| Definition |
Formal records presenting the financial performance and position of a company, prepared according to accounting standards. |
Internal reports prepared for management to assist in decision-making, planning, and control. |
| Purpose |
To provide stakeholders (investors, creditors, regulators) with a clear financial picture. |
To provide management with detailed insights to improve business operations and strategy. |
| Audience |
External parties such as shareholders, creditors, regulators, and the public. |
Internal users like company executives, managers, and department heads. |
| Content |
Includes balance sheet, income statement, cash flow statement, and notes. |
Includes operational data, budgets, forecasts, performance metrics, and analysis. |
| Regulation |
Must comply with accounting standards (e.g., IFRS, GAAP) and legal requirements. |
Not regulated; format and content are flexible according to management needs. |
| Frequency |
Usually prepared quarterly and annually. |
Prepared as needed: weekly, monthly, or quarterly. |
| Focus |
Historical financial performance and position. |
Forward-looking insights and operational efficiency. |
| Level of Detail |
Summarized and standardized data for broad understanding. |
Detailed and customized data tailored to specific management needs. |
| Format |
Structured and formalized format. |
Flexible and can include narratives, charts, and KPIs. |
| Use in Decision-Making |
Supports investment, lending, and compliance decisions. |
Supports tactical and strategic business decisions. |
| Time Orientation |
Primarily retrospective (past performance). |
Includes historical data and future projections. |
| Confidentiality |
Generally public or shared with external stakeholders. |
Confidential and restricted to internal personnel. |
| Examples |
Annual reports, audited financial statements. |
Monthly sales reports, budget variance analysis, performance dashboards. |
| Impact on Business |
Reflects company’s financial health and compliance. |
Drives improvements and operational efficiency. |
| Preparation Responsibility |
Prepared by accountants and auditors. |
Prepared by management accountants, analysts, and managers. |
Financial Statement vs Management Report