Paid Time Off (PTO) Accruals

Paid Time Off (PTO) Accruals

PTO accruals may apply depending on the PTO policy chosen by the project leadership. PTO accruals, if applicable, are performed monthly to reflect earned but unused vacation time.

• PTO accruals are done monthly with a transaction posting date as of the last day of each month.

• The accrual calculation uses each employee’s hourly rate as of the last day of each month multiplied by their accrued vacation hours as of the last day of each month to post:

• a PTO liability, and

• an associated PTO expense on the last day of each month.

PTO is not a cash entry. It is an accounting entry to reflect the amount the project would owe to all its employees as of that date if PTO were paid out. The balance fluctuates up and down each month depending on:

• PTO hours used versus hours accrued, and

• changes to employee pay rates (which can also affect the liability).

Example: When PTO Is Used

When an employee actually uses PTO hours:

• The PTO hours used are recorded as wage expense in GL code 6001.

• The use of PTO also has an opposite, reducing effect on the PTO liability that was recorded from the prior month (so the project does not “double expense” the PTO).