A-73326, MAY 12, 1936, 15 COMP. GEN. 992

A-73326: May 12, 1936

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INTEREST - COMPUTATION - GOVERNMENT TRANSACTIONS COMPUTATION OF INTEREST IN GOVERNMENT TRANSACTIONS IS ON THE BASIS OF ACTUAL NUMBER OF DAYS WITHIN THE PERIOD INVOLVED. EXCEPT THAT IN COMPUTING MONTHLY OR SEMIANNUAL INSTALLMENTS ON LOANS FOR A PERIOD OF YEARS THE INTEREST IS ARRIVED AT BY A DIVISION OF THE YEARLY INTEREST BY 2 OR 12. WITH REGARD TO FRACTIONAL PARTS OF SEMIANNUAL OR MONTHLY PERIODS THE ACTUAL NUMBER OF DAYS BASIS IS APPLICABLE. UNDER SOME OF OUR OBLIGATIONS INTEREST IS PAYABLE MONTHLY AND IN OTHER CASES IT IS PAYABLE SEMI-ANNUALLY. IT HAS BEEN A RULE LONG FOLLOWED BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT THAT COMPUTATION OF INTEREST IN GOVERNMENT TRANSACTIONS IS MADE ON THE BASIS OF THE ACTUAL NUMBER OF DAYS WITHIN THE PERIOD INVOLVED.

A-73326, MAY 12, 1936, 15 COMP. GEN. 992

INTEREST - COMPUTATION - GOVERNMENT TRANSACTIONS COMPUTATION OF INTEREST IN GOVERNMENT TRANSACTIONS IS ON THE BASIS OF ACTUAL NUMBER OF DAYS WITHIN THE PERIOD INVOLVED, EXCLUSIVE OF EITHER THE BEGINNING OR ENDING DATE OF A PERIOD, EXCEPT THAT IN COMPUTING MONTHLY OR SEMIANNUAL INSTALLMENTS ON LOANS FOR A PERIOD OF YEARS THE INTEREST IS ARRIVED AT BY A DIVISION OF THE YEARLY INTEREST BY 2 OR 12, AS THE CASE MAY BE, BUT WITH REGARD TO FRACTIONAL PARTS OF SEMIANNUAL OR MONTHLY PERIODS THE ACTUAL NUMBER OF DAYS BASIS IS APPLICABLE.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR, RURAL ELECTRIFICATION ADMINISTRATION, MAY 12, 1936:

THERE HAS BEEN RECEIVED YOUR LETTER OF APRIL 1, 1936, AS FOLLOWS:

IN CHARGING INTEREST UPON THE LOANS OF THE RURAL ELECTRIFICATION ADMINISTRATION DURING THE PERIOD OF CONSTRUCTION AND IN MAKING CERTAIN CREDITS ON MONEYS NOT ADVANCED AS PROVIDED IN THE LOAN AGREEMENT, THE QUESTION HAS ARISEN AS TO THE BASIS OF INTEREST COMPUTATION. I SHALL APPRECIATE ADVICE FROM YOU AS TO WHETHER INTEREST SHOULD BE COMPUTED UPON A BASIS OF 360 DAYS PER YEAR OR UPON A BASIS OF 365 DAYS PER YEAR. UNDER SOME OF OUR OBLIGATIONS INTEREST IS PAYABLE MONTHLY AND IN OTHER CASES IT IS PAYABLE SEMI-ANNUALLY.

IN THE ABSENCE OF CLEAR AUTHORITY TO THE CONTRARY, IT HAS BEEN A RULE LONG FOLLOWED BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT THAT COMPUTATION OF INTEREST IN GOVERNMENT TRANSACTIONS IS MADE ON THE BASIS OF THE ACTUAL NUMBER OF DAYS WITHIN THE PERIOD INVOLVED, INCLUDING EITHER THE BEGINNING OR ENDING DATE OF THE PERIOD, BUT NOT BOTH (1 COMP. GEN.411; A- 51618, DATED NOV. 21, 1934). IN OTHER WORDS, INTEREST IS COMPUTED ON THE BASIS OF 365 DAYS PER YEAR, OR 366 DAYS PER YEAR, IN A LEAP-YEAR (A-71918, DATED APR. 1, 1936, 15 COMP. GEN. 871).

THE RULE THAT INTEREST SHOULD BE COMPUTED ON THE ACTUAL NUMBER OF DAYS INVOLVED, HOWEVER, IS NOT FOR APPLICATION IN ARRIVING AT THE AMOUNT PAYABLE IN MONTHLY OR SEMIANNUAL INSTALLMENTS ON A LOAN RUNNING FOR A PERIOD OF YEARS. FOR EXAMPLE, ON A LOAN OF $1,000 FOR 5 YEARS AT 3 PERCENT PER ANNUM PAYABLE SEMIANNUALLY OR MONTHLY THE AMOUNT FOR EACH SEMIANNUAL PERIOD WOULD BE $15, AND THE AMOUNT DUE EACH MONTH WOULD BE ONE -TWELFTH OF THE ANNUAL INTEREST OR $2.50. BUT IN COMPUTING THE INTEREST DUE FOR A FRACTIONAL PART OF THE SEMI-ANNUAL PERIOD THERE WOULD BE USED THE FRACTION WHOSE NUMERATOR WOULD CONSIST OF THE ACTUAL NUMBER OF DAYS ACCRUED, AND WHOSE DENOMINATOR WOULD BE THE ACTUAL NUMBER OF DAYS INVOLVED IN THE SEMI-ANNUAL PERIOD. LIKEWISE, THE COMPUTATION OF ACCRUED INTEREST FOR ANY FRACTIONAL PART OF THE MONTHLY PERIOD WOULD BE ON THE BASIS OF A FRACTION WHOSE NUMERATOR WOULD CONSIST OF THE ACTUAL NUMBER OF DAYS ACCRUED, AND WHOSE DENOMINATOR WOULD BE THE ACTUAL NUMBER OF DAYS INVOLVED IN THE PARTICULAR MONTH.