Reporting Practices and Ethics Paper

Shemika Williams
HCS/405 Health Care Financial Accounting
Joe Gazdik
August 26, 2013









Financial management
Profit making, non-profit making and governments need to account for their financial
transitions for a period. Hospital financial management involves strategies put in place to ensure that
financial operations in the hospital are run in an appropriate manner. Resources are scarce, thus they
need to manage effectively. When managing and reporting financial information, managers,
accountants and leaders should use some code ethics; other than normal business ethics, there are
some specific accounting ethics recognized by GAAP and IFRS (Baker & Baker, 2011).
Elements of financial management
Financial management works under four general elements, they are:
Planning
The first step taken by financial managers is developing a plan detailing the expectation of
each department in the hospital. This is to financial expectations (expenses, capital, investments and
revenue). With the understanding of the expectations goals and objectives are set. Strategies to see the
fulfilment of the goals are also developed.
Controlling
This is a continuous process where the manager through feedback from various departments
monitors the progress toward attainment of goals and objectives set in planning stage. Current
performances are calculated and any variance in the reports is interpolated. This stage offers a chance
to change strategies if the current ones are not leading the department/organization to attainment of set
goals. Objectives and goals may also be adjusted.
Organizing and directing
Resources in an organization are scarce; thus they need to be well allocated to various
programs. For efficiency, financial managers prioritise the project to be undertaken in a particular
time and how. This may involve a day to day allocation of available resources in different programs.
Decision-making
Financial management information is used for decision making. They assist management in
making current and future decision regarding the operations in a business. Information is crucial for
decision making since it offers a number of alternatives to choose from. The best alternative is
considered (Baker & Baker, 2011).
Accounting code of ethics can be classified into five elements, these elements are:
Competence
Management accountants are expected to be competent in the discipline. They should be
adequately trained to ensure that they understand the art of accounting. Different countries have
accounting bodies that licence management accountants. In case of a change in accounting principles,
then its ethical for a management accountant to update him/herself with the changes.
Integrity and professionalism
Management accountants should uphold integrity and professionalism in their duties. They
should understand that the information they give is used by internal and external users for making
decisions and thus it should not be misleading. The ability to stand on ones ground when called to
fraud or abuse is crucial. Fraud and abuse can create many problems for and organization including
fines and loss of operational licensing.
Confidentiality
Information is power. Financial managers should maintain high-level of confidentiality. They
should know what information to disclose to the public and which one not to. Patients should feel safe
when giving out information and knowing that it will be confidential helps. Mangers should be
professional enough to know not to give out important information.
Credibility
Financial managers should be accountable of all their actions. They should perform their
duties in a responsible way. Personal ethics like honesty are also important. To be credible with what
one does, a certain degree of independence is called for.
Resolution of Ethical Conflict and due Care
Financial managers should be on the frontline to guide an organization to ethical principles
and conduct. They should also understand that they have access to information that managers use for
decision making, thus they have a duty of care to them. Financial information is also used by external
users like investors for making decisions; thus they should reflect the true position of the business
(Cleverly & Cameron, 2007).
Examples of ethical behaviours in Baker & Bakers book
Example 1
On page 7, the writers illustrates that financial accounts are important to outsiders. They go
ahead and give the outsiders who use the hospital accounts as Medicare, Medicaid and the
government for various policies making.
Significance
The significance of the example is to show how important financial information is to the
management of an economy. This calls for ethics in financial management. Integrity and truthfulness
of the accountants will be required.
Example 2
On page 13, the writers gives an example of some of the information required in a hospital;
patients data. The text states that when data is well captured, it assists the hospital to have a smooth
follow.
Significance
This example shows the need for good financial management in the hospital. It portrays how
important financial management is within in a hospital. The example supports the ethics of
competence in financial management as well as compliance with the set organisational code of
conduct (Baker & Baker, 2011).
Conclusion
Financial management is an important aspect within health care organizations. It provides
relevant information for internal and external users for decision making. Financial management have
a duty of care and thus should perform their duties with integrity. Financial managers follow the code
of ethics required for the profession. Every health care sector relies on the accuracy and fairness of
financial reporting.











References
Baker, J. J., & Baker, R. W. (2011). Health Care Finance Basic tools for Nonfinancial Managers (3rd
ed.). Sudbury, Ma: Jones and Bartlett Publishers.
Cleverly, W. O., & Cameron, A. E. (2007). Essentials of health care finance (6th ed.). Sudbury, MA:
Jones and Bartlett.
Richard L Clarke. (2005, August). Transparency and accountability. Healthcare Financial
Management, 59(8), 160. Retrieved December 6, 2010, from ABI/INFORM Global.