What type of reports are primarily prepared to demonstrate accountability?

General purpose external financial reports are designed to demonstrate accountability to a wide range of stakeholders, including taxpayers, investors, and regulatory bodies. These reports provide a comprehensive overview of an entity's financial performance and position, adhering to established accounting principles. Their primary goal is to inform the public and stakeholders about how governmental organizations manage and allocate resources, thus fostering transparency and trust.

In contrast, internal management reports are typically more focused on assisting management within an organization in making informed decisions rather than demonstrating accountability to external parties. Project reports and grant proposal reports serve specific purposes such as monitoring project progress or seeking funding, but they do not encompass the broader aim of meeting accountability requirements to the general public and stakeholders in the same way that general purpose external financial reports do.