Several agencies operate loan programs that appear to fulfill the intent of program loans; they provide financing that will benefit individuals throughout the state. However, for many of these programs, the individuals do not receive the direct benefit of the programs. Instead, local governments or businesses gain the direct benefits, which they in turn pass on to individual constituents. Therefore, these loan programs cannot be shown in the operating section of the cash flow statement.
However, GASB 9 only provides guidance on the cash flow statement. It does not provide any guidance on the operating statement. Therefore, the income and expenditures from these loan programs can be shown as operating activities on the agency's operating statement. If this is done, the agency must show these inflows and outflows as a classification difference between the cash flow statement and operating statement in the reconciliation section of the cash flow statement.