Comprehensive Annual Financial Report Ending June 2011

Fayette County Board of Education
NOTES TO FINANCIAL STATEMENTS- CONTINUED
June 30, 2011
NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -continued
8. Compensated Absences
It is the School System's policy to permit employees to accumulate earned but unused vacation benefits.
All vacation is accrued when incurred in the system-wide financial statements. A liability for these
amounts is reported in the governmental funds only if they have matured, for example, as a result of
employee resignations and retirements.
Sick and personal leave does not vest with the employee and unused accumulated sick and personal leave
is forfeited upon retirement or termination of employment. Therefore, no liability is recorded for nonvesting
accumulating rights to receive sick pay benefits.
9. Long-term Obligations
In the system-wide financial statements, long-term debt and other long-term obligations are reported as
liabilities in the applicable governmental activities statement of net assets. Bond premiums and discounts,
as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line
method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance
costs are reported as deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as
well as bond issuance costs, during the current period. The face amount of debt issued is reported as
other financing sources. Premiums received on debt issuances are reported as other fmancing sources
while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not
withheld from actual proceeds, are reported as debt service expenditures.
10. Fund Equity
Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity
for all other reorting is classified as "net assets."
Generally, fund balance represents the difference between current assets and current liabilities. In the
fund financial statements, governmental funds report fund balance classifications that comprise a
hierarchy based primarily on the extent to which the School System is bound to honor constraints on the
specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows:
N onspendable: Fund balances are reported as nonspendable when amounts cannot be spent because
they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted: Fund balances are reported as restricted when there are limitations imposed on their use
whether through constitutional provisions or enabling legislation, or through external restrictions
imposed by creditors, grantors or laws or regulations of other governments.
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