Internal users of accounting information

There are three groups of people within a business that use its accounting information, each having different needs and objectives. These groups of users are as follows:

  • Management. The core internal users are the managers. They need detailed performance information about each segment of the business, so that they can make ongoing corrections and enhancements to the organization. Their objectives are to maintain a steady or increasing level of cash flow, while also maintaining a prudent level of debt risk.
  • Owners.  Investors use accounting information to determine their return on investment, based on the reported cash flows being generated by the business. Depending on the outcome, investors may alter their level of investment in the business.
  • Employees. If employees have access to accounting information (which is not always the case), they can use it to estimate the ability of the firm to pay them an adequate level of compensation, as well as to fund any pension plan that the organization offers them. This can result in decisions to remain with the firm or seek employment elsewhere.