Topic Thread

Work comp accruals

  • 1.  Work comp accruals

    Posted 10-11-2018 12:57
    ​We have recently switched insurance brokers and our carrier for work comp and general liability.  In the past our work comp was rated by state and code (all different rates).  Our new carrier provides a composite rate that is the same for all employees in all states (field or office).   Is anyone else using composite rates?  And how do you accrue and allocate that (we allocate through payroll to wherever time is charged - we are a Spectrum user).

    Thanks in advance for any responses!

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    Ron Heemstra
    Controller
    Interstates
    Sioux Center IA
    (712) 722-1662
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  • 2.  RE: Work comp accruals

    Posted 10-12-2018 08:34
    We setup a labor burden for the composite (carrier's fixed cost) rate to follow all (field and office) straight-time labor cost.  We also setup separate burdens for the deductible component and other work comp costs that follow only field labor costs, again on a straight-time basis.  Same goes for general liability and secondary insurance coverages.  We're accruing the burdens onto the balance sheet and burning off the prepaid against the accruals.  We're a Sage 300 user.

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    Paul Kravic CPA
    CFO
    Miller & Long Concrete Construction
    Bethesda MD
    (301) 657-8000
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  • 3.  RE: Work comp accruals

    Posted 10-12-2018 09:38
    Same as you, through payroll to the department or Job that the labor is charged. We are also a Spectrum user.

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    Tom Lowrey CPA C F O
    Scott Bridge Company, Inc.
    Opelika AL
    (334) 749-5045
    tlowrey@scottbridge.com
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  • 4.  RE: Work comp accruals

    Posted 10-12-2018 11:14
    We recently made the same change. However, in Texas, the carrier still has to provide rates by WC classification, even though it is charging a composite rate. I simply input the current rates in my payroll system and accrue WC expense based on those rates. When I write the check to the insurance company, I charge that to a prepaid account. At each month end, I charge the accrual against the prepaid. At year end I usually have a small difference which I charge against my liability expense (which is with the same company).


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    Timothy Mickunas CPA, CCIFP
    Chief Financial Officer
    D. Wilson Construction Company
    McAllen TX
    (956) 686-9573
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  • 5.  RE: Work comp accruals

    Posted 10-12-2018 11:19
    Our w/c rate is also composite now.  We have our agent calculate the equivalent rates by class/state and still bid, budget, allocate/accrue at the non-composite rate.  We reconcile the accrual to what will be billed/charged by the carrier at the composite rate.  Any reconciliation adjustment goes to field operating overhead.

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    Jyll Waters CPA, MBA, CGMA, CCIFP
    Chief Financial Officer
    Vancon, Inc.
    Springville UT
    (801) 491-8898
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  • 6.  RE: Work comp accruals

    Posted 10-12-2018 11:56

    Ron,

     

    We do use composite rates.  The rate is entered into our payroll software just as we would have entered different rates by code.  One thing to keep in mind.  Although we have one rate, when we are audited for workers comp, they ask us to generate reports based on the state codes.  It's my understanding that is due to submitting the information for analytical purposes.  

     

    Hope that's helpful,

     

    Vickie Tischendorf, CFO

    Martel Construction, Inc.

    Office: 406-586-8585

    Fax: 406-586-8646

    vickie@martelconstruction.com

     

    "Problems are guidelines, not stop signs".

    Robert Schuller