Who needs accounting?

The International Accounting Standards Board (IASB) was formed in 2000 with the aim of developing accounting standards that 'require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in the world's capital markets and other users make economic decisions'. In 2001 the IASB adopted a Framework for the Preparation and Presentation of Financial Statements1 which set out certain concepts that underlie the preparation and presentation of financial statements. The Framework identifies the following seven groups of users together with the information which they need from the financial statements:
Investors

Investors need to assess the financial performance of the organisation they have invested in to consider the risk inherent in, and retum provided by, their investments

Lenders

Lenders need to be aware of the ability of the organisation to repay loans and interest. Potential lenders need to decide whether to lend, and on what terms


Suppliers and other trade creditors
Should suppliers sell to the organisation? Will they be paid?

Employees

People will be interested in their employer's stability and profitability, in particular of that part of the organisation (such as a branch) in which they work. They will also be interested in the ability of their employer to pay their wages and pensions

Customers

Customers who are dependent on a particular supplier or are considering placing a long-term contract will need to know if the organisation will continue to exist


Governments and their agencies

Reliable financial data helps governments to assemble national economic statistics which are used for a variety of purposes in controlling the economy. Specific financial information from an organisation also enables tax to be assessed

The public

Financial statements often include information relevant to local


See Also:

• About Accounting
• What are the different branches of accounting