Users of Accounting Information
For accounting information to be helpful, the accountant must be unambiguous for whom the information is being ready and for what is the purpose of information that will be used. There are similarly to be several groups of people (termed as 'user groups') along with an interest in a specific organisation, in the sense of requirement to make decisions about it. For the distinctive private-sector business, the more significant of these groups are displayed in Figure 1.1.
Figure: main users of financial information relating to a business
Conflicting Interests of Users
As described above that each user group looks at a business from a dissimilar viewpoint and has its own specific interests. The meaning of this is that there is all the time risk that the interests of one group will have a collision with those of another group. Conflict among user groups is most probable to take place over the way wherein the wealth of the business is produced and/or distributed. A good instance is the conflict that might arise among the managers and the owners of the business. Even though managers are appointed to work in the best interests of the owners, there is all the time a danger that they will not do so. In its place, managers may make use of the wealth of the business to reward them large pay increases, to buy expensive cars or to furnish large offices for their personal use. Accounting information has a vital role to play in reporting the degree to which several groups have benefited from the business. So, owners may depend on accounting information to check whether the pay and advantages of managers are in line with the policy that is agreed. An additional instance is the potential conflict of interest among lenders and owners. There is a threat that the funds loaned to a business will not be employed for aims that have been agreed. So, Lenders may depend on accounting information to check that the funds have been applied in a suitable manner and that the terms of the loan agreement are not being broken.
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