This essay the author will be able to evaluate current systems for managing finances Resources in health and social care settings. Therefore will evaluate how financial Decisions are made and the need to monitor budgets. This will then enable the author to Evaluate the impact of financial considerations on an individual using health and Social care services.
Furthermore will provide a core understanding of the range of systems available, and How these are used in the planning and financial management of health and social Care budgets. The unit further will encourage understanding the importance of Monitoring budget expenditure and its influence on the provision of health and social Care services.
1.1PRINCIPLE OF COSTING AND BUSINES CONTROL SYTEMS
Analysis of current situation against budget and forecast, classification and coding, job costing, Contract costing, actual cost ascertainment,allocation/apportionment
Costing it describe as According official terminology the technique and procedure of ascertaining cost. These valuation systems including main beliefs and system to determine the cost of goods or services. It also the quantity of supply used in replacement of goods or services. The income used can be financed or money’s value, Semi Variable
Semi Fixed Cost
Cost: Cost is an amount that has to be paid or given up in order to get something Cost Unit: The unit cost is the cost incurred by a company to produce, store and sell one unit of a particular product. Unit costs include all fixed costs and all variable costs A cost center is part of an organization that does not produce direct profit and adds to the cost of Running a company. Examples of cost centers include Cost object: Cost object is often a product or department for which cost is accumulated or measured. For example, a product is the cost object for direct materials, direct labor and manufacturing overhead also the factory maintenance department is cost object for the cost of the maintenance employees and the maintenance supplies. Cost benefit analysis: Is A cost object is a tangible input for a product manufactured/service provided, like labor or material. For example a cloth manufacturing firm requires some
Break even analysis:
Classification of cost means, the grouping of costs according to their common characteristics. The important Cost behavior The way a specific cost reacts to changes in activity levels is called cost behavior. Costs may stay the same or may change proportionately
Variable Cost / Product Cost:
Variable costs are the Fixed and Variable cost A cost is fixed if, within a specified period of time, it does not change in response to changes in the level of activity. A variable cost is one that changes in response to changes in the level of activity, it changes in direct proportion to the volume of activity, that is, doubling the level of activity will double the total variable cost total cost over a period of time for the variable inputs. Any increase in the volume of production results in an increase in the variable cost and vice versa. For example, of variable costs is the cost of raw material. Semi-Variable Cost / Semi-Fixed cost: These costs are in part fixed and in part variable. For example: repair machine fees. Semi-variable cost includes both a fixed and a variable element. For example, a telephone bill contains a fixed standing charge and a variable charge based on the number of units dialled.
A semi-fixed cost or stepped cost is one where the cost remains constant for a range of activity; then when the activity increases still further the cost will take a step upward. Break-even Analysis is an expected component of most business plans, especially for start-up companies. It shows how much revenue you need to cover for both fixed and variable costs and cost benefit analysis are frequently used by health and social care organisation to monitor cost and make decision about expenditures. Cost data are very useful in budget preparation and forecasting for the financial year, the Providers use cost data to manage services and improve operational efficiency. Cost data are also used to support the development of pricing and currency design for reimbursement purposes A direct cost is especially noticeable to a set cost object.
A cost object is a product, procedure, section, or action for which the health administration requirements to assess the cost, such as a medical test, a care appointment, or a health check process. Indirect costs cannot be traced to an agreed cost purpose not including resorting to some arbitrary method of assignment. Hand, is directly involved in producing revenues, and, if it is managed well, its revenues exceed its cost and it produces a profit.
The six principles of costing are:
Stakeholder engagement: Stakeholder engagement is the process by which an organisation involves people who may be affected by the decision it makes or can influence the implementation of its decision Materiality : is in accounting relates to the significance of transaction, balances and errors contained in financial statements. . Consistency For some costing purposes, a consistent approach is required across or within organizations. Data accuracy, Accurate costing relies on the quality of the underlying input data. Transparency Costing should be transparent and auditable
Causality and objectivity
Importance of costing:
Costing help an organisation to manage is company to incur a cost with the expectation of profit Example: A company may have a variety of distinct departments,division,or operating groups,each with separate responsibilities and each contributing to the overall success of the company.cost centers,for example,such as accounting,auditing,or inventory control,have costs,but does not contribute revenues. As a result, they do not produce profits.
1.2 The information needed to manage financial resources
Is to understand the role of planning in the management of health and social care budgets also the importance of monitoring budget expenditure. Such as transparent and Accurate accounting Information, risk management, short and long term Forecasts, audit report.
1 Need is business costs, people, equipment, finance, buildings, consumable items, administration; Income streams; trends and external influences, e.g. changes in policy, competitive factors, legal requirements.
Legislation and codes of practice, audit, accountability, policies. Systems: sources of income, how budgets are set, administration of budgets, cost centers, accountabilities, Audit requirements Information: business costs: people, equipment, finance, buildings, consumable items, administration; Income streams: trends and external influences:changes in policy, competitive factors, legal requirements.
1.4 System for managing finance
Is a plan, assuring that resources are obtained and used effectively, efficiently in the accomplishment of the organization’s goals. Therefore, it focuses on programs and responsibility center and it is a total encompasses of all aspects of a firm’s operation and usually built around a financial and accounting structure need two types of information for management control planned date such as, budgets, standards, and projections) and actual data.
Budgetary control system
Cost control system
Financial control system
Internal control and audit
Enterprise resource management system
IT control systems
Importance of business control system
LO2: ROLE OF PLANNING IN THE MANAGEMENT OF CARE TECH BUDGET
Care tech annual report
The Group has repeated the good progress of recent years in 2013 The UK market Group has continued to be progressive and has made encouraging progress during the year. The underlying operating profit remains strong at £23.2m compared with £21.7m last year.
Transaction on 28 August 2013 to acquire two property portfolio businesses, leading to an annual rent saving Of £4.4m.
£m £m Growth
Revenue 114.3 114.1 0.2%
Gross profit 45.6 45.3
Administrative expenses (19.2) (20.4)
Underlying EBITDA 26.4 24.9 6.0%
Underlying EBITDA margin 23.1%, 21.8%
Depreciation (3.1) (3.1)
Share-based payment charge (0.1) (0.1)
Underlying operating profit 23.2 21.7 6.9%
Net financial expenses (5.7) (5.0)
Underlying profit before tax 17.5 16.7
Taxation (3.4) (3.4)
Effective tax rate 20.0%, 20.0%
Underlying profit for the year 14.1 13.3
Weighted average number of diluted shares (millions) 51.3 50.4 Underlying diluted earnings per share 27.43 26.47
Full year dividend per share 7.00p 6.50p
Revenue of £114.3m (2012: £114.1m) was 0.2% higher than in 2012. In the established Adult Learning Disabilities segment we continued to experience high levels of occupancy
2.1 Diverse sources of income
2.2 Factors that may influence the availability of financial resources 2.3 Types of budget expenditure
2.4 Decisions about expenditure
TASK 3: IMPORTANCE OF MONITORING BUDGET EXPENDITURE IN CARE TECH
3.1 Managing financial shortfalls
3.2 Financial fraud actions
3.3 Budget monitoring arrangements
LO.4: INFLUENCE OF SYSTEMS AND PROCESSES ON CARE TECH SERVICES 4.1 Information required in making financial decisions:
Different types of information are needed by decision makers depending upon the stage of operation they are in. The decision involved can be Quantitative or qualitative. Judgments regarding movements in future share prices, likely future dividend payments and management efficiency. Ratios to determine management efficiency. Data to compare the market trend and future estimates.
4.2 Relationship between care service delivered and ‘costs and expenditure’ 4.3 Impact of financial considerations on a service user
4.4 Improving care services through changes in financial systems and processes
Bottom of Form
4 Understand how systems and processes for managing financial resources influence health and social Care services Financial decisions: responsibility for decision making, information available, sources of income, priorities
The relationship between service delivery, costs and expenditure: cost-benefit, pricing policies, purchasing Arrangements. Impact on individuals: quality of service, access to service. Recommendations: options available, supporting evidence, information to be presented for discussion by financial decision makers. :
Information about the business environment and external influences Good understanding Of the business cost by health care managers will aid the management of financial resources in health care organisation. The information includes Staff cost (Wages and salaries, Pension cost) Medical equipment and appliances cost (Hoist, Buckets, Buckets, Stretcher, Trolley, Wheelchair) Cost (Outright purchase or lease – Operating or finance lease Cost of consumable items (Food, toiletries, Soap, Kerosene, lantern
Administrative cost and Professional fees The revenue (income) receives depend on the service and business engagement of the health organisation which includes normal business activities such as (Adult Learning Disabilities, Mental Health, Young People Residential Services, Foster Care rents and service charges from social housing lettings and leasehold management revenue grant, tax support contribution.
The Regulatory body
They are alot of regulatory required for satisfying while managing financial resources, but in this essay the author will mention a few such as, Care tech holding PLC in 2013 financial ending. Care Quality Commission, Healthcare Sector Regulator Monitor, NHS Commissioning Board,
1. Important to monitor to avoid fraud and eoror
What is Importance of costing in HSC
1.2Intoduce by defining business control systems
Identify and explain the different business controls systems in BULLETS (Budgetary control system, Cost control system, Financial control system, Internal control and audit, Enterprise resource management system, IT control systems) Conclude with the importance of business control systems.