Definition of accounting
Objectives of accounting
Internal users include all levels of management and other governing bodies of an organisation.
– Management and other governing bodies, such as executives of clubs and boards of directors,
are continually making decisions on various aspects of the operation of the organisation, such as
financing, personnel, production and marketing.
Objectives of Accounting
External users include investors and other resource providers, and government departments and
other parties performing a review or oversight function.
– Investors and other resource providers, such as creditors, lenders, employees and suppliers, are
particularly interested in the organisation’s performance and financial position. They wish to evaluate
how efficiently and profitably management and the organisation have used the resources entrusted to
them. They will be interested in such things as financial stability and returns on investments.
– Governments and other parties performing a review or oversight function, such as the Australian
Taxation Office and the Australian Bureau of Statistics. Labour unions, the media and special
interest groups (including environmental and consumer groups) are also interested in information
from the organisation, to see if it is complying with external requirements and meeting social
obligations.
Objectives of accounting
What accountants are trying to do in terms of the governance of an organisation can be expressed in
three main objectives or functions:
to provide information for decision making
• to assist in discharging accountability
• to help evaluate performance.
To achieve these three objectives, information must be provided to users to allow judgements to be
made concerning matters such as:
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• performance in using resources efficiently
• the financial position or condition of the reporting entity
• financing and investing activities undertaken
• compliance with external requirements, such as the law and government regulations.