April 6, 2015
Reporting Practices and Ethics
Proper and Ethical financial management plays an integral role to today’s healthcare financial plans. Healthcare organizations big or small are unable to function without proper financial planning. It is essential that all financial accounting records are kept up to date and follow proper guidelines. This helps keep track of how an organization is performing and allows the accountants to see where their revenue is going and makes profits and losses visible and proper adjustments to be made.
Financial management plays a vital role in a company’s success. The health care industry is a service, but also a business. There are four elements of financial management are essential in running a health care organization successfully. The first element is planning. A financial manager must know and understand an organizations objectives and be able to identify the steps they must take to accomplish the objectives. The next element is Control. A financial manager needs to ensure that all areas of the company are following the guidelines and plans that have been established. Another element is Organization. A financial manager will determine and decide how the resources of the organization will be used to carry out the plans most efficiently and effectively. Finally the financial manager will have to make decisions based on information and evaluation of information and tasks to make informed educated decisions.
The Generally Accepted Accounting Principles otherwise known as GAAP is a term that refers to a set of rules, standards and practices that are used in accounting to prepare and standardize financial statements that can be used for an organization. The use of GAAP is not required or mandatory for all businesses, but the U.S. Securities and Exchange Commission does require publicly traded and regulated companies to follow GAAP for the purpose of financial reporting ("Business News Daily", 2015). General financial ethical standards must also be followed by organization to conduct an honest successful businesses. This can be done by maintaining competence and continuing education to ensure a professional knowledge and skill in the finance of an organization. Performing tasks in good faith and in accordance with legal and regulatory practices displays competence and dedication. Another way organizations follow ethical standards is by maintaining confidentiality and only disclosing information when legally acceptable. Practicing honestly and accuracy with all aspects of an organization and avoiding any conflict of interest or prejudice displays a company’s ability to carry out professional responsibilities with integrity ("Association For Financial Professionals", 2015).
According to Goldberg and Lindquist (2005) “Fraud may be defined as intentionally employing surprise, trickery, cunning deception, and unfair ways by which one party cheats another party out of financial resources” (p. 29). Because health care is such a large, growing industry it becomes a large target for fraud activity. Fraud schemes in health care come in many forms and can be very difficult to detect. Many organizations do not have a good control over their internal systems, and even when they do have control, they lack the internal monitoring and auditing procedures done by skilled management who have specific training in the financial field of healthcare and fraud. According to Sandrick (1993) As Larry Morey, chairman of the National Healthcare Anti-fraud Association, has observed, "Fraud is by its very nature, invisible until we uncover it."(a) Fraud nevertheless is believed to account for a major portion of U.S. healthcare spending. The General Accounting Office (GAO) estimates that fraud accounts for about 10 percent of all U.S. healthcare dollars. (b) Healthcare organizations have not been able to substantiate this