Labor Accounting Overview

LAST UPDATED: November 20, 2014

What You Should Know

Labor Accounting (LA) is the systematic recording and maintenance of the charges incurred for the compensation or financial support of an individual. Labor Accounting supports four key business processes.

The Labor Accounting system distributes Labor Accounting costs to one or more chartstrings by amount, percentage, or full-time equivalent (FTE) for most regular employees’ normal compensation. These include: regular 12-monthly salary, faculty 10-month academic year salary and summer salary, biweekly employee salary, and graduate student support.

The LA system is the source of commitments for faculty summer salaries and graduate student support such as fellowship stipends, assistantship salaries for instruction and research, and tuition support.


In LA, commitments are a record of funds that are expected to be paid during a fiscal year, based on earnings codes for a given person. Some commitments are based on earnings codes entered in PeopleSoft HR or Student Administration. These commitments cannot be changed in LA.

Other commitments are entered directly in LA, or can be changed there. These include faculty summer salaries and various graduate student support commitments.

Commitments are based on centrally established earnings codes maintained by Human Resources and the Dean of the Faculty.


Distributions control which chartstring is actually charged for each commitment. Distributions may be simple, with a single distribution line for a single commitment, or they may be complex, with multiple distribution lines for a single commitment.

In addition, distributions for the same commitment may change within the course of a year or a term. For example, a project's funds run out mid-term, a person's commitment needs to be distributed to a different project for the remainder of the term.


Encumbrance is an approved commitment that has not yet been paid and posted in Prime Financials. Encumbrances serve as "placeholder" expense amounts between the time a purchase or salary commitment is approved and the time it is actually paid.

LA generates the encumbered salary and graduate student support amounts, encumbered benefits, and encumbered indirect cost allocations by individual for the Financial Warehouse.


Learn more about Labor Accounting.


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