General Inquiries

PTO Balance Sheet Accruals

  • 1.  PTO Balance Sheet Accruals

    Posted 05-07-2019 09:00
    Good Morning All. It has always been my understanding if you do not pay out PTO (Paid Time Off) to employees upon termination or in any instance, it is not necessary to accrue the PTO carryovers at year end. I have looked through my books for the GAAP and it appears as long as it is not probable to pay out, there is not a need to accrue. I would like some insight on how the rest of you handle this and if you include on your balance sheet.

    Kyrah Coker
    Vice President of Finance
    National Roofing Partners
    Coppell TX
    (469) 549-0935

  • 2.  RE: PTO Balance Sheet Accruals

    Posted 05-07-2019 15:48
    yes we accrue and maintain a BS balance at year-end but only because we changed our PTO period end to 3/31 in an attempt to avoid the year end rush of people trying to use it before they lose it.  that failed miserably since we ended up a rush at year end for the holidays and again in the end of March as people tried slamming in PTO.

    The purpose of us accruing PTO though is to spread the cost of PTO across jobs so one or two jobs don't get punished and others get a pick up.

    Brad Dalbec BS Accounting
    Builtech Services, LLC
    Schaumburg IL
    (630) 523-0174

  • 3.  RE: PTO Balance Sheet Accruals

    Posted 05-08-2019 08:34
    Do your employees lose unused PTO time at year-end or can they carry over the unused balance or part of the balance to the new plan year?​  If they can carry over the unused balance then you need an accrual at year-end.  If they lose the unused time at year-end then you do not need to accrue at year-end.

    Susan Milner
    Corporate Controller
    Eldeco Inc.
    Greenville SC
    (864) 312-9896

  • 4.  RE: PTO Balance Sheet Accruals

    Posted 05-08-2019 08:39
    Hello Kyrah -

    It sounds like your PTO is "use it or lose it", meaning you can't roll over and use any in the following year. as long as your PTO is based on a calendar year, and your financial year end is a calendar year, then no PTO accrual is needed.

    However, if your PTO is based on a hire date or some other time period, there may be a consideration for what an employee has earned by the end of a calendar year that they are still able to use in the following year.

    I hope that helps.

    Corey McSweeney
    Katz, Sapper & Miller, LLP
    Fort Wayne IN
    (260) 710-8588

  • 5.  RE: PTO Balance Sheet Accruals

    Posted 05-08-2019 10:14
    It can stem deeper than whether or not to accrue this at year end.  If you work on prevailing wage projects, it could be an issue that you didn't pay out that vacation upon termination.  You are claiming that this is a fringe given to the employee that you opted to not pay cash in lieu of fringe.  Another issue brought to my attention years ago - if you have an employee that wants to fight this, it could be an issue.  We promote that we have paid vacation time and then we don't pay it out for whatever reason - not a good thing.  We found it was the best policy to pay the employee on their due / accrued vacation time upon their termination.  Another point to consider, this market is so hard finding trade labor.  You will want to leave a good taste so that the ex-employees aren't putting bad comments out there for potential employees to read about.   Also, what about the situations where employees leave and find out that other companies made promises that didn't happen and the grass wasn't greener on the other side of the fence.

    I agree with Brad that the purpose is to spread it out through the course of the year.  I would think you have to consider how much money are you talking about and what stance does your CPA take on the matter?  I have worked with 2 different companies - 1 with 500 employees which accrues and pays it and another company having 50 employees and doesn't pay it upon termination and doesn't accrue it at all.

    Tammye Brown
    Airco Mechanical Ltd
    Round Rock TX
    (512) 837-2917

  • 6.  RE: PTO Balance Sheet Accruals

    Posted 05-13-2019 14:26
    Edited by Abel Hegyes 05-13-2019 14:27
    We advise our clients who are taking fringe credits on government work that is regulated by prevailing wage laws to pay out PTO upon termination. You could get into compliance issues by taking the credit for the PTO but not paying out. Our system tracks these PTO accruals and verifies compliance.

    Abel Hegyes
    Marketing Specialist
    Phoenix AZ
    (623) 580-4900