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Disclosed in the operating section of the cash flow statement since the loans fit the definition of program loans. No disclosure is required in the reconciliation section.
Cash flows from loan programs should be classified as investing activities with the exception of program loans. Program loans are treated differently from other loan programs under paragraph 19 of Statement 9. Program loans are distinguished from other types of loans because they are undertaken to provide a direct benefit to individual constituents.
Loans recipients in this program are individuals. Therefore, the loans qualify as program loans and should be shown as operating activities in the statement of cash flows. Since the agency will show the loan programs as operating activities on the operating statement, the effects of any transactions will be present in the calculation of operating income. Therefore, no adjustment is needed in the reconciliation section to tie to cash flows from operating activities.