The success of any organization is heavily based on its ability to appropriately handle every aspect of its financials. Those aspects include a range of financial activities that include the inflow of cash and the outflow of cash which can be affected by a number of events including the raising of revenue through products or services, investments, purchases, debts and sales to name a few. With the number events that can take place within a particular reporting period, it is important that those transactions be monitored and tracked so that year end reports can reflect the most accurate overview of a the organization’s performance. These events and transactions are recorded and tracked through a number of financial reporting referred to as financial statements. For Patton- Fuller Community Hospital, information regarding its financial activities is included within their Annual Report. This report is compiled from financial statements that include their Balance sheet as December 31 for 2009 and 2008(audited) and the Statement of Revenue and Expense 2009 and 2008 (audited).
In addition to the audited balance sheet and the audited statement of revenue and expense, other financial reports were utilized by Patton- Fuller which includes Balance Sheet as December 31 for 2009 unaudited, the Statement of Revenue and Expense 2009 and 2008 (unaudited), the Statement of Retained Earnings and Stockholders’ Equity and the Interim Statement of Income (unaudited) though these reports were not included within the annual report. In comparing the audited and unaudited reports there were differences were observed between the two. For the balance sheets, the unaudited balance sheet reflects $128,867 under total assets whereas the audited sheet reflects $127,867. This difference of $1000.00 is the result of the change in current assets reported under the patient account receivable whereas the net allowance for bad debts was increased. As a result of this change, the total current assets reported for 2009 changed in addition to the total amount of assets reported.
Other differences were observed in the area of total liabilities and equity where the audited balance sheet reflects a decrease of $1000.00 which is a change from the unaudited reporting of $588,767 to $587, 767. In reviewing what the effect was of revenue sources on financial reporting, the facility may have performed determinations based on a contribution margin. Utilizing this would show how the organization has increased or decrease in sales, profits, and assets. Further review of the financial reports indicates that on the Patton Fuller Financial Statement there was a huge negative decrease in the Investment Income. This caused a -123.48% drop. Other sources of revenue showed a positive increase from 2008 to 2009. Further review of the full report reflects that findings that indicate that the sources of revenue and the expenses in 2008 were much lower than 2009. The unaudited expenses show that there was $41,391 difference between the two years.
The expenses that increased within the two years were the salaries and benefits of employees, supplies needed, and utilities. Within this time frame from the point where there was a negative impact, the organization was able to increase revenue and turn around what had been a negative into a positive. Patton-Fuller Community Hospital has grouped revenues into one category and expenses into another. All the revenue is what they are making from providing services and the expenses are what they have to pay out to keep the hospital staffed, supplies, and running. Patton-Fuller groups there revenue by care settings and there are only two. Eighty percent of the revenue is from inpatient care and the other twenty percent is from emergency care or outpatient services.
This type of grouping allows Patton-Fuller to see exactly what they are making for certain services they provide. All the financial reports generated by Patton- Fuller Community Hospital provide an overview of the company’s activities that will be useful in future planning, controlling, organizing and decision making. In addition, they provide information to internal and external auditors that demonstrate the organization’s ability to properly track funds that are received and dispensed.
For other external users such as investors and creditors, these same reports provide financial data that demonstrates how well a company is performing and has performed in the past. These reports are also important to employees, as the financial health of the organization is used to make determinations regarding raises, expansion and compensation. Overall review of the statements, including the annual report, shows the company’s ability to be transparent to both internal and external users. In doing so their reports serve as valuable tools that allow for improvement and continued growth to occur based on the organization’s mission and goals.
University of Phoenix. (2015). Week Three Learning Team Assignment: Virtual Organizations. Retrieved from University of Phoenix, HCS/405- Health Care Financial Accounting course website. Baker, J. & Baker, R.W. (2014). Health Care Finance: Basic Tools for Nonfinancial Managers, Fourth Edition. Jones & Bartlett Learning. Retrieved from University of Phoenix, HCS/405- Health Care Financial Accounting course website.