Accounting

Government agencies are interested in the efficient allocation of resources and therefore in the
activities of enterprises. They also require information in order to provide a basis for national
statistics.
The public. Business entities affect members of the public in a variety of ways. For example, they may
make a substantial contribution to a local economy by providing employment and using local suppliers.
Another important factor is the effect of an entity on the natural environment, for example as regards
pollution.
Accounting information is summarised in financial statements to satisfy the information needs of these
different groups. Not all will be equally satisfied.
Managers of a business need the most information, to help them make planning and control decisions.
They have greater access to business information, because they are able to review internally produced
statements. Managers can obtain extra information through the cost and management accounting
system.

Interactive question 1: Accounting information [Difficulty level: Intermediate]

It is easy to see how 'internal' people get hold of accounting information. A manager, for example, can just
go along to the accounts department and ask the staff there to prepare whatever accounting statements she
needs. But external users of accounts cannot do this. How, in practice, can a business contact or a financial
analyst access accounting information about a company?
See Answer at the end of this chapter.

In addition to management information, additional financial statements are prepared for the benefit of other
user groups, who may demand particular information.

NBR will receive information to make tax assessments.

A bank might demand a cash flow forecast as a pre-condition of granting an overdraft.
The Institute of Chartered Accountants of Bangladesh is responsible for issuing Bangladesh
Accounting Standards and Bangladesh Financial Reporting Standards (BASs and BFRSs)
and these require companies to publish certain additional information. Accountants, as members of
professional bodies, are placed under an obligation to ensure that company financial statements
conform to the requirements of BAS/BFRS, where relevant.
Over time, some commonly used accounting practice has developed in Bangladesh. Many companies,
as well as sole traders and partnerships, prepare their accounting information following those common
practices rather than IFRS.
Note that, in this study manual, we will refer to the collective body of standards issued by the ICAB as
BASs.

1.4.1 Not Government Organisations (NGOs)

It is not only businesses that need to prepare financial statements. NGOs and clubs, for example, prepare
financial statements every year. Accounts also need to be prepared for government (public sector)
organisations.

1.5 BFRS Framework: users and their information needs

As well as identifying the objectives of financial statements the BFRS Framework sets out who uses financial
statements and their specific information needs.
Investors (current and potential shareholders) are the providers of risk capital for the company, so
they are interested in the risk to their capital presented by the investment, and the return they will
get for taking that risk. They need information to help them determine whether they should buy, hold

6 The Institute of Chartered Accountants in England and Wales, March 2009