Resources - CLEAR Accounts

Important Note: This content will be available in CORE Payroll once the system is live. These transactions are not activated for end users at this time.  

Purpose

This resource outlines the mandatory requirements for each Agency regarding the use of LDPR CLEAR accounts. All agencies must maintain an LDPR CLEAR for each home department within their respective cabinet. This procedure details the responsibilities, definitions, causes of account activity, and the steps required to create and clear these accounts.

The purpose of this is to establish a standardized process for the management of Labor Distribution Profile (LDPR) CLEAR accounts. This document provides a uniform framework for each agency to ensure accurate labor distribution by properly managing temporary clearing accounts. The specific goals of this are to:

• Define the structure and purpose of LDPR CLEAR accounts for each home department.

• Establish the default coding requirements for these accounts.

• Clarify the function of CLEAR accounts as temporary holding facilities for financial data.

• Ensure the prompt review and zeroing out of CLEAR accounts to maintain an accurate trial balance.

• Assign clear responsibilities to each agency.

• Identify the root causes for transactions falling into a CLEAR account.

This applies to all state agencies and their respective home departments. Each Agency is required to have an LDPR CLEAR for every home department in their cabinet. For example, Cabinet A (DPA - Department of Personnel and Administration) comprises the following Home Departments: AAAA, AABA, AACA, AADA, AAEA, AAFA, AAGA, and AAHA. Each of these home departments requires a corresponding LDPR CLEAR account. This procedure covers all personnel and administrative staff roles involved in labor distribution, payroll processing, and financial reconciliation. All transactions must adhere to the standards defined within this document.

Clear and distinct responsibilities are required to ensure effective management of LDPR CLEAR accounts. All parties must fulfill their specific duties as outlined to ensure compliance and fiscal accuracy.

Agency Requirements

• Maintain an LDPR CLEAR account for each home department within their cabinet.

• Utilize the designated default coding when establishing CLEAR LDPRs.

• Review CLEAR account activity regularly to ensure prompt reconciliation.

• Zero out the CLEAR account balance for each home department on a consistent basis to preserve the accuracy of the trial balance.

• Ensure that all staff handling labor distribution are adequately trained on this.

Financial/Accounting Staff Responsibilities

• Monitor the CORE financial system and LDPR to ensure the Chart of Accounts (COA) align correctly.

• Investigate recurring or anomalous activity within CLEAR accounts.

• Initiate correcting entries to clear residual balances in a timely manner.

• Coordinate with HR/Payroll staff to resolve timesheet issues that cause LDPR failures.

HR/Payroll Staff Responsibilities

• Ensure timesheets are accurately created and approved before processing.

• Verify that all LDPRs referenced on timesheets are current and have not expired.

• Flag and resolve any timesheet issues related to LDPRs promptly.

Definitions

This section defines the terms and concepts used throughout this to establish a common understanding.

Labor Distribution Profile (LDPR)

• A Labor Distribution Profile is a set of predefined coding instructions that determines how an employee's actual labor costs are allocated across various funding and accounting streams. This profile directs expenditures to the appropriate objectives and projects.

CLEAR LDPR

• A CLEAR LDPR is a specific type of Labor Distribution Profile assigned to an agency for the purpose of capturing and holding financial data that cannot be immediately allocated to a permanent account. Each agency is required to establish and maintain one CLEAR LDPR for each home department in their cabinet. 

Dump Account / Suspense Clearing

• A dump account, referred to as a suspense clearing, is a temporary holding place for financial data before it is sorted into the correct permanent accounts. The account functions as a temporary bucket that should be reviewed and zeroed out regularly to keep the trial balance accurate. 

Default Coding

• Default coding refers to a specific predetermined set of accounting values assigned to an LDPR. When creating CLEAR LDPRs, agencies use this designated default coding scheme to standardize the temporary holding structure. 

Chart of Accounts (COA)

• The Chart of Accounts (COA) is the structured list of all account codes, including appropriation codes, program codes, and program periods, used by the CORE financial system to record and categorize financial transactions.

Cabinet

• A cabinet refers to the grouping of a Primary Cabinet Agency (e.g., DPA - Department of Personnel and Administration) and its associated Home Departments.

Causes of Transactions Falling into a Dump/CLEAR Account

Transactions may fail to post to their intended permanent labor distribution account and instead are captured in the CLEAR account for a variety of reasons. Understanding these causes is essential to preventing and correcting them. The primary causes are listed below: 

Expired LDPRs

A transaction will fall into the CLEAR account when an employee's Labor Distribution Profile has reached its end date and has expired. When an LDPR is no longer active, the system is unable to process the labor distribution transaction against it. Consequently, the financial data is redirected to the CLEAR account until a valid LDPR is in place.

Updated Accounting Elements (COA) in CORE Financial but Not LDPR

Another primary cause is a discrepancy between the accounting elements updated in the CORE financial system and those still applied within the LDPR. Specifically, the Chart of Accounts (COA) elements may have been updated in CORE financial but have not been correspondingly updated in the LDPR. This can occur for several reasons, including:

• Appropriation codes that have changed effective a specific date.

• Program codes that have been modified or deactivated.

• Program periods that may have changed due to the end of a funding source, causing the LDPR to reference a period that is no longer active in the system.

In these scenarios, the transaction is rejected and deposited into the CLEAR account.

Timesheet Issues Involving LDPRs

Timesheet issues directly involving LDPRs are also a common cause for transactions to land in a CLEAR account. These issues can include:

• Timesheets submitted or approved using an LDPR that is invalid or not yet active.

• An employee is retroactively assigned to a project, but the LDPR for that period was not established.

• Administrative errors in the timesheet entry where a referenced LDPR code is incorrect or incomplete.

Procedure: Creating an LDPR CLEAR Account

The steps required to create an LDPR CLEAR are identical to the process used to create a standard Labor Distribution Profile. The procedure is outlined below to ensure consistency across all agencies. It is imperative that agencies use the "default coding" designated for CLEAR LDPRs.

Managing and Zeroing Out the CLEAR Account

Managing the CLEAR account is an ongoing process that requires immediate review of new entries and periodic correction. The aim is to minimize the time funds reside in the CLEAR account, as this is a temporary bucket. Zeroing out the account keeps the trial balance accurate. Agencies are responsible for zeroing out the CLEAR account for each home department in their cabinet.

Regular Review of CLEAR Account Activity

• Daily Monitoring: Check the CLEAR account transaction log for new postings. Investigate any new transactions that appear and identify the cause of the misposting.

• Weekly Reconciliation: Reconcile the CLEAR account on a weekly basis against the payroll register and timesheet data. Ensure all transactions are accounted for.

• Monthly Finalization: At the end of each month, prior to the accounting close, perform a complete review to ensure that no balances remain unaddressed in the CLEAR account.

Actions to Zero Out the Account

When transactions have been identified in the CLEAR account, agencies must take corrective action to move them to their proper permanent accounts. The standard procedure includes the following steps:

• Identify the Correct LDPR: For each transaction, determine the correct permanent LDPR (e.g., a specific program account) where the expense should be accurately recorded.

• Determine the Root Cause: Confirm the reason the transaction failed, such as an expired LDPR or an outdated COA element.

• Correct the Master Data (if applicable): If the root cause is an expired LDPR, request a new one or extend the existing one. If the cause is a COA discrepancy, update the LDPR to match the CORE financial system.

• Initiate a Transfer Journal Entry: Enter a journal entry to transfer the financial data out of the CLEAR account and into the appropriate permanent account code.

• Document the Correction: Maintain a log of all corrections, including the reason for the error and the action taken. This documentation supports future audits.

• Re-run Reports: Generate a trial balance or a specific CLEAR account report to confirm that the balance is zeroed out and no residual data remains.

Trial Balance Accuracy

Ensuring that CLEAR accounts are reviewed and zeroed out regularly is a critical component of safeguarding an accurate trial balance. Only through diligent monitoring of these accounts can an agency guarantee that all financial data is allocated correctly and that these "temporary buckets" do not improperly hold funds that should be reflected elsewhere. 

Compliance and Best Practices

Compliance with this is mandatory. Agencies must establish internal controls to ensure strict adherence to the procedures described. To simplify the process and reduce the frequency of transactions hitting the CLEAR account, the following best practices are recommended:

• Frequently audit all active LDPRs to ensure their end dates are correct and they do not expire unexpectedly.

• Establish a systematic process to update LDPRs whenever the COA is changed in the CORE financial system to prevent discrepancies.

• Conduct training sessions for all staff responsible for submitting timesheets to minimize user errors.

• Implement an alert system to notify financial staff when a transaction is posted to a CLEAR account, allowing for immediate remediation.