Users of accounting information

Users of Accounting Information may be classified into two groups, as follows:

• Internal users

• External users

Internal users of accounting information

These users are usually people inside the organization. They are those who own, manage, monitor, and/or control the entity. 

Thus, internal users are most interested with internal financial reports. 

External users of accounting information

They are those who are outside the organization but are interested in the financial standing and economic performance of the entity. 

Hence, these group of users usually looks at the external financial reports which are the general purpose financial statements issued by the company. 

Internal Financial Reports 

These financial reports are those various internal reports prepared for the use of management or internal users.  

Examples of such reports are variance analysis, opex and capex monitoring reports, sales and distribution reports, cost behavior trending and analysis, and other internal reports relating to management uses and purposes.

External Financial Reports

These financial reports are normally the end-products of financials accounting and reporting, the basic financials statements such as Statement of Financial Position, Income Statement, Statement of Cash Flows, Statement of Changes in Equity and Notes to Financial Statements. 

Internal users comprise the management group while external users, the financing group and the public group.


The Management Group

The management group needs detailed financial information in order to help them make relevant economic decisions in achieving the goals and targets of the firm...read more


The Financing Group

The following are the external users in the Financing Group and their reasons and needs on the financial information:

Investors or Potential Investors

• To asses the risk of investments portfolio and the return on investments

These users need information to help them evaluate and determine whether they should invest or buy, hold and retain, or sell their investments...read more

The Public Group

The external users in the public group and their needs are the following:

Government, Regulatory Agencies or Taxing Authorities

These users are interested in the financial statements of the organization for taxes, regulations, data and statistics...read more 

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