Accounting information is used by different stakeholders for different reasons. The users of accounting information are summed up into six groups. This article is written in response to a question asked by one of the readers of the original articles on users of accounting. You may want to read that article for further insight into uses of accounting information as this article answers the question directly.
CATEGORIES OF USERS OF ACCOUNTING INFORMATION AND WHAT THEY LOOK FOR
This section of the article discusses six different groups of users of accounting information and their stake in accounting figures.
The internal users of accounting information are those consumers of figures from the accounting information system that have special connection with the entity that produces the accounting figure. Managers for example fall under the internal group that relies on accounting information for decision making purposes. The employees of company also are classed as internal users of accounting information, their main concern when looking through the financial figures produced by a company is the ability of the company to give them the maximum job security and also to ask for pay rises and other bonuses.
The external consumers of accounting information are those parties that use financial information produced by a business from the outsider’s perspective. Examples of external users of accounting information are: equity analysts, investment accounts, business valuation experts, government agencies, interest groups, etc. Their interest could be purely commercial or non-commercial. Equity analyst for instance sells investment tips to investors from information gathered from annual report of a company and other economic indicators.
These are the book makers that heavily rely on accounting figures to generate their products. They are also external to the business that produces accounting information. To be honest, these are the class of users of accounting information that fuels the vicious cycle of economic crisis that now has the tendency of causing global financial quake (that usually leaves lasting scars on the lives of many people- directly or indirectly) as the promoters of particular entity packages the accounting information of the company they are promoting in the best favourable form as possible so as to make profit. What else do you expect from equity analysts if not to portray the company or stock that is after their heart in a positive way? Well, that is the subject of this article.
NON COMMERCIAL USERS
Government establishments and research institutes predominantly occupy this cadre of users of accounting details. Though the ultimate goal of this group of people is to make one economic impact or the other, the intent is not to make any direct impact from the use of accounting figures.
SMALL SCALE USERS
Private investors usually fall within this bracket. They are most likely on the receiving end of spectrum as they do not have much influential strength of dictating what goes into the end product of the accounting figure. Student union for instance that looks into a company’s annual report so as to make decision of whether to pay courtesy visit or not does not influence the system that generates the accounting figure.
LARGE SCALE USERS
Mega investors and investment houses are found in this class of users of accounting output. Most of the stakeholders here are the movers and shakers of the world economy.
I hope that this article has answered the question; what are the groups of accounting information users as asked by one of the readers of this blog. You can post your question in the way of comment, I will do my best to source possible solution to the question.