Uses of Accounting Information (Who will use accounting information other than owners?)
"Overall purpose of the accountancy is to help managers in decision making on resource allocation. It must disclosure and provision operations carried out in the business including future performance. These decisions affect on various aspects of the environment such as legal, political, Social and Cultural Environment. Therefore accounting information is not only used by business owners, but also employees of the organization, government, trade unions, potential investors and general public."
1. General Public
Economic Inflation is the most affected economical concept on general public. General public will aware about how a company will act on changing economic situations. If company ill behaved on those situations, public will rise against it or if company behaved well, then the company will able to receive good feedback from General public.
General Public will also aware whether the organization has vacancies in work force and what are the opportunities they can have. (For example, if someone opens an international school, there might be certain crowd if someone opens a tuition class near it.)
General public will check whether the organization is useful for their society. Whether it damages natural resources or whether it supports the society. They may assume economic trends according to these.
According to general public, they have certain right to debate on whether organization earnings are fair or not.
2. Government
Government departments such as Department of Import and Export Control, Consumer Affairs Authority, Department of the registrar of Companies, Measurement Units – Standards and Services Department, National Income Department, Sri Lanka Central Bank, Labor Department requests organization’s final accounting reports to organize national economy, to preserve consistency of economic structure, to creates and measure reports on industry, forecasting economic growth and to make decisions about country’s economy.
Government wants to receive that information to prepare tax reports such as income tax, VAT and turnover.
Government will collect this information to measure national revenue and national expense etc… values.
Main objective is to control the economy according to national economic policies and preserving the proper scope of the business development. Government will decide what policies need to change, append or remove in order to control the industry.
Sri Lanka Central Bank needs accounting information to measure and create official reports about national economy. Sri Lanka central bank produces a year report that will summarize all this information. A set of reports create by Sri Lanka Central Bank will use to compare national economy with other economies.
Governments will advice Share Exchange Market (i.e. CSE) officers to check registered organizations in Share Market. Government will gain information out of it and will advice them how companies can make progresses in Share Market, whether the organization’s account books preserve legal standards and those information will use to compare performances of each organization.
Government will also check to find about the company’s patronage of local suppliers.
3. Employees Of Company
Employees have certain right to check their organizations accounting.
Employees will use this information to check whether their labor rights are protected, to check whether employees are safe, job security, whether upper level authorities work legally and stability of the organization. They will also check whether they can have bonuses or salary increments.
4. Potential Investors
Potential Investors are very keen in choosing which company to do the investment. If an organization has proper accounting information and if they show mirror view of the organization, potential investors can invest their money with trust.
Investors want to check whether the company is a legal one or not, financial stability and position. How much he can expect as income, how is the company performance, profitability/creditability/liability and other rates.
5. Trade Unions
Trade Union will use this information to check whether employees are safe, to protect their rights and to check upper level authorities work according to agreements.
On the other hand, accounting information is a valuable source to solve employee problems such as wages and tax reductions.
Finally, accounting information helps company to win awards by Government, Public associations and even by company's trade union.