Question

Research the ways compensated absences should be accounted for in governments. Provide examples.

ORIGINAL ANSWERS, PLEASE.

Answer 1

Note -{ Please don't think answer is lengthy, answer is not lengthy i was break into points for your better understanding }.

•Compensated absences are absences for which employees will be paid, such as vacation, sick leave, and sabbatical leave. ... On the other hand, paid time off for earned sick leave is contingent on an illness-a specific event that is outside the control of the employer and employee.

•This Statement provides guidance for the measurement of accrued compensated absences liabilities by state and local governmental entities, regardless of the reporting model or fund type used to report the transactions.

The standards in this Statement give consideration to the different characteristics of various types of compensated absences.

• For example -

employees usually receive full compensation for vacation leave-either as paid time off or as compensation at termination or retirement. Thus, employees earn the right to be compensated for vacation leave based only on rendering past service. On the other hand, paid time off for earned sick leave is contingent on an illness-a specific event that is outside the control of the employer and employee.

• In some cases, however, employees may be compensated for a portion of their sick leave when they terminate or retire. In those cases, employees earn the right to be compensated for sick leave at termination based only on rendering past service.

•The compensated absences liability generally to be measured using the pay or salary rates in effect at the balance sheet date.

•It also requires additional amounts to be accrued for certain salary-related payments associated with the payment of compensated absences.

•for example, the employer's share of social security and medicare taxes.

{• How to financially report compensated absences for governmental entities is a common question. There are two major categories of compensated absences:}

••Vacation leave and similar compensated absences (with the exception of sick leave) should be accrued when the benefits are earned and it is probable that the employee will be compensated through paid time off or some other means, subject to the modified accrual basis of accounting in governmental funds.

••Sick leave may be accrued using either the termination payment method or the vesting method. Both consider only sick leave that is used for other than sickness, but here are the basics:

••The termination method -

recognizes an expenditure/expense and liability to the extent it is probable that the employee will be paid for the benefit upon termination or retirement.

••The vesting method -

recognizes an expenditure/expense and liability based on leave accumulated by employees who are currently eligible to receive termination payments—as well as other employees who are expected to become eligible in the future.

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