Abstract

The general purpose financial reports are financial report intended for use by a variety of external groups: they include the balance sheet, the income statement, and the statement of cash flows. As mentioned in the exposure draft published by the IASB in 2008, the objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to capital providers. This paper intends to provide arguments that such information may also useful to other users of financial reporting who are not capital providers. Non capital providers identified in this paper are resource providers, recipient of goods and services, parties performing an oversight function, and management and governing bodies. The role, interests and the nature of decision that each party made is provided to support the argument. From there it can be concluded that general purpose financial information are decision useful to capital providers as well as non capital providers.

Introduction

On 29 May 2008 an exposure draft of chapter 1 and 2 is published as an attempt to develop an improved common conceptual framework of FASB and IASB (ifrs.org, 2012). The first chapter of the conceptual framework establishes the objective of general purpose financial reporting by business entities in the private sector as the foundation of the framework (IASB, 2008). The objective of general purpose financial report is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers (IASB, 2008). However, information that is decision-useful to capital providers may also be useful to other users of financial reporting who are not capital providers (IASB, 2008).

Body
General Purpose Financial Report
According to SAC 2, general purpose financial statement is a report intended to meet the information needs common to users who are unable to command the preparation of reports tailored to satisfy all their information need (AARF and ASRB, 1990). General purpose financial report communicates information about an entitys economic resources, claims on those resources, and the transactions and other events that change them (IASB, 2008). It is directed to the needs of a wide range of users rather than only to the needs of a single group (IASB, 2008). Users of financial report can be distinguished as capital providers and non-capital providers.

Capital Providers
Capital providers are the primary users of financial information. They are those with a claim on the entitys resources in exchange for resources they provide for an entity (IASB, 2008). By virtue of those claims, capital providers have the most critical and immediate need for general purpose financial information about the economic resources of an entity (IASB, 2008). Capital providers include investors, lenders, and other creditors, who have common information needs (Kieso, et al., 2012). They are interested in financial reporting because it provides information that is useful for making decisions (Kieso, et al., 2012). When making those decisions, capital providers are interested in assessing the entitys ability to generate net cash inflows and managements ability to protect and enhance the capital providers investments (Kieso, et al., 2012).

The entitys ability to generate net cash inflows affects the cash flow to the capital providers from the value of debt and equity interest (IASB, 2008). An entitys capital providers are directly interested in the amount, timing and uncertainty of cash flows from dividends, interest, and the sale, redemption or maturity of securities or loans which significantly affects the entitys ability to distribute cash to them in the form of dividends or other types of distributions to owners, or interest and repayment of borrowing (AARF and ASRB, 1990). The prospects for those cash flows depend on the entitys existing cash resources and on its ability to generate enough cash to pay its employees and supplier, satisfy its other operating needs to meet its obligations when due, and to reinvest in operations (AARF and ASRB, 1990). Managements performance in discharging its stewardship responsibilities usually affects an entitys ability to generate net cash inflows (IASB, 2008). Management is responsible to protect the entitys economic resources from unfavorable effects of economic factors such as price changes and technological and social changes (IASB, 2008). Management prepares the financial report and is accountable for ensuring that the entity complies with applicable laws, regulations and contractual provisions (AARF and ASRB, 1990). Management is also accountable to the capital providers for the custody and safekeeping of the entitys economic resources and for their efficient and profitable use. Equity investors may use the financial report to make decisions in their capacity as owners about whether to replace or reappoint management, how to remunerate management, and how to vote on shareholder proposals about managements policies and other matters (IASB, 2008).

Other Users
Information that is decision-useful to capital providers may also useful to other users of financial reporting who are not capital providers (IASB, 2008). However, financial reporting is not primarily directed to these other groups because capital providers have more direct and immediate needs (IASB, 2008). Generally, non-capital provider users can be classified as the resource providers, recipient of goods and services, parties performing review/oversight function, and management and governing bodies.

Resource providers

Resource providers are those who compensated for resources they provide (AARF and ASRB, 1990). They want to know whether the reporting entity is operating economically and efficiently and using resources as prescribed and is achieving the objectives which formed the reason for the provision of resources in the past (AARF and ASRB, 1990). Information provided in general purpose financial reports to enable resource providers to make these assessments will assist them in determining whether continued support of the entity's activities is warranted and in predicting the level of resources necessary to support those activities (AARF and ASRB, 1990). Included in this group are employees and suppliers; they are non-capital provider by nature and are compensated directly for resource they provide (AARF and ASRB, 1990). Employees and supplier are interested in the entity's ability to generate cash flows for timely payment of the entity's obligations to them. Other members of this group who are compensated indirectly are donors, members of nonbusiness entities, clubs, societies and public sector bodies, parliament, taxpayers and ratepayers (AARF and ASRB, 1990). Taxpayers and ratepayers want to know whether the entity is delivering the services expected of it, and whether it is achieving its objectives economically and efficiently (AARF and ASRB, 1990).
Recipients of goods and services

Recipients of goods and services are those who purchase or gain advantage from goods and services (G&S) delivered by the exposure entity (AARF and ASRB, 1990). They want to assess the ability of the reporting entity to continue to provide goods and services in the future, the likely level at which the goods and services will be provided and the likely cost of the goods and services. Customers and beneficiaries are the recipients of goods and services in the case of business entities; while ratepayers, taxpayers, and members of professional association are those in the case of non-business entities. In the case of business entities, the focus of this user group is on the ability of the entity to generate favorable cash flows, since only by obtaining sufficient cash to pay for the resources it uses and to meet its other obligations will the entity be able to continue to provide the goods and services in the future (AARF and ASRB, 1990). In the case of non-business entities, and to extent public sector business entities, the focus of this user group is on the extent to which the entity is using resources in their interests (AARF and ASRB, 1990). Assessments made by this category of users in relation to public sector entities may influence their voting preferences and representations concerning the existing management or governing body of the entity and their decisions as to whether to continue to obtain the goods and services provided by the entity

made to parliamentary and other representatives, and may lead to the continuation, expansion, contraction or even cessation of the entity's activities (AARF and ASRB, 1990).
Parties performing a review/oversight function

Parties performing a review/ oversight function are those who perform oversight or review service on behalf of the community (AARF and ASRB, 1990). They want to know whether the reporting entity has been operating in the interests of such members (AARF and ASRB, 1990). Parties performing oversight function have indirect interest of the general purpose financial report since they advise or represent those who have the direct interest on them (AARF and ASRB, 1990). Members of this group of users include parliaments, governments, regulatory agencies, analysts, labor unions, employer group, media, and special interest community group (AARF and ASRB, 1990). Assessments by these users of the extent to which the entity is operating satisfactorily will influence the decisions they make about the activities of the entities and, in respect of the advice they give to their constituents, will affect the decisions of those constituents (AARF and ASRB, 1990).
Management and Governing Bodies

Management includes managers and the governing board of an entity. They need financial information in similar nature with capital providers to carry out their planning, decision making and control responsibilities (AASB, 2004). However sometimes special purpose financial reports may have to be tailored to meet the needs of these users (AARF and ASRB, 1990).

Conclusion
After all, it can be concluded that general purpose financial reports are decision useful for capital provider users as well as non-capital provider users. Capital providers, resource providers, and recipient of goods and services generally may want to assess the entitys ability performance and ability to generate cash to make sound decision regarding the entity. Capital provider makes decision to protect and enhance their investment; resource provider makes decision in predicting the level of necessary resources and the continuation of those support; Recipient of goods and services make decision based on the prospect of the goods and services that the entity provide. Furthermore, Parties performing a review/oversight function uses financial information to check whether the reporting entity has been operating in the interests of such members and management uses financial information to carry out their planning, decision making and control responsibilities.

Bibliography
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