How to Record Prompt Payment Act Interest
Records interest income received from the U.S. Government when payments are delayed beyond the terms specified in the Prompt Payment Act.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash | Asset | 1,250.00 | - |
| Interest Income - Prompt Payment Act | Revenue | - | 1,250.00 |
💡 Accountant's Note
When the government fails to pay a proper invoice by the required due date, it is legally required to pay interest. This income is typically treated as non-operating income and is not included in the calculation of indirect rates.
Practitioner & Systems Framework
💻 ERP Architecture
Ensure the Interest Income account is mapped to a non-recoverable/non-allowable revenue code to avoid offsetting overhead pools.
⚠️ Audit Flags
Reconciliation of MOCAS payment vouchers against original invoice amounts.
📄 Required Documentation
Remittance advice from DFAS and a copy of the original dated invoice.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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Discussion & Community Questions
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