1101 Overview

This chapter establishes the Department of Veterans Affairs’ (VA) financial policies regarding employees’ accrued salaries and benefits.

Key points covered in this chapter include:

• VA will recognize accrued salaries and benefits for amounts owed to employees from the current fiscal period but not yet paid in accordance with Federal Accounting Standards Advisory Board’s (FASAB) Statement of Federal Financial Accounting Standards (SFFAS) No. 1, Accounting for Selected Assets and Liabilities;
• VA automatically calculates accrued salary and benefit costs using projections of accrued normal (regular pay) costs incurred but not yet paid for current employees;
• Local fiscal offices should compare actual expense for accrual periods to their accrual estimates to evaluate need for process changes to improve estimates;
• FSC will ensure that the automated accruals for accrued salaries and benefits are posted at the end of each financial reporting period;
• Accrual transactions will be reversed at the beginning of the subsequent accounting period or when payments are made; and
• VA will report accrued salaries and benefits in accordance with the requirements of OMB circular A-136.

1102 Revisions

Section	Revision	Office	Reason for Change	Effective Date
Various	Performed full review of policy	OFP (047G)	Full review	April 2023
1101 Overview	1101 Overview	OFP (047G)	Full review	April 2023
1103 Definitions	Updated and revised definitions adding Human Resources Payroll Application Service (HR PAS).	OFP (047G)	Full review	April 2023
110502 Calculating Employees’ Accrued Salaries and Benefits	Clarified HR PAS automatically calculates accrued salary and benefits cost.	OFP (047G)	Full review	April 2023

1103 Definitions

Accrued Salaries and Benefits – The amounts owed by VA for accrued employees’ wages, bonuses, salaries and entitlement benefits, such as Old Age Survivors and Disability Insurance (OASDI) that will be paid in the following period.

Human Resources Payroll Application Service (HR PAS) – A system providing Human Resources (HR) and payroll services to VA. HR-PAS integrates employee data, supporting more than 50 interface data exchanges; facilitates payroll adjustment processing for VA’s Financial Service Center (FSC); and acts as a central repository to aggregate HR and payroll data and reports.

Liability – A probable future outflow or other sacrifice of resources as a result of past transactions or events.

Other Liabilities – Title given to liabilities not reported in a separate line item on the face of the consolidated balance sheet, which includes all liabilities that are immaterial to the agency and not reported elsewhere.

1104 Roles and Responsibilities

Administration/Staff Office Fiscal Staff and Chief Financial Officers (CFOs) are primarily responsible for recording and reporting other liabilities under their jurisdiction. Staff Office/Administration Fiscal Staff and CFOs also provide assistance in preparing VA’s quarterly and year-end financial statements and accompanying notes, which include the appropriate reporting and disclosure of VA’s other liabilities.

Financial Services Center (FSC) is responsible for providing support for the accounting and reporting of VA’s liabilities.

Office of Financial Reporting (OFR) is responsible for preparing VA’s financial statements and related disclosures.

1105 Policies

110501 General Policies

1. In accordance with Federal Accounting Standards Advisory Board’s (FASAB) Statement of Federal Financial Accounting Standards (SFFAS) No. 1, Accounting for Selected Assets and Liabilities, VA will recognize as current liabilities accrued salaries and benefits for amounts owed to employees from the current fiscal period but not yet paid.
2. Accrued salary will include, at a minimum, employee salary payments (except a Voluntary Separation Incentive Payment (VSIP)) if present, and employer contributions to TSP.
3. Accrued employee benefits will include, at a minimum, VA’s share of contributions to the following benefit programs: Retirement, Health Insurance, Life Insurance, VSIP, Federal Employees’ Compensation Act (FECA) unemployment insurance for Federal employees, OASDI (i.e., Social Security), and Medicare (Hospital Insurance – Part A).

110502 Calculating Employees’ Accrued Salaries and Benefits

1. VA’s’ Human Resources Payroll Application Service (HR PAS) system automatically calculates accrued salary and benefit costs using projections of accrued normal (regular pay), weekend days, and any holiday costs incurred during the accrual period, but not yet paid for current employees. After the calculation, Facilities and FSC Nationwide Accounting will consider adding their own manual adjustments to that data for: overtime; on-station fee basis and other intermittent employee salary estimates; other premiums and late changes affecting Full Time Employee Equivalent (FTEE) and lump sum payouts.
2. Stations and FSC have access to use the Financial Content Management (FCM) system to view the reports and can slice regular Gross to Net (G2N) data down for the accrual period to see how well the accrual estimates track actual cost incurred. Utilizing these reports can drive changes in accrual estimate practices.
3. Local fiscal offices may adjust the automated accrual entry to match anticipated actual expense. Items regularly included in local field office adjustments for the accrual period include new hires’ regular pay; separations; overtime; other premium pay; leave without pay; lump sum annual leave payable; and Government contributions to social security taxes; retirement; Thrift Savings Plan (TSP); and other agency benefit contributions affected by accrued pay adjustments.
4. Local fiscal offices must compare the actual salary and benefit expense incurred to the accrual estimate in order to evaluate the need for process changes to improve the calculation of the estimate.

110503 Recording and Reporting Employees’ Accrued Salaries and Benefits

1. FSC will ensure that the automated accrual recorded accrued salaries and benefits in the appropriate VA Standard General Ledger (SGL) account at the end of each financial reporting period.
2. Accrual transactions will be reversed at the beginning of the subsequent accounting period or when payments are made.
3. In accordance with OMB Circular A-136, VA will present accrued salaries and benefits under Other Liabilities on the consolidated balance sheet. See Volume VI, Chapter 10, Other Liabilities, for additional details.

1106 Authorities and References

• SFFAS No. 1, Accounting for Selected Assets and Liabilities
• OMB Circular A-136, Financial Reporting Requirements
• Treasury Financial Manual (TFM), USSGL Supplement
• VA Financial Policy Volume VI, Ch 10, Other Liabilities

1107 Rescissions

VA Financial Policy Volume VI, Chapter 11, Employees Accrued Salaries and Benefits, March 2020.

1108 Policy Approval

This policy was approved by the VA Chief Financial Officers’ Council on April 5, 2023.