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3.4 FINAL ACCOUNTS (STAKEHOLDERS AND ACCOUNTING INFO (Business Managers…
3.4 FINAL ACCOUNTS
STAKEHOLDERS AND ACCOUNTING INFO
Business Managers
measure the performance of the business to compare against targets, previous time periods and competitors
provide info for taking decisions
new investments
closing branches
launching new products
control and monitor the operation of each department and division of the business
see targets and budgets for the future and review these against actual performance
Workforce
assess whether the business is secure enough to pay wages and salaries
determine whether
the business is likely to expand/reduce in size
jobs are secure
find out ;
if wages can be afforded if profits are rising
how the average wage in the business compares with the salaries of the directors
Banks
decide whether
to lend money to the business
to allow an increase in overdraft facilities
to continue an overdraft facility/loans
Creditors
such as suppliers
assess whether
the business is secure and liquid enough to pay off its debts
the business is a good credit risk
decide whether to press for early repayment of outstanding ebts
Customers
assess whether the business is secure
determine whether they will be assured of future supplies of the goods they are purchasing
establish whether there will be security of spare parts and service facilities
Government & Tax Authorities
calculate how much tax is due from the business
determine whether the business is likely to expand and create more jobs
assess whether the business is in danger of closing down, creating economic problems
confirm that the business is staying within the law in terms of
accounting regulations
Investors and Potential Investors
assess the value of the business and their investment in it
establish whether the business is becoming more or less profitable
determine what share of the profits investors are receiving
decide whether the business has potential fro growth
Local Community
see if the business is profitable and likely to expand
determine whether the business is making losses and could lead to closure
LIMITATIONS OF ACCOUNTING INFO TO STAKEHOLDERS
One set of accounts is of limited use
Accounts do not measure items which cannot be expressed in monetary terms
The accounts of one business do not allow for comparisons
Business accounts will only publish the minimum information required by law
Accounts are historic
Window dressing
; presenting the accounts of a business in the best possible which could potentially mislead users of account
THE PRINCIPLES AND ETHICS OF ACCOUNTING PRACTICE
Integrity
accountants should act honestly when with clients, tax authorities and all other stakeholder groups
being straightforward, honest and truthful in all professional and business relationships
Objectivity
Accountants should not allow bias, conflict of interest or the influence of other people to override their professional judgement.
Professional Competence and Due Care
Accountants are required carry out their work with a proper regard for relevant technical and professional standards.
Responsibility of accountants to continually update their level of professional knowledge and skill
Confidentiality
Accountants should not disclose professional info unless they have specific permission
Professional Behaviour
The obligation to behave with courtesy and consideration