Financial Accounting Stakeholders

Financial Accounting Stakeholders

Financial accounting stakeholders are those people, who are interested in financial statements of the organization. Different stakeholders requires these statements for different needs. Some stakeholders need financial statements for economic decision making, while other requires them for compilation purposes.

In this article we would explain the information needs of different stakeholders. Some stakeholders are more interested in financial performance component, while others focuses on financial position component, and some users are interested in both financial position and financial performance component.

1.   Investor & Shareholders:

Investor can be classified into two categories i.e. current investor and prospective investor. Current investor is interested in financial statements to know the return and growth of their investments , while prospective investor wants to plan their future investments on the bases of financial statement information.  

2.   Creditors & Financial Institutions:

Creditors on one hand want early recovery of their due amount and on other hand are interested to have long term business relationship with organization. Thus creditors are more interested in financial position and cash flow statements. These statements clearly reflect organization Financial strength and ability to pay. Financial institutions also want to know about the financial stability of the organization before approving the loan.

3.   Employees & Trade Union:

Employees are also stakeholder of financial statements. They want to predict the possible increase in their salaries and possible announcement of bonus. Financial performance and liquidity position may give them some idea about the possibilities of salary increments. Trade unions also frame their demands in accordance with the financial performance of the company. 

4.   Government:

Another important stakeholder is Government. The Government is obviously interested in financial statement to levy and recover the tax from the organization. Government may also need financial statements for compilation of the national economic data.

List of Stakeholders

a.    Investor for investment decision & investment return information.

b.    Employees for possible salary increments & bonuses information.

c.    Creditor for timely/early recovery of the credit amount.

d.    Government to levy tax and compilation of national data.