GASB Statement No. 101: What Government Entities Need to Know About Compensated Absences

March 3, 2025

Garrett Williams | CPA

GASB Statement No. 101, effective for fiscal years beginning after December 15, 2023, revises how governmental entities report compensated absences like vacation and sick leave.

Key Changes

Recognition and Measurement:

· Governments must recognize leave as a liability if it (a) is attributable to services already rendered, (b) accumulates, and (c) is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means.

Parental leave, jury duty, and similar absences are recognized when leave begins.
Liabilities are generally measured at the employee's pay rate as of the financial statement date.

Disclosure Requirements:

· The new statement simplifies disclosures, requiring only the net change in compensated absence liabilities (not gross changes).

Why It Matters

This update improves the accuracy of financial reporting for compensated absences and enhances comparability across governments.

Effective Date

The new guidance applies for fiscal years beginning after December 15, 2023. For entities with fiscal years ending June 30, 2025, compliance will be required. Early adoption has been encouraged.

Next Steps

‍Update Policies and Procedures: Review your policies for compensated absences and ensure your financial systems are ready to track and report under the new guidelines.‍
Financial Reporting: Prepare to revise your financial statements to include the updated liability measurement and disclosures or contact your CPA.

For more information or to ensure your entity is compliant, contact HHM CPAs today.

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