Comprehensive Annual Financial Report 2012 - Kettering City ...

KETTERING CITY SCHOOL DISTRICT
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
K. Compensated Absences
GASB Statement No. 16 specifies that compensated absences should be accrued as employees
earn them if both of the following conditions are met:
1. The employee’s rights to receive compensation are attributable to services already
rendered.
2. It is probable that the employer will compensate the employee for the benefits through
paid time off or cash payment. The District includes in its liabilities any employee who
has at least 20 years of service or an employee who has five years of service and is at
least 60 years of age.
Compensated absences accumulated by governmental fund type employees are reported as an
expense when earned in the government-wide financial statements. For governmental fund
financial statements, compensated absences are recognized as a liability and expenditure to the
extent payments come due each period upon the occurrence of employee resignations and
retirements. These amounts are recorded in the fund from which the employees who have
accumulated leave are paid. The noncurrent portion of the liability is not recorded.
L. Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in capital
assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by
the outstanding balances of any borrowings used for the acquisition, construction or improvement
of those assets. Net assets are reported as restricted when there are limitations imposed on their
use either through the enabling legislation adopted by the District or through external restrictions
imposed by creditors, grantors or laws or regulations of other governments. Net Assets restricted
for Other Purposes include restricted state and federal grants.
The District applies restricted resources when an expense is incurred for purposes for which both
restricted and unrestricted net assets are available.
M. Fund Balance
Fund balance is divided into five classifications based primarily on the extent to which the
District is bound to observe constraints imposed upon the use of the resources in the
governmental funds. The classifications are as follows:
Nonspendable - The nonspendable fund balance category includes amounts that cannot be spent
because they are not in spendable form, or legally or contractually required to be maintained
intact. The “not in spendable form” criterion includes items that are not expected to be converted
to cash. It also includes the long-term amount of loans receivable, as well as property acquired for
resale, unless the use of the proceeds from the collection of those receivables or from the sale of
those properties is restricted, committed, or assigned.
DRAFT - 35 - 12/18/2012