Reporting practices and ethical standards are the most important building blocks that are needed to build a successful health care organization or any business. These reporting practices and ethical standards prove to be the upmost important practices in any health care organization. When reviewing all the variables and factors, one considers the principals listed in the generally accepted accounting principles. There are several factors to consider and inforce these principles in an organization. To successfully implement generally accepted accounting principles and execute corporate compliance, an organization should consider in order for building a successful organization; ethics, fraud and abuse are all key components for maintaining a successful health care or business organization.
A successful organization cannot be successful unless they integrate and implement the four elements for financial management. In order to implement and execute the four element of financial management for a successful organization, the four elements should be implemented and carried out in full on a daily basis for every procedure and operation within the organization. Controlling, planning, organizing, and decision making are the four components every business and/or health care organization should adopt. The four elements are the keys to every good business ethics and standards to maintain a successful organization.
Four Elements of Financial Management
The planning stage of the four elements of financial management proves this stage, is vital to set goals for a healthcare organization end to end with its execution of this stage and the other four elements. The next element of financial management is the controlling stage and in this important stage the organization must set goals for their organization and that each goal is executed and carried out. A perfect example of how an administrator /director/ manager in a healthcare organization can control their organization is to conduct audits of the department they oversee. Decision making is defined as the overall performance of the other three elements and determination on wither or not the overall performance of the other elements. The success of this can be measured Decision making in conjunction with the other elements and the overall performance and success of other 3 elements ultimately determines decision making elements.
Examples, if the organization exceeds the funds budgeted and find they are over budget, the decision making element comes in to play to review these items over budget and make an action plan to correct and/or prevent in the future. The four components are a vitally in financial management there are also other important principals and standards. The Generally accepted accounting principles and general financial ethical standards along with corporate compliance, ethics, or fraud and abuse are equally important separately and combined. The four functions of management help the facilities function properly and give the management the opportunity to resolve any issue or obstacle that may present as well as the opportunity to growth and make them better to perform and utilized the resources around them. Management is responsible for beginning the process for procedure or task at hand and sustaining the actual method of internal control that is set by the organization.
It is important that management/ administrator/ director to oversee and maintain the budget control. The manager/admin/director overseeing the budget should be knowledgeable of how to control the budget and in order to maintain budget control, they should regulate to increase productivity and be familiar with assets, financial reporting and account summary. Every cooptation or health care organization is necessitate to meet the satisfactory operational needs, consequently cash management function helps any organization begin to create a set of policies and procedures to ensure that federal funds are not withdraw unreasonable from the organization and payments are made properly to the programs (Ethics and Compliances May 1994).
According to Ethical Behavior by Companies Benefit Society and Business (November 13, 2010), when applying ethical business practices, says that business should ensure that the production of its services should be environmentally ecological and every human involve in the production should not be dangerous or harmful for them. Ethical practices involve the strong financial reporting as well as consideration for the social and environmental impact of the business. Audit reports help the organizations know the financial condition of the organization for Health Care or any other business as well as the result of the organization’s day to day internal operations.
Audits are helpful when following the practices of financial reporting practices of the organization can serve as a checks and balances and a great tool for capturing financial data, if management checks the financial audit reports often. Financial reports explain in detail how the organization is doing and prevents negative numbers on the company because it records any procedure and activity that happens in the organization (Ethics and Compliances. May 1994). According to American College of Physicians (Snyder. 2012), the environment for the delivery of health care continues to change. Sites of care are shifting, with more care provided in ambulatory settings while the intensity of inpatient care increases.
Generally Accepted Accounting Principals
“The phrase “generally accepted accounting principles” is a technical account term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. Generally accepted accounting principles (GAAP) are concerned with the measurement of economic activity, the timed when such measurements are to be made and recorded, the disclosures surrounding this activity, and the preparation and presentation of summarized economic information in the form of financial statements (Bragg, 2012). Generally accepted accounting principles also known as GAAP to understand the definition better, GAAP are guidelines that one should follow when trying to establish proper financial documents and reports. With these guidelines to follow, it was easier to maintain the financial reporting’s for all fields, including healthcare. The generally accepted accounting principles were held in the highest regard.
The guidelines of the GAAP have had a high authority when it came to determining financial practices in healthcare. The GAAP influence has dwindled if not stopped. It was stated that it was not required for hospitals, nursing homes or any kind of healthcare facility to adhere to the GAAP (Taebel 1995). It has been documented that the guidelines of the GAAP has caused facilities to lose money, even though they knew what was best about recognizing costs. It has been suggested that is not required to make decisions based off of the general accepted accounting principles. Capital costs are reimbursed according to a prospective payment system; providers are being paid a predetermined amount regardless of GAAP issues (Taebel, 1995).
There are countless of different ways that we can touch bases on to understand the importance of a cohesive financial department. It is essential to its success to be ethically compliant and to follow through with policy and procedure. It is up to the financial managers to execute and enforce proper guidelines. In conclusion, there are four elements of the financial structure that is the basis for a financial department’s success which are planning, controlling, organizing and decision making. With this information we were able to understand and summarize more in depth the importance of generally accepted accounting principles and general financial ethical standards. Finally, we were able to view examples in those respecting terms and gain understanding from them. By compiling all of these elements together can guarantee a solid financial department in any healthcare facility.
American College of Physicians (2010) Ethics in Practice: Managed Care and the Changing Health Care Environment. Retrieved 11/13/2010 from http://www.annals.org/content/
Bragg, Steven M. Wiley GAAP 2012: Interpretation and Application of Generally Accepted Accounting Principles (10th Edition). Hoboken, NJ, USA: John Wiley & Sons, 2011. ProQuest ebrary. Web1 May 2015.
Ethics and Compliances Retrieved 11/13/2010 from http://www.miamivalleyhospital.org/mvhdefault.aspx?id=12746 (May 1994)
Snyder L, for the American College of Physicians Ethics, Professionalism, and Human Rights Committee. American College of Physicians Ethics Manual: Sixth Edition. Ann Intern Med. 2012;156:73-104. doi:10.7326/0003-4819-156-1-201201031-00001
Taebel, S.W. (1995, October). Supreme Court ruling reduces GAAP’s authority in Medicare cases. Healthcare Financial Management, 49(10)