Payroll Reversal Process

Issue- In Oracle Fusion payroll run employee got paid wrongly and amount transferred to the employee bank account as well. Later person refunded the money to the company but post process already ran in the system so we can’t rollback the process. So to fix this case we have to do the reversal at payroll end to knock of the entries.

Reversing Payroll Calculations

You can reverse a payroll calculation after generating a payment. The reversal process generates a negative run result to offset the original run result and maintains an audit trail. The reversal doesn’t affect the payment itself, only the payroll run results and costing results.

The most common reasons you would reverse payroll calculations would be:

You can a reverse a payment within the same payroll period it was generated but if you reverse the calculation after running prepayments but before the payment process, the process will still issue payment. You can reverse a payment from a previous payroll period, before or after processing the payroll for the current period.

To reverse the payroll run results and costing results:

1. Select the Reversal action from the View Person Process Results page to reverse an individual calculation or Submit the Reverse Payroll Calculation process in the Payroll Calculation work area to reverse a set of payroll calculations, based on the parameters you select.

When you submit a reversal, you can control whether the next prepayments process, which covers the date of the reversal, includes the negative net pay value, as shown in this table.

Purpose – If we don’t fix the calculation and payment thinking the amount is already refunded by the employee there are financial impact of that, as employee will get extra tax charged on the earning already refunded and also reporting issue in finance and W2 and other year-end reports.

Reversal process can be used when we don’t have option to rollback the process as post process already ran, and entry posted to GL. System will not allow to roll back the process.

Solution-

Step-1-To do the reversal we can go to the payroll which we wanted to REVERSE and select the reversal option as shown in below screenshot.

Now while doing the Reversal we have two options to process the entries. Once click we can see two below options. If we choose “Include in Pay” system will reduce this amount when next payroll process we have money to deduct from employee paycheck. But in our case as employee already refunded the money we can use “Exclude in Pay” so that it will not impact the future payroll.

Till here we are able to reverse the payroll and able to create the reverse entries, now we need to see how to reverse the payment in system which is already refunded by employee and also how to reverse the ‘Payment Costing’ in GL.

Step-2 To do that we should go to the prepayment process results and select the void payment option as shown below.

Once you select the option and by giving the date, we can void the payment. System will ask for date to void which you can give based on the date we wanted to void. Once we are able to void successfully, we can see the status as ‘VOID’.

Step 3-Now we can cancel this payment by choosing the below option. There are option to cancel and do the external payment through AP (Account Payable)

Again, when you choose this option you can give the effective date and reason to do the cancellation of payment. Once done with the process we can see status become “Canceled and cannot be reissued”.

Step-4 By now we have cancelled the payment as well in the system, Next step is to run the ‘Costing of Payment”, we can run the process to pick these entries. This is required to reverse the wrong payment accounting entries already there in GL.

Once process got complete we can see the payment costing results as shown below.

Now we can see the account, which was debit earlier now got credited, when these entries will go to GL, costing of payment will also get knock off.

Payroll Reversal Process

Reversing Payroll Calculations

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