How to Record Accrued Severance Costs
Recording the liability for severance payments in accordance with FAR 31.205-6(g).
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Severance Expense (Indirect Pool) | Expense | 12,000.00 | - |
| Accrued Severance Liability | Liability | - | 12,000.00 |
💡 Accountant's Note
Severance costs are allowable provided they are required by law, employer-employee agreement, or established policy.
Practitioner & Systems Framework
💻 ERP Architecture
Record in the payroll accrual sub-ledger and map to the appropriate fringe or overhead pool.
⚠️ Audit Flags
Severance payments exceeding normal business practices or payments made to executives without proper justification.
📄 Required Documentation
Written severance policy, employment agreements, and evidence of payment obligation.
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