QUESTION 1 (1000 WORDS )
You are the CFO for a 400-bed hospital in your community. You have been asked to present information to the local business organization on financial information and its importance to the stability of any business. You have been presented a list of questions from the group to answer in your presentation:
- What is the importance of financial information to the hospital?
- Who are the various users of the hospital financial information and how is the information used in healthcare decision making?
- Discuss the different healthcare businesses and what are the financial and managerial differences?
QUESTION 2 (10 slides with speaker notes)
As the Director of Accounting, you have been tasked with briefing during the new employee’s orientation on the principles of accounting and how these apply to your hospital. In addressing the principles of accounting, you are concerned with both sets of accounting information–financial and managerial. Managerial accounting has no formally adopted set of principles it relies strongly on financial accounting principles. Understanding the principles and basics of financial accounting is critical to understanding both financial and managerial accounting information.
- Address the regulations around safeguarding financial information to prevent fraudulent activity.
- Identify and explain the five (5) principles of accounting and how they apply to the financial statements specific to your healthcare institution.
Here is an except Solution.
INTRODUCTION
As the role of healthcare organizations are expanding so is the needs for sound financial information is growing over time. The healthcare organization key decision makers are mostly dominated by healthcare professionals; doctors, nurse, pharmacist, medical lab scientist among others, who have little or no knowledge about the financial health of the organization and relies heavily on the organization chief financial officer (CFO). The CFO, therefore, is charged with the responsibility of the planning, coordinating and analyzing the financial cash flow of the healthcare organization; their financial strength and weakness and providing plans on improving the financial health status of the organisation.
Because the healthcare business is expanding this day, and investors and stakeholders to the healthcare organization are expanding, there are equally a growing needs for the organization to provide quality financial health status of the organization to these varieties of stakeholders for improved decision makings. The managers and board of directors of the healthcare organization equally need the financial information to understand the progress of the organization, to evaluate projects; its viability or otherwise. This essay will cover, the importance of financial information in healthcare organization, the end users of financial information and lastly the different class of healthcare business and the difference between their financial and managerial.
Importance of Financial Information to Healthcare Organization
Decision Making: The basic purpose of preparing or providing financial information is to improve the decision-making process of the organization. The financial information comprises of four distinct information set; the balance sheet, income statements, cash flow statements and changes in owners of assert. Once the organization CFO prepares and supply the financial information, it serves as the basis of identifying the course of action and basis of developing strategic plans to be followed by the organization.
The manager would be interested to know the viability of the proposed course of action, whether the organization has enough resources to embark on it or not. It equally helps the organization to evaluate the performance of the organization over time, whether the organization is making headway or not………………………….
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