What types of entities are considered external users of financial reports?

The correct answer identifies shareholders, creditors, and regulatory agencies as external users of financial reports due to their roles and interests in the financial health and performance of a company. Shareholders seek information to make informed decisions about their investments and assess the company's profitability and growth prospects. Creditors are interested in understanding a company's creditworthiness and ability to meet its obligations, influencing lending decisions. Regulatory agencies rely on financial reports to ensure compliance with laws and standards, protecting the interests of the public and maintaining market integrity.

In contrast, the other groups mentioned involve individuals or teams that typically work within the organization. Management and employees, for example, use financial reports to make internal decisions and assessments related to operations, compensation, and resource allocation. Similarly, internal auditors and finance teams are focused on compliance, risk management, and the accuracy of financial information from within the company. Information technology departments and consultants, while they may analyze data, typically do so to support internal strategies and operational improvements rather than acting as external evaluators of financial performance. Thus, the distinction between internal and external users is key to understanding the role each plays in relation to financial reporting.