In 1975 the Corporate Report was published, this was the outcome from the Accounting Standards Steering Committee's wide ranging discussion paper and in part considered the usefulness of financial statements
(Dunn, April 2002) discusses that to meet their basic objective financial statements must be useful; and the information relevant and reliable. Information will have relevance if it influences the decisions of the users. Relevance and reliability are primary characteristics relating to content together with the threshold quality,materiality. The primary characteristics relating to presentation include comparability, clarity and understandability.
The Corporate Report in 1975 identified the major user groups listed below
Equity Investors
Lenders
Employees
The Analyst Advisor Group (financial analysts, journalists, economist's statisticians, researchers, trade unions, credit rating agencies and stockbrokers)
The Business Contact Group (suppliers, customers & competitors)
Government
Public
The Users Of Financial Statements
Equity Investors can be
Existing investors
Potential Investors
Both existing & potential investors can be long-term or short-term investors with a sole purpose of increasing their wealth by way of capital gains (Via trading of shares/securities) or by earning dividends
Lender/Creditors often referred to as the loan creditor group are people who supply funds to the company either on a
Short term basis
Medium term OR
Long term Basis.
On short term basis the loan can be overdraft facility for a company but long term basis include heavy loans secured for future expansion or capital expenditures. The loan creditor group normally includes banks & discount houses which usually provides overdraft and other flexible fund management facilities to corporations, provided they have a sound financial performance backing.
Employees This group is considered to be the least affected of all when it comes to analyzing
References: & Bibliography http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=86269 (Philip E Dunn ACCA JOURNAL APRIL 2002 Financial Statements their Usefulness and the User) The Corporate Report 1975 Accounting Standards Steering Committee Financial Reporting David Alexander & Anne Briton 7th Edition 2004 http://www.aicpa.org/pubs/jofa/feb97/busin.htm (Jenkins committee, 1996 AICPA) The websites mentioned above were accessed from 3rd November to 25th November.