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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 5 – Long-Term Liabilities
Compensable Leave Liability Methodology

Type Benefits Designation as Current or Long-Term
Annual Employees accrue annual leave from the first day of employment through the last day of attendance at work. The rate of annual leave accrual for various lengths of state employment and the maximum number of hours an employee may carry forward each fiscal year is:
Years of State Service Hours Accrued Carry Forward
Less than 2 8 180
At least 2 but less than 5 9 244
At least 5 but less than 10 10 268
At least 10 but less than 15 11 292
At least 15 but less than 20 13 340
At least 20 but less than 25 15 388
At least 25 but less than 30 17 436
At least 30 but less than 35 19 484
35 or more 21 532
Excess annual leave (beyond the amount that can be carried forward) is credited to an employee’s accrued sick leave balance effective the first day of the next fiscal year.		 Current: Can never exceed annual hours accrued maximum



Calculations are based on First-In/First-Out
Compensated Time and Overtime Non-exempt employees may be credited with compensatory (comp) time or overtime for time worked in excess of 40 hours worked in a seven-day period. Comp time is credited as one hour for each additional hour worked. Overtime is credited as 1.5 hours for each additional hour worked. Comp time must be used within the twelve months following the end of the work week when the comp time was earned. An employee will not be paid for unused comp time. Legislative agencies only lapse compensatory time at the end of even-numbered fiscal years.

Exempt employees do not earn overtime — but do, instead, earn comp time. Hours worked in excess of 40 hours per seven-day period are credited as comp time on an hour-for-hour basis. Comp time must be used within 12 months from date earned except at legislative agencies. Exempt employees of legislative agencies do not have a time limit in using their comp time.

Maximum overtime accrual for non-exempt employees is 240 hours (480 hours for non-exempt emergency personnel). Overtime is automatically paid for accrued overtime hours exceeding 240 hours (or 480 hours, if applicable). There is no time limit on use of overtime balances. Balance is paid in full at termination, transfer or death.		 Overtime: Must be calculated for short-term (current) and long-term (non-current) liabilities


Comp Time: Always a short-term (current) liability

Liability Calculation Criteria

  • If the amount of overtime leave accrued during the current year is greater than the fiscal year-end balance, then the current liability is equal to the fiscal year-end balance. The noncurrent is the fiscal year-end balance minus the current liability.
  • If the amount of overtime leave accrued during the current year is less than the fiscal year-end balance, then the current liability is equal to the leave accrued during the year. The noncurrent liability is the fiscal year-end balance minus the current liability.

Liability Calculation Examples:

Example 1:

The employee has 23 years of service and can accrue 15 hours of annual leave per month. The employee used 120 hours of annual leave during the current year and had a beginning balance of 300 hours and a fiscal year-end balance of 360 hours. The employee’s salary rate is $35 per hour.

Criteria Applied = Liability in Hours Hours x Current Rate
Annual leave accrued during current year (180 hours) is less than the fiscal year-end balance (360), therefore current liability is equal to annual leave accrued during the year (180). Current = 180 180 x $35 = $6,300
Fiscal year-end balance (360) minus current liability (180) equals 180. Non-current = 180 180 x $35 = $6,300

Example 2:

The employee has 6 years of service and can accrue 10 hours of annual leave per month. The employee used 64 hours of annual leave during the current year and had a beginning balance of 59 hours and a fiscal year-end balance of 115 hours of annual leave. The employee’s salary rate is $12 per hour.

Criteria Applied = Liability in Hours Hours x Current Rate
Annual leave accrued during current year (120) is greater than the fiscal year-end balance (115), therefore current liability is equal to fiscal year-end annual leave balance (115). Current = 115 115 x $12 = $1,380
Fiscal year-end balance (115) minus current liability (115) equals 0. Non-current = 0 N/A

Example 3:

The employee earned 60 hours of unpaid overtime during the year and used 160 hours of overtime as comp time. The employee had a beginning balance of 200 hours and a fiscal year-end balance of 100 hours. The employee’s pay rate is $12 per hour.

Criteria Applied = Liability in Hours Hours x Current Rate
Overtime leave accrued during current year (60 hours) is less than the fiscal year-end balance (100), therefore current liability is equal to overtime leave accrued during the year (60). Current = 60 60 x $12 = $720
Fiscal year-end balance (100) minus current liability (60) equals 40. Non-current = 40 40 x $12 = $480

COBJs that can be used for the following entries are:

  • 7001 – Salaries and Wages – Line Item Exempt Positions
  • 7002 – Salaries and Wages – Classified and Non-classified Permanent Full-time Employees
  • 7003 – Salaries and Wages – Classified and Non-classified Permanent Part-time Employees
  • 7004 – Salaries and Wages – Classified and Non-classified Non-permanent Full-time Employees
  • 7005 – Salaries and Wages – Classified and Non-classified Non-permanent Part-time Employees
  • 7006 – Salaries and Wages – Hourly Full-time Employees
  • 7007 – Salaries and Wages – Hourly Part-time Employees
  • 7008 – Higher Education Salaries – Faculty/Academic Employees
  • 7009 – Higher Education Salaries – Faculty/Academic Equivalent Employees
  • 7010 – Higher Education Salaries – Professional/Administrative Employees
  • 7011 – Higher Education Salaries – Extension – Professional/Administrative Employees
  • 7014 – Higher Education Salaries – Student Employees
  • 7015 – Higher Education Salaries – Classified Employees
  • 7016 – Salaries and Wages – Employees Receiving Twice-a-month Salary Payment
  • 7017 – One-time Merit Increase
  • 7018 – Hardship Stations Pay
  • 7019 – Compensatory Time Pay
  • 7020 – Hazardous Duty Pay
  • 7021 – Overtime Pay
  • 7022 – Longevity Pay
  • 7023 – Lump Sum Termination Payment
  • 7024 – Termination Pay – Death Benefits
  • 7025 – Compensatory or Salary Per Diem
  • 7028 – Productivity Bonus Awards
  • 7031 – Emoluments and Allowances
  • 7032 – Employees Retirement – State Contribution
  • 7035 – Stipend Pay – Revised
  • 7037 – Incentive Award for Authorized Service to Veterans – Revised
  • 7041 – Employee Insurance Payments – (Employer Contribution)
  • 7043 – FICA Employer Matching Contribution
  • 7046 – Food Stamp Bonus Pay
  • 7047 – Recruitment and Retention Bonuses
  • 7048 – Performance Rewards
  • 7050 – Benefit Replacement Pay
  • 7051 – Severance Pay

The following is an example of the governmental funds entry.

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Record Non-current Employee Compensation
(1) 5 U 0832CY XXX 502 CY 99999 7XXX $ XX.XX   XXXX 1700
To Reduce Non-current Employee Compensation
(2) 5 U 0832CY XXX 503 CY 99999 7XXX $ XX.XX   XXXX 1700
To Record the Portion of Current Payable Due Within One Year
(3) 5 U 0832CY XXX 537 CY 99999 N/A $ XX.XX   XXXX 1525
To Reduce Non-current Payable by amount of Current Due Within One Year
(4) 5 U 0832CY XXX 537 CY 99999 N/A $ XX.XX R XXXX 1700
These are posted this way because they are all considered non-current until the year they are due.

Accounting effect of above entries:

Debit Credit
(1) To Record Non-current Employee Compensation    
  5650 BC Expenditure Control $ XX.XX  
  1700 BC NC Employee Compensable Leave   $ XX.XX
(2) To Reduce Non-current Employee Compensation    
  1700 BC NC Employee Compensable Leave $ XX.XX  
  5650 BC Expenditure Control   $ XX.XX
(3) To Record the Portion of Current Payable Due Within One Year    
  9992 System Clearing $ XX.XX  
  1525 BC CL Compensable Leave Payable*   $ XX.XX
(4) To Reduce Non-current Payable by Amount of Current Due Within One Year    
  1700 BC NC Employee Compensable Leave* $ XX.XX  
  9992 System Clearing   $ XX.XX
* Note: Using T-code 537 generates an automatic reversal in the following fiscal year using T-code 534.

Working Papers are available under Long-Term Liability Basis Conversion and BTA Working Papers to assist in Preparation of the governmental fund (FT12) and propietary fund (FT05) journal entries.