N.Y. Comp. Codes R. & Regs. Tit. 9 §§ 1645-2.4

Current through Register Vol. 46, No. 45, November 2, 2024

Section 1645-2.4 - Interest earned on investments

(a) Interest earned on all investments, except investments in U.S. series F, G, J and K bonds, U.S. Treasury bills, savings accounts and State Housing Fund investments, shall be accrued at the end of each calendar quarter beginning as of the date of acquisition of the investment. The accrual of interest earned on investments in U.S. series F, G, J and K bonds and on State Housing Fund investments is separately described in sections 1645-2.6, 1645-2.7, and 1645-2.8 and for treasury bills, see section 1645-2.3, supra. The charge for interest accrued on investments is made to account 1144, Accrued Interest Receivable on Investments, and the credit is made to the applicable interest earned account, as follows:

Funds invested	Account to be credited for interest earned
Development Funds	Account 1420.1, Interest-for interest earned prior to the date of substantial completion.
Account 3610, Interest Earned-for interest earned beginning with, and subsequent to the date of substantial completion.
Administration Funds	Account 3610, Interest Earned.
Reserve Funds	Account 2511, Interest Earned on Reserve Fund Investments.

Note:

Interest earned on reserve fund investments shall not be apportioned among the various reserves, but shall be accumulated in account 2511 and considered as a part of the replacement reserve.

(b) In calculating the interest to be accrued on U. S. government obligations, the Treasury Department requires that only one of the two days of date and due date of an obligation be taken into account in stating the time for which interest is to be calculated. With respect to interest on U. S. government obligations for fractional periods, the Treasury Department rule is that the time is the true fraction of that period. For an annual rate, the time is the exact number of days for which the interest runs, counting either the initial date or the due date, divided by the number of days in the year, 365 or 366; for semiannual or quarterly period, it is the number of days for which the interest runs divided by the number of days in the particular half year or quarter year.

(c) With respect to obligations other than U.S. government obligations, local agencies should be guided by the General Construction Law of the State of New York which defines the term year as meaning 365 days, the added day of a leap year and the day immediately preceding being counted as one day. Under the New York law, the term year means 12 months, the term half year, six months, and the term quarter of a year, three months. For investments other than U. S. government obligations, local agencies will find it most convenient, however, to state the time in terms of months and days, rather than in days alone. This is the usual practice for such investments and has also been adopted by the division for the purpose of accruing interest payable on State housing bonds (see Part 1644, Debt Service). Interest for odd days is computed on the basis of so many thirtieths of a month, assuming a 360-day year. Attention is called to the fact that banks operating under the Federal Reserve Banking System employ an entirely different basis for calculating interest on obligations, such as a local agency's temporary loan note, held by them. Such banks calculate interest on the basis of 360 days to the year, but the computation of the time the interest runs seems to vary among banks. Some banks compute the actual number of days, others state the time in months and days with each month considered as having 30 days. The latter convention has been adopted by the division for the purpose of accruing interest on temporary indebtedness of the local agency (see Part 1644, Debt Service). For savings accounts the interest is generally not earned unless the deposit is maintained to the end of the interest period. The interest earned will therefore be recorded at the end of the interest period designated by the bank by means of a journal voucher.

(d) Interest payments, when received, are deposited in the appropriate bank account for the applicable fund and credited, through the cash receipts register, to account 1144, Accrued Interest Receivable on Investments. See section 1645-2.9 for the allocation of interest earned on development fund investments to the related programs.

N.Y. Comp. Codes R. & Regs. Tit. 9 §§ 1645-2.4