GASB47 - Assigning Description of Service (DOS) Codes to Voluntary and Involuntary Termination Benefits
Governmental Accounting Standards Board (GASB) Statement #47 requires two classification types of termination benefits – voluntary and involuntary. Voluntary termination benefits include inducements to hasten separation from employment or as a result of voluntary termination. Involuntary termination benefits include benefits provided as a direct result of an involuntary termination.
These guidelines provide information to help departments assign Description of Service (DOS) codes to voluntary and involuntary termination benefits paid to employees through the Payroll/Personnel System (PPS). The Guidelines apply to termination payments made to employees in all personnel groups, including SMG, MSP, and PSS.
Examples of Termination Benefits
In general, termination benefits may be provided to an employee for either a voluntary or involuntary purpose. The following are examples of termination benefits:
- Health care coverage continuation
- Expanded health care coverage
- Expanded health care coverage not provided to UCRP annuitants
- COBRA benefits paid by the University
- Severance pay
- Cash payouts at or following termination
- Career counseling or job placement
Voluntary Termination Benefits
Voluntary Termination Benefits represent payments made to employees as:
- An inducement to hasten the termination of services or
- As a result of a voluntary early termination plan.
The University’s obligation to provide benefits for some forms of voluntary terminations arises as a result of a bilateral agreement in which the University agrees to provide benefits in exchange for which the employee agrees to leave service earlier than he or she otherwise would. Applicable benefits are those that are typically over and above the normal benefits provided upon termination and are effectively an inducement for the employee to terminate his or her services.
For Voluntary Termination Benefits paid through the PPS, the following DOS Codes must be used:
| DOS | Description | Use |
|---|---|---|
| REG, TRM, OTS | Payments not reportable as termination benefits under GASB 47 rules | Example: Employee A retires and has 300 hours of accrued vacation leave and 4 hours of compensatory time.
This is a voluntary termination without incentives to retire early. Based upon the GASB 47 rules, accrued vacation leave and compensatory time are not reportable as voluntary termination benefits and should be paid using codes like REG, OTS, TRM. |
|
VTL |
Voluntary Termination – Lump Sum |
Settlement payments Example: Employee B, by mutual agreement and prescribed in a settlement agreement, will receive payment for accrued vacation leave, $10,000 buyout, and health benefits for three (3) months before being eligible for continuation through COBRA. The payments for the $10,000 buyout should be coded as VTL and the health benefits should be recorded as benefits reportable as voluntary termination benefits. The accrued vacation leave is not reportable as GASB 47 termination benefits and should be coded as TRM. |
|
VTR VTS |
Voluntary Termination – Regular Pay Voluntary Termination – Severance |
Pay in monthly increments By agreement payments Example: Employee C, by mutual agreement is given three (3) months of salary, $20,000 as severance pay. The three (3) months of salary should be recorded as 3 separate transactions with the DOS code of VTR and the lump sum of $20,000 should be recorded with the DOS of VTS. |
Involuntary Termination Benefits
Involuntary Termination Benefits represents payments made to employees as a consequence of the involuntary termination of services. In contrast to voluntary terminations, involuntary terminations result from a unilateral decision by the University, such as a layoff. For involuntary termination benefits, all of the following criteria must have been met:
- A plan of termination has been approved by those with the authority to commit the University to the plan,
- The plan has been communicated to the employees, and
- The benefits can be estimated.
For Involuntary Termination Benefits paid through the PPS, the following DOS Codes must be used:
| DOS | Description | Use |
|---|---|---|
|
ITL ITR |
Involuntary Termination – Lump Sum Involuntary Termination – Regular Pay |
Settlement payments Pay in monthly increments Example: Employee E is terminated by the University. The employee challenges the termination, and the University settles by paying the employee back pay for two (2) months and a lump sum of $1,000. The two (2) months of pay should be coded with the DOS code ITR, and the lump sum should be coded as ITL. The health and welfare benefits associated with the ITR payments will be reported on the Voluntary and Involuntary Termination Benefits Detailed Report. |
|
ITS ITP |
Involuntary Termination – Severance Involuntary Termination – Pay in Lieu of Notice |
By agreement payments; for example, one month pay for each year worked Regular pay in lieu of notice Example: Employee D, after 10 years of service, is laid off without notice. Employee D will receive two (2) weeks of wages as payment in lieu of notice and severance pay of $1,000 for each year of service credit ($10,000). The payments for this involuntary termination should be coded ITP for the two (2) weeks of pay and ITS for the $10,000. |
Additional DOS Codes No Longer Available
DOS Code BYA can no longer be used to make either Voluntary or Involuntary Termination Benefits payments. In addition, codes BYS and BYU (assigned by UCLA) may not be used.
Payments Outside of the PPS
For non-salary termination payments made throughout the year outside of the PPS (e.g., Accounts Payable), the following Accounts should be used to record the payments:
- Termination Benefits – Voluntary: Account 50566 (Object Code 8770)
- Termination Benefits – Involuntary: Account 50567 (Object Code 8775)