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Are items like vacation pay, sick pay, holiday pay and bonuses normally included as fringe in annual budgets or as separate line items?

Rose Robbins's Profile

Answers

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

I would expect everyone shows bonuses as a separate line item. I think it depends on your individual circumstances whether you'd need to show PTO as a line.

Topic Expert
Paul Benedetto
Title: CFO, Director of Finance, Consultant
Company: Nextwave Software, Rethink Fabrics
(CFO, Director of Finance, Consultant, Nextwave Software, Rethink Fabrics) |

Hello. My general practice over the years on such items as follows:

1. Vacation and Sick Pay - At a budget level no; as technically the employee should be using close to all of those hours during the year (that is what they are there for). Example - If a person works full time at 40 per week, and gets 2 weeks vacation, then they are either using those 2 weeks or getting paid for some or all of it. I would accrue vacation earned but not yet used though, usually as a month end entry. Then offset as reported/used. I normally post actual vacation, sick, holiday, jury, etc. as separate line items on paychecks and if it is something you want to analyze, create a GL account for each.

2. Bonuses - I would budget for this, IF you have a formal or somewhat defined bonus or risk-based pay component at the company. If based on milestones, I would accrue each month end to align progress towards. I always report bonus as a separate line item from salary in financials.

Happy to delve further if you still have questions, thanks. -Paul

Ken Mason
Title: Controller
Company: Pascua Yaqui Tribe
LinkedIn Profile
(Controller, Pascua Yaqui Tribe) |

Hi Rose,

All four of those items are included in wage calculations for both tax and financial reporting, as well as on grant applications. Separate line items can be used so that you see the cost burden versus pay for hours worked if you find that granularity beneficial.

For financial reporting, the fringe lines normally include medical, dental, vision, retirement and any other benefit plans. There is a third wage-related category, which is taxes including FICA, FUTA, SUI and workers' compensation. Yes, unemployment and workers' comp are insurance, not taxes, but they are not usually considered among the fringe benefits offered employees as employers are required to pay in.

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