Nice try! Except for program loans, cash flows from loan programs are classified as investing activities. Program loans are treated differently from other loan programs under GASB 9, paragraph 19. Program loans are distinguished from other types of loans because they are undertaken to provide a direct benefit to individual constituents.
Loan recipients in this program are individuals. Therefore, the loans qualify as program loans and must be shown as operating activities in the statement of cash flows. Since the agency shows the loan programs as operating activities on the operating statement, the effects of any transactions are present in the calculation of operating income. Therefore, no adjustment is needed in the reconciliation section to tie to cash flows from operating activities.
See Cash Flows From Capital and Related Financing Activities for further review.
