Summary of the four elements of financial management
The elements of financial management include; financial reporting, accounting records and source documentation, budget control, internal control, and cash management.
Reports on Financial performance
Financial reports serve various purposes within an organization; the reports are made from certain requirements retrieved from various authentic sources. The reports are generally used by the management for the purposes of controlling activities within the organization ensuring the achievement of goals and objectives. The financial reports provide basic information on the organization’s financial status and operations that are sometimes used by external parties to ascertain whether the organization fulfills the stated regulations and policies (CFR services, 1994).
Records of Accounts and related documentation
These provide the true picture of the financial condition of an organization and the resulting operations. Several procedures are followed in the process of recording and documenting important reports. The records are used for auditing purposes as part of support information from the financial statements (CFR services, 1994).
Internal control
It is the responsibility of the management team to run the organization on effective principles that guarantee good internal control. This is ensured through the implementation of workable policies and procedures that ensure appropriate operating systems, accounting recording systems, and control procedures (CFR services, 1994).
The control of the Budget and management of cash
The budget provides the spending plan that shows the level of performance of the organization. The budget is drawn in accordance with the needs of organization members and activities. It is presented either on a monthly or yearly basis and provides information on revenues and their sources and also the expenditures. Cash management on the other hand ensures that enough funds are available for every transaction and that there is no misplaced fund within the organization (CFR services, 1994).
Generally accepted accounting practices (GAAP) and general financial ethical standards
GAAP requires good control from the budgetary accounting control department. The budgetary accounting control system is very crucial in determining the level of legal compliance with state practices. Financial management in healthcare organizations needs to pay much attention to the generally accepted accounting principles (GAAP) and ethical issues in order to overcome the various problems and challenges they encounter. These standards also help in maintaining the credibility of healthcare practitioners. GAAP refers to the standards provided as a guideline to help in key financial management and it is related to ethics since it provides the basis for sincerity in the preparation of reliable financial statements and reports. It is one of the important tools that help in the management of healthcare organizations since it ensures that all financial records reflect the true picture of the financial position of the organization. GAAP ensures that all organization accountants use the same method of financial analysis ensuring transparency and easier auditing processes. It simplifies the processes used in regulations and governance within healthcare organizations. The reality and honesty reflected through financial management help in building confidence between the organization and other external institutions (Hines, 2010).
Ethical standards are applied to all aspects of healthcare delivery including financial management. Ethics are represented by an individual’s honest judgment on how better issues should be handled. It is comprised of norms of morality that differentiate right from wrong behavior. The financial information provided should be consistent with that of previous accounting periods. The management team within a healthcare organization has to show clear procedures on transactions which eliminates the essence of unexpected compensations and losses. GAAP controls the issues on certainty where managers are only allowed to record income and expenditures they are sure about. This gives managers in healthcare organizations the basis for appropriate and effective performance since GAAP ensures the preparation of credible and reliable financial reports (Hines, 2010).
Corporate compliance
The corporate compliance programs within healthcare institutions assist the healthcare providers in building appropriate goals, internal procedures, and policies. These rules help in minimizing the issues on employees’ misconduct behaviors and improve the level of understanding. Healthcare organization ethics help in the creation of accountability programs that enable appropriate business conduct. Corporate compliance program ensures that medical employees get the opportunity of displaying high standard behaviors that result in job satisfaction (Health Net Inc., 2006).
Examples from the articles that reflect ethical standards of conduct and financial reporting practices
Mistakes are uncovered and appropriate measures are undertaken for correction purposes. There should be no falsification of any records within the organization be it for a customer or third party. Concerning financial integrity, all the investors and creditors are guaranteed access to the organization’s financial and accounting information. The healthcare organization bases its integrity of financial reporting and accounting information on the accuracy and authenticity of entries and records. It is generally accepted that all financial records must honestly reflect processes and activities within the organization and conform to GAAP standards. Each medical staff is endowed with the responsibility of adhering to the set standards (CFR services, 1994).
They are also expected to offer full assistance and cooperation to the auditors with no falsification of information. Any incorrect information on financial records results in the employee being terminated from his duties. The following provides examples of some unethical practices in financial management; hiding of true figures that result in alteration of transactions, inappropriate recording of income and expenditures, reflecting on the records of any undisclosed assets, maintenance of fraudulent accounting reports and documents, recording any payments outside those described by organization rules and regulations, signing any inaccurate document not supported by the organization rules (CFR services, 1994).
Significances of the measures undertaken
Financial reports enable a clear understanding of profit and cost drivers that reduce the management’s workload during decision-making processes. Ethical trends help in the clear prediction of market changes and budgeting. The healthcare institution requires the reputation of its employees to be beyond reproach by abiding by the high standards of professional ethics when undertaking their duties. The company does not allow personal financial inducement to control its professional set objectives on the course of treatment. The associates of the healthcare institution provide related services to the medical management in reference to the institution’s core values on cost and quality. The associates performing abilities are put into question when he/she allows activities from outside the company to influence the undertaken duties. The associates are prohibited from indulging in any activity that is contrary to the rules and regulations of the institution. The healthcare professionals are cautioned never to conduct any business to gain influence over consumers (Health Net Inc., 2006).
The accuracy of the accounting records is one of the key issues that healthcare organizations are concerned with. It enables prompt corrections to be made where deficiencies are realized during the auditing process. No retaliation is allowed against those who faithfully and honestly reports violation of the institutions code of conduct and ethics, the individual is neither subjected to job termination by the institution nor loss of benefits. The penalty imposed on any violation will have to comply with many standards which include the individual’s behavior history within the institution.
References
CFR services. (1994). Basic elements of an effective financial management system. Web.
Health Net Inc. (2006). Code of business conduct and ethics. Web.
Hines, R. (2010). Accounting principles and ethics. Web.