GASB streamlines guidance on compensated absences with unified model

By Bryan Strickland

GASB issued guidance Thursday on compensated absences, enhancing recognition and measurement requirements and refining related disclosure requirements.

Statement No. 101, Compensated Absences, supersedes Statement No. 16, Accounting for Compensated Absences, which GASB issued in 1992. The guidance updates how state and local governments process paid leave benefits for their employees.

The new requirements are effective for fiscal years beginning after Dec. 15, 2023. Earlier implementation is encouraged.

GASB noted that employee benefits have evolved over the years, particularly with the establishment of a paid-time-off model that packages vacation and sick leave. The new guidance aligns recognition and measurement guidance for all types of compensated absences under a unified model that will result in governments recognizing a liability that more appropriately reflects when they incur an obligation for compensated absences. The model also will lead to greater consistency in application and improved comparability across governments.

The general approach for measurement outlined in Statement 101 is to use an employee's pay rate as of the financial reporting date.

GASB said that, generally, a liability for leave that has not been used would be recognized if the leave:

  • Is attributable to services already rendered;
  • Accumulates; and
  • Is more likely than not to be used for time off or otherwise paid or settled.

GASB said there are some exceptions — such as parental leave and military leave — for which a liability would not be recognized until the leave commences.

The guidance eliminates or makes optional certain existing disclosures that, according to GASB, did not provide essential information to financial statement users.

The guidance provides an alternative to the existing requirement to disclose the gross annual increases and decreases in long-term liability for compensated absences, allowing governments to disclose only the net annual change in the liability as long as it is identified as such. It also removes the disclosure of the government funds used to liquidate the liability for compensated absences.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at

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