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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
Claims & Judgments

Claims and judgments that are settled but unpaid at fiscal year-end and that will be paid with future governmental fund resources are presented on the governmental funds balance sheet in the long-term liabilities adjustments column.

Report the current and non-current portions of a long-term claims and judgments payable as follows:

  • Business-type activities — GL 1030 and GL 1210 (respectively)
  • Governmental activities — GL 1530 and 1710 (respectively)

Report current claims and judgments incurred and paid within one year as accounts payable in GL 1010. Proprietary fund types report the claims and judgments as fund liabilities.

Settlement and Judgment Processing Guidelines (FPP E.041), provides details of settlements and judgment guidelines, USAS coding and other details. This document defines judgment as a judgment order rendered in a federal court or a court in this state for which an appeal or rehearing, or application therefore, is not pending and for which the time limitations for appeal or relearning have expired.

Disclose a brief description of the claim and the amounts accrued. Text disclosure information is entered in the Note Disclosure field in the LTLN web application.

  • Describe the risk of loss to the entity.
  • Disclose the amount accrued for the liability.
  • If the agency participates in a risk pool, describe its participation and responsibilities.

COBJs that can be used for the following entries:

  • 7061 Workers’ Compensation Claims – Self Insurance Program
  • 7062 Workers’ Compensation – Indemnity Payments
  • 7220 Court Expenses – Parental Notification
  • 7225 Settlements and Judgments – Attorney Fees
  • 7226 Settlements and Judgments for Claimant/Plaintiff or Other Legal Expenses
  • 7227 Miscellaneous Claims Act Payments
  • 7228 Legislative Claims
  • 7229 Settlements and Judgments for Claimant/Plaintiff Attorney Fees
  • 7231 Workers’ Compensation – Medical Services and Attorney Payments
  • 7232 Workers’ Compensation Self Insurance Programs – Medical Services and Attorney Payments
  • 7234 Compensation for Crime Victims
  • 7236 Crime Victims Expenses
  • 7237 Payment of Claims from Trust or Other Funds
  • 7867 Miscellaneous Claim Adjustments – Non-cash

Long-Term Liability Basis Conversion instructions and BTA Working Papers are available to assist in preparation of journal entries. 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 Claims and Judgments
(1) 5 U 0832CY XXX 502 CY 99999 7XXX $ XX.XX   XXXX 1710
To Reduce Non-current Claims and Judgments
(2) 5 U 0832CY XXX 503 CY 99999 7XXX $ XX.XX   XXXX 1710
To Record the Portion of Current Payable (due within 1 year)
(3) 5 U 0832CY XXX 537 CY 99999 N/A $ XX.XX   XXXX 1530
To Reduce Non-current Payable by Amount of Current (due within 1 year)
(4) 5 U 0832CY XXX 537 CY 99999 N/A $ XX.XX R XXXX 1710
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 Claims and Judgments    
  5650 BC Expenditure Control $ XX.XX  
  1710 BC NC Claims and Judgments Payable   $ XX.XX
(2) To Reduce Non-current Claims and Judgments Payable    
  1710 BC NC Claims and Judgments Payable $ XX.XX  
  5650 BC Expenditure Control   $ XX.XX
(3) To Record the Portion of Current Payable (due within 1 year)    
  9992 System Clearing $ XX.XX  
  1530 BC CL Claims and Judgments Payable*   $ XX.XX
(4) To Reduce Non-current Payable by Amount of Current Due Within One Year (due within 1 year)    
  1710 BC NC Claims and Judgments Payable* $ 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.

The following is an example of the business-type (FT05) entry.

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Record Non-current Claims and Judgments Payable
(1) 5 U 0832CY XXX 645 CY 99999 N/A $ XX.XX   XXXX 1210
To Reduce Non-current Claims and Judgments Payable
(2) 5 U 0832CY XXX 644 CY 99999 N/A $ XX.XX   XXXX 1210
To Record the Portion of Current Payable (due within 1 year)
(3) 5 U 0832CY XXX 647 CY 99999 N/A $ XX.XX   XXXX 1030
To Reduce Non-current Payable by amount of Current (due within 1 year)
(4) 5 U 0832CY XXX 647 CY 99999 N/A $ XX.XX R XXXX 1210
To Record Unrestricted Net Position
(5) 5 U 0832CY XXX 646 CY 99999 N/A $ XX.XX N/A XXXX 2950
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 Claims and Judgments Payable    
  9999 System Clearing $ XX.XX  
  1210 NC Claims and Judgments Payable   $ XX.XX
(2) To Reduce Non-current Claims and Judgments Payable    
  1210 NC Claims and Judgments Payable $ XX.XX  
  9999 System Clearing   $ XX.XX
(3) To Record the Portion of Current Payable (due within 1 year)    
  9999 System Clearing $ XX.XX  
  1030 CL Claims and Judgments Payable*   $ XX.XX
(4) To Reduce Non-current Payable by Amount of Current (due within 1 year)    
  1210 NC Claims and Judgments Payable* $ XX.XX  
  9999 System Clearing   $ XX.XX
(5) To Record Unrestricted Net Position    
  2950 Unrestricted Net Position** $ XX.XX  
  9999 System Clearing   $ XX.XX
*Note: Using T-code 647 generates an automatic reversal in the following fiscal year using T-code 644.

** Note: Using T-code 646 generates an automatic reversal in the following fiscal year using T-code 645.