (This is an acceptable
answer, although it is not the exact response expected).
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Defining Payrolls for Your OrganizationChapter 3 - Page 14
Defining a Payroll
Defining a Payroll
These are some of the defining features of a payroll, and these criteria are important when you
are configuring a payroll. For example, if you are configuring multiple payrolls for your
organization, it is important to choose names that sufficiently distinguish between them.
You can also specify whether:
• Negative payments are allowed by checking the Negative Payment Allowed check box.
• Multiple assignments are allowed by checking the Multiple Assignments check box.
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Defining Payrolls for Your OrganizationChapter 3 - Page 15
Understanding Pay Calendars
Understanding Pay Calendars
In addition to the actual calendar year, and the tax calendar for your legislation, each individual
payroll has an implied calendar of its own. This slide illustrates the relationship between each
of these calendars, and how the different calendars for calendar year, tax year and individual
payrolls can overlay each other
In some countries, including U.S. the tax year and the calendar year are the same while in some
countries, including U.K. Canada and Australia they are different. U.K. starts 06 April.
The number of pay periods is determined by the frequency of pay. For example, monthly = 12,
weekly = 52, 53 or 54.
The pay period number is determined by the frequency of pay and the tax year calendar, for
example, week 1-54, month 1-12, bi-week 1-26 and so on. This number uniquely identifieseach pay period for processing and reporting.
Government reporting takes place at defined quarter and year end periods and typically doesnot match the specific processing dates of any single cycle. You can start an Oracle Payroll
calendar at any time – although typically you would try to start with the tax year or the start of
a new quarter to simplify balance loading and reporting. When you define a payroll you canenter the end date of the first period and the system will generate all the correct numbers and
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dates. Good advice is to define a payroll with a start date from the beginning of the current or
previous tax year to simplify balance loading.
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Defining Payrolls for Your OrganizationChapter 3 - Page 17
Specifying Payroll Periods
Specifying Payroll Periods
When you are specifying payroll periods, use these criteria to determine your pay periods:
• For the first period end date use the first check/cheque date for the current or the previous
year.
• Do not create lots of historical pay periods. If you do, you will have more informationthan you can usefully process.
• Identify how many years of pay periods you want. Start with 3 or 5 years. You can easily
extend this later if you need to.
• If you have several payrolls with the same frequency, use names that a user can recognizeeasily.
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Understanding the Pay Period Cycle
Understanding the Pay Period Cycle
This processing cycle is constant for every payroll period in your calendar. When you define
the length of your pay period, you are also defining when these key processing points occur.
The cycle applies whether the period is a week, a month, or any other frequency.
Note: The pay period dates are the start and end dates for any nonrecurring elements you enterfor an employee assignment.
The key dates in the cycle are:
Cut Off
• Date when all changes to the payroll should be completed before the final run
• For information only in Oracle PayrollScheduled Run
• Date when regular payroll run is processed
• For information only in Oracle Payroll
Check/Cheque Date
• Pay date or the date of constructive receipt of pay
• Used for tax calculations
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Defining Payrolls for Your OrganizationChapter 3 - Page 20
You can also make use of date offsets. Date offsets are payroll calendar defaults created
automatically when the payroll is saved. For example, U.S. Payrolls can have a cut-off date fora semi-monthly payroll to three days before the period-end date (-3). The scheduled run and
check dates could be 5 and 7 days after the period-end date. In Canada, you could keep the
same cut-off date and set the pay date to five days after the period end date.
You can manually change dates if, for example, a check/cheque date falls on a holiday or
weekend.You can also change the default Open status to Closed to prevent further element entries. You
can also reopen the period if necessary. Use this feature carefully since you cannot enter orchange element entries that span a closed payroll period. For instance, if you are terminating an
employee and an element should be end-dated, a “closed” payroll prevents you from
performing this task.
You can use offsets to determine when employees are allowed to view payslips. Employeescan normally view payslips as soon as all payroll processes have completed, that is, several
days before the official payment date. However, you can specify that the first view of a payslip
should coincide with the payment date. You align the payslip date with the payment date bysetting a payslip offset date in the Payroll window. For example, if the payroll processes are
complete on 15th May 2005, but the payment date is 20th May 2005, you can enter 5 as youroffset so that employees cannot view their payslips before the payment date.
The PrePayments process enables you to select a payment method to pay your employees. You
can distribute employee pay over more than one method using either a percentage or monetary
split.
The External/Manual Payments Process enables you to make cash payments or to pay
employees from external sources.
When you complete a payroll run, you can distribute the associated costs across particular cost
centres using the Costing process. You can use a post-payroll run process to accumulate
payroll costs by cost centre, GL account code, and the labor distribution codes in use at yourenterprise.
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Quiz
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Entering Further Information for a Payroll
Entering Further Information for a Payroll (Global and US)
Your localization may support the entry of further payroll information, for example:
• Hours Calculation Type – specifies whether hours calculation is Annualized, (the hourly
rate varies according to the number of hours in a pay period), or Standard, (the hourly
rate is always constant because it is derived by dividing the weekly salary by the numberof scheduled hours in a week.
• Pre-notification Allowed (US only) – specifies whether the NACHA payment method
should be paid in the first available payroll run, or whether prior notification is necessary.
• Tax Multiple Payments as One (US only) – “Yes” to base tax for the second payment on period to date taxable wages rather than on the current period. “No” to calculate FIT and
SIT from the current payment amount.
• Terminate Seeded Earnings By (US only) – select a termination rule to override the
termination rule for the business group.
• Iterative Method – Select Interpolation or Binary to determine the algorithm for iterative
calculation of pre tax deductions.
• Interpolation and Binary Methods are mathematical algorithms used within the net to
gross processing. This is an iterative process where you run the payroll iteratively with
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Defining Payrolls for Your OrganizationChapter 3 - Page 25
Establishing a Payroll Contact
Establishing a Payroll Contact
When payroll queries arise it is useful to have a named payroll contact who is familiar with
payroll details for a particular employee so that you can resolve outstanding issues quickly and
efficiently.
You can set up a payroll contact based on criteria that you specify. For example, you canspecify organizational criteria so that all employees in the same department share the same
payroll contact. Alternatively, you can specify an alphabetical range so that all employees in
the A to E surname range have one contact whereas those employees in the F to J alphabeticalrange have a different contact name.
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Setting Up Payroll Contact Information
Setting Up Payroll Contact Information
To specify a payroll contact, you firstly do each of the following:
• Add the Payroll Contact EIT to your responsibility. (Refer to Responsibilities in the
online help.)
• Write a formula to specify the contact criteria. For example, you can write a formula toassociate the leading letter of an employee name with a particular payroll contact. (All
employees with names beginning with “A” have the same payroll contact, whereas all
employees with names beginning with “B” could either have the same contact, or a
different contact). For an example of a formula that assigns alphabetical criteria, refer toSample Formula for Payroll Contact in the online help. You can vary the formula to
specify other criteria, such as the department to which an employee belongs. You canalso write several formulas to cover different allocation criteria, and then select theformula containing the particular criteria that you want to use.
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Allocating a Payroll Contact
Allocating a Payroll Contact
Once you have added the Payroll Contact EIT to your responsibility, and written the formula
that specifies your contact criteria you can then run the Allocate Payroll Contact program to
apply the payroll contact details for each assignment.
You provide the Allocate Payroll Contact program with:
• A start date that denotes which assignments will have payroll contact information. For
example, if you enter 20-MAR-2007, then all assignments that are effective at this date
will have a payroll contact provided that they satisfy the criteria described in your
formula.
• The name of the payroll formula that contains your allocation criteria.
Alternatively, you can allocate a payroll contact by navigating to the Extra Assignment
Information window, selecting the Payroll Contact information type, and modifying the payroll
contact details in the Details descriptive flexfield.
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Deleting a Payroll
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Maintaining PAYE and NI (UK only)Chapter 4 - Page 1
Maintaining PAYE and NI (UKonly)
Chapter 4
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Maintaining PAYE and NI (U.K.)
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Overview
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PAYE and NI (U.K.)
PAYE and NI (U.K.)
The rest of this module covers the maintenance of PAYE and NIC payments for UK
employees:
• PAYE (Pay as You Earn) is the system used to calculate and collect income tax from all
taxable income paid to employees.
• NI (National Insurance Contributions) are payable by employees on any taxable benefits
that they receive, unless exempted by age or employment contract. In addition,
employers also pay national insurance as a contribution to social insurance for their
employees.
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Essential Information: PAYE and NI
Essential Information for PAYE Processing
To calculate PAYE accurately for your employees, the employee payroll requires these
categories of information:
• Tax tables. The underlying rules for national assessment of PAYE and NI as determined
in an annual or interim budget. These rules specify maximum and minimum levels ofPAYE, and any tax thresholds and exemptions.
• Individual rates for each employee. The tax tables deliver a series of tax codes to reflect
PAYE liability for broad categories of individual employment. Oracle Payroll needs to
know which personal tax codes apply to individuals on your payroll.
• Tax office. This is the Inland Revenue office that administers the PAYE records for your
employees, and receives payment of the final PAYE assessment.
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Sources of Essential Information
Sources of Essential Information (PAYE)
This is how you obtain the essential information in each category:
• Latest tax tables. These are always available in Oracle Payroll provided that you have
applied the latest patch from Oracle Development. There is always an annual patch to
deliver changes for the forthcoming tax year. This patch incorporates any necessarychanges to the Start of Year and End of Year processes, and also includes the predefined
elements, formulas and balances that reflect the latest updates.
• Adding details of individual tax rates. This is a payroll setup activity, and we explain how
to do this on the next slide.
• Specifying a tax office for payment. This is also a payroll setup activity. For reference,
see Defining a Payroll in the online help.
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Entering PAYE and NI Details for an Employee
Entering PAYE and NI Details for an Employee
You use the Statutory Details window to enter PAYE and NI details for an employee. This
window becomes available when you query the person and select the assignment.
Note that all Earnings elements are subject to NI unless you remove the NIABLE sub-
classification from the element. This enables you to specify that particular employees shouldnot be subject to NI. This typically occurs where there is an exemption on grounds of age, or as
otherwise defined in the employment contract.
For reference, see Entering Employee PAYE and NI details in the online help.
Example of a manual adjustment
It proves impossible to pay a new starter in the period of starting so the employee receives a
double payment in the next period. You calculate this employee’s NIC separately for each
period: it should not be aggregated in the second period. The system does not calculate this
method automatically for new starters, so a manual adjustment is required.
Calculation of NIC
If a wrong category code is used for an employee, too much or too little NIC may be deducted.
You can correct this as follows:
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If the employee has been overcharged: The balances maintained for year-end reporting against
each category code need to be corrected and the excess deduction refunded.
If the employee has been undercharged: The balances maintained for year-end reporting also
need to be corrected and the balance of secondary contributions owing must be paid to the
Inland Revenue with the next payment.
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Quiz
Answers: 2
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Entering NI Details for a Director
Entering NIC Details for a Director
Directors have a different pattern of remuneration. They typically receive bonuses and
directorial fees as a single annual payment. If you derive NIC for these payments solely from
the pay period in which the director received payment there is likely to be an underpayment of
NIC. This is because directors only pay NIC on amounts within the Upper Earnings Limit forthe period.
The main features of the calculation of directors’ NI are:
• The use of an annual or prorated earnings period. (This avoids the underpayment issue).
• The use of the exact percentage method.
• Calculation on the director’s cumulative earnings.
• Deduction of the difference between NI paid and NI due. (Directors can make interim
NIC payments on account. Oracle Payroll calculates what has already been paid and
derives the outstanding amount).
For details of how to set up NI for a director, see Updating an Employee to a Director in the
online help.
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Quiz
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Summary: Setting Up PAYE and NI (U.K.)
Reminder: Setting Up PAYE and NIC (U.K.)
This overall setup sequence applies in all localizations. You perform each of these activities to
ensure that your U.K payrolls can process PAYE and NIC:
• Set up the tax district details to specify which tax district receives payment. For details of
how to do this, refer to these online help topics:
- Business Groups: Setting Up Tax Details.
- Defining a Payroll.
• Set up the PAYE and NIC details for an individual employee to specify the basis for
calculating individual contributions.
• Link your employee PAYE and NIC details to at least one payroll so that you can use this payroll to calculate tax for this employee.
Please refer to the additional guide for labs and/or demos for this lesson.
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Maintaining Other Deductions (UK.only)Chapter 5 - Page 1
Maintaining OtherDeductions (UK.only)
Chapter 5
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Maintaining Other Deductions (U.K. Only)
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Overview
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Maintaining Other Deductions (UK.only)Chapter 5 - Page 5
Maintaining Student Loans (U.K. Only)
Maintaining Student Loans (U.K. Only)
You maintain student loans from the Student Loans Window.
Employers are required to:
• Deduct student loan repayments from employees who have become liable for repayment.
• Display the amount of the deduction on the employee payslip.
• Submit monthly or quarterly remittances of student loans to the Collector of Taxes and to provide details of loan repayments in the end-of-year documents.
The following conditions apply:
• Repayments are only taken if NIable pay for the periods exceeds the period value of the
£10,000 annual threshold.• Existing CCAEO or CTAEO court orders must become inactive before student loan
repayments are activated.
• Other Court Orders with a higher priority take precedence and reduce the repayment of
student loans to an amount that will not reduce assessable pay below the protectedamount.
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• You can recover underpayments of student loans provided that you attempt recovery
within the same tax year as the initial payment.
See Maintaining Student Loans in the online help.
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Maintaining Tax Credits (U.K. Only)
Maintaining Tax Credits (U.K. Only)
Employers are required to add tax credits to employee wages and display the amount of the
credit on employee pay slips. The following conditions apply:
• The Inland Revenue provides notification to employers of the employees to receive the
credit, the amount of the credit and the start and end date of the credit.
• Employers recover credit payments from PAYE and NIC.
• Only one tax credit may be active at any one time, although an employee may have
multiple tax credits provided that they do not overlap.
To set up a tax credit, you use the Element Link window to link the working tax credit elementto your payrolls. You can obsolete a link by giving it an end date, provided that your obsolete
element does not have any element entries.
When you receive notification of a working tax credit from the Inland Revenue, you use the
Element Entry window to enter the details. You can also restart a tax credit that has previously been stopped. You can amend a tax credit twice in one month, and decide whether to
implement a request for a third amendment. You can stop a tax credit if the Inland Revenue
request a stop. Enforce this stop by providing a stop date and a stop reason. Do not end-datethe element – it must remain in place at the end of the month.
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Quiz
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Maintaining Other Deductions (UK.only)Chapter 5 - Page 11
Summary
Please refer to the additional guide for labs and/or demos for this lesson.
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Costing OverviewChapter 6 - Page 1
Costing Overview
Chapter 6
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Costing OverviewChapter 6 - Page 3
Costing Overview
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Costing OverviewChapter 6 - Page 4
Objectives
Objectives
Explain that when you are configuring a payroll, you need to ensure that your configuration
actions enable you to allocate costs correctly. Later in the course, we’ll describe how to
configure your payroll for correct costing. In this topic however, we begin with an overview of:
• The different costing models available within HRMS
• The distribution of costs across HRMS and General Ledger
• The default rules for costing
• How HRMS processes your costs
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Costing OverviewChapter 6 - Page 5
The Oracle HRMS Costing Solution
The Oracle HRMS Costing Solution
Oracle HRMS costing provides a highly configurable solution that meets the needs of many
diverse customers. The same solution applies whether you are in the public or commercial
sector, whether you are a national or global enterprise, whether you are project based or
consultant based, or whether you are a service industry or manufacturing based enterprise.Different types of business can use the same solution, but configured in different ways.
Using the Cost Allocation Key Flexfield, you can define the cost information you want to
capture and any validation you need.
You define the data entry levels at which you want enter default cost information, and at whichyou want to enter cost information to override the system defaults.
You decide how you want to distribute your costs across different headings, such as costcenters and projects. You decide how you want to map costs between your payroll cost codesand your GL cost codes. If you are sending cost information to other accounting areas, such as
project or grants, you can enter these codes and map that information to those accounts.
You can also set up separate costing structures for country-specific organizations as required,
to allow for variations in costing requirements across countries.
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Costing OverviewChapter 6 - Page 6
Costing Options
Costing Options
Your method of costing using Oracle tools depends on your type of organization.
• Your organization may be commercial, and does not tie costs to projects. You need to
track labor costs for General Ledger reporting purposes.
• Your organization may be commercial and project driven. In this case, you need todistribute costs across projects and General Ledger reporting structures.
• Your organization may be public sector, in which case you need to keep track of grants
and projects expenditure. You also need to distribute costs across General Ledger
reporting structures.
We show you how to use different combinations of Oracle modules to get the costing results
your organization requires. You can then make the right decisions for your Costing setup in
Oracle HR.
The details of each option are beyond the scope of this course, but as a brief summary:
• Commercial, Non-Project-Driven - use Oracle HR to allocate your labor costs to different
cost codes. Include GL segments in the flexfield setup so that you can distribute costs
across the GL reporting codes. Use Payroll to calculate pay, then distribute the pay results
across your cost codes and finally post the costing results to GL.
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Costing OverviewChapter 6 - Page 7
• Commercial, Project Driven Option 1 – do exactly as above, but when you have posted
your costing results to GL, additionally use Oracle Projects to to assign people to projects, cost the projects, and post the results to GL. Ask your consultant how to resolve
the double posting of costs to GL
• Commercial, Project Driven Option 2 – for this option, you do not use Oracle Projects, but you do include a Projects segment so that you can allocate costs to GL.
• Public Sector, Externally Funded Option 1 - use Payroll to calculate pay, then post the pay results to Labor Distribution. Post the costing results from Labor Distribution to
Oracle Projects, Oracle Awards, and GL. This is the only option that requires no costsetup in HR.
• Public Sector, Externally Funded Option 2 - use Oracle HR to allocate your labor costs to
different cost codes. Include GL segments in the flexfield setup so that you can distribute
costs across the GL reporting codes. Also include Grant, Project and Award segments toenable you to allocate costs across these areas. Use Payroll to calculate pay, then
distribute the pay results across your cost codes. Finally, post the costing results to GL.
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Costing OverviewChapter 6 - Page 9
Cost Distribution in HR
Cost Distribution in HR
You can use HR Costing to distribute costs for General Ledger (GL) reporting. In GL, there are
legal accounting requirements you must meet. For example, you need to be able to distribute
costs across account codes, cost center codes, and balancing codes for bookkeeping purposes.
You may also want to allocate labor costs to particular departments, or to particular products or projects. You may be using other modules to handle these costing requirements. If not, you can
handle them using HR Costing.
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Costing OverviewChapter 6 - Page 10
What Costing Rules Apply in Your Enterprise?
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Costing OverviewChapter 6 - Page 11
Handling Rule-Based Costing
Handling Rule-Based Costing
Oracle HRMS enables you to implement rule-based costing.
Typically, you allocate and report employment costs as you incur them, that is, as you deploy
and pay people. We recommend that you default costs at a lower level because you can then
avoid multiple entry of costing rules that apply to a range of costs. Default costing rulesgenerally apply to people based on enterprise-wide definitions. Costs can also be inherited
from the payroll or the organization that you belong to. So, costs for a specific payroll may be
allocated to a specific company; costs for an organization may be associated with a specific project.
For these standard costs, implement your costing rules at the installation of Oracle HR so that
costing is subsequently automatic. At installation time you can allocate labor costs to costcenters, GL codes, and project or product codes.
Your rules may require you to distribute costs across a set of cost centers. For example, you
may need to distribute employer charges, such as employee benefits, across a range of other
cost centers, typically for a set of earnings.
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Costing OverviewChapter 6 - Page 12
You may have different costing requirements in different countries, for example in the U.S.
and U.K. you need to maintain cost details for specific types of tax. You therefore need theability to apply different costing rules in different country organizations.
You can also set defaults for assignment costs if you use Position Control to create
assignments. Typically, you also need to allow for exceptions to the costing rules. You canoverride costs at the point of data input to handle exceptions to the general rules.
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Costing OverviewChapter 6 - Page 13
Quiz
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Costing OverviewChapter 6 - Page 14
What Exceptions Occur in Your Enterprise?
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Costing OverviewChapter 6 - Page 15
Managing Exceptions to Costing Rules
Managing Exceptions to Costing Rules
Oracle HRMS enables you to override default costing rules for individuals.
You can override default costing rules for an individual at the assignment level, when you
deploy, relocate, transfer, or promote the employee, or make any other changes to the
employee assignment. For example, in certain instances you may want to allocate assignmentcosts to a separate project.
You can also override default costing rules at element entry level, where you may want to
allocate costs for a specific element to a different cost code.
You also need to handle split costs. For example, there may be separate funding sources for a particular assignment that require you to split the assignment costs between two or more
individual cost centers. So, at the level of the assignment, you need to split costs on a percentage basis.
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Processing Costs
Processing Costs
You use the Cost Allocation Key Flexfield to capture your default costing rules and any
exceptions. You enter the appropriate cost codes into the the flexfield segments during
installation and data input to determine the distribution of costs across your organization.
The Payroll Run process generates pay results.
The Costing process distributes the pay results according to the Costing codes. Your costs are
then available for GL and HR reporting. You can view cost distribution using the Cost
Breakdown report.
If you have installed Oracle General Ledger, you run the Transfer to GL process to transfercosts to Oracle General Ledger.
Online help topics:
Labor Costs in Oracle HRMS
Labor Cost Allocation Example
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Quiz
Answers: 2
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Quiz
Answers: 1
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Costing OverviewChapter 6 - Page 19
Summary
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Processing CostsChapter 7 - Page 1
Processing Costs
Chapter 7
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Processing CostsChapter 7 - Page 3
Processing Costs
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Processing CostsChapter 7 - Page 4
Objectives
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Processing CostsChapter 7 - Page 5
Overview: Costing and the Payroll Process
Overview: Costing and the Payroll Process
Once costing information has been entered, all that remains is to process payroll for employees
and to accumulate costs according to the results produced.
This slide summarizes the operation of Oracle Payroll with the major activities of pre- and
post-payroll run processing.
• Data Input
- The typical payroll processing model includes data entry of time capture, salary
management, and adjustments using Data Input.
• Payroll Calculations
- A payroll process runs and produces the gross-to-net results.• Prepayments and Disbursement
- The normal payroll cycle goes through prepayments and disbursement of pay. The
costing process takes the results of payroll processing and costs them according to
the costing codes you have entered.
The costing information is then available for transfer to GL.
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Processing CostsChapter 7 - Page 6
An important point here is that the results of payroll processing are transferred to GL. If you do
not have Oracle Payroll you must rely on your payroll system to calculate results and transferactual costs to GL.
Note: Standard and Advanced Benefits have an additional process for costing Benefits. Setup
and administration of this is covered in detail in the Benefits modules. This manages thecalculation of employer costs associated with benefits.
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Processing CostsChapter 7 - Page 7
Typical Costing Issues?
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Typical Costing Issues
Typical Costing Issues
In order to complete your costing processes accurately, you may need to do each of the
following:
• Incorporate outstanding costs in those instances where your accounting period ends
before the current payroll period so that you have a period of unprocessed costs from the previous period.
• Check that costs have been allocated correctly so that you can identify and fix any
discrepancies before you run the Costing process.
• Use subledgers so that you can obtain better audit information on how costs aredistributed within your organization.
• Make late changes to reprocess any costs that have been assigned to the wrong costing
code.
• Update your journal entries automatically rather than relying on a manual update.
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Processing CostsChapter 7 - Page 9
Costing Solutions
Costing Solutions
Oracle Payroll offers the following solutions to common costing issues:
• Run Partial Period Accruals
• Preview Cost Allocations
• Notify and Approve Assignment Costing Details using Self-Service
• Transfer to SLA (Subledger Accounting)
• Upgrade Historical Payroll Data to SLA
• Run the RetroCosting process
• Run the Costing of Payments process
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Processing CostsChapter 7 - Page 10
Costing Processes in Oracle Payroll
Costing Processes in Oracle Payroll
Three processes are associated with costing.
• First, you need to run the Costing process to accumulate the payroll results to the cost
codes you have entered at the various levels. The process places the results into payroll
cost tables. If you are using GL, this information is available to you to transfer to yourown GL system.
Note: If you have not installed Oracle GL, you need to write your own process to extract
costing information from the payroll cost tables and post it to your own system.
• If your accounting period closes before the end of your current payroll period, and youhave outstanding costs that have accrued since the end of your last complete payroll
period, run the Partial Period Accrual Calculation process. The Partial Period AccrualCalculation process estimates the costs to transfer into the General Ledger.
• If you are using Oracle GL, there is a further process, which is the Transfer to GL process. This makes use of the GL mapping that we discussed earlier to identify which
journal entries have to be made for individual segments.
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- Run the Transfer to GL process to create the journal entries to the GL interface
tables, ready for posting to GL. There is a separate process from GL to import t