Healthcare Accounting Principles and Ethics Essay
Financial Management, Reporting Practices, and Ethical Standards in Health Care Finance
Health care managers have many responsibilities, which support their roles in creating and maintaining successful organizations. A key responsibility managers undertake is the ability to manage financials appropriately.
"First and foremost, financial management is a decision science. Whereas accounting provides decision makers with a rational means by which to budget for and measure a business’s financial performance, financial management provides the theory, concepts, and tools necessary to make better decisions” (Gapenski, 2007).
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Principle of Regularity:
This requires the organization to adhere to enforced rules and laws.
Principle of Consistency:
This requires accountants to use the same reporting methods and procedures across reporting periods.
Principle of Sincerity:
The accounting entity’s reporting should mirror the organization’s true financial status.
Principle of the Permanence of Methods:
This principle intends for reports to be logically consistent and allow for the comparison of the published financial information.
Principle of Non-Compensation:
Precise details of the financial information should be represented, and auditors should not attempt to compensate a debt with an asset, a revenue with an expense, etc.
Principle of Prudence:
Prudence is an accounting principle that ensures assets and income are not exaggerated and that liabilities and expenses are not underreported.
Principle of Continuity:
One should assume while reporting financial information, business will not be interrupted. This principle accepts that assets may be accounted for at their historical value versus their disposable value.
Principle of Periodicity:
Each accounting entry should be allocated to a specific period, and divided accordingly if it covers numerous periods.