GASB 16 on compensated absences issued; GASB 11 delayed.

The Governmental Accounting Standards Board issued Statement no. 16, Accounting for Compensated Absences, establishing accounting and reporting standards for compensated absences by state and local governmental entities-- regardless of the reporting model or fund type used to report the transactions.

Effective for periods beginning after June 15, 1993, Statement no. 16 requires vacation leave and similar compensated absences based on past service to be accrued as a liability as they are earned.

For sick leave and similar unplanned compensated absences, it provides a measurement option. Employers can accrue the absences as a liability as the benefits are earned but only to the extent it is probable the employer will compensate employees on termination of their employment for unused time off. Alternatively, the liability can be measured based on the sick leave or similar absences accumulated at the balance sheet date by employees currently eligible to receive termination payments as well as other employees expected to become eligible in the future.

In calculating the liability, the accumulations are reduced to the maximum amount allowed as a termination payment.

Employers also must measure the compensated absence liability at the salary rate in effect at the balance sheet date. Additional amounts should be accrued for salary-related payments such as the employer's share of Social Security benefits and Medicare taxes.

Statement no. 11 delayed. The GASB also tentatively voted to delay implementing Statement no. 11, Measurement Focus and Basis of Accounting- Governmental Fund Operating Statements. The statement, which provides accrual standards for governmental funds, would have become effective for financial statements for periods beginning after June 15, 1994.

The GASB said an indefinite delay at this time would allow the board to reexamine the financial reporting model before final decisions are made on implementing the statement.

Report on financial condition. Finally, the GASB released research report GR-18, The Relationships Between Financial Reporting and the Measurement of Financial Condition, describing how financial reporting can be used to present information on a government's financial condition. The report defines financial condition as the probability a government will be able to meet both its financial obligations as they become due and its service obligations both currently and in the future.

For information on ordering copies of these releases and on applicable prices and discount rates, contact the GASB order department at [phone], ext. 555.