The government financial statements

In addition, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS standards are prepared for the use of creditors. The creditors are person who have loaned money or other assets to   companies. The creditors are interested to use the financial statements to determine if the company will be able to generate enough profits to stay in the business for long period of time. The creditors are interested to know if the company will be able to pay their obligations when the time for payment of the company’s loans arrives.

There is a very high probability that the company will not be able to pay their loans, short term and long term, if they cannot generate enough sales to pay for their loans. The creditors could include the banks and other financial institutions as well as the credit suppliers. In addition, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS standards are prepared for the use of creditors.

Certainly, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS standards are prepared for the use of creditors(Hitt, Harrison, and Ireland 2001, null03). Also, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports are prepared for the use of the managers. The managers are interested to know if the company is generating a profit or is in the red. The managers will use the financial statements under both types of financial reporting standards as a benchmark.

For, a net profit shows that the manager has been doing well. On the other hand, the manager is not very effective if the financial statement shows that his or her leadership has a benchmark of net loss for the current accounting period as well as the past years of running his part of the company. The managers will also need the financial statements to determine if what his next operating plant will be to increase company profits or decrease company net loss. One way of increasing company profits would be to lessen allowable expenses in both financial statement types would be to retrench workers who do not perform their work.

Surely, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports are prepared for the use of the managers(Kanji 2002, 179). Lastly, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports are prepared for the use of the government regulating agencies. The government needs the financial statements prepared by companies using both types of financial statement reports to determine if government statues have been complied with.

The government wants to determine if the companies in both financial statement types are paying their workers the minimum wage allowed by law. Also, the government will also be using the financial statements to determine if the company has not been violating environmental laws. One such law includes not throwing the company’s waste products into the community’s rivers(Kanji 2002, 179). Another law that the company would be violating is the anti pollution laws where the company plans to lessen environmental safety expenses by not installing the required factory smoke exhaust very high as required by the anti –pollution environmental laws.

The government is also interested to use the financial statements presented by companies using both types of financial statements to determine if the expenses are within the limits mandated by the nation’s statutes. The government is also interested to use the financial statements of companies using both types of financial statement standards to know if government will have to step in to aid the companies increase their economic benefits or profits.

For, the government could use laws to prevent a saturation of the market. Saturation results because there are too many companies engaged in the same types of business and there are only a few customers to call on. Definitely, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports are prepared for the use of the government regulating agencies(Kanji 2002, 179).