I would love to get thoughts from anyone on pros/cons of changing from a vacation policy where an accrual is required to a vacation or PTO policy in which the company can eliminate the balance sheet accrual.
My understanding of GAAP (simplification of 710-10-25-1) is that the accrual is no longer required if the policy is changed such that the employees never receive payment for any of their unused vacation/PTO balance at any time, including time of termination. ...even if employees are allowed to carry over some unused vacation from one fiscal year to the next. (i.e. they have plenty of vacation/PTO to use while employed but will never receive an actual cash payment for unused balances)
Specifically I'm looking for 1) possible accounting-related gotchas as you transition b/t policies, and 2) suggestions on how management would sell/communicate such a policy change to the employees (it's important the employee morale stay positive but the company wouldn't want to pay out cash on any of the current balances - it seems preferable to somehow work the balances down over a certain period to limit any one-time gain on change in policy)