... cash receipts and payments, this specific knowledge of the sources of these cash receipts and for what purposes cash payments were made is especially useful when trying to forecast future cash flows. The preference of IAS 7 is that the direct method be used but does not require it1. The main benefit of the indirect method is that it shows the difference between reported profits and net cash flow from operating profits. There are differing views amongst national standard setters as well as within the business community. The main issue of disagreement being; whether in all cases the benefit to the user outweighed the costs to the company of providing this type of reporting2 The ASB in the UK has generally held the indirect method to be preferable, and has only encouraged the use of the direct method when the possible benefit of the users outweighs the cost of providing it ...

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