Purpose of information
|
Help managers make decisions to fulfill an organization’s goals
|
Communicate organization’s financial position to investors, banks, regulators, and other outside parties
|
Primary users
|
Managers of the organization
|
External users such as investors, banks, regulators, and suppliers |
Focus and emphasis
|
Future-oriented (budget for 2011 prepared in 2010) performance
|
Past-oriented (reports on 2010 prepared in 2011)
|
Rules of measurement and reporting
|
Internal measures and reports do not have to follow GAAP but are based on cost-benefit analysis
|
Financial statements must be prepared in accordance with GAAP and be certified by external, independent auditors
|
Time span and type of reports
|
Varies from hourly information to 15 to 20 years, with financial and non-financial reports on products, departments, territories, and strategies
|
Annual and quarterly financial reports, primarily on the company as a whole
|
Behavioral implications
|
Designed to influence the behavior of managers and other employees
|
Primarily reports economic events but also influences behavior because manager’s compensation is often based on reported financial results |