General Purpose Financial Report

General Purpose Financial Report basically provides the information and analysis about the scarce resources of a public sector or a private sector company. It normally focuses the general and overall financial information and produces the result for shareholders and board of directors to analyze the current situation of the assets and scarce resource and take a decision on the basis of the report's outcome. GPFR becomes the main tool for accountability, it usually supports the accountability and very useful for taxpayers to hold public sector entities accountable, shareholders to monitor a company, the donor to track charities.

However, there is a case we are discussing here is that "General Purpose Financial Reports do not and cannot provide all of the information that existing and potential investors, lenders and others creditors need." (OB6, IASB). We are discussing here that how this statement is lethal enough and should the process of accounting in GPFR be limited to financial accounting only or cover the word ‘accountability' as it gives the impression that everything should be held accountable and GPFR should be broadened wider enough to cover a company's whole accountable assets with the support of few summarized examples and case scenarios in detail.

General Purpose Financial Report emphasis on scarce resources and provides the feasible report which contains the financial statements evaluation, It gives the financial outcome of an organized public or private to their shareholders and investors that how the entities they installed are producing their desired results and what exactly they require to do in order to make it more productive (SAC2 AARF, 2018)

GPFR is usually used for two purposes. To precisely promote accountability by entities to the users by requiring the disclosure information about the financial position of the entity and its performance. Its main purpose is to provide information which is useful for a wide number of users, so they can take decisions regarding entities that whether to hold one, sell one or buy more. Now, there's a point where the debate starts that whether a General Purpose Financial Report is enough for the potential investors, lenders and other creditors to help their decision-making process and whether this report can give the idea of their outcomes? Now, in this scenario we rather look at how General Purpose Financial Reporting is good and bad either way, we will look at the pros and cons first.

Pros: General Purpose Financial Report is basically designed to meet the requirements of the common evaluators for example shareholders, investors, creditors or public at large. This gives the idea in general that how an entity is behaving and it covers it as a whole. While, in contrast to this we have SPFR (Special Purpose Financial Report) which is more narrow and doesn't cover the whole subject but can be useful for tiny or specific objects, which can help a single or couple of beneficiary but it is never used for the wide range of users, and cannot give the idea that where an organization is standing (SPFR for FPEs, 2018).

Cons: Where General Purpose Financial Report is useful for the wide range of users, in contrast it does not and cannot give any sort of benefit to the single shareholder among many, or a particular investor in a group of investors, if his intention is to determine about a particular segment of a company for his best of interests. For example, We have a group of investors each of the ten holds 10% shares of an entity. Now, if one of the investors is interested to know about a particular location that how the entity is performing because he owns another business in that location and wants to know about the entity's performance whether it can collide with its business, then the answer is No, he cannot (Para 21, CFED 2010) There's no segment in General Purpose Financial Report which can determine the particular segment of an entity, but it gives the accountable evaluation of the whole.

The Scope of GPFR

The debate regarding whether General Purpose Financial Report should be broadened enough in order to cover all the account information because the ‘accountability' means to hold an entity accountable by looking everything inside it or to keep it focused on financial assets because financial information is the backbone of an accountability audit.

Well, in this regard let's suppose we have an entity which is generating a great deal of profit from the years on a particular location and contributing to the entities profit with big pieces, producing more than demanded. While on another location we have an entity which is unable to meet the deadlines every now and then and the production is not meeting the supply demanded. Now then General Purpose Financial Report gives us the clue of the relocation of entities that what If we relocate the entities or shuffle some whether it will benefit the entire outcome or damage our flow. That's why in GPFR we can determine to allocate the scarce resources, which cannot be possible if we are looking for the financial information only. There's that critical point where General Purpose Financial Report becomes handy and useful because of its broadened coverage.

But on the other hand, if we look at it critically we will realize the General Purpose Financial Report is a benefit for an entity but in contrast due to its wide range of coverage it really does not benefit the single investor, lender or a creditor. Which make this report useful but useless for the potential investors, creditors, and lenders for their own benefits. In other words, the assessment of common information does not need to be shared all across the existing and potential investors, lenders and other creditors but some of the identified information will remain common between all three categories. If the information would be useful for one but will remain useless for the other, it might exclude the information that meets the needs of only one category.

After critically analyzing and looking at both Pros and Cons of the General Purpose Financial Report that whether its scope should be limited to the financial issues or should it be broadened wider enough to cover whole accountability process. The research gives the idea that this is beneficial for the entity if the General Purpose Financial Report focuses the financial issues only in a case where it does not intend to give benefit to their potential investors, lenders, and creditors.

But to give the benefit to their shareholders, investors and lenders the General Purpose Financial Report should be broaden wider enough to cover the segments which can be useful individually to their investors, lenders and creditors, because in the finance only related issue the shareholders, lenders, creditors and potential investors cannot their future with the entity and cannot take decisions whether to hold the entity or release it, the allocation of scarce resources becomes vital after the evaluation by General Purpose Financial Report which helps the allocation of scarce resources.