Monitoring Salary Packaging Expenditure

This chapter provides an overview of monitoring salary package expenditure for Australia and discusses how to:

Update expenditure data for employee salary packages.
Review salary package expenditures.

Understanding Monitoring Salary Package Expenditure

The Administer Salary Packaging business process in Human Resources enables you to monitor and project employee expenses during a salary package period. It also provides tools to ensure that actual spending, for both employees and the organization, stays within the limits of budgeted salary packages. You can view package expenditures online as they take place, or generate reports that detail employee expenditures from their package budgets.

Note. Before you can begin monitoring expenditures against a salary package, you must have completed the modeling, confirmation, and enrollment of the salary package in Human Resources. Doing so provides you with the base budgeted package against which your expenditure is tracked.

See Also

Modelling Salary Packages

Managing Salary Packages

Updating Expenditure Data for Employee Salary Packages

The integration of Administer Salary Packaging with the Human Resources and Global Payroll systems enables you to enter actual expenditures against a budgeted salary package. When you define components, you use the Expense Data page to identify whether the component is administered as a deduction, earnings, or expense type.

For deductions and earnings, expenditure is based on the payments made through Global Payroll. For components or additional components identified as expenses, expenditure is based on amounts that you enter on the Business Expenses page in the Administer Workforce business process in Human Resources.

The remainder of this section discusses how to:

Calculate salary package expenses.
Enter salary package business expenses.

See Also

Tracking a Worker's Business Expenses

Defining Expense Details for Salary Packaged Components

Page Used to Update Expenditure Data for Employee Salary Packages

Page Name	Object Name	Navigation	Usage
Calculate Package	GPAU_RC_SP02	Global Payroll & Absence Mgmt, Absence and Payroll Processing, Calculate Package Expenses AUS	Run the Calculate Package process, which updates the Package Summary page, enabling you to view details of the budgeted, expended, and projected year-to-date totals for the package. This gives you vital information for observing and addressing spending and over-spending trends.

Calculating Salary Package Expenses

Access the Calculate Package page.

Report Request Parameters

As Of Date

The date on which package expenses are calculated.

Note. Align this date with the pay period end date, end of a reporting period, and the end of the FBT or tax year. You should consider these dates when running the process.

Delete Empl. Expense History (delete employee expense history)

Select to delete previous expenses on the Package Summary page.

Package Expense Calculation Process

Regardless of the selection criteria, the package expense calculation is only completed for confirmed salary packages. This process retrieves the expenditure from the expenses and payroll tables and aggregates them in your Salary Packaging records.

You can view the actual and projected expenditure both online and as a report. To facilitate expense tracking throughout the package year, run the process on a regular basis. Typically, you run it at the completion of the payroll process, when you have the most up-to-date information on earnings and deductions paid through Global Payroll. Any expense amounts that have been entered through Business Expenses are included in the Package Expense Calculation.

You can run the expense calculation process as often as you like. You can also rerun the process if the expense details change—for example, when you add new business expenses to the employee's records.

Note. Components with a payroll type of None do not have any expenditure tracked against them unless they have expenses entered on the Expense Data page. Components with nothing on the Expense Data page do not have anything tracked against them, even if they enroll a payroll item.

Entering Salary Packaging Business Expenses

When you define a component with an expense code on the Expense Data page, you enter expenditures for the employee using the Business Expenses page. The amounts entered here do not affect payment of the expenses. You use this page merely for recording expenditures.

When tracking expenditures against expense codes, you must be sure that there is a unique expense code for each component included in the employee salary package model.

Business expenses relate to Administer Salary Packaging only if the expense code is linked to a package component on the Package Component Exp (expense) page of the Package Component table.

See Also

Tracking a Worker's Business Expenses

Reviewing Salary Package Expenditures

Use the Salary Package Summary AUS component (which you access in the Review Absence/Payroll Info menu) to review the overall expenditure for an employee's salary package. You can also review the expenditures against individual components that make up a salary package.

Some of the components that are paid through the payroll system do not require close monitoring during the package year, as they are based on the details that you defined in the salary package. For example, expenditures for the employee's salary, health benefits, and superannuation will probably not vary much during the year. However, for components that are subject to ad hoc payments, you might monitor expenditure more closely. For example, an employee's actual spending against an expense account for motor vehicle operating costs could easily exceed the budgeted amount for the benefit if you do not monitor it carefully.

The remainder of this section discusses how to:

View year-to-date employee package expense summary information.
View period employee package expense summary information.
Check package expenditure progress during the year.
Reconcile payments at the end of the package period.
Monitor expenditure over-spending and under-spending.

Pages Used to Review Salary Package Expenditures

Page Name	Object Name	Navigation	Usage
Period Summary	GPAU_PKG_EXP_PRD	Global Payroll & Absence Mgmt, Absence and Payroll Processing, Review Absence/Payroll Info, Salary Package Summary AUS, Period Summary	View actual and budget summary amounts for a package and its components by pay period. This information is stored in the Package Expense table.
Package Summary	GPAU_PKG_EE_EXP	Global Payroll & Absence Mgmt, Absence and Payroll Processing, Review Absence/Payroll Info, Salary Package Summary AUS, Package Summary	View year-to-date employee package expense summary Information. Displays the actual expenses and budget amounts for an employee from the Year-to-Date Expenses table.

Viewing Year-to-Date Employee Package Expense Summary Information

Access the Package Summary page.

As of Date

Indicates the date that the package expense calculation was processed. The page calculations include only those expenditures for the employee up to this date.

Note. Totals are divided into three areas—TPV Components, TEC Components, and the Package Total. The TPV Components and TEC Components identify each component, and they display the value of components that add to TPV and TEC respectively. These values include the component value and any additional components that add to that package total. The system also displays Budgeted, Actual, %Var (percentage variance), and Project Year End totals.

Total Package Value Components and Total Employee Cost Components

Budgeted	The budgeted values for each component and the budget totals reflect in the package component details that you enter and adjust on the Employee Salary Package - Base Components pages.
Actual	For each component, the system determines the expenditure based on the payroll type definition on the component. If a component is linked to an earnings type, any payment made against that earnings type is regarded as expenditure against the component if you've set up the component with an earnings type on the Expense Data page. The package expense calculation aggregates expenditure from business expenses and payroll data based on the preceding criteria. This process accounts for the expenditure against the base component amount but doesn't take into account additional component liabilities. Note. For actual expenditure, the values processed through the payroll or entered in business expenses are disregarded for additional components. The system calculates additional component liabilities based on the percentage of the base component amount that has been expended. To display the actual expenditure for the component, the system calculates the additional component liability based on the percentage of the base component amount that the employee has expended. The system calculates these values and incorporates them into the display of the actual expenditure for each component that is listed on the Package Summary page.
%Var (percentage variance)	This amount represents the difference between the actual amount and the budgeted amount. It is expressed as a percentage of the budgeted amount. The system uses the following calculation to determine percentage variance amount: (Actual Amount − Budget Amount) ÷ (Budget Amount × 100) = Variance Amount
Project Year End	Depending on the method that you select for projecting values to year-end for the component, the system calculates this value accordingly. Different components use different methods and rates of expenditure. You identify whether a component is expended on a regular or ad hoc basis when you define components. For components identified with a regular rate of expenditure, the system uses the following method to project earnings: Actual Expenditure ÷ (Total Days in Package Period × Days Passed in the Package Period) For components identified with an ad hoc rate of expenditure the system does not calculate a projection. Because they are expended at an ad hoc rate, it is not possible to presume any future expenditure. Because package periods can be for periods other than a single year, the projection amount is calculated to the package end, not to year's end.
Over Bud (over budget)	The Over Bud column displays either Y (yes) or N (no) to indicate whether the component is exceeding the assigned budget limits. The system determines whether a component or the package is over budget by prorating the package budget or the component budget. It calculates the value of the package or component from the start date to the package expense date. To determine any over- or under-spends, the system compares the result to the actual expenditure as of the date you last ran the Expense Calculation process.

Package Total

Total TPV and Total TEC

For each column amount that is displayed in the TPV and TEC Components group boxes, the system provides a Total TPV and Total TEC in the Package Total group box.

Non-Packaged Components

Because it is possible in an organization for earnings or deductions not included in the employee's salary package to be paid, the system also displays the nonpackaged components. This field identifies the total value of any deductions, earnings, and expenses that are not included as a packaged component but have been paid out to the employee in the payroll.

You can see if expenditure outside the package has occurred for the employee, and you can quickly respond to the nonpackaged payments. These types of payments may prompt you to perform a package review or some other corrective action. To view the individual totals for these values, refer to the Non Packaged group box on the Period Summary page. The system displays the totals for nonpackaged earnings, deductions, and expenses on the Period Summary page if any nonpackaged payouts for these earnings types have taken place.

Note. You determine the nonpackaged components that appear on the Package Summary page by using the Ern/Ded Included page.

Defining Non-Salary Packaged Earnings and Deductions Elements

Modelling Salary Packages for Employees

Checking Package Expenditure Progress During the Year

During the package year, you should review package expenditure on a regular basis to identify any potential over-expenditures on the part of the organization or employee.

You need information about employee benefits to determine whether you need to correct an over-expenditure at any time during the package period. Employees might not be aware of the rate of expenditure and may potentially over-spend on their expense accounts.

Viewing Period Employee Package Expense Summary Information

Access the Period Summary page.

Package Start Date and Period End Date

The period end date is the end date for the pay period that you are viewing. The page calculations include only those expenditures for the employee for that the indicated pay period.

Note. The information on the Package Summary pages is current up to the date that you run the Package Expense Calculation process, and the page calculations include only those pay period expenditures for the employee up to that date.

Budget

The budgeted values for each component and the budget totals are reflected in the package component details that you enter and adjust on the Employee Salary Package - Base Component pages. .

Non-Packaged

Earnings, Deductions, and Expenses

The Package Summary page includes a Non-Packaged Components group box to identify the total values of earnings, deductions, and expenses that are not included as a packaged components.

All the other fields on this page are identical to the fields on the Package Summary page.

Note. You determine the nonpackaged components that display appear on the Package Summary page using the Ern/Ded Included page.

Defining Non-Salary Packaged Earnings and Deductions Elements

Modelling Salary Packages for Employees

Reconciling Payments at the End of the Package Period

During the package review process for each employee, you must reconcile expenditure in the previous package period. At this time, you should recover any overpayments, or make any adjustments for underpayments. Salary Packaging enables you to identify these amounts, but it doesn't automate any payment or recovery for package balances.

When reviewing these amounts, you should also consider the balances for each component and consider the reasons for the over-spend or under-spend before making any adjustments.

For example, at the end of the package period, you might find that one of the employee's salary components is under-spent. You should consider what has caused the under-spend for the component. It might be that the employee took two weeks leave without pay. In that case, the under-spend is valid and no adjustment should be made. Alternately, an expense account that is under-spent could have been under-utilized, and the employee should receive some adjustment for the balance remaining through payroll.

The actions that you take to acquit a salary package at year's end depend on your business practices. Some organizations allow balances to be carried forward to future years; others pay out or recover differences at year's end.

Monitoring Expenditure Over-spending and Under-spending

The Package Summary pages clearly identify package and component over-spending and under-spending.

Some organizations choose not to control employee package expenditure at the component level. The package total information is most important to package administrators for these organizations. When budgeting or modelling packages, package administrators in these organizations define individual package components in the usual way. But component values act more as a guideline than a rule for tracking expenditures against the employee's package.

For organizations that are concerned with the overall package expenditure over-spends and under-spends, you can easily identify this information at the package level using the Package Summary pages. The pages also track expenditure at the component level, but expenditure caps are enforced at the package level.

In other organizations, business rules require that the package administrator track expenditure at the individual component level. Using the Package Summary pages, any over-spending or under-spending of the components is easy to see.

Note. The system does not issue warning messages regarding over-spending or under-spending of either packages or components in salary packages other than indicating that the package or the components are over- or under-spent on the Package Summary pages.