Users of Accounting Information and AASB Conceptual Framework

Answer 1
International accounting standards board uses conceptual framework for the financial
reporting. As per the AASB conceptual framework the users of the accounting information
are as follows:
 Investors: Investor plays a major role in deciding a financial statement of the entity.
Accounting information prepared by the management needs to be correct as it is used by the
users. The investor uses financial statement for taking the investment decisions. If he finds
that the accounting information is good and it can give him a good return then he should
invest in the securities of the company. The conceptual framework of AASB states the
management of the company has to prepare correct financial statement to assist the investors
in taking investment decisions.
 Employees: Employees is an integral part of the organization and their decisions
affects the functioning of the company. They use the accounting information to determine the
growth made by the company. They took decisions regarding raise in their salary, bonus from
the top level management after checking the accounting information.
 Lenders and suppliers: The Company has to purchase material and it cannot
purchase whole material on cash as so much cash is not available to the company. The
company’s accounting information is checked by the lenders and creditors to check the credit
worthiness of the company. Lenders give loan to the company and they want an assurance
that their money is safe and they will receive a good amount of interest if they give loan to
the company. If they found that the accounting information provided by the company is good
and as per the conceptual framework then they easily give loan to the company.
 Customers: The whole business is done for attracting the customer, so they can
purchase the goods and services of the company. The future of the company depends upon
the customers as they check the financial information to determine that the product produced
by the company is harmful or not. The annual report contains all the information about the
business of the company. The customer check that information to satisfy himself that the
product produced by the company is safe.
 Government Agencies: Government affects the functioning of the business as they
assess the financial information to check the financial performance of the company is good. If
the company’s financial performance is good then it levies taxes on that income and if the
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financial performance of the company is not good then it provides subsidies to the business to
help them in succeeding in the future.
 Public and society: Public and society is the surrounding where the company
operates its business. The public uses the financial information to determine that the business
of the company does not affects the functioning in an adverse way. They check the
accounting information to determine whether the company took decisions towards the
welfare of the society. The information about the welfare of the society can be checked from
the CSR report of the company as it contains all the information about the functions of the
company towards the welfare of the society.
Yes the identification of particular users within the conceptual framework has implications
for the future of accounting information. The company’s overall objective is the
maximization of the wealth of the shareholders and investors plays an major role. The future
planning needs to be done by taking in considerations the requirements of the investors as
they are the one who invested money in the company. Investors are providers of risk capital
to the entity.
The company has to prepare its financial statements as per the guidelines of the IASB and
AASB conceptual framework. The company has to prepare its financial statements on the
basis of fair value. The accounting regarding the preparation of the financial statements needs
to be done as per the fair value accounting. The complete description about the accounting as
per the fair value is given in accounting standard and the company needs to follow the
guidelines of the accounting standard in order to do the fair value accounting as the investor
wants to know the fair value of the business and he took decision after checking the fair value
of the business. Historical cost accounting is an accounting concept and it also used by the
company to determine the historical cost of the company. The users check the historical
information also to take their decisions.
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