Accounting

Accurate financial statements are very important for outside business interests. The users of financial statements, such as customers, suppliers, creditors, need accurate financial statements for better decision making activities.   In addition to this, tax collection agencies, community residents and stock market agents need accurate financial statements for deciding on their next move.

There are many users of financial statements, namely, customers, suppliers, creditors, tax collection agencies etc. Certain companies, like Enron and WorldCom, issue fraudulent financial statements. Auditing brings credence in terms of the fairness of financial statements. Accurate financial statements are important for outside business interests (Pride, 2008).

Customers
Customers need accurate financial statements to determine if the company will continue supplying goods or services satisfying their needs.  The clients require a financial statement showing net profits of a company. It is a sign that the company will continue to serve their business or personal needs for another year. A financial statement showing net losses will indicates a negative aspect, serving a sign that the company may not be able to continue meeting their business or personal needs for another year.  The customers do not need to worry if the company generates considerable profits.
     
On the other hand, the customers may start to look for other alternative suppliers, if the financial statements indicate a net loss. A false financial statement indicating net profits, instead of the actual net losses, would bring a wrong message to the customers. In this case, the clients will after all be surprised to find that the company will close down due to bankruptcy. The clients will then have less time to search for other suppliers of customer needs.  This falls under the concern concept of the United States Generally Accepted Accounting Principles (Bragg, 2001).

Suppliers 
Suppliers need accurate financial statements to determine, if the company continues to buy their products. A financial statement showing net profits will satisfy the companys suppliers, as this is a sign that the company will continue to buy their products for another year. A financial statement showing net losses will be perceived negatively by the suppliers, as this is a sign that the company may not be able to continue satisfying their business or personal needs with the suppliers goods or services for another year.
     
Furthermore, the suppliers do not need to worry, if the company generates profits. On the other hand, the suppliers may start to look for other alternative companies to serve, if the financial statements indicate a net loss. A false financial statement indicating net profits, instead of the actual net losses, would bring a wrong signal to the suppliers. In this case, the suppliers will be surprised to find that the company will shut down within one year. The suppliers will then have less time to search for other companies to serve (Rittenberg, 2009).

Creditors
Creditors need accurate financial statements to determine, if the company continues to avail of credit services. A financial statement showing net profits will give the general credit picture of the company. It is a sign that the company will be able to pay for their maturing obligations on time for another year. A financial statement showing net losses will not be good in the eyes of the creditors. It is a signal that the company may not be able to continue pay their maturing loans and other payables for another year.
   
Furthermore, the creditors do not need to be concerned, if the company generates profits. On the other hand, the creditors may start to look for other alternative companies to serve, if the financial statements indicate a net loss. A false financial statement indicating net profits, instead of the actual net loss, would bring a wrong signal to the customers. In this case, the creditors will be surprised to discover that the company will close down due to bankruptcy. In the same light, the creditors will have less time to search for other companies to offer credit terms (Rittenberg, 2009).

Tax collection agencies
Tax collection agencies need accurate financial statements to determine if the company can pay their taxes. A financial statement showing net profits will indicate the companies will be able to pay higher taxes. It is a sign that the company will continue to pay taxes for another year. A financial statement showing net losses will be perceived negatively by the tax agencies. It is a signal that the company may not be able to continue paying similar tax amounts for another year.
     
Further, the tax agencies do not need to worry, if the company generates profits. On the other hand, the tax agencies may start to scrutinize the financial statements to determine if the company falsified the financial reports in a net loss situation. Some companies reduce net income or present net loss. A false financial statement indicating net loss, instead of the actual net income, would bring a wrong signal to the tax agencies. In this case, the tax agencies must scrutinize the financial statements for fraud (Covello, 2006).

Community residents
Community residents need accurate financial statements to determine, whether the company will hire local residents. A financial statement showing net profits will be perceived positively by the residents. It is a sign that the company will continue to hire new staff for another year. A financial statement showing net loss will diminish their chances for employment in the company. It is a signal that the company may not be able to continue hiring community residents for another year. The community residents do not need to worry if the company generates profits.
     
On the other hand, the community residents may start to look for other companies to work for, if the financial statements indicate a net loss. A false financial statement indicating net profits, instead of the actual net losses, would bring a wrong signal to the community residents. In this case, the community residents will be surprised to find out that the company will stop hiring the community residents within one year. The community residents will have lesser time to find another job in the community (Cunnighham, 2002).

Stock market agents
Stock market agents need accurate financial statements to determine, if the company is a good investment alternative. A financial statement showing net profits will make stock market agents proud to sell the company to prospective investors. It is a sign that the company will continue to be a viable investment opportunity for another year. A financial statement showing net losses will not bring a good picture in the eyes of the stock market agents. It is a signal that the prospective investors will shy away from the company as an investment option for another year.
     
Furthermore, the stock market agents do not need to worry, if the company generates profits. On the other hand, the stock market agents may start to look for other alternative companies to sell in the stock market, if the financial statements will indicate a net loss. A false financial statement showing a net profit, instead of the actual net loss, would give a wrong signal to the stock market agents. In this case, the stock market agents will be surprised to discover that the company will stop operations within one year. The stock market agents will then have lesser time to find other companies to sell (Cunnighham, 2002).

Environmental groups 
Environmental groups need accurate financial statements to determine, if the company implements environmental laws. A financial statement showing amounts spent to install environmentfriendly assets will make the environmental groups happy. It is a sign that the company will continue to implement environmental procedures within its premises for another year. A financial statement showing the absence of environment friendly assets like anti  smoke pollution (high smoke exhaust stack) features will not be good in the eyes of the suppliers. It is a signal that the company may not be able to continue complying with anti pollution statutes for another year.
     
In addition, the environmental groups do not need to worry if the company invests in anti pollution devices. On the other hand, the environmental groups may investigate why the company does not include anti pollution devices among its expenses or assets enumerated in the financial statements. A false financial statement indicating the company invested in anti pollution devices, instead of the actual position where nothing was funneled into anti pollution spending, would bring a wrong signal to the environmental agencies. In this case, the environmental group may be surprised to find that the company closed shut down within one year because another environmental agency group will penalize the company for violating anti pollution and other environmental policies (Bragg, 2001).

Current investors
Current investors need accurate financial statements to determine if the company will continue distributing dividends. A financial statement showing net profits will make current investors happy. It is a sign that the company will continue to give dividends for another year. A financial statement showing net loss will not be good in the eyes of the current investors. It is a signal that the company may not be able to continue offering dividends for another year.
       
Further, the current investors do not need to worry if the company generates profits. On the other hand, the current investors may start to look for other alternative companies to invest their cash and other assets if the financial statements will indicate a net loss. A false financial statement indicating net profit, instead of the actual net loss, would bring a wrong signal to the current investors. In this case, the current investors will be surprised to find the company closed shut down within one year. The current investors will then have lesser time to search for other companies to invest their money and other assets (Larson, 2003).

Prospective investors
Prospective investors need accurate financial statements to determine if the company will be a good investment. Financial statements showing net profits will bring more investors into the company. This will make prospective investors happy. It is a sign that the company will continue to give dividends for another year. A financial statement showing net loss will not be good in the eyes of the current investors. This is clear landmark indicating the company will not be able to offer dividends for another year. The prospective investors do not need to worry if the company generates profits. On the other hand, the same prospective investors may search for other alternative companies to invest their cash and other assets if the financial statements will indicate a net loss.
   
In addition, a false financial statement indicating net profit, instead of the actual net loss, would bring a wrong signal to the prospective investors. In this situation, the prospective investors will be surprised to find the company will not release dividend payments to prospective investors within one year. The prospective investors will then have lesser time to search for other companies to put their hard-earned money and other assets (Larson, 2003).
     
City Planners
City planners need accurate financial statements to determine the ways of improving the local economy. Financial statements showing net profits will persuade the local planners to construct bigger roads, and other infrastructure to increase the current movement of goods and services between the clients and the companys premises. Road widening will make both the clients and the manufacturing companies happy. A financial statement showing net loss will tempt the city planners to forego road expansion.
     
Further, a net loss may indicated to the city planners that it would be useless to widen the roads from the company to the clients because there is a strong probability that the company may close shop within one year from the income statement date. A false financial statement indicating net profits, instead of the actual net losses, would bring a wrong signal to the city planners. In this situation, the city planners will be surprised to find the company shutting operations within one year. The city planners will then feel that the road expansion was a waste of tax payers money (Pride, 2008).

Conclusion      
All things considered, accurate financial statements are crucial for outside business interests. First, customers need accurate financial statements to determine if the company will continue to fill the clients needs. Second, suppliers need accurate financial statements to determine if the company will continue to purchase from the suppliers. Third, creditors need accurate financial statements to determine if the company will continue using credit. Fourth, tax collection agencies need accurate financial statements to determine if the company will continue paying taxes. Fifth, community residents need accurate financial statements to determine if the company will employ local residents.  Sixth, stock market agents need accurate financial statements to determine if the company is a good investment choice. Seventh, environmental groups need accurate financial statements to determine if the company obeys environmental laws. Eight, current investors need accurate financial statements to determine if the company will continue dividend payout. Ninth, prospective investors need accurate financial statements to determine if the company will be a good investment venue. Tenth, city planners need accurate financial statements to determine ways of advancing the local economy. Indeed, accurate financial statements are essential for outside business interests.