ACCA Applied Knowledge · Financial Accounting · The regulatory framework
Which of the following is a user group that relies on published financial statements but typically lacks the power to demand additional management information, thereby supporting the need for regulation?
External lenders and minority shareholders rely on published financial statements because they cannot demand extra management information. Internal parties such as directors, managers and budgeting staff can obtain detailed data themselves, so regulation mainly protects the external users.
- AThe finance director of the company
- BThe company's external lenders and minority shareholdersCorrect
- CThe company's production manager
- DThe company's internal budgeting team
Explanation
External lenders and minority shareholders depend on published statements because they cannot require bespoke information. Directors, production managers and budgeting staff are internal and can access management information directly.
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