Taxpayers as well as the investors requires sufficient and accurate information in order to make sound decisions and also safeguard their financial interests.Individuals and organizations requires to have confidentiality so as to ensure that competitors do not invade their privacy.Donors,Research agencies and the entire community have a legal right of accurate data concerning revenues and the deployment of resources as far as public hospitals are concerned and so the financial statements are required to provide such data(Cichon et.al.1999).
The health care industry should aim at providing high quality health care standards for the citizens. Health care also needs to be integrated ,dynamic, effective and responsive so as to take care of the needs of communities and patients and this will enable them to be accountable as far as their performance are concerned. The following essay addresses the financial reporting practices and ethical standards in health care finance including the health care finance and the generally accepted accounting principles and the corporate compliance, fraud or abuse and ethics.
In compliance with the ethical standards, health care financing should aim at coming up with a system that have supplement and co-payment systems which should be applied so as to incorporate the incentives and hence improve the quality as well as to ensure that resources are allocated fairly in order to meet the needs of patients. This requires the use of quality information creatively and intensively about the economic and financial effects of health. All the costs and revenues concerning the health care organization should be accounted for (Eastaugh, 2004).
In healthcare financing transparency and comprehensibility are very important aspects because all stakeholders including patients, civil servants e.t.c.should are able to understand and compare on ways of improving the cost effectiveness and financial allocations fro the patient’s benefits (Hoffman, 1996).
The cost information needs to be comprehensive and consistent and should enable patients to make good decisions. The information thus should be in accordance with the IFRS so that the patients can understand well the full cost concerning their healthcare such as medical services, diagnostic services, rehabilitation services, drugs prescribed, charges for the services and facilities e.t.c.The information should therefore be consistent and should comply with the IFRS.The costing methodology should breakdown the costs and should be transparent and uniform.
The resources that are available at the health centers such as accommodation facilities, technology, and equipment e.t.c.should meet the IFRS and so the management should ensure that safety standards are being put into place before declaring a premise ready to be used as a health care organization. In health care finance, the principles of financial management that should be considered so as to comply with the financial reporting practices includes the assessment and analysis of the complete financial position, formulation and implementation of long-term strategies aimed at achieving personal as well as financial goals, Managing the organization’s daily affairs and ensuring a thorough follow up on the details and making informed financial decisions.
The accounting principles known as US GAAPs are applied to create uniformity in the accounting practice and preparation of the financial statements. The underlying assumption in generally accepted accounting principles includes the monetary unit i.e. all the transactions are normally expressed in monetary terms, business entity i.e. the reason behind forming the organization is to make profits, going concern i.e. the business is deemed to continue in its operation seven in the foreseeable future and the principle of time period. GAAP are governed and issued by the International Accounting Standards Board and the Financial Accounting Standards Board. The principle that ensures accurate, free and fair accounting practices includes revenue, cost, disclosure and matching principles.
According to revenue principle, revenues should be recognized when the earning effort has been expended. Any revenue that is not earned or realized is usually not recognized in financial reporting. The matching principle states that the expense should be matched with the revenues earned. The expenses are not recognized before the work done earns revenue for the business in any given accounting period. Cost principle guides that the initial costs of assets should be reflected in the books of account instead of their depreciated value.
The other principle of Generally Accepted Accounting Principle is the disclosure principle which requires that the organization discloses all the information concerning the financial status of the business such as the method of depreciating that is used, a change in depreciation method e.t.c.and thus if an organization decides to change the current method of depreciation say straight line method and switch to the sum of digit method, then this should be well disclosed.
Cichon, M. (1999).Modeling in health care finance: a compendium of quantitative Techniques for health care financing. US: International Labor Organization.
Eastaugh, S. (2004).Health care finance and economics. Sudbury: Jones & Bartlett Learning.
Hoffman, D. (1996).The ethics of accounting and finance: trust, responsibility, and control. US: Greenwood Publishing Group.