The Public Group

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. 

Employees, Labor Unions or Retirees

These users are interested in the financial statements to ascertain the employers financial strength and stability.   

They want to know the capability of their employer to provide for remuneration, benefits, retirement assistance, and other allowances or incentives the company can provide.

Customers

These users are interested in the financial statements of their suppliers and trade creditors to evaluate the latter's capability to continue doing business with them.  

Existence of some business are dependent with some suppliers. They need the financial statements to ensure the availability of supplies and sustainability of their production or operation.

Public or Economic Planners

The public or economic planners are interested in the financial statements of entities because they provide information regarding trends, operations, activities, and developments of the organization.

The Financing Group

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.

Suppliers, Trade Creditors or Potential Creditors

• To determine the continuity of customers' business.

These users need the information to enable them to determine whether debts owed to them  will be paid when due date comes.  

Lenders, Banks or Financing Institutions

• To determine if borrowers can pay the loaned value.

These users need the information to determine whether borrowers and debtors can pay their loans and its interests when due.

The Management Group

Again, Internal users of accounting information are those who own, manage, monitor, and/or control the entity.

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.

The internal financial reports are not governed by the standards in financial accounting and reporting, and auditing.

Normally, it is the management accountants who focus in providing internal financial reports.  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.

The management accountants are those who assist in the corporate planning and profit planning, and translate the corporate plans into budgeting terms.  They are those who monitors and interprets the differences between the budgeted and actual figures thru variance analysis reports.

Management group also uses the financial information for target setting and and metrics for key performance indicators and administration of incentives to participating employees in attaining the targets.



Researched by:

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 

Researched by: