FABM Users of Financial Information

• Under the new Conceptual Framework for Financial Reporting, the users of financial information may be classified into:

  -Primary Users

  • Existing and potential investors
  • Lenders and other creditors

  -Other Users

  • Employees
  • Customers
  • Government and their agencies
  • Public
• Primary Users

  -Existing and Potential Investors

  • They are concerned with the risks inherent in and returns provided by their investments (whether they should buy, hold or sell their investments).
  • To enable them to assess the ability of the entity to pay dividends.
• Primary Users

  -Lenders and Other Creditors

  • Interested in information which enables them to determine whether their loans, interest thereon and other amounts owing to them will be paid when due.
  • For potential lenders/creditors, they use this information as basis for ascertaining whether to grant loans or not and to determine the amount of loan and other terms and matters.
• Other Users

  -Employees

  • Interested about the stability and profitability of the entity and help them assess the ability of the entity to provide renumeration, retirement benefits and other opportunities.
• Other Users

  -Customers

  • Interest in information about the continuance of the entity when they have a long-term involvement with or are dependent on the entity.
• Other Users

  -Government and Their Agencies

  • Use this information to regulate the activities of the entity, determine taxation policies and as a basis for national income and similar statistics.
• Other Users

  -Public

  • Assist the public by providing information about the trend and range of its activities
• Other Classification of Users

  • Direct vs Indirect Users
  • External vs Internal Users