CMIA interest liabilities paid by either the Federal Government or the state to the other compensate for lost value (e.g. investment earnings) of funds.

A federal interest liability (which the Federal Government pays to the state) accrues for any covered program whereby a state pays out its own funds for federal assistance program purposes with valid obligational authority under federal law, federal regulation, or federal-state agreement as, for example, when a delay occurs in establishing a federal appropriation.

Conversely, a state interest liability (which the state pays to the Federal Government) is recorded for any covered program whereby the state receives federal funds earlier than required for “actual immediate cash needs,” or prior to the date that checks containing covered federal funds clear the state’s bank account, an EFT settlement involving covered federal funds occurs, or federal funds are returned to the U.S. Treasury.

Guide to Financial Operations

REV. 03/19/2012