Did you budget additional money for a temp employee while ‘Edward’ takes an extra month off this year to work on his bucket list?
We didn’t think so…
According to FASB 43 and GASB 16, organizations should accrue a liability for employee’s rights to receive compensation for future absences.
We know this is easier said than done considering the many funding sources for any given nonprofit organization. But we have good news! Leave Accrual for MIP, by RBP Methods can help you automate this task and make it painless!
Unused Vacation Can be a Huge Liability
Often overlooked by nonprofits, many employees tend to store up large amounts of vacation hours over time. This can be hazardous if it is not budgeted for ahead of time. Waiting until the benefits are used can put a major strain on your yearly finances especially if multiple employees chose to take a significant amount of time off all at once, or if they take it during a time of shortened funding.
Tracking Leave Liability Manually can be Tedious
Furthermore, many nonprofits manually track leave liability in enormous excel spreadsheets. Add to that the tracking of attendant costs and pay raises and you have a massive amount of data entry on your hands.
How Leave Accrual for MIP can Help
Properly accruing leave for your organization is a vital part of a good budgeting process, not to mention it is highly recommended by the Regs. We would define leave accrual as: “planning and setting aside the monetary benefits for an employee prior to their use.” The great thing about this is that you can earn interest on the benefits of a leave fund without receiving government penalties. Then when your employees take their vacation or sick time you simply charge it to the account, instead of incurring an unexpected loss.
RBP Methods has created 3 versions of Leave Accrual for MIP to chose from depending on what you need to track. Some of the features you will receive include:
- Gross earnings associated with leave are charged to the current funding source(s) during the pay period which the leave is accrued allowing for an appropriate allocation of leave expense.
- Creates the MIP journal entries to transfer money set aside for leave payable into an interest bearing account
- And more!
Intermediate Version: Basic Version Features Plus:
- Tracks the funded liability amount by employee and will adjust subsequent leave liability calculations and pay rate adjustments to ensure a more fully funded leave fund.
- And more!
Advanced Version: Basic and Intermediate Version Features Plus:
- Allows for the addition of attendant costs such as FICA or retirement so as to more accurately fund your leave liability fund account.
- And more!
If you’d like more information on how Leave Accrual for MIP, by RBP Methods can help you better manage your leave assets, give us a call! We’d be happy to provide you with a free consultation and further documentation.