°Ù»¨ÊÓƵ

Purpose

To ensure accurate accounting and reporting of sick leave liabilities in accordance with Governmental Accounting Standards Board (GASB) 101 - Compensated Absences.  These guidelines outline the process for evaluating, recording, and reporting sick leave that meets the defined accounting criteria.

Policy

For financial accounting and reporting purposes, sick leave taken is charged first against hours earned in the current fiscal year, with calculations made at year end.  Year-end, calculations are performed to determine the liability to be recorded based on historical usage trends and GASB 101 criteria.  If the leave is deemed more likely than not to be used, a liability will be recognized in the financial statements.

Procedures

• Liability Determination
  
  
  • The Payroll Department will generate reports on total sick leave accrued, used, and the remaining balances.
  • Historical trends will be evaluated to determine the likelihood of future use.
  • A liability will be recorded only if it meets the criteria of: More likely than not to be used (i.e., likelihood >50%).
  • The liability includes the cost of leave plus any associated salary-related payments, such as the employer share of Social Security and Medicare taxes.
    
    
• Materiality Determination
  
  
  • The Vice President for Business Affairs (VPBA) and/or the Associate VPBA and/or Assistant VPBA will assess whether the impact of sick leave liability is material to the financial statements.
  • If immaterial, in accordance with UT System guidelines, no liability will be recorded. 

These guidelines apply to all departments and °Ù»¨ÊÓƵ employees.  They support the implementation of GASB 101 within the °Ù»¨ÊÓƵ's financial reporting processes.

Definitions

More Likely Than Not  – A probability greater than 50% that a particular event will occur.

Salary-Related Payments  – Additional obligations incurred by the employer related to sick leave, such as the employer portion of payroll taxes (e.g., Social Security and Medicare).

Responsible Party

• General Accounting and Financial Reporting Departments: Oversee implementation of the accounting treatment and ensure compliance with GASB standards.
• Payroll Department: Provides data and reporting necessary for liability assessment.
• VP for Business Affairs (VPBA): Collaborates on materiality determinations.

Last Updated: June 2025

• Download Printer Friendly Version