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GASB EXPOSURE DRAFT ON COMPENSATED ABSENCES

GASB EXPOSURE DRAFT ON COMPENSATED ABSENCES

In an effort to provide guidance for the recognition, measurement, and disclosure of compensated absences, the Governmental Accounting Standards Board (GASB) has issued an exposure draft with proposed amendments to GASB Statement 16, Accounting for Compensated Absences. The exposure draft eliminates the complications regarding whether services rendered are contingent on an event being outside the control of the employer or employee. Under this proposed statement, a compensating absence liability should be recognized if the absence accumulates (i.e. can be carried over to future reporting periods), the absence is attributable to services rendered, and the absence is more likely than not to be either paid or settled through other means. The intent of the GASB is also to add clarity to the types of leave that should be accounted for as a compensated absence liability, such as vacation leave, sick leave, parental leave, sabbatical leave, etc. Proposed amendments to disclosure requirements under Statement 34 paragraph 119b include the option to disclose separate increases and decreases or the net change in the government’s compensated absence liability. For clarity, governments should state if the net change method is used. An exception was also made to paragraph 119d, which required governments to disclose which funds were used to liquidate the compensated absence liability. Proposed amendments in this statement are effective for periods beginning after December 15, 2022, and are to be applied retroactively or as a restatement of beginning net position for periods presented. Written comments in regards to this draft may be submitted through June 4, 2021.

 

03/30/2021

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