Accounting For Workers Comp Insurance Expense

You should remember that there is a difference between financial reporting and management reporting. Your company's current practice is "acceptable" for financial reporting. However, I usually encourage breaking it down as detailed as possible (separate line items) when it comes to how it is recorded in the GL as it is easier to just pick out the line items for management reporting. Having said that, I also encourage management reporting to be as close as possible to financial reporting.

While I agree with my esteemed colleague, I find that one needs a plethora of management and financial accounting reports. Each type is made for a different audience.

It really is about the detail presented and personal style. While I normally group WC with Salary and Benefits, I could definitely see it as part of an insurance groupings.

I'd like to re-emphasize the concept that Emerson stated, that using separate GL lines for certain types of expenses (especially for something that can be audited by a outside entity) makes your life much easier.

I group it with insurance, but ensure management understands cost is driven by payroll. Incidentally, in my case (contractor) liability insurance cost is also driven by payroll. When talking to management about budgeting/wage overhead they know wc and liability needs to be part of wage overhead in addition to taxes.

Under insurance, listed as a separate item

I would separate the Worker's Comp from your General Business Insurance. These are driven not only by the size of your company, headcount and class type but also by previous claims and litigation. So you would rather see trend on these insurance costs separately.