ACCA Applied Knowledge · Financial Accounting · Stakeholders' needs
Which of the following users is most likely to have the power to demand management information tailored to its own needs, rather than relying on published financial statements?
A bank with a loan covenant requiring monthly reporting can demand tailored information because it is a condition of the lending agreement. Investors, the public and competitors have no such power and must rely on published financial statements and other public information.
- AA potential investor considering buying shares
- BA bank that has just agreed a large loan with a covenant requiring monthly reportingCorrect
- CA member of the public living near the company's factory
- DA competitor analysing the company's results
Explanation
Lenders can make special reports a condition of the loan agreement, so they can obtain tailored information. Potential investors, the public and competitors lack such power and depend on published statements and other public data.
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