Skip to content Menu

A new Governmental Accounting Standards Board (GASB) exposure draft explains requirements for recognizing and measuring compensation-related liabilities. When finalized, the new standard will replace guidance in GASB Statement No. 16, Accounting for Compensated Absences.

Compensated absences are leave that employees use for time off with pay. Leave for which employees receive payment upon termination of employment and leave for which employees receive settlement through other means, such as conversion to postemployment benefits, also are covered under the proposal. Examples include vacation and sick leave, paid time off, holidays, parental leave, bereavement leave, and certain types of sabbatical leave.

The proposed guidance would require that a liability for compensated absences be recognized if all of the following are present:

  1. The absence accumulates
  2. The absence is attributable to services rendered
  3. The absence is more likely than not to either be paid (including being paid for use) or settled through other means

Disclosures related to compensated absences also would be modified. Governments would only need to disclose the net change in liability rather than the current requirement to disclose gross increases and decreases in the compensated absences liability.  

The proposed standard would be effective in FY24 for most public institutions and new requirements would be prospectively applied. Comments are due June 4.


Sue Menditto

Senior Director, Accounting Policy


Related Content

NACUBO Weighs In on Major GASB Projects

NACUBO supported the Governmental Accounting Standards Board’s proposed financial reporting model changes and offered suggestions to improve complex and concerning proposed changes to categorizing revenue and expense transactions.

NACUBO Issues HEERF Program Grants Accounting Tutorial

The new tutorial provides HEERF I, II, and III background and revenue recognition guidance under FASB and GASB standards.

AICPA Addresses Federal COVID Relief Programs and SEFA Reporting

The AICPA Governmental Audit Quality Center released revised guidance for SEFA reporting in light of federal rule changes for certain pandemic relief aid, such as the Higher Education Emergency Relief Fund.