Bonus accruals that survive a cold look from finance
Year-end bonus accruals fail review when the calculation basis is tribal knowledge instead of a written formula tied to eligible headcount.
Controllers dislike bonus accruals that cannot be rebuilt from a formula and a headcount list. “We usually set aside about one month” is not a basis an auditor or an inspector will accept without support.
Write the eligibility rules: hire date cut-offs, probation exclusions, and whether resigned staff share in the pool. Tie the accrual to those rules and to the payroll register, not to a round number from last year.
If sales commissions interact with the bonus pool, separate the schedules. Mixing them hides which variance belongs to payroll and which belongs to revenue recognition.
Revisit the accrual after the board or management confirms the pool. Large late changes should appear as a documented revision, not a silent overwrite.
A clean bonus schedule shortens year-end payroll close review and reduces last-minute journal chaos in January.