The responsibility of the accountant stems from the purpose of accounting itself. Accounting is the process of recording, classifying and interpreting financial information to interested users in order to help them in their economic decisions. Thus the accountant is responsible to prepare the necessary reports on a timely manner, and ensure that they are understandable, relevant and reliable. The users of financial information may be internal or external. Internal users encompass mainly management.
The external users are lenders, investors, suppliers, Governmental agencies, customers and the general public. The internal user group normally necessitates more detailed financial information than the other one. This is due to the fact that the economic decisions taken by this group are more frequent. Indeed the management accounts, which are the financial reports normally, give to management are much more in detail than the financial statements provided to external users. Management accounts are also prepared every month, while financial statements are performed annually.
External users would demand information in line with the decision they are seeking to take. For instance, the decision usually taken by an investor is to either to hold, buy or sell the stock invested in such company. The investor will therefore be interested to know the return that he will attain by such investment by examining the profitability of the company. Going concern is also another important issue for the investor, especially in light that he is the ultimate risk bearer of the company.
An analyzes of the Balance Sheet and Cash Flow Statement would also be necessary to obtain relevant information about the Financial Position and Financial Stability of the organization. Once all this examination takes place, the investor would hold sufficient financial information that would guide him in selecting the most optimal decision.
Lewis R. ; Pendrill D. (1996). Advanced Financial Accounting. Fifth Edition. London: Pitman Publishing. Weetman P. (2003). Financial and Management Accounting. Third Edition. Essex: Pearson Education Limited.