After studying cash flow data for 15 of the biggest publicly traded commercial banks, the Georgia Tech Financial Analysis Lab is looking to stir some debate on how to make the information more useful to investors.

“It’s generally agreed that the cash flow statement for banks is not a useful document,” said Chuck Mulford, director of the lab and an accounting professor at the Georgia Institute of Technology. “When you look at a bank, you look more at the book value and the quality of the loans, and you tend not to look at the cash flow statement. Yet banks are required to prepare a cash flow statement so there’s information there.”

The focus of the cash flow statement tends to center on how companies classify cash flows among three categories, namely operating activities, investing activities, and financing activities, said Mulford. The study sought to determine how consistently banks classified their cash flows among those activities, and whether there’s any insight to be gained by examining inconsistencies.

The analysis included an adjustment of reported operating cash flows for the differences in the ways banks treat federal funds transactions. The study also adjusted for non-cash transfers of loans and investments between categories that impact operating cash flow, and for the effects of acquisitions on operating cash flow. The analysis revealed that while banks generally are consistent in their cash flow classifications, the effects of non-cash transfers and the cash flow impacts of acquisitions make the overall cash flow picture a little fuzzy for investors.

Ultimately, the study suggests that analysts should consider making such adjustments when examining bank finances. It also suggests bank regulators and the Financial Accounting Standards Board should take these adjustments into account, as well as the “somewhat limited disclosures of information” that might be useful to cash flow analysis, especially information on brokered deposits and acquisition-related cash flows.

Where the study found inconsistencies, said Mulford, it appeared to reflect differences in how banks interpret and apply Generally Accepted Accounting Principles. “It doesn’t seem to be an intent to mislead,” he said. “They’re just not doing what everyone else does.”

Georgia Tech is looking for feedback on the study in hopes of opening a dialogue with FASB on how to improve the usefulness of the cash flow statement for financial institutions. Most notably, Mulford is looking for ideas on how best to sort out the difference between operating and financing cash flows, since the very nature of banking can blur the lines between operating and financing activities.