Nominal Codes

Use the Nominal Codes command to enter the payroll control nominal accounts and default cost centres. If the Payroll to Nominal option is selected on the Options tab of the Company Profiles form in the System application, the codes you identify here are used when transferring payroll details to the Nominal application. The transfer is carried out when you use the N/L Analysis command on the Utilities submenu in the Payroll application. You can select nominal codes from the account records you maintain in the Nominal application. If you also have the Cost Centres in Nominal option selected on the Company Profiles form, you can also identify cost centres that you have defined in the Nominal application.

If the Payroll to External Nominal option is selected on the Options tab of the Company Profiles form in the System application, the codes you identify here are used to determine the content of the CSV file created by the Payroll application's N/L Analysis command; the content of which can be used to transfer payroll details to an external nominal ledger. You can select nominal codes from those you maintain using the Nominal Accounts command on the Maintenance submenu in the Payroll application. If you also have the Cost Centres in External Nominal option selected on the Company Profiles form, you can also identify cost centres that you have defined using the Cost Centres command on the Maintenance submenu in the Payroll application.

Even if you have not specified options to link to the Nominal application or an external nominal ledger, you can still enter details of nominal codes. In this case, you can 'free-type' the codes that apply (as opposed to selecting predefined codes) and they will be used to produce a journal report created when you use the N/L Analysis command. This report prints details to assist you in making manual journal entries in an external nominal ledger.

Masking

Provided you have selected the Allow N/L Masking option on the Options Page 2 tab of the Payroll Options form, you can apply a masking to one or more of the nominal codes you specify. To assign masking to a nominal account code, select the Mask option on the General tab of the Nominal Codes and Cost Centres form, then use the Masking tab to define the way in which the masking operates. All payments and deductions, including statutory deductions, can be analysed by one or more of the following references:

*The nominal code may relate to such items as PAYE , employers’ NI, individual payment/deduction types, and so on.

You may construct this additional code from the character positions of one or more of the references listed above and this is what constitutes the process called ‘nominal masking’.

Whether or not your payroll is integrated with a nominal ledger you can specify that an additional analysis code is created by the application. Where your payroll is integrated with a nominal ledger, this additional code will provide the nominal ledger account reference, and cost centre (if used), when you use in the N/L Analysis command. These four codes listed above are displayed across the top part of the Masking tab screen and each character of the code is referenced by its position number and a letter of the alphabet:

So, in the above table, the third character of the employee reference code is at position 3 and its cross reference letter is C. Similarly, the fourth character of the nominal code is position 4 and has a cross reference letter of P. Any single character in any of the four payroll analysis codes can be identified by a unique cross reference letter.

Any of the cross reference letters can be ‘selected’ to represent one of the characters in either the nominal account and/or cost centre code in the nominal ledger. Whatever character is found at that position when the nominal transfer is carried out will form part of the nominal or cost centre code in the position specified.

Source	Reference	Dept. Code	Nominal Code	Cost Centre
Nominal Code Position	12345678	1234	12345678	1234
Cost Centre Position	ABCDEFGH	IJKL	MNOPQRST	UVWX

In the bottom half of the Masking tab are the nominal code positions (1 to 8) and the cost centre code positions (1 to 4). These relate to the positions of characters in the nominal account and cost centre codes used in the nominal ledger. For each position of the nominal code and cost centre code, you instruct the application whether the actual character at that position is ‘selected’ — meaning that it is chosen from one of the payroll analysis codes; or is ‘predetermined’ — meaning that its value is fixed. When you choose ‘selected’, by entering an S in the column, you will need to follow that entry with the cross reference letter that identifies which of the payroll analysis code positions will be used as the source. When you choose ‘predetermined’, by entering a P in the column, you will need to enter the actual character that will be put in that position in either the nominal account or cost centre record in the nominal ledger.

Tip: Use the SPACEBAR to swap between 'P' or 'S' in the first column of the Nominal Code Position and Cost Centre Position boxes and to cycle through the cross reference letters or 'blank' when the cursor is positioned in the second column.

This example is based on masking for the payment/deduction nominal codes in the payroll, but the same principles apply to other nominal codes, such as employers’ NI, PAYE, wages control, and so on. For the purpose of this illustration, we need to establish some fictitious payroll and nominal ledger codes.

In the payroll, Joe Smith has an employee reference of A1JS0001. His department code is 0032 which is the department number of the administration department. The nominal codes used for payment types include:

BASIC001, for basic pay no. 1

BASIC002, for basic pay no. 2

BASIC003, for basic pay no. 3

BASIC004, for basic pay no. 4

OVT00001, for overtime no. 1

OVT00002, for overtime no. 2

OVT00003, for overtime no. 3

and so on. The cost centre code is the cost centre of the department, which represents administration costs for the particular warehouse (no. 3) in which Joe works. Thus we can apply these specific codes to the positions and cross reference letters shown on the Masking tab:

Source	Dept. Code	Nominal Code	Cost Centre
Actual Code	A1JS0001	0032	BASIC001*
Position	12345678	1234	12345678
Code	ABCDEFGH	IJKL	MNOPQRST

*The actual entry for the nominal code would depend upon the payment type used, that is, whether Joe was being paid basic pay or overtime. In the above example, it is assumed he is paid basic pay no. 1.

In the nominal ledger, we have several accounts for basic pay with the references:

EXWGBAS1, for the expense account, wages, basic pay no. 1

EXWGBAS2, for the expense account, wages, basic pay no. 2

EXWGBAS3, for the expense account, wages, basic pay no. 3

EXWGBAS4, for the expense account, wages, basic pay no. 4

EXWGOVT1, for the expense account, wages, overtime no. 1

EXWGOVT2, for the expense account, wages, overtime no. 2

EXWGOVT3, for the expense account, wages, overtime no. 3

and so on. where EX identifies the account as an expense account and WG indicates the expense type — wages. BAS1, BAS2, and so on, identify the basic pay accounts, numbers 1, 2, 3, and so on; while OVT1, OVT2, and so on. identify the overtime pay accounts, numbers 1, 2, 3, and so on. Attached to these account codes are various cost centres, including:

AD1W for administration costs, warehouse no. 1, wages

AD2W for administration costs, warehouse no. 2, wages

AD3W for administration costs, warehouse no. 3, wages

and so on. Where AD identifies the administration cost centre, 1, 2, 3, and so on, identify the warehouse number and W indicates the wages cost centre. Having established how the nominal account and cost centre codes are structured in the nominal ledger, the next stage is to decide which parts of the nominal account and/or cost centre codes can be derived from the payroll analysis codes.

The first four characters of the nominal account codes are the same for all; that is EXWG. Therefore, these can be considered as ‘predetermined’. The second four characters, however, will be different, depending upon the nominal codes associated with the payment type. For example, if basic pay no. 1 is being paid, the value will need to be transferred to the nominal account EXWGBAS1. Three of the characters in the payroll’s Nominal Code box can be used to identify the payment type for the purpose of transfer to the nominal ledger; position 1, 2, 3 and 8:

BASIC001

BASIC002

OVT00001

OVT00002

and so on. These characters are therefore ‘selected’ and can be identified in the masking screen as follows:

Nominal Code Position	1	P	E	Predetermined Value - E
	2	P	X	Predetermined Value - X
	3	P	W	Predetermined Value - W
	4	P	G	Predetermined Value - G
	5	S	M	1st Digit of Nominal Code
	6	S	N	2nd Digit of Nominal Code
	7	S	O	3rd Digit of Nominal Code
	8	S	T	8th Digit of Nominal Code

A similar exercise can be used to define the relationship between cost centre codes in the nominal ledger and the payroll codes. All relevant cost centres in the nominal ledger end in the letter W, so this can be considered to be ‘predetermined’. The first three characters, however, can vary, depending upon which department an employee belongs to, and in which warehouse they work. These characters can be taken from the employee’s cost centre code. So the following entries can be made in the masking screen for the cost centre positions:

Cost Centre Position	1	S	U	1st Digit of Cost Centre
	2	S	V	1st Digit of Cost Centre
	3	S	X	1st Digit of Cost Centre
	4	P	W	Predetermined Value - W

Having set up the masking, it is now possible to illustrate what actually happens to a value when it is transferred from the payroll to the nominal ledger. Assuming that Joe Smith is paid £1,200 basic pay in the current pay period which is analyzed to basic pay number 1 (that is, BASIC001), the illustration below shows how the masking is applied to the various payroll codes, resulting in that £1,200 being posted to nominal account EXWGBAS1, cost centre AD3W.

Nominal Code Entries

For each of the above accounts, a cost centre can also be identified if cost centres are being used.

Box	Description
Mask	An option that determines whether you want to use 'masking' to identify nominal ledger accounts. You define the masking using the Masking tab.
Employers NI	The nominal code for the employer's NI costs.
Employers/ Employees	The nominal code for the account that records the total NI liability due for payment to the authorities.
PAYE	The nominal code for PAYE.
Employers COMP	Contracted out Money Purchase (COMP) occupational pension schemes that operated on a defined contribution basis were abolished in 2012.
Employees/ers COMP	Contracted out Money Purchase (COMP) occupational pension schemes that operated on a defined contribution basis were abolished in 2012.
Wages Control	The nominal code for the account whose balance represents the net pay due to the employees.
Wages Suspense	The nominal code for the account that acts as a ‘safety valve’ to take care of any payroll transactions which have been given incorrect nominal ledger account references.
Wages Rounding	The nominal code for the account to which period rounding values are posted. This applies where you pay employees by cash and have elected to operate payroll rounding. The balance of the account reflects the total overpayments made on the basis of pay rounding for the tax year to-date.
Employers Pension Contra	The nominal code for the employer's pension contra account. Where you are operating a company pension scheme with employer’s contributions, this is the account which records employer’s pension contribution liabilities. These will be credit entries. The double entry of such values is posted to the account which you nominate for the employer’s pension ‘deduction’ type.
Holiday Accrual Contra	The nominal code for the holiday accrual contra account. This is the account which records your liability for employees’ holiday pay on the basis of the entitlement calculated on a value basis. The double entry of such values is posted to the account which you nominate for the holiday pay entitlement ‘deduction’ type.