How surplus funds returned should be disclosed in the cash flow statement?

The Public Sector Accounting Forum noted uncertainty in practice regarding the classification of a surplus paid back to the National Treasury in the cash flow statement. Some see it is as a financing activity, while others see it as an operating activity.

It was considered that:

• The nature of the return of funds (outflow) should be classified in the same way as the original inflow.

GRAP 2 on Cash Flow Statements states that the classification of cash receipts from grants or transfers and other appropriations or other budget authority made by national government or other entities are operating activities.