Compensated Absences - Vacation & Sick Leave Liability (GASB 101)
Recording the accrued liability for compensated absences (vacation leave, sick leave, and similar benefits) under GASB 101, with recognition at current salary rates for leave expected to result in payments.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Expenditures - Compensated Absences (Governmental Fund - Current Portion) | Expenditure (+) Fund | 485,000.00 | - |
| Compensated Absences Liability - Current (Governmental Fund) | Liability (+) Fund | - | 485,000.00 |
| Compensated Absences Expense (Government-Wide) | Expense (+) Gov-Wide | 1,250,000.00 | - |
| Compensated Absences Liability - Long-Term (Gov-Wide) | Liability (+) Gov-Wide | - | 1,250,000.00 |
💡 Accountant's Note
GASB 101 (effective FY2024) updated compensated absence accounting. The new standard requires recognizing a liability for leave that (1) has been earned by the employee, (2) has accumulated (can be carried forward), and (3) will be paid. Sick leave is now recognized as a liability when it is probable the employee will use it as pay upon termination or retirement — a departure from the old 'will vest' approach. In governmental funds, only the current maturity (due within the current period) is reported as a fund liability. The full long-term balance appears only in the government-wide statements.
Practitioner & Systems Framework
💻 ERP Architecture
The compensated absence liability requires data from the HR/payroll system (employee leave balances by type, by employee) multiplied by current salary rates (GASB 101 requires current salary rates, not historical rates). Calculate the full liability for government-wide statements; determine the current portion (expected to be paid within 12 months) for the governmental fund statements.
⚠️ Audit Flags
Auditors test the compensated absence liability by selecting a sample of employees, tracing their leave balances to payroll records, and recalculating the liability at current rates. New GASB 101 sick leave probability of payout analysis requires management's estimation of employee turnover and sick leave usage patterns — these estimates are a key audit focus.
📄 Required Documentation
Payroll system leave balance report (all employees, all leave types), current salary rate list, compensated absence liability calculation workpaper, GASB 101 probability analysis for sick leave, rollforward of liability (beginning balance + accruals - payments = ending balance), note disclosure.
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