Page 64 - Hudson City Schools CAFR 2017

HUDSON CITY SCHOOL DISTRICT
SUMMIT COUNTY, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2017

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

J. Interfund Balances

On fund financial statements, receivables and payables resulting from short-term interfund loans are
classified as “due to/from other funds”. Interfund balances between governmental funds are eliminated
in the governmental activities column on the statement of net position.

K. Compensated Absences

Compensated absences of the District consist of vacation leave and sick leave liability to the extent that
payments to the employee for these absences are attributable to services already rendered and are not
contingent on a specific event that is outside the control of the District and the employee.

The District reports compensated absences and salary related payments in accordance with the
provisions of GASB Statement No. 16, “Accounting for Compensated Absences”. The total liability
for vacation and sick leave payments has been calculated using pay rates in effect at the balance sheet
date and reduced to the maximum payment allowed by labor contract and/or statute, plus any
applicable additional salary related payments. Vacation leave and other compensated absences with
similar characteristics should be accrued as a liability as the benefits are earned by the employees if
both of the following conditions are met:

1. The employees’ rights to receive compensation are attributable to services already rendered.

2. It is probable that the employer will compensate the employees for the benefits through paid time
off or some other means.

Other compensated absences with characteristics similar to vacation leave are those which are not
contingent on a specific event outside the control of the employer and employee.

Further, sick leave and other similar compensated absences are those which are contingent on a
specific event that is outside the control of the employer and employee. The District has accrued a
liability for these compensated absences using the termination method which is based on the District’s
past experience of making termination payments for sick leave.

The entire compensated absence liability is reported on the government-wide financial statements and
the proprietary fund financial statements.

For governmental fund financial statements, the current portion of unpaid matured compensated
absences is the amount expected to be paid using expendable available resources. These amounts are
recorded in the account “compensated absences payable” in the fund from which the employees who
have accumulated unpaid leave are paid. The noncurrent portion of the liability is not reported.

L. Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities and long-term obligations are reported in the government-wide
financial statements, and all payables, accrued liabilities and long-term obligations payable from the
proprietary funds are reported on the proprietary fund financial statements.

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