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Accounting For Workers Comp Insurance Expense

Where should Workers Comp Insuance expense be on Financial Statement?

Should it be included as a salary/payroll expense? My company has been just classifying as Insurance Expense, which also include property, g/l, etc. Seems like it should be broken out a little more. I appreciate your thoughts

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

You should remember that there is a difference between financial reporting and management reporting. Your company's current practice is "acceptable" for financial reporting. However, I usually encourage breaking it down as detailed as possible (separate line items) when it comes to how it is recorded in the GL as it is easier to just pick out the line items for management reporting. Having said that, I also encourage management reporting to be as close as possible to financial reporting.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

While I agree with my esteemed colleague, I find that one needs a plethora of management and financial accounting reports. Each type is made for a different audience.

It really is about the detail presented and personal style. While I normally group WC with Salary and Benefits, I could definitely see it as part of an insurance groupings.

I'd like to re-emphasize the concept that Emerson stated, that using separate GL lines for certain types of expenses (especially for something that can be audited by a outside entity) makes your life much easier.

Andrea Schrosk
Title: CFO
Company: Treecology, Inc.
(CFO, Treecology, Inc.) |

I group it with insurance, but ensure management understands cost is driven by payroll. Incidentally, in my case (contractor) liability insurance cost is also driven by payroll. When talking to management about budgeting/wage overhead they know wc and liability needs to be part of wage overhead in addition to taxes.

Ross Anderson, CPA, MBA
Title: Controller
Company: TFS Capital
(Controller, TFS Capital) |

Under insurance, listed as a separate item

Lani Basa, CFE MBA
Title: Controller
Company: Blue Dot Safes Corporation
(Controller, Blue Dot Safes Corporation) |

I would separate the Worker's Comp from your General Business Insurance. These are driven not only by the size of your company, headcount and class type but also by previous claims and litigation. So you would rather see trend on these insurance costs separately.

Anonymous
(Finance and Human Resources Manager) |

Thank you for all the answers. This site is wonderful!

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