The Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences, helps align the recognition and measurement guidance under a unified model and amends certain previously required disclosures. The statement refreshes GASB’s compensated absence guidance from the 90s based on the changes to compensated absences offered since the guidance was introduced.
Cherry Bekaert’s team has outlined a four-phase approach to help your government implement GASB 101. In the second episode of the four-part GASB 101 podcast series, podcast host Danny Martinez, Partner, and Tatiana Britton, Advisory Associate, discuss Cherry Bekaert’s second phase of implementation which focuses on completeness of compensated absence liabilities.
Tune in to learn more about:
- Tips for identifying your government’s compensated absences
- Different or unique types of compensated absences
- Ways a government can identify the completeness of their population
- What a government should looking for in policies, payroll register and trial balance
- Why it’s important to meet with human resources and payroll during discovery
- What questions governments should ask their human resources and payroll departments during discovery
- Cherry Bekaert’s GASB 101 template and how it’s helping clients with implementation
Subscribe and stay tuned for the other two phases of this mini-series. In the next episode, we will cover phase three, which delves into ensuring completeness and identifying compensated absences.
Phase three involves updating policies and procedures and documenting the implementation to facilitate a smooth audit. The final phase addresses journal entries, disclosures and ongoing training to ensure continued compliance and effective application.
Do You Need Assistance with GASB 101?
Cherry Bekaert’s Government and Public Sector Accounting Advisory team provides a comprehensive GASB-as-a-service offering that helps governments overcome staffing and technical challenges. Cherry Bekaert has a dedicated team of professionals who solely provide governmental accounting advisory services for governments, equipping them with the confidence that their needs will not be placed second to competing audit regulatory deadlines.
More from this Series
- GASB 101 Podcast Series – Part One: Defining GASB 1010 and the First Phase of Implementation
- GASB 101 Podcast Series - Part Three: Evaluation of the Current State of Policies & Procedures
- GASB 101 Podcast Series - Part Four: Journal Entries, Disclosures, and Go-Forward Training
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DANNY MARTINEZ: Today is the second part of our four-part series on GASB 101, Compensated Absences implementation. I'm your host Danny Martinez, Advisory Partner at Cherry Bekaert.
DANNY MARTINEZ: Our national team provides government accounting assistance to help governments meet accounting and financial reporting requirements amid ongoing staffing and technical challenges. Lately we've also been providing support dealing with uncertainty from Washington and navigating it all.
DANNY MARTINEZ: As a reminder, we'll have a guest on each part of this series as we work through the four phases of implementation. I'm happy to welcome Tatiana Britton, Advisory Associate and GASB 101 implementation team member, to the show. Tatiana, will you please introduce yourself to the audience?
TATIANA BRITTON: My name is Tatiana Britton. I am an Advisory Associate at Cherry Bekaert and have been with the firm for almost two years. My primary projects on the GASB team include assisting clients with the implementation and ongoing support of GASB 87, which focuses on leases, and GASB 96, which focuses on subscription-based information technology arrangements (SBITAs). Now we are featuring GASB 101, which focuses on compensated absences as our newest service offering.
DANNY MARTINEZ: Tatiana did an incredible job with our clients on GASB 87 and GASB 96 and has been very helpful as we've been standing up this four-phase approach for GASB 101 and all the supporting tools. She's going to help us walk through part two of our series.
DANNY MARTINEZ: In the first part, Scott Anderson joined me, and we talked about what GASB 101 is and dug into the first phase of implementation, which is understanding the standard. If you missed it, you'll find it in your feed, on YouTube, on the Cherry Bekaert website, Spotify, and other podcast platforms. We'll also share a link in the episode description to the show notes so you can link back to the first phase.
DANNY MARTINEZ: In today's episode we'll talk about completeness of compensated absence liabilities and tips for identifying all those absences. Let's get started. Tatiana, as you know, completeness is often the biggest audit risk when implementing a new standard. How do I cast a wide net and capture all potential types of compensated absences that exist within my government?
TATIANA BRITTON: One reason GASB issued this pronouncement is the evolving types of compensated absences that governments offer. It's not the same environment as in 1992 when the previous compensated absence guidance was issued.
TATIANA BRITTON: During our understanding-the-standard and research phase, we found well over 30 different types of compensated absences a government entity could potentially offer employees, as well as policies that handle different leave types for certain employees and departments. For example, someone in the finance department may have a different policy than someone who works in law enforcement or the fire department.
TATIANA BRITTON: The most common types we found include parental leave, which is a gender-neutral, inclusive term that offers parents of a new child time off to care for the child, regardless of whether the child arrived via birth or adoption. Another common type is military leave, which allows employees who are members of the National Guard or reserves to take time off for involuntary military service such as inactive-duty training or deployment.
TATIANA BRITTON: Other well-known leave types include vacation, sick leave, short- and long-term disability, and bereavement leave.
DANNY MARTINEZ: I knew the variety was broad, but I didn't expect it to cross 30. In your research, were there any unusual or different compensated absences you found?
TATIANA BRITTON: Yes. One we found is called pet parental leave, which allows new pet owners to take time off to care for a new pet and help it settle into a new home, or to grieve and arrange a funeral after the passing of a pet. Another leave type we found is political leave, which allows employees to take time off to protest political beliefs or to campaign as a candidate for elective office in their area.
TATIANA BRITTON: We left no stone unturned in identifying and researching leave types offered by governments.
DANNY MARTINEZ: Back to governmental accounting—what are the ways governments can work to identify the completeness of their population? How can they figure out which leave types they have and start to identify the completeness of their compensated absence population?
TATIANA BRITTON: Governments should start with a thorough review of their policies, payroll registers, and trial balance to verify all potential compensated absence types offered to employees. They should conduct walkthroughs not only with HR but also with payroll.
DANNY MARTINEZ: You mentioned policies, payroll registers, and the trial balance. Can you explain why reviewing those documents is helpful for identifying compensated absences and what governments should look for in each?
TATIANA BRITTON: Reviewing policies, payroll registers, and trial balances helps discover all possible compensated absences and understand how each type is treated under the standard. How a compensated absence is settled can impact whether the leave should be recognized as a liability.
TATIANA BRITTON: Specifically, policies describe the leave type and settlement terms, payroll registers show leave usage and balances, and the trial balance can reveal accounting treatment and any related liabilities or expense recognition.
DANNY MARTINEZ: You also recommended meeting with HR and payroll. Why is that important, and what questions should government accounting and finance professionals ask during those meetings?
TATIANA BRITTON: HR and payroll are essential members of the implementation team because they usually know the government's policies best and are often first informed of policy updates. Their expertise on scenarios related to compensated absences and what happens if certain events occur is invaluable.
TATIANA BRITTON: While assisting in discovery, governments should ask three important questions about the leave once it is discovered: (1) Does the leave accumulate? (2) Is the leave attributable to services already rendered? and (3) Is the leave more likely than not to be used or otherwise paid in cash or settled through non-cash means other than conversion to defined benefit postemployment benefits? These questions are in paragraph three of the statement.
DANNY MARTINEZ: HR and payroll often know what actually happens when someone terminates, how leave is used for service credit, or whether it converts to another postemployment benefit plan. We learned similar lessons during our GASB 96 implementation when meeting with IT directors; their insights revealed blind spots for accounting and financial reporting.
DANNY MARTINEZ: To ensure completeness, we need to engage all stakeholders who have the information required to identify all compensated absences the government may have.
DANNY MARTINEZ: One last thing—our team likes to build tools to help with seamless implementation. Tatiana, you're on the project team that helped design the GASB 101 summary template. Can you share what that template is and how it's helping clients?
TATIANA BRITTON: Over the past few months our team became subject matter experts on the standard and developed a GASB 101 summary template to help clients determine if a compensated absence liability needs to be recognized. The template uses dropdown responses and includes nearly 30 of the most popular leave types offered by governments.
TATIANA BRITTON: The template is designed to make GASB 101 implementation clean and efficient for clients and their auditors.
DANNY MARTINEZ: The tool provides a large list of leave types as a starting point and guides users through the questions in GASB 101 that lead to a conclusion about whether a potential liability exists. You can document the analysis and show auditors the thought process that led to a determination that a leave is or is not a liability under GASB 101.
DANNY MARTINEZ: We'll stop there. This discussion leads into the next phases, which cover evaluation of policies and procedures, settlement methods at termination, employee retention, and whether the first or last leave is used or paid out. Those topics are covered in phases three and four.
DANNY MARTINEZ: Tatiana, thank you for your time and for sharing practical information governments can use as they work on completeness.
TATIANA BRITTON: Of course.
DANNY MARTINEZ: We hope listeners continue along this four-phase journey. We're signing up organizations now for our four-phase GASB 101 implementation solution. If you want to learn more, you can email me at danny.martinez@cb.com or message me on LinkedIn. You can also contact Tatiana at tatiana.britton@cb.com or find her on LinkedIn.
DANNY MARTINEZ: Thank you all for your time. We hope you're enjoying this four-phase journey, and we will see you next time.
