Information user

An information user is the person or group that needs accounting information. Naming the user is the first step in deciding which records may help. A household considering a loan, a bank deciding whether to lend, a manager planning cash needs, an investor assessing a company, and a regulator checking compliance can examine the same activity for different reasons.

Do not treat the user, decision, and information need as the same thing. The user is who will use the information. The decision or judgment is what the user is trying to make. The information need states which facts and measures can help with that work.

Start with a complete question

“How much cash is there?” is incomplete. Ask whose cash, on what date, and for what decision. A household deciding whether it can make a monthly loan payment may need expected cash received, regular payments, the loan terms, and the timing of each amount. A lender considering the same loan may focus on evidence of income, existing obligations, payment history, and the proposed terms.

The two users can reach different judgments without either record being wrong. They hold different positions and responsibilities. Useful analysis makes those differences visible.

A useful record does not make the decision

Decision usefulness describes how information can help a user make a judgment or decision. It does not mean the information dictates one answer. A household cash plan can show a positive monthly amount after listed payments. It cannot decide whether that remainder provides enough protection against repairs, lost work, or other risks. The accounting result supports the decision; the user still makes the judgment.

The record also has limits. It may cover one month rather than a year, rely on estimates, omit nonfinancial goals, or represent only the facts supported by available evidence. State those limits beside the result instead of letting a precise number imply a broader conclusion.

General-purpose reports serve a narrower user group

This concept is broader than a user of general-purpose financial reports. The FASB Conceptual Framework focuses general-purpose financial reporting on existing and potential investors, lenders, and other creditors who cannot require an entity to provide information directly to them. Managers and tax authorities also use accounting information, but they can obtain information through other channels and for other purposes.

Do not stretch a general-purpose financial statement to answer every user's question. First identify the reporting entity, the date or period, and the report's purpose. Then decide what other records or evidence the particular user needs.

A six-part check

Before selecting a report or calculation, state:

1. Who will use the information.
2. Whose activity the information describes.
3. What decision or judgment the user faces.
4. Which date or period matters.
5. Which records can help.
6. What those records cannot establish.

If one part is missing, the request may still be too vague to answer well.