The accounting information is highly useful for different groups of persons.

No organisation can function without the use of money and hence without accounting. For an organisation, accounting information is very important for its functioning. Not only the proprietors and the managers, but also the other groups of persons are interested in getting accounting information. Various groups of persons along with their requirement for such information are discussed below in the large organisation. 1. Proprietors: Proprietors who have invested their money in the business would

certainly like to know the financial details at every point of time. Since any business is being carried out to earn profit, accounting information becomes utmost significant to understand profitability and financial soundness. 2. Managers: In case of organisations which have been managed by professional managers, requirement of watching all those parameters that can affect profits, is highly important. Generally these parameters are related to accounts and hence accounting information is of high interest to these managers. The accounting disclosures helped them in informing about what has happened and what should be done to improve the profitability and financial position of the enterprise in the period to come. 3. Creditors: Creditors are those persons from whom the company has taken loans or credit. These people are also interested to know the financial status of the company so as to know whether the company is in the position to meet its commitments towards them in regard to both payment of interest and the principal amount. 4. Government: The requirement on the part of the government to know about the financial details is due to taxation, labour and corporate laws. If government feels it important, it can examine the accounts of any organisation. 5. Prospective Investors: Prospective investors would also like to know the status of profitability and performance of a company before investing in the business. Accounting information would help them in taking decision. 6. Employees: Employees are also interested to know the financial performance of the organisation due to their interests in profit sharing and bonus schemes. If some of the employees have purchased the shares of same company, their interest would further increase. 7. Citizens: General public would like to know the accounting information of institutions such as banks, temples, utilities like transport, gas, fuel, electricity companies etc. People could be interested in government institutions also as a tax-payer and voter.

Generally Accepted Accounting Principles (GAAP) refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing, and in the preparation of financial statements.

Financial statements are prepared to summarize the end-result of all the business activities by an enterprise during an accounting period in monetary terms. These business activities vary from one enterprise to other. To compare the financial statements of various reporting enterprises poses some difficulties because of the divergence in the methods and principles adopted by these enterprises in preparing their financial statements. In order to make these methods and principles uniform and comparable to the extent possible standards are evolved. What are Accounting Standards? Accounting Standards are the statements of code of practice of the regulatory accounting bodies that are to be observed in the preparation and presentation of financial statements. In layman terms, accounting standards are the written documents issued by the expert institutes or other regulatory bodies covering various aspects of measurement, treatment, presentation and disclosure of accounting transactions. What are the objectives of Accounting Standards? The basic objective of Accounting Standards is to remove variations in the treatment of several accounting aspects and to bring about standardization in presentation. They intent to harmonize the diverse accounting policies followed in the preparation and presentation of financial statements by different reporting enterprises so as to facilitate intra-firm and inter-firm comparison. Who issues Accounting Standards in India? The Institute of Chartered Accountants of India (ICAI) recognizing the need to harmonize the diverse accounting policies and practices at present in use in India constituted Accounting Standards Board (ASB) on April 21, 1977. The main role of ASB is to formulate Accounting Standards from time to time. What is the duty of Statutory Auditor for Compliance with Accounting Standards? Section 211(3A) of Companies Act, 1956 provides that every profit and loss account and balance sheet of the company shall comply with the accounting standards. The statutory auditors are required to make qualification in their report in case any item is treated differently from the prescribed Accounting Standard. However, while qualifying, they should consider the materiality of the relevant item. In addition to this Section 227(3)(d) of Companies Act, 1956 requires an auditor to report whether, in his opinion, the profit and loss account and balance sheet are complied with the accounting standards referred to in Section 211(3C) of Companies Act, 1956.